The Biggest Obstacle to Retirement Success

What is it that causes humans to avoid the unknown and become complacent with the familiar?  As children we would explore caves, old homes and lands that piqued our interests.  As adults we assume a mindset of comfort and do so at our own peril.  

As it relates to retirement planning success, too many of us are submitting to fear instead of boldly seeking our best interests for the future.  We gamble with our life savings in entrepreneurial ventures that attract our passions and fail to consider the long-term implications.  Often the smaller, consistent investment process over a period of decades yields the greater probability of success for our future.  

A client came to our office recently and spoke of his fear of the debt ceiling, foreign wars and economic issues going unresolved by the government.  I asked him a simple question, “What can you, personally, change of the three issues you spoke?”  He looked at me with a whimsical glance and said, “I guess none of them.”  Shaking my head to acknowledge his incorrect answer, I said, “You have more control over your world than you know.”  As investors, we should only invest in those types of instruments that we have full knowledge of their function.  To blindly cast our lot to the winds of chance is not a solid plan of action.

When we had concluded our discussion, he shook my hand and thanked me for “talking him down from the cliff.”  After some thought, I realized that many of us give too much credibility to the fear in our lives when we should be embracing the opportunities.  By starting our retirement savings in our 20’s, the compound effect over the next four decades is exponential.  It is much easier to save smaller amounts over prolonged periods of time than to find lump sums to invest over a shorter period.

The solution to overcoming fear is to run toward it.  David and Goliath are a familiar story in the Bible.  Theological scientists have analyzed the narrative to determine that David’s proactive energy of running toward the giant Philistine played a significant role in the success of his conquering the enemy.  The combination of forward motion, swinging the sling to create centrifugal force and the placement of the stone on its mark of the foe created a constructive collaboration of force so dramatic that the stone was sunk into the forehead of Goliath.  Immediately the giant topples, and David claims his prize of the most feared man of the Philistines’ head to present to his king.

Do not spend too much time stewing over the process of planning.  Start doing the things that are necessary to conquer your most feared adversary (i.e., lack of sufficient savings, health issues, psychological adaptation to a new lifestyle, etc.).  Run toward these challenges in a manner that empowers you to take the necessary steps to gaining victory over the unknown – your future.  

Another of our clients had saved diligently during his lifetime and was working until age 70 to maximize his Social Security Benefits.  After retiring and receiving his first SSA benefits payment, he began to feel ill.  His spouse convinces him to seek the advice of his doctor.  The answers received were not good.  He was suffering from an extremely aggressive form of cancer.  His life would end within one year.  Instead of feeling sorry for himself and resting on his comfort built over the past fifty years, he set new goals that could be accomplished within a year.  Setting aside enough assets for his wife to live successfully in retirement, he sought new adventures through travel and philanthropic work.  One of our last conversations was that he was happy with how his life had turned out and he would not have changed a thing.

My friend ran toward the unknown difficulties in his life and gained greater perspective.  Our planning process helped him achieve happiness in life and fulfillment of his wife’s concerns for a better future for her.  We do not know the future, but we can work to make the future what we want it to be.

Financial planning is the process of setting up goals and strategies to make your future what you wish it to be for your family.  By meeting with a Certified Financial Planner™ professional, you are running toward the unknown with an expert to help guide you to your ultimate goal accomplishments.  Leonard Sweet stated it best, “The future is not something we enter.  The future is something we create.”  See you on the jogging trail!

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Bridging the Gap in Retirement

Preparing for retirement is part science and part art.  The science portion of the planning process is based on factual matters such as resources saved for retirement, predictable fixed and variable costs of living, cash savings for emergencies and use assets that are free of debt.  To measure these items when planning for retirement, one simply makes a list from the most recent statement of accounts or values assigned to the property (i.e., when valuing a home or rental property).

However, the more difficult aspects of life to define and quantify are longevity of life, market conditions upon retirement, health expenses during the period after your career and lifestyle needs that may change with age.  To fail to consider these aspects in your retirement plan is tantamount to ignoring your blood pressure until you have a heart attack.  The most crucial factors in planning for the future are typically pertaining to lifestyle.  Why?  Because these costs can be significant in impact to your overall plan for cash flows and require immediate attention to squelch the negative outcomes.

One such planning point is the transition from career to retirement while considering multiple income streams.  Let’s assume you no longer receive a salary but desire a consistent revenue stream.  By investing in the appropriate equity positions that pay dividends consistently, you may experience salary-like cash flows to help you meet your obligations. For example, consider stocks that pay dividends in January, April, July, and October of each year.  Also, you may want to consider other stocks that pay dividends in February, May, August, and November of each year.  By laddering the receipt of dividends, you will be receiving potential cash flow each month that helps you assimilate the receipt of a salary.

Another approach, using fixed income investments, is to buy certificates of deposit with laddered maturity dates such as 30-day, 60-day, 90-day, and six-month maturities.  This will provide cash flow for the periods purchased to help you maintain continuous streams of monies to contribute toward your cost of living.  Also, a similar approach may be taken with bonds.  These are approaches that a wealth advisor may consider for your cash flow transition from employment to retirement.

Being consistent in saving for your future is a good habit to build.  Time is one of the best builders of wealth.  There are no guarantees in investing or life.  However, if you allow yourself the amount of time necessary to properly save for retirement, while investing in a prudent manner, your probabilities for success are much higher.  Another caveat is to only invest in the types of companies and or industries that you understand.  While it may seem inspiring to invest in the most recent technology company because of a new app that will change the world, ask yourself about the true purpose of your investment.  Are you expecting the investment to grow significantly in a brief period?  Or are you looking for cash flow through consistent dividend payments?  

Before investing your hard-earned money, I highly recommend you fully evaluate the underlying business operations, product sales history, management capabilities and additional financial information to gain a good understanding of the company.  Many of the growth companies that look good on paper, fail to pay dividends because of their nature of operations.  Growth companies, unlike value companies, reinvest their profits to facilitate their growth initiatives in market share.  

Balance is the key to a portfolio that provides total return.  By definition, total return is growth of the capital investment plus the dividends received from the investment.  To achieve your cash flow needs, you may be required to sale your growth company stock to receive the capital gains you desire.  This will be a taxable event and, therefore, you will receive less cash than planned.  Remember, there are no free lunches in life!

Cash flow is the most critical concern of most retirees.  Transitioning from full employment to retirement is a challenge.  To gain confidence in the process, we highly recommend you seek the advice of a Certified Financial Planner™ professional to analyze and create a cash flow plan that assails your fears.  President Eisenhower, while serving in WWII, stated, “In preparing for battle, I have always found that plans are useless, but planning is indispensable.”  

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Don’t Leave Your Money Behind When You Leave a Job

If you were to leave your home and move to another one, would you leave your valuable jewelry and other assets with the old home?  Of course not!  In a similar sense, millions of Americans leave their place of employment and fail to protect one of their most important assets after the change in employment – their retirement account.

Participants of 401(k) plans control, to a degree, the mobility of their retirement accounts.  We were visiting with a business executive recently who had been very successful in his career.  One interesting note was that he had worked for five different companies during his career and left his sizeable retirement accounts at each of the employers.  When I asked his reason for abandoning his accounts with a previous employer, he simply stated that he had invested his funds in a proper allocation and wanted to diversify his total investment for retirement.

My next question caught him ill prepared.  I asked, “Who is the new custodian for the plan you HAD with XYZ Company?”  For purposes of full disclosure, I had direct knowledge that the XYZ Company had changed platforms for the retirement plan twice since this gentleman had been last employed with the company.   He couldn’t answer my question.  Then I asked what he knew of his sign on and password for the platform to obtain balances and statements.  Again, he admitted that he did not know the information.

A valuable lesson to be learned is to take control of your retirement assets from your former employer by transferring them to your Individual Retirement Account (IRA).  Too many times have we witnessed the stress a person experiences when they can’t gain access to their money because of changes in platforms, company being sold or some other transaction that occurs since their last date of employment.

By taking proactive action upon separation from service from your employer, you have the information to request a trustee-to-trustee transfer to an IRA without tax impact.  Further, you will have retained the pre-tax favorability of the assets by transferring to your IRA.  Lastly, you will have the opportunity to invest in a much larger selection of investment types than most plans can provide you.  

Another excellent benefit for maintaining control of your employer plan accounts is that you can consolidate all of your 401(k) accounts into a single IRA which will make your management of the funds much simpler.  By maintaining a single IRA, you can monitor any potential rebalancing or concentrating in a single asset class that will help you mitigate risk in the portfolio.

Life in retirement should be simpler and with more freedom than you accomplished while in your career.  It does take a plan to reach a simpler lifestyle and it is something we do every day for our clients.  No one retires to work harder managing and protecting their assets.  Life is simple but we tend to make it harder than it must be.

If you have orphaned a 401(k) account with a previous employer, act today to regain control of your assets.  We believe it is in your family’s best interest to communicate the location last recalled of the assets with a spouse or significant other.  What if you decease while the plan assets remain with your employer?  There are steps you can take to protect your family and facilitate the distribution or transfer of these assets. To help you paint the picture of your bigger future, seek a complimentary consultation with a Certified Financial Planner™ professional.  A quote by Joshua Becker is so fitting to end this article, “The first step in crafting the life you want is to get rid of everything you don’t.”

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“During” Retirement is Different than “To” Retirement

Work, work, work! This is the metronome of our lives for more than 40 years of our existence.  My father was an excellent instructor on life as he dispensed exorbitant amounts of wisdom to me while growing up.  Some of his sage advice, not original to him, was “you don’t have time to do it twice so make sure its done right the first time.”  Or, the excellent mode of always staying focused on the task at hand as he framed in the statement, “the idle mind is the Devil’s workshop, therefore, if you have time to breathe, you have time to work.”  

My father is not moving as fast as I remembered from my early childhood but at the young age of 83, he continues to mete out wonderful statements and quotes about work being good for a person and building character.  Recently, he made a statement during our telephone conversation that got me to thinking.  His comment was regarding his longevity in life and his admission that he would have taken better care of himself had he known he was going to live this long. 

Many people initiate savings for retirement in their employer’s benefit plan. Whether it is a SIMPLE Plan or 401(k), most of the participants establish the allocation of the underlying investments and forget about them.  Every pay period the funds are deposited in their account and a statement is produced every quarter which may, or may not, be reviewed with an eye toward the ultimate goal of retiring.

It is critical that a change of mindset be adopted toward the processing of saving for retirement and investing during retirement.  These are two distinct functions with differing goals. While accumulating wealth it is a goal to invest in growth as well as value stocks.  Perhaps a younger person may invest a greater allocation of their savings in equities and allocate bonds in greater percentage as they age.  Further, additional risks may be assumed by younger investors that allow for non-traded investments to be a diversification strategy for their portfolio.  

As a person gets closer to their targeted retirement date, a different thought process must be invoked.  For example, it is imperative that a pre-retiree understand their income streams which will be needed to support their lifestyle when their salary is no longer an option.  Understanding your Social Security benefits, pension options and Medicare plans are the basics for preparing for retirement.  

To potentially increase your cash flow in retirement, many investors will allocate a portion of their portfolio equities to value stocks which, generally, pay a consistent and higher dividend than their growth counterparts.  Bonds become more prevalent in a retiree’s portfolio than during the accumulation phase.  It is also important to review or stress-test your portfolio for potential market contractions to determine if the income streams generated will be sufficient for your lifestyle.  Remember, if the markets decline in performance, you costs of living do not cease or lower.  

Two of the most negative consequences to a retiree’s portfolio are mostly uncontrollable – inflation and taxes.  Certainly you can plan your finances in a manner that reduces the impact of inflation and taxes but you can’t remove them as an influence on your budget.  Inflation applies to every good you buy such as groceries, gasoline and clothing.  Taxes are assessed on most everything you own or touch – property, automobile, consumer goods, etc.

The best method of being prepared for retirement is to seek out an independent opinion as to your plan for the future before you retire.  We advise our clients to meet with us approximately five years before their planned retirement date to allow time for them to implement their plan and feel comfortable with the intended outcomes. 

One of the most empowering processes we developed for our clients is called The LifePlan Solution™. This unique process analyzes the resources you have available for retirement, provides a comprehensive approach to lifetime income and instill confidence by consistently communicating potential changes that are necessary to maintain your desired lifestyle.  To gain confidence in your future plans, seek a complimentary consultation with a Certified Financial Planner™ professional.  It is much easier to hit a target that you have defined and stay focused on for your life.  

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Life Isn’t “Set it and Forget it”

“It’s the end of the world as we know it,” as the pop singer bellows out the first line of the chorus of a top song for their band.  What a profound statement when we think of the chaos of the past few years and the impact economic factors have made on your net worth.  For many Millennials and Gen-Z individuals it may appear as if their world has ceased to exist as they are accustomed to in their short lives.  We have been here before and we will return to this state of the economy again.

One constant in U.S. economy is the fact that it will continue to cycle.  The four phases of our economy have been recognized by financial experts for decades and with quite predictable accuracy – expansion, peak, contraction, and trough.  Difficulty lies in defining which one of the phases we currently find our country.

Economists analyze several factors to determine the current phase of our economy.  Gross Domestic Product, employment, interest rates and consumer spending are a few of the factors followed to determine trendlines within the four phases of the economy.  Gross Domestic Product (better known as “GDP”) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.  GDP can be computed on a nominal basis or a real basis.  When accounting for GDP on a real basis, the consideration of inflation plays a significant role in the computation.

In the United States, our real GDP rate is typically between 2% – 4% on an annual basis.  To compare this with other countries, consider China who reports a real GDP rate of 8.1% for 2021 according to  As the country’s GDP rate goes up the production for labor, exports and other areas of the United States is performing at efficient levels.  If other factors considered are increased over a previous period, the country may be in expansion or reaching its peak economically.

It is important to understand the cycle of our economy and use this information to your benefit.  The New York Stock Exchange, the American Stock Exchange and London Stock Exchange are auction markets.  It functions by a process that someone must sell a stock for someone to buy a stock.  This is known as the secondary market.

Another of the statistics focused on by investors is the labor participation rate.  The United States is currently experiencing one of the best unemployment rates in modern history due to the recall of millions of workers back to the workforce after the federal government shut down the businesses employing them.  If the unemployment rate rises, this will be a leading indicator to possible negative economic conditions occurring.  

There is not one magic number for purposes of determining the type of economy experienced in the United States.  To study these factors and guide your investment philosophy requires discipline and patience.  Many investors have been unable to fight the emotional battle of watching their savings plunge and staying the long-term course determined to be the most probable path to success.  As wealth advisors, our goal is to provide understanding and education to our clients so they can make intelligent decisions.  Emotions play no role in the process but can be intrusive to sound judgment.

Life changes on a daily basis. It is critical that you construct your affairs in a manner that allows for the disruptive periods of time to pass without substantial change to your long-term plans.  To attempt to time the markets would, in my opinion, give greater risk to reaching your long-term savings goals than to simply design a fully-diversified portfolio to weather the storm.  By consistently maintaining your acceptable level of risk in the portfolio through periodic rebalancing, your probabilities for reaching your goals are much higher.

If you’re concerned about the economic conditions or have questions pertaining to your investments providing for your future in the manner you desire, consider a complimentary consultation with a Certified Financial Planner™ professional.  When you have a vision for your future that helps you see your goals accomplished, it is much easier to live through the economic challenges of life.  See you on the jogging trail!

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New Retirement Changes That May Secure Your Future

One of the best attributes about my profession is the constant change in the rules for which we give advice to our clients. One of the worst attributes of our profession is the constant change in the rules for which we give advice to our clients.  This double-edge sword keeps our team of professionals motivated to learn new strategies each day.  Another aspect of constant change is the challenge of providing long-term advice to clients.

On December 29, 2022, while many of us were preparing for a New Year’s Eve Party, Congress and the President were finalizing the printing and signing of the Consolidated Appropriations Act of 2023 which contains a substantial number of changes pertaining to retirement plans. To summarize the plethora of changes, the idea was to create greater opportunities for plan participants to save for their future.  Congress attempted to simplify many of the complex rules pertaining to employer retirement plans and encouraged employees to become savers through automatic enrollment provisions within retirement plans.

To encourage smaller employers, defined as those entities with 50 employees or less, to establish retirement plans, the IRS will allow a tax credit for 100% of the start-up costs for a plan.  This is an increase from the previously allowed 50% credit.  To take advantage of this credit the plan must be started after January 1, 2023.  Many smaller companies may find that a retirement plan serves as a wonderful retention tool to maintain their workforce.

For individuals reaching a certain age in which distributions from their Individual Retirement Account (IRA) are required, good news is included in the new law.  Prior to 2023, required minimum distributions (RMD) were mandated by the IRS at age 72.  If the individual failed to meet the minimum distribution amount in distributions, a penalty of 50% of the value required to be reported in income as was assessed on the appropriate income tax return.  Starting in 2023, the age for required distributions from an IRA is 73.  The law also provided for greater longevity of life in the United States in that RMDs will not start until age 75 beginning on January 1, 2033.  

Some employers have desired to provide incentives to certain classes of employers to participate in retirement plans.  The new law provides for employers to offer de minimis financial incentives, not paid with plan assets, such as low-dollar gift cards, to boost participation in workplace retirement plans.

One of the reasons for employees to deny participation in workplace retirement plans is that the money is required to be invested for a considerable period of time and access to the funds for an emergency is penalized unless certain criteria are met.  Under the new law, employers may rely on the employee certifying that deemed hardship provisions are met.  This will allow a short-term distribution of assets or a permanent distribution based on the needs of the participant.

Smaller employers generally establish SIMPLE (Savings Incentive Match Plan for Employees) IRA Plans or SEP (Simplified Employee Pension) Plans due to the lowered threshold of reporting and minimal administrative costs associated with such plans.  Certain criteria must be met by the employer in the number and types of employees but overall these plans are effective in saving for the future while capturing current tax deductions for the employer.  In 2023, SIMPLE IRA’s are allowed to accept Roth contributions (which are post-tax).  Also, SEP contributions by the employer (employees do not contribute to these types of retirement plans if not an owner) may be treated as Roth contributions.  This, my friends, is a big deal for younger workers who may wish to take advantage of a lower income tax burden early in their career.

One of the more tenuous debates in Washington, DC has been the student loan forgiveness ordered by President Biden.  Many students have worked multiple jobs to pay their way through college while others applied for loans.  Some of the animus results from the students who chose to attend college while working and now seem to be offended by the exclusion of their efforts from the forgiveness order.  Further, some allege individuals who attended very expensive private universities would be favored since they chose to attend a university requiring significantly higher tuition than the student who attended a state-sponsored university.  

The reason for opening the debate door on student loans is that employers are allowed to make matching contributions to allowed retirement plans with respect to “qualified student loan payments” beginning in 2024.  This will allow the employee to continue to reduce student loan debt while not forgoing savings for their future.

Emergencies do occur in life and many are caught without liquid funds to address the problem.  In 2024, plan participants will be allowed a $1,000 early withdrawal without penalty to address emergency expenses.  The participant has the option of repaying the withdrawal to the plan within three years.

Retirement does not have to be a complicated process. By planning accordingly with a Certified Financial Planner™ professional, you will feel more confident and comfortable about the future you choose.  As I often inform clients, “You retire for the first time only once.  It is better for your future that you do it right.”  Go make your world a little brighter, smile at everyone you meet!  

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To retire, overcome these three challenges

Retirement planning of itself has many challenges for individuals.  It is an area of life that has many concerns and questions because of the unknowns in the future.  It is as the Boy Scouts would say, you must be prepared for anything.  To help you accomplish your goal of retiring with a worry-free lifestyle, we believe you should overcome three challenges in the planning process, as well as the remainder of your life.  The first of these challenges is longevity.


Longevity is that period of time for which you may outlive your sustained investments.  Too often, we are asked by our clients, “How long do you think I will live, and how much money do I need to live comfortably?”  This is a question, of course, that we cannot answer with any certainty.  No one knows what tomorrow may bring.  However, it is critical that you provide a savings plan for your future with the hope of reaching the longevity goal you establish for yourself.  It is not an answer any of us know with a degree of certainty.  For example, I have a friend who is dying from cancer at the age of 45.  However, my grandmother lived to the age of 100 years and 10 months.  Why this happens, we don’t know.  However, we must be prepared for either event.


The other challenge to overcome in retirement planning is inflation.  It is critical to understand that inflation cycles throughout the economies through the decades of life.  No one knows what the next cycle of inflation may entail.  However, let’s review what has happened in the past.  Over the past two and a half years, our inflation in the United States has increased to a height of 9.1%.  It is critical to understand that the cost of buying goods for your everyday living has increased by 9.1%, and certain sectors of the market increased much more.  Food and fuel have increased far more than 9.1% over the past two and a half years.  It is critical that you understand this large increase takes a tremendous toll on the investments you may have saved with a planned distribution rate of a much lower amount than the inflation factor.

One of the challenges you experience with inflation is that you do not know the length of time or term the inflationary period will be.  The height of inflation and the term of which it lasts, both play a role in the use of your retirement funds.


The third challenge, as mentioned in the previous paragraph, is taxation.  It is true that as Americans, we are taxed on many things, from income, the purchases we buy, and the real estate we own.  Taxation impacts literally every aspect of our lives in the United States.  However, there are areas that you can control in your cash flow to assist your savings for retirement in lasting longer. 

The timing of certain events with your retirement savings can help mitigate the tax burden you are impacted with on an annual basis. It is also a measure of how you invest that you will be taxed. For example, shouldn’t most of your retirement savings be in a qualified plan, such as your 401(k), or an IRA? These types of savings require taxation on the first dollar to be distributed from the respective plan.

However, for most of the wealthy, additional investments are made in those types of companies, or assets, that grow in value. This growth in value is not taxed until such a time as you wish for it to be taxed. For example, you must sell or liquidate the investment for a taxable event to occur. Once you decided and have liquidated the investment, capital gains at a much lower rate that ordinary income tax rates will be attached to the event. If you were invested primarily in growth-type companies and/or assets, your maximum rate on those capital gains in today’s law is 20%. This is a much lower rate than the 37% maximum ordinary income tax rates.

The wealthy in the United States pay an effective lower rate of tax than most Americans that are wage earners. This seems to be an abnormality. However, it is due to the impact and control these wealthy individuals exert over their investments and the realization of gains on a basis for which they control. For example, if you had property that you invested a very small amount in, and sold for a much larger amount, two to three times what you paid for it, the capital gains would then be applied to that portion you sold. Twenty percent tax rates on capital gains has been the effective rate on capital gains for many years now. It allows the planning for such events to have a little more certainty.

For you to be successful in retirement, it is vital that you overcome the challenge of longevity, inflation, and taxation. If you desire some guidance and seek some form of assistance, contact your local CERTIFIED FINANCIAL PLANNER™ professional for a complimentary consultation. You will be glad you did. See on the jogging trail!

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Medicare Benefits Planning

One of the most critical benefits affecting American citizens is the Medicare Program.  For those individuals who qualify at age 65, this program provides health coverage for inpatient care (Part A), outpatient care (Part B), prescriptions (Part D) and other areas.  This article will focus on these three most common areas of care.

To qualify for Medicare benefits, you must have worked in a job that withheld Medicare contributions from your paycheck while working at least forty quarters (i.e., 10 years).  This is a very low bar to meet eligibility for such a comprehensive medical plan.  Of course, as with many federal laws, exceptions apply to the general guidelines.

The important concept of medical coverage through Medicare is that it functions similar to the private insurance you may have received while employed in your career.  For example, Medicare covers 80% of your covered qualified medical charges for inpatient care.  This means your hospital stay may be covered but you will be expected to pay the remaining 20% unless you purchase a Medicare Supplement Plan.

Supplement plans are relatively inexpensive and can be the difference between destroying your lifetime savings and the security your family needs.  There are many carriers of such plans and each state may differ as to the carriers available.  It is critical that you determine the appropriate Medicare Supplement Plan you desire that is contracted with your various medical providers.  Supplement plan consultants are often helpful to narrow the field of possible plans and to assist in the selection of a plan that meets your budget.

To enroll, or to change plans, you should be aware of the upcoming Open Enrollment Period.  For 2022, the period is October 15 through December 7.  It is critical that you review your current plan for potential savings as new plan changes and plan providers are introduced into the marketplace.  Often people will purchase a supplement plan and, like the infomercial, “set it and forget it”.  This is a big mistake that could cost you thousands of dollars.

Let’s review the outcomes of such a person who failed to obtain a supplement plan and suffered a significant health issue.  While in the Intensive Care Unit of a major hospital, the medical care she received was excellent.  She left the hospital after 10 days of care and felt so much better… until she started receiving the bills!  The total cost of the hospital stay was more than $120,000 for all the medical care provided her.  Without a supplemental plan, she was responsible for more than $24,000 of the total cost.

Medicare Part D is a complicated area of law.  It is vital that you seriously consider enrolling in this program when you are first eligible or you will be penalized for each month you delay enrollment.  This sounds rather harsh but the method of funding the program is through premiums assessed individuals who utilize the benefit.  Considering that most people may live a relatively healthy life until age 75, the ten-year period of qualification to election date may cause you to incur a significant penalty at a time when you may need your savings for other priorities.  

The cost of medical care continues to rise at an unprecedented pace in the United States.  We highly recommend those individuals enrolling for their Medicare Benefits to seriously consider purchasing a supplement plan.  Monthly premiums vary depending upon the level of care and the carrier issuing the policy.

If you are approaching your 65th birthday, it is critical that you file for your Medicare Benefits approximately 60 – 90 days prior to your birthday.  It will be a lot easier to blow the candles off your cake if you aren’t worrying about medical bills.  Seek the assistance of a CERTIFIED FINANCIAL PLANNER™ professional to guide you through this critical and difficult process. Make it a wonderful week!

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Lifetime Decisions on Social Security Benefits

Perhaps one of the “Top 10” retirement questions we receive is when to elect social security benefits. The question is one that is complicated to answer due to the fact that many unknown variables exist within this question. Just a few considerations are: 1) How long will I live? 2) How can I maximize my benefits? 3) What is the best strategy to gain the most household benefits? 

Let’s tackle the first question since it is preeminent to the prediction of mortality. The answer to the question of “How long will I live?” requires greater analysis than a simple number presented as the target date. What age were your parents and grandparents at their deaths? Do you have any comorbidities or systemic health issues? What are your current cash flow needs? Are you married? Widowed? Do you have a dependent child that has been diagnosed special needs? All of these factors, and many more, give rise to a greater amount of analysis to properly estimate your date of filing for benefits.

According to the U.S. Centers for Disease Control, in a study published in 2019, men enjoy a life expectancy, at birth, of 75.1 years and women 80.5 years. Of course, these are averages and many of us will live to 100 years of age and beyond. Curiously, the projected ages for men and women declined in the past year by approximately 0.9 to 1.2 years. Was this due to the effects of the pandemic or is this a normal fluctuation of the population cycle? 

The most important election many of us will make that has a lifetime impact is the election to receive social security benefits. Much confusion exists around the timing of this election. We highly recommend that each client examine their needs, lifestyle and circumstances when determining the filing date for benefits. For example, if your lifetime savings is not projected to meet your cash flow needs due to the lower returns from the current market cycle, you may wish to analyze the lifetime loss of SSA benefits by electing earlier than your Full Retirement Age (FRA). It is not ideal to make lifetime decisions based on short-term needs. For an individual who is age 62 and would reach FRA at age 67, if benefits are elected at any time from age 62 to 66 years and 364 days (provided it is not leap year), his or her benefits will be reduced permanently by 30%. Depending on your lifetime earnings report, this may be a significant loss of benefit.

Lastly, the best strategy for your household is to determine the ages of each spouse and then review the earnings reports for each by obtaining them on . If the higher earned benefit spouse were to delay benefits until reaching age 70, instead of claiming at age 67, a 24% increase in monthly benefits would be availed to the surviving spouse upon the death of the higher earner. The bonus earned by the higher-earning spouse is material in the fact that many spouses may live to be 90 years of age or more which allows significant time for the collection of the bonus payments. Upon the death of the higher benefit spouse, the survivor would “step in the shoes” of the deceased and receive their benefit (while forgoing the survivor’s original earned benefit).

It is critical that you make the best decision for your family. A proper analysis of the hundreds of options of benefit elections is necessary to give you confidence in this lifetime decision. If you wish to plan appropriately for your SSA benefits, contact a CERTIFIED FINANCIAL PLANNERTM professional to assist you in this important lifetime decision.

Today is another 24-hour period for you to find gratitude and happiness. Spread your smiles to those around you and you will reap what you sow. I have a saying that may be appropriate – “If smiles were contagious, would you start a pandemic?” See you on the walking trail!

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Defining Retirement Success

The word “success” scares a lot of people, confuses some and eludes most. This word is such a phenomenon that many of us can’t define it in terms that are relatable to others. Why is this so? I believe the word “success” has been given a bad reputation because many people associate the word with wealth or money.

Success is simply the level of happiness you attain in life. If this means you must possess great wealth to be happy, be careful for what you wish. Many of the wealthiest families I know have experienced significant familial hardships throughout the decades. Too many opportunities for negative aspects of life to become entrenched in your family are realized. Simply put, to seek a goal of having an abundance of wealth for wealth’s sake is not a proper goal. It is the person you become while attaining wealth that should be the goal – more charitable, more caring, more family supportive.

As retirement planning specialists, we are often asked, “How much money do I need to retire?” This question is valid and the answer is, “Enough to meet your family’s needs and acquire some of your wants.” When we state this response to our client the wheels start turning in their mind and their eyes become bigger. The follow-up response is, “How do I know what my needs and wants are for this purpose?”

Now we are at the point of the matter. Too often retirees compare their personal situation to generic plans or the specific plans of others with dissimilar facts. The most significant and impactful approach to retirement success is cash flow planning. By understanding your cash inflows and managing your cash expenditures on a monthly basis, you will gain confidence that your time in retirement will be enjoyed.

Let’s explore some critical errors to avoid in retirement. The first four to five years of retirement should be funded in a manner that you are not required to take significant distributions from your long-term funding sources such as Traditional IRAs or Roth IRAs. To leave these pools of money intact is critical in the later years of retirement when additional cash outflows are required for health maintenance and other lifestyle needs.

Another error in retirement is improper use of resources in elimination of debt. Ideally, we prefer our clients to be debt-free before initiating retirement. However, in some cases this is simply not feasible. To effectively create a means where your assets are creating sufficient income streams to address the monthly outlay for housing or automobiles, your asset allocation should consist of more income-generating assets such as bonds, real estate and value stocks. Project the return your portfolio may generate and compare the need for the payments you must tender each month. If your portfolio is generating a greater return than the interest charged on your indebtedness, you are on the right track. In this instance, your earnings on the investments will, over time, completely liquidate the indebtedness. 

If retiring in the current market cycle, additional challenges will need to be overcome in your investment strategy. Further, if possible, it would advisable to delay retirement if you’re concerned about the sufficiency of income from your existing sources to fund your lifestyle in retirement.

Deciding to retire is a huge life event. One shouldn’t make this decision without consideration for all aspects of life that require use of resources. If you are considering retirement within the next five years, it would benefit you to create a plan of action that will give you confidence and comfort that your life will continue on your terms. Contact a CERTIFIED FINANCIAL PLANNERTM professional to obtain a second opinion or construct a plan that meets your goals and desires. Remember, you retire for the first time only once. It is better to be confident than to be forced to correct course at a time in life you should be enjoying your time. Make it a great weekend!

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