Racing to Retirement?
September 14, 2020
If you had been carefully planning your retirement and thought that you had a few more years to accumulate a nest egg before you officially called it quits, you may be prompted during the COVID-19 pandemic, to shift gears and reevaluate your options.
Employees worldwide are enduring furloughs pending a rebound in the economy, permanent layoffs because of drastic downturns at their workplaces, or have decided not to return to a work environment that may expose them to COVID-19. If one of these, or another reason, has spurred you to consider or plan to retire sooner than you had anticipated, make sure your retirement income strategy is right for your current and future financial situation. You may want to consult a financial planner who can help you project and protect your retirement benefits while you decide when to retire.
Retirees with limited financial resources face numerous risks, including out-living their money, investment losses, unexpected health expenses, the unforeseen needs of family members, and even reductions in retirement benefits. Some workers, including teachers, restaurateurs, and healthcare providers, whose professions require close contact with others, have started withdrawing from the workforce earlier than they had planned because of challenges and concerns resulting from the COVID-19 pandemic.
The pandemic has hit older workers hard. The unemployment rate among Americans age 55 and up reached a staggering 13.6 percent in April, up from just 2.6 percent in January, according to the U.S. Bureau of Labor Statistics. As of August, the percentage had gone down to 7.7 percent but other data show that one in five Americans in their 60s has lost his job or has been furloughed due to COVID-19, according to the July 2020 Retirement Confidence Index by the financial technology company SimplyWise. Overall, 15 percent of Americans are now considering claiming Social Security benefits earlier than they had anticipated. One in five respondents who was laid off during the coronavirus pandemic is now planning to retire early.
If you can identify with these staggering statistics, take a deep breath and review the following suggestions to guide you to the finish line for a financially successful retirement.
Examine Expenses and Downsize
For many employees, the COVID-19 pandemic has revealed how fragile their financial security is. A recent survey from the National Endowment for Financial Education found that nearly 9 in 10 (88 percent) Americans said that the COVID-19 crisis is causing stress on their personal finances. Americans who are not yet retired but whose finances have been impacted by the pandemic can use this time to review their expenses and reduce unnecessary spending. You’ll need to take inventory of your entire financial situation and determine how much cash will see you through retirement.
Take Stock of Resources and Make Adjustments
Evaluate what resources you have available. Make any necessary adjustments to savings and portfolio asset allocations, including your 401(k) or 403(b) accounts, pension plans from former or current employers, IRA accounts, and annuities as well as Social Security benefits based on your employment and age. For those who are eligible but not yet drawing Social Security payments, this is a good time to consider how to maximize your benefits.
Decide how much money you want to keep in stocks vs. bonds, based on your risk tolerance and financial goals. Keep in mind, most people need to maintain a stake in stocks, even in retirement, to get the long-term growth they need. But for those who prefer a more cautious strategy—and for older investors who have already amassed enough savings to afford a comfortable retirement—it may make sense to reduce the percentage you invest in stocks and increase your fixed-income holdings.
Rethink Withdrawal Rate
People in or nearing retirement need to review their withdrawal rate, and the pandemic has given new urgency to designing a safe withdrawal strategy. The 4 percent rule is the traditional rule of thumb for retirement withdrawals. You take out 4 percent of your portfolio in the first year, then increase that amount by the inflation rate in subsequent years. Studies show that this strategy can minimize your risk of running out of money over a 30-year retirement.
The article, “Don’t Let the Coronavirus Derail Your Retirement: How to Get Back on Track If Your 401(k) Has Taken a Hit,” published in the May 2020 issue of Consumer Reports advises retirees to consider skipping their required minimum distributions from their 401(k) plans and individual retirement accounts that is permitted this year under the coronavirus relief package. If you can forgo those withdrawals, your portfolio will have more time to recover from losses.
Consider Taking Social Security Early
The longer you wait to claim Social Security benefits, the larger the payout you’re likely to receive. If you are at the full retirement age between 65 and 67 years old, you can claim benefits about 30 percent higher than if you take them early starting at age 62. By waiting until you’re 70 years old, the benefit amount would be another 32 percent higher than the amount you’d get at full retirement age.
But waiting isn’t always the best option and individuals need to be aware of how claiming benefits at different ages will impact their overall retirement strategies.
Evaluate Employment Opportunities
If you figure out that you don’t have enough currently saved for a comfortable retirement, consider remaining at or returning to work–even in a part-time position. Earning additional income and accumulating money in your retirement savings account will be beneficial if you can delay retirement and avoid unemployment. One of the most effective measures for protecting your finances is to amass an emergency fund that can cover three to six months of expenses—perhaps as much as a year if your job isn’t secure. That money should be kept in a safe, easily accessible account, which will spare you from having to dip into retirement funds or rely solely on credit cards for unexpected bills.
Once you have come to terms with a retirement date and a vision of a secure financial future, store copies of your decisions for portfolio changes, Social Security formulas, records of all of your 401 (k) or 403(b) accounts, pension plans, IRA accounts, annuities, and other investments at InsureYouKnow.org.
Time to Review Your Retirement Allocations
June 1, 2020
The Teachers Insurance and Annuity Association of America (TIAA), recently sent an email to members. Their advice was clear: review your allocations carefully. Financial advisors, self-help blogs and money-smart books suggest periodically looking at your available funds and asking questions. Do you have savings? Do you have a rainy day fund? What is your income stream? The answers take us on a journey of possibilities. The resources of 401k, pensions, insurance, investments, savings and CD accounts provide the financial safety for the future.
There are few resources available to let us know when and how to access our systems. Is today the time to use the money that was set aside for later? The money set aside for retirement, supporting adult children or grandchildren, investments and dreams may be utilized at a more efficient rate now. The funds can be available today during our COVID days. The stress levels are high from furloughs, loss of jobs, reduction in hours, and lack of work for the self-employed.
401k and Pensions
Intended for future days of retirement, the 401k and pension plans were projected to be utilized by the current workforce later rather than sooner. To prevent early access, penalties for utilizing certain financial safety resources available from employers were created. These include high fees, the loss of employer matching, and limits on the amount that could be dispersed annually. Part of the lengthy Coronavirus Aid Relief and Economic Security (CARES) Act passed by Congress, addresses some of the previous restrictions although they are not eliminated completely. Although up to $100,000 can be withdrawn from accounts instead of $50,000 and are not subject to the 10% penalty, taxes will need to be paid on the amount.
Despite the risk of lower resources for the future, the Washington Posthas indicated that many people have opted to utilize their pension and 401k resources for car and home payments. For the baby boomers, cashing into the pension at 55 instead of 65 wasn’t the plan, but is a necessity in some cases. It is also the smart option when basic needs take precedence over potential losses or gains in the volatile market. There are choices between loans from the accounts or withdrawals, and each have their own set of benefits.
Whether opting for the withdrawal option instead of the loan, the premature access is worrying the financial industry globally, who have advised against utilizing this resource in light of the downward economy. In March, the Federal Reserve lowered the interest rates to close to zero to try and support the marketplace. Over the recent weeks, some accounts have seen fees above yields, leading to negative returns in some accounts. Given the current environment, and the financial volatility in personal circumstances, markets could still fall before we see the bottom. Companies like TIAA are providing certain limited and short-term fee waiver of expenses to help prevent their client accounts from having negative yields, but that may not last too long.
Your Action Items
At a minimum, review where 401k and pension resources are allocated for yourself and those that are in your care. Since the money is invested in the global stock exchange until you access it, the recession may leave you in a different place than anticipated. Morningstar’s report indicates people in aggressive portfolios have seen the largest declines.
To recall your 401k account information, log into http://www.insureyouknow.org and sign in with your personal credentials. If you do not utilize this online information storage resource, create an account with InsureYouKnow.org and start saving your documents, and files relating to your affairs. Set a reminder within the portal to revise and review the allocations as the world market changes further. There are various levels of access you can set to allow your family members, caregivers or business associates insight into the documents.
February 25, 2020
The English language is such that for every rule, there is an exception or a way to break the rule and still be understood. Childhood rhymes or mnemonics are created to help memorize the rules: “i before e except when c…. “ (friend vs. receive),the letter “q” is always followed by “u” (queen, quilt), except for 78 words that came to English from other languages like Qatar and qi. Other confusions include words that are spelled the same, pronounced the same but have different meanings based on context. Examples – orange and orange, wave and wave, bat and bat. The name for this is a homograph.
A homograph that is particularly relatable to my work is the word trust. Trust can be used as verb or noun and the definitions are: 1. Trust – to have faith/confidence in truth, and 2. trust – a legal arrangement usually due to money. Interestingly you cannot have a legal trust, without having trust.
There are many layers in the formation of a trust:
Trust the process. You are not the first person to create a trust – and there are friends, family and google to help you through. There are step by step guidelines to be followed and they vary by state. In order for your trust to be a legal agreement, it needs to follow the checkboxes. These include taking stock of your assets (read my blog post on this step) and thinking about the people in your life that would be included, excluded and notified about your trust. To hold your hand and walk you through the process – an advisor can be the first formal step.
Trust the advisor. Find someone you like and that you feel like you can relate to. How do they organize the meeting? Where do you meet and what is their demeanor, and the personalities of the team? We all have preconceived expectations about what we want, and we are investing our energy, money and intimate details with the advisor. The advisors have varying expertise and may be able to assist with other to-do items as well as the trust.
Trust yourself. It is easy to second-guess or be unsure of your decisions and choices as you put together the documentation. This is a legal document and though the steps can be completed in a few days or weeks, the peace of mind when this is done right will last your lifetime. Trust yourself to complete the tasks and create a trust is yours. You can be guided by the process, standards and the advisor but ultimately this is your trust and can be notarized and funded on your timeline and comfort level.
Trust InsureYouKnow.org. It’s a safe place to store all the information in case you need to access it remotely – or from the comforts of your own home. The documents are password protected and utilize Amazon cloud encryption to secure and protect each password encrypted account. Your password is not known to the site. Only you, or someone you share the password with, can ever access your account.
Regaining trust – whether it is the confidence or the legal agreement kind – takes work and immense heartache, so getting things right the first time is advantageous to your mental, physical and financial health.
Who is the record keeper?
September 17, 2019
Do I really need to keep this? …yes….Now where should I keep this? In the information age it seems like there is more to keep track of – but when we come down to basics there are still basic documents that we all have and need, and need to be able to find. There is a lot of information online – bank statements, mortgage payments, bills, paystubs – but what happens when your circumstances change or the information system shuts down. Is there a way for you to get what you need – or your family members?
- Weeks. Paper receipts. The grocery store, gas, eating out. These receipts are not necessarily for long term record keeping – but they help when the credit card statement and balancing the checkbook routine comes. According to Experian research – the average U.S. consumer has an average balance of $6,354 on their credit cards. Without the paper receipts to verify transactions – the extra $100-$300 in excess charges or fraud may not be detected. After the monthly verification – the paper receipts can be discarded. Preferably in the shredder.
- Years. The ones that come to mind are the tax returns, mortgage payments and warranties. These are usually in a drawer or stuffed in a cupboard – “somewhere” and may not be accessible in an easy way. The ones that slip the mind and can be difficult to keep track of are the medical bills and plans. Even if you have changed employers, doctors or plans – there is no record of your medical history and payments other than you. Pre-existing conditions or the blood-test that didn’t get sent to the insurance company can come back years later when you interact with the same providers again. Suze Orman has an article on other documents that we should have in our record box.
- Forever – These are the one that we mention on most of our blogs and the things that are, hopefully, in our safe places. Give yourself time to get these together. Your birth certificate (and those of your household), Marriage License(s),(it is key to continue to keep the marriage license of previous marriages even if they have been officially annulled), the Adoption papers and Death certificates. Wills and Death certificates (of anyone that may be connected to your life and could have influence in your future holdings). To get a copy of most of these documents – you need to make a request at the county where the event occurred. This can be tricky when a person is born or dies in a place other than their usual place of residence. If you are unable to physically go to the county clerk office – there are third-party groups that, for a processing fee, will be able to help you get the documents you need.
As you hit the deadlines of storage – don’t forget to dispose of your paperwork carefully. Saving the planet by utilizing the recycling bin is all in good nature, but identity theft is real and has happened to 1 out of every 15 Americans. Consider investing in a home shredder that can be used on a daily basis. Alternatively there are often community shredding services multiple times a year when you can take boxes of paperwork to be safely shredded. For a fee, local office supply stores will also shred important documents.
As you reach to begin the record keeping process and shred those papers, remember InsureYouKnow.org product offerings may be your answer. It’s a safe place to digitally store all the information in case you need to access it remotely – or from the comforts of your own home. Taking stock of your records, memories and your current resources with an annual plan, may provide the peace of mind you’ve been looking for.
Supporting your World – How to Donate
August 15, 2019
Donor fatigue has been taking the limelight in recent months. Many international nonprofits are unable to get the funding they need to cover the increasing needs. Flooding in Asia, Refugees in Central America, Ebola and HIV in East Africa, Endangered species in Europe. And closer to home – children needing school supplies and living without a balanced diet, seniors without funds to pay their bills, veterans without jobs. It all matters – it is all relevant, and it can all seem a bit too much – especially when many of us have concerns in our day-to-day lives. According to charitynavigator.org – 70% of donations come from individuals. How can you – an individual drill in and focus on what matters to you?
Look at your …
Passion– What in the world inspires you? Angers you? Has changed your life? This is the backbone of most donations in the United States. According to philanthropy.com, most donors give from the heart. Whether it’s due to a life changing event, love of animals or art, or a neighbor who you wish to support – it’s good to start somewhere…. Even if it’s just knowing what you are not willing to give to. Many households begin their journey of giving within their faith-based communities and continue from there, others start in childhood with sales from scouting. If you enjoy an organization’s work, or a cause – you are more likely to continue your support.
Budget – How would you like to donate? One time, monthly, semi-annually, on birthdays? How much can you give? There’s a nagging voice that often pops up when looking at this area – what’s in it for me. Some nonprofits provide levels or recognition for donations, others provide a material incentive – a logo-ed item, tickets to an event or opportunity to participate in an activity. Be mindful of the incentives you receive as they may affect the ability for you to claim on your tax returns.
Research – There are nearly 100,000 registered nonprofits in Texas, 1.5million in the United States and there is no clear number for the number around the world. Registered nonprofits are not the only ways to donate. There is overlap on causes, and there are scams. Gofundme among other groups are a recent phenomenon where individuals can reach out and ask for $$ without affiliation to a nonprofit. There are great stories out there, but also many people who are utilizing your heart and budget to fund their personal needs. Unfortunately there are people and people within nonprofits that are less than ethical. There are watch-dog organizations in the charitable space that publish findings and news.
Connections – As you research – there may be nonprofits that are new to you, people doing things that wow you. You do not have to support them with monetary means. Connecting with them via social media, joining their communication lists or even volunteering your time are ways to support the cause and may even be more valuable than cash. Some nonprofits also have wish lists or item donations that they appreciate more than the cash.
Family involvement – What is important to your partner, children, grandchildren, parents, siblings? Donations on behalf of family members can also provide value. There may be causes that you haven’t considered or ways to make the donation a team building effort. They may also have ideas for you to research.
Donations can also be documented for your tax return purposes. InsureYouKnow.org product offerings are a tool to support you. It’s a safe place to store all the information relating to your donations, easy to access remotely – or from the comforts of your own home, and has options to save receipts and documentation that you may need in the early part of the year. An annual plan is available to support your budget needs.
What Constitutes a True “Emergency”?
May 28, 2018
You’re a responsible person. You’re saving for retirement. You have a 529 plan set up to help pay for your daughter’s college education. Your car is paid off. You have an adequate amount of life insurance. You’re using InsureYouKnow to make sure your loved ones know how to access your important documents and financial information if needed. And you have six months of living expenses set aside in an emergency fund.
Then the unexpected happens: The alternator goes out in your car. It’s going to cost $400 to replace it.
Where do you find the money to pay for it?
If you answered, “My emergency fund,” you may want to take another look at your definition of “emergency.”
Your emergency fund is money you have socked away in case of a major life event, such as a job loss, divorce, or medical issue. This money would be used to cover your day-to-day expenses and bills if needed.
Washington Post columnist Michelle Singletary advocates the use of a separate fund—the “life happens” fund—for those pesky but somewhat predictable expenses that crop up.
“You’ll withdraw money from this fund to pay for unexpected or major expenses that don’t quite fit the dire straits definition,” Singletary wrote. “Car repairs would come out of this account. Start with trying to save $500, ideally increasing to a few thousand.”
Whether you call it the “life happens” fund, the “just in case” fund, or some other term, this fund is for those immediate expenses that aren’t quite catastrophic. These are expenses that result from situations that people often treat as emergencies but that in reality are expected, if irregular, like a broken appliance.
In an ideal world, you’d never touch your emergency fund. You wouldn’t lose your job. You wouldn’t get diagnosed with a major medical condition. You would have a regular, steady income with no major disruptive events in your life. For many people, this is indeed the case. That money sits in an easily accessible savings account where it earns minimal interest but supplies maximum peace of mind.
But even in an ideal world, you’re probably going to tap into your life happens fund fairly regularly. Even the most budget-obsessed person can’t predict every expense that may appear, such as the following:
- A storm blows through, knocking large tree branches onto the roof of your house that have to be sawed apart and hauled away.
- Your dog swallows a tennis ball and needs emergency surgery to remove it.
- Your toddler climbs onto the dishwasher door one too many times and it finally breaks.
- Your aunt dies and you need to fly out for the funeral.
In many of these situations, life is already stressful enough without you needing to scramble to come up with money for the resulting expenses. And you don’t want to tap into your emergency fund because that’s money you never want to touch. The life happens fund is the perfect compromise. Like an emergency fund, it’s kept in a savings account where it’s accessible on a moment’s notice. But unlike an emergency fund, taking money out of it won’t potentially result in your water getting shut off when you suddenly find yourself without an income.
Keep in mind that because you do need to access this fund somewhat regularly, it’s important to replace any money you take out as soon as possible. After all, life happens—and you never know when the next storm is going to pass through town.
Lоw Cоѕt Prеѕсrірtіоnѕ
September 13, 2016
If уоu аrе a rеgulаr uѕеr оf prescription mеdісаtіоnѕ, уоu knоw thаt thеѕе drugѕ саn bе соѕtlу tо рurсhаѕе. Cuttіng bасk оn drugѕ саn bе dаngеrоuѕ tо уоur hеаlth, but іf уоu аrе оn a fіxеd іnсоmе уоur сhоісеѕ саn seem lіmіtеd. Lеt’ѕ lооk аt ѕоmе соѕt еffесtіvе wауѕ fоr уоu tо ѕlаѕh уоur рrеѕсrірtіоn соѕtѕ.
- Uѕе Gеnеrісѕ. I саn’t еmрhаѕіzе еnоugh thе bеnеfіtѕ оf gеnеrіс drugѕ. Sаvіngѕ аrе drаѕtіс, bоth fоr іnѕurеd аnd nоn-іnѕurеd раtіеntѕ. If уоu’rе tаkіng аn еxреnѕіvе brаnd-оnlу mеdісаtіоn (bу thе wау, Lіріtоr gоеѕ оff-раtеnt іn Nоvеmbеr), аѕk уоur dосtоr оr рhаrmасіѕt (whо wіll ѕtіll nееd tо соntасt уоur dосtоr fоr аррrоvаl) fоr аn аltеrnаtіvе drug thаt hаѕ a gеnеrіс. Thе dеbаtе оvеr brand vѕ. gеnеrіс ԛuаlіtу wіll ѕаvе fоr аnоthеr dау. Mу vоtе 99.9% оf thе tіmе іѕ tо gо fоr thе generic. Juѕt аѕk уоur рhаrmасіѕt.
- Sрlіt thе ріll. If уоu hаvе bееn рrеѕсrіbеd 40 mg оf a drug аnd оnlу nееd 20 mg соnѕіdеr іnvеѕtіng іn a ріll ѕрlіttеr. Yоu саn rеduсе уоur соѕtѕ ѕіgnіfісаntlу еѕресіаllу іf thе рrісе dіffеrеnсе bеtwееn thе twо ѕtrеngthѕ іѕ mіnіmаl; сhесk wіth уоur рhаrmасіѕt tо mаkе ѕurе thаt thе drug wіll nоt lоѕе еffесtіvеnеѕѕ іf іt іѕ ѕрlіt.
- Shор іn Cаnаdа. Rеgulаtеd рhаrmасіеѕ bаѕеd іn Cаnаdа tоut thеіr lоwеr рrеѕсrірtіоn соѕtѕ tо Amеrісаn соnѕumеrѕ vіа thе іntеrnеt. Nоt аll drugѕ аrе lоwеr, еѕресіаllу whеn іnсludіng ѕhірріng аnd hаndlіng соѕt, hоwеvеr.
- Aѕk fоr a mеdісаtіоn rеvіеw. Idеаllу thіѕ ѕhоuld bе сооrdіnаtеd bеtwееn уоu, уоur рhаrmасу, аnd уоur dосtоr’ѕ оffісе(ѕ). Mаkе ѕurе еvеrуthіng уоu аrе tаkіng іѕ ѕtіll nесеѕѕаrу, аnd uр tо dаtе. Tоо оftеn, реорlе kеер tаkіng drugѕ thеу dоn’t nееd, оr whісh hаvе bееn сhаngеd, аnd thеу dоn’t еvеn rеаlіzе іt. I оftеn ѕuggеѕt уоu tаkе уоur сurrеnt ріll bоttlеѕ wіth уоu tо еасh dосtоr vіѕіt, аnd rеvіеw thеѕе wіth уоur dосtоr. Thіѕ аllоwѕ уоur dосtоr tо vеrіfу thаt whаt уоu’rе tаkіng іѕ whаt wаѕ іntеndеd, аnd аllоwѕ аn орроrtunіtу tо ѕее whаt drugѕ nееd rеfіll оrdеrѕ tо bе wrіttеn.
- Gо bіg. Purсhаѕіng a twо mоnth ѕuррlу саn bе muсh mоrе соѕt еffесtіvе thаn рurсhаѕіng a оnе mоnth ѕuррlу. Chесk tо ѕее іf уоur іnѕurаnсе соmраnу реrmіtѕ thіѕ рrасtісе.
- Aррlу fоr раtіеnt аѕѕіѕtаnсе рrоgrаmѕ. Thеrе аrе mаnу аvаіlаblе, uѕuаllу fоr thе mоѕt еxреnѕіvе drugѕ. Mоѕt аrе fіnаnсіаllу bаѕеd, but dоn’t nесеѕѕаrіlу еxсludе реорlе wіth іnѕurаnсе. Rіdісulоuѕlу рrісеd drugѕ lіkе Enbrеl fоr еxаmрlе, hаvе рrоgrаmѕ thаt саn hеlр mоѕt реорlе. Sоmе рrоgrаmѕ саn еvеn hеlр Mеdісаrе раrt D rесіріеntѕ.
- Gоvеrnmеnt аѕѕіѕtаnсе. Yоu mау bе еlіgіblе fоr ѕресіаl аѕѕіѕtаnсе thrоugh gоvеrnmеnt рrоgrаmѕ ѕuсh аѕ Mеdісаrе аnd Mеdісаіd.
- Cоuроnѕ. Oссаѕіоnаllу, соmраnіеѕ gіvе аwау frее ѕаmрlеѕ оf thеіr рrоduсtѕ оr wіll gіvе уоu mоnеу ѕаvіng соuроnѕ. Chесk wіth уоur dосtоr аbоut gеttіng frее ѕаmрlеѕ tоо.
Yоu саn ѕаvе mоnеу оn рrеѕсrірtіоn drugѕ wіth a lіttlе bіt оf рluсk аnd wіth рlеntу оf dеtеrmіnаtіоn. Shор wіѕеlу аnd уоu wіll bе сеrtаіn tо ѕаvе mоnеу іn thіѕ dау оf еvеr ѕріrаlіng hеаlth соѕt