Making Money Last Blog

What’s your money personality?

Mon, 12 Dec 2022 16:04:30 GMT

Discovery Your Money Personality Type & Take Control of Your Choices

How would you describe yourself in two or three words? Extroverted, charming, or adventurous? Reserved, cautious, or serious? Optimistic or fair-minded?

Whatever you say, there are really good chances others don’t see you in the same way. In fact, even though most of us think we’re pretty self-aware, we aren’t¹. That means most of us don’t really know who we are, how we fit in, or how others see us². And most of us don’t have a really deep understanding of our strengths and limits – or how our individual personality sets us apart and affects our relationships².

Why should you care? Because if you’re falling short in the self-awareness department, you’re probably coming up short in life too¹. By the way, that’s not limited to our personal and professional lives. It also extends to our financial lives. Each of us has our own money personality². We all react to and feel differently about money. And if we’re not really in touch with those emotions, we’re not going to be able to make the best moves with our money².

So, what do you actually know about your money personality? Let’s find out by taking a look at the different money personality types and how each one naturally uses and reacts to money.

Your Fast, Fun Guide to 5 Different Money Personality Types

#1: The Busy Bee

Money Superpower: Giving your all to your work and your money-making endeavors.

Personal Pitfall: Always putting work and wealth ahead of your relationships and experiences.

Most Likely To: Be one of the hardest working people in any room and do the extra work to get ahead financially.

#2: The Saving Squirrel

Money Superpower: Saving money and squirreling away wealth, even if you have no plans on how to spend it.

Personal Pitfall: Letting a fear of “losing” or spending money prevent you from ever really enjoying it.

Most Likely To: Know the best rates, deals & bargains and have the biggest rainy-day fund.

#3: The Lavish Lion

Money Superpower: Showing your generosity and treating others and/or yourself to the finer things, even when there’s no “occasion”

Personal Pitfall: Giving into lifestyle creep, going overboard, and losing site of financial options that could be better than spending right now.

Most Likely To: Be the life of the party, take risks, and be the best shopping buddy.

#4: The Indifferent Iguana

Money Superpower: Not sweating the small stuff financially, not stressing about money, and being resilient to uncertainty.

Personal Pitfall: Not thinking about money when making important decision or starting to think of money as “evil”.

Most Likely To: Think money isn’t the key to happiness.

#5: The Concerned Camel

Money Superpower: Keeping a close eye on your money and planning for worst-case scenarios.

Personal Pitfall: Obsessing about losing or running out of money or letting your fears get in the way of opportunities to enjoy life or level-up your wealth.

Most Likely To: Know where the exits are in any room and have a back-up plan for the worst-case scenarios.

Most of us have money personalities that combine multiple “types.”

How Your Money Personality Can Be a Tool for Reaching Your Financial Goals

So, what personality describes you best? Whatever it is, remember, there are no “good” or “bad” types. And many folks aren’t’ defined by just one “type.”² Actually, most of us have money personalities that blend at least a few different “types.”² Zeroing in on those types is how you get to know your natural skills and Achilles heals when it comes to finances. And that’s the only way you can really start to figure out how to improve your financial wellbeing, make better financial choices, and give yourself an even better financial outlook².

How does knowing your money personality help you do any of that? Well, let’s say, you’re a Saving Squirrel or a Busy Bee. Instead of squirreling away every penny or staying in worker-bee-earner mode all the time, start investing some money and time into meaningful experiences that enrich your life.

If you’re more of an Indifferent Iguana, you don’t have to start thinking about money all the time – but make it a point to know where your money goes.

And if the Lavish Lion characterizes you better, you may want to practice conscious spending before you splurge on big things.

The bottom line? Book smarts alone may not make you better with your money. And it may not be the one key to staying on track with your big financial goals. Knowing the ins and outs of your money personality is important too. So is the right plan and being able to get advice from people you trust.

Sources:

¹ https://www.betterup.com/blog/what-is-self-awareness

² https://www.cnbc.com/2021/04/28/7-money-personality-types-and-the-pitfalls-of-each.html

Boston Independence Ribbon Cutting Ceremony

Mon, 05 Dec 2022 17:03:37 GMT

Boston Independence Ribbon Cutting Ceremony

On November 30, 2022 Westborough welcomed Boston Independence with a ribbon cutting ceremony! Corridor 9/495 Regional Chamber of Commerce, Economic Development, Senator Michael Moore, and many more were in attendance. For more information about Boston Independence visit their website here.

Harness The Power of Your Money Mindset

Tue, 22 Nov 2022 17:49:04 GMT

Money is much more than a medium of exchange for goods and services.

Money reflects our personal values and the hard work we put into earning it. How we treat money, save it and spend it, is a reflection of our internal beliefs — our money mindset.

When it comes to money, we all have strongly held beliefs, whether or not we realize it. Many of these beliefs grew out of childhood and come from lessons we learned from our families or picked up through life experiences.

Why does mindset matter?

Because understanding our internal beliefs helps us make smarter financial decisions and avoid the behaviors that damage financial health.

So, how much do you know about your money mindset?

Answer the questions below to discover more about your money beliefs and unlock key insights about your mindset and the behaviors holding you back from achieving your financial goals.

FINANCIAL LESSON: Your Mindset is the Key to Financial Health

What does the word "money" bring to mind? Are the associations positive or negative?

Beliefs about money are complicated. It's a symbol of one's self: respect, love, freedom, control, power, worth, and much more (depending on the person).

Having a healthy relationship with money and using it to create success require you to understand the beliefs and internal scripts driving your behavior. Trying to build strong financial habits without the right mindset is like driving down the highway with your emergency brake on.

As a financial professional, I think about wealth in terms of the opportunities it offers and as a tool for good. But, I've realized that everyone who walks in my office doesn't view money the same way. For some people, money is uncomfortable and something they'd rather not think about. Others tie wealth to their definitions of success and self-worth.

I don't think one mindset is better than the other.

What's important is understanding your own beliefs and identifying how they drive your decisions and your behavior. If you can recognize the negative aspects of your money mindset, you can manage your emotions and fears better—and you can recognize and start to change bad habits.

Identifying and changing negative behaviors associated with your mindset are key to making the best financial decisions.

If you're looking to understand how to shift your money mindset and improve it, I'm here to help. One of the best services I can provide is that of a financial coach and accountability partner.

I'd be happy to chat with you and shed more light on your money mindset. Give my office a call at 877.772.1776 or shoot me an email at Gerry@bostonindependencegroup.com

How The Bright Side of Uncertainty Can Enrich Your Life

Tue, 22 Nov 2022 17:27:39 GMT

Let’s imagine you’re standing in front of two doors.

You have two options.

Open Door 1 and get an ELECTRIC SHOCK.

Or choose the mystery behind Door 2 .

Door 2 could be better or worse than Door 1, but you won't find out until you open it.

What do you choose?

Which door would you open?

Most folks would open Door 1. (1)

That's because most of us would rather have certain pain than gambling with the unknown. And that's true even if we have a 50-50 shot at getting something better, not worse, with Door 2. (1)

Why?

Because we crave certainty. We're calmer when we know what to expect — even if it's certain pain — because we can prepare for it. (1)

With uncertainty, we're hyper-vigilant to the possibility of pain. We're constantly on edge, waiting for the ball to drop. (1)

That's stressful and exhausting up until the moment we get certainty. And that waiting and worrying creates its own pain, no matter what outcome we get. (1)

That's how uncertainty hijacks our mind and outlook.

And that can backfire BIG time.

How?

It closes us off from the priceless opportunities that can come with uncertainty.

And that means we miss the chance to take advantage of all the good that uncertainty can really do for us.

So, what type of lemonade can we make from the lemons of uncertainty?

Let's find out by looking at some of the incredible silver linings of uncertainty.

7 SURPRISING ADVANTAGES OF EMBRACING THE BRIGHT SIDE OF UNCERTAINTY

1. Uncertainty...Inspires New Thought

The unknown can captivate us. It upsets our assumptions and expectations. And it makes us pay attention and think more deeply. That can get us to think outside of the box and open us up to new possibilities we wouldn't have considered otherwise.

2. Uncertainty...Builds Character

With the unknown, our choices may be the ONLY things that are 100% in our control. That can really put our judgment, our values, and our beliefs to the test. And it gives us the opportunity to learn from novel experiences, take on new challenges, and truly grow.

3. Uncertainty...Gives Us a Reality Check

Unexpected new situations can peel back our blinders and open our eyes to what's really going on. That can ground us, so we're not chasing rainbows. It also empowers us to recognize the difficulties we face, so we can actually work through them, instead of ignoring them and hoping they'll go away.

4. Uncertainty...Spotlights Our Priorities

Big uncertainties mute the little worries and distractions in our lives. When we don't know what's coming next, we're forced to focus on what really matters. As we do, our priorities can be a comforting safety net to fall back on — and a roadmap that gives us direction to move forward with confidence.

5. Uncertainty...Makes Us More Resilient

Every time we deal with uncertainty, we face novel challenges — and new chances to adapt, improvise, flex our skills, and endure. That can strengthen our mental game and keep us flexible when things go off course. It can also give us better strategies for bouncing back, solving problems, and persevering. (2)

6. Uncertainty...Makes Us Grateful

When everything's up in the air and nothing feels certain, it's much easier to appreciate what we DO have — like our relationships, our health, or our career. The gratitude we have for those dependable joys can keep us positive and clear-headed in the face of uncertainty. And that can help us get better at dealing with it and taking advantage of its silver linings. (3)

7. Uncertainty...Adjusts Our Perspective

Without surprises, we tend to roll along with life. Uncertainty can stop us in our tracks. It gives us a chance to pause, stand back, and look at the bigger picture. That can give us a fresh outlook and a big-picture perspective. It can also help us make better choices, no matter what type of uncertainty we're facing. (4)

FINANCIAL LESSON: ENJOY A MORE FULFILLING LIFE BY LEARNING HOW TO DEAL WITH UNCERTAINTY BETTER

Have you experienced any of those windfalls of uncertainty?

Whether you have or not, you’ll have another chance to in the future.

That’s because, like it or not, uncertainty is an unavoidable part of life.

Big or small, those unknowns can pop up at any time. And they can make us unsure about our options, our choices, and our future.

But it’s not all bad.

Uncertainty can be wonderfully rewarding.

In fact, like life, uncertainty can become what you make of it — and how you approach it can make ALL difference in what you get out of it.

That’s why it pays for us to get better at living with uncertainty.

If we can do that, the silver linings can become golden opportunities for us to grow and prosper.

So, how do we approach uncertainty better?

We can start by accepting it, instead of resisting it.

And we can focus on the positive and check ourselves when we’re spiraling into the worst-case what-ifs.

We can also turn to someone we trust for support and words of reason.

Sincerely,

Boston Independence Group

Sources:

1 - https://www.psychologytoday.com/us/blog/the-right-mindset/202002/why-uncertainty-freaks-you-out (2020)

2 - https://www.mpi.org/blog/article/building-resiliency-in-uncertain-times (2020)

3 - https://www.health.harvard.edu/healthbeat/giving-thanks-can-make-you-happier (2021)

4 - https://knowledge.wharton.upenn.edu/article/perspective-taking-brain-hack-can-help-make-better-decisions/ (2021)

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Social Security: Choosing When to Claim

Thu, 08 Sep 2022 21:05:58 GMT

One of the most critical decisions you can make regarding your retirement is when you choose to claim Social Security. Deciding when to claim Social Security can make a difference in your monthly bottom line.

Before You Retire

Your monthly Social Security Benefit amount is calculated based on the number of years you have worked and the taxes you have paid into the Social Security Benefits program. Social Security counts the years you have paid taxes as “credits” for years that you have worked. For example, if you were born in 1929 or afterward, you must have 40 credits to receive Social Security benefits when you retire. This is equal to about 10 years of work.1

Your benefit amount is also calculated by the number of credits you have earned during your working years. Fortunately, the Social Security Administration has made it easier for you to verify your expected benefits by setting up an online account. It is worth double-checking your earnings to catch errors, if any, and factor in your expected benefits as you strategize for retirement.1

What Age Should You Claim?

There are several ages that should be considered when deciding when to claim Social Security.

Early Retirement Age: The earliest age you can claim Social Security benefits is 62. However, if you claim Social Security early, you'll receive a lower monthly payment as compared to not waiting until the full retirement age.1,2
Full Retirement Age: This is the age when you are eligible to receive the full amount of your Social Security benefits. The full retirement age is calculated based on the year you were born. For example, for those born between 1943 and 1954, the full retirement age was 66. If you were born between 1955 and 1960, the full retirement age goes up to 67.1,2
Delayed Retirement Age: You can also delay the claim of your retirement benefits until age 70. If you wait until then, you will continue earning benefits. However, benefits stop accruing at age 70, so there may not be any reason to delay the claim of benefits past age 70.1,2

Deciding when to claim Social Security benefits is an important decision to make as you approach your retirement age. Talk with us to make sure that you decide the best time for you to apply for Social Security.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Advisory Services offered through CreativeOne Wealth, LLC an Investment Adviser. Boston Independence Group and CreativeOne Wealth, LLC are not affiliated.

Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. 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.

Retirement Strategy: How Much Should I Save?

Thu, 25 Aug 2022 18:28:18 GMT

"Will I outlive my retirement money?" This is one of the top fears for people who are starting to prepare for their retirement years.

Determining how much money you need in retirement is a process. It shouldn't be a number that you pull out of thin air.

The process should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income, and also may project what your income would look like each year in retirement.

We all have our "blue sky" visions of the way retirement should be, yet our futures may unfold in ways we do not predict. So, as you think about your "second act," you may want to consider some life and financial factors that can suddenly arise.

You may see retirement as an extension of the present rather than the future.

This is only natural, as we all live in the present, but the future will arrive. The costs you have to shoulder later in retirement may exceed those at the start of retirement. As you may be retired for 20 or 30 years, it is wise to take a long-term view of things.

You may have a health insurance gap.

If you retire before age 65, what do you do about health coverage? You may shoulder 100% of the cost.

Suppose you become disabled or seriously ill, and working is out of the question. How will you make ends meet?

Age may catch up to you sooner rather than later.

You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people you can trust to manage your finances.

You could be alone one day.

As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple's income. Keeping up a house or even a condo can be tough when you are elderly. Driving can also be a concern. If your spouse or partner is absent, will someone be available to help you in the future?

These are some of the blind spots that can surprise us in retirement.

They may quickly affect our money and quality of life. If you age with an awareness of them, you will be able to manage the outcome better.

Your workplace retirement account can play a critical role in your overall retirement strategy. However, some people have gone further with such accounts than others, especially recently.

Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Aside from these blunders, some classic financial missteps plague retirees.

Calling them "mistakes" may be a bit harsh, as not all of them represent errors in judgment. However, whether they result from ignorance or fate, we need to be aware of them as we prepare for and enter retirement.

Timing Social Security.

As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before you reach Social Security's Full Retirement Age (FRA) can mean comparatively smaller monthly payments.

Managing medical bills.

Medicare will not pay for everything. Unless there's a change in how the program works, you may have a number of out-of-pocket costs, including dental and vision care.

Underestimating longevity.

Actuaries at the Social Security Administration project that around a third of today's 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.

Withdrawing strategies.

You may have heard of the "4% rule," a guideline stating that you should take out only about 4% of your retirement savings annually. Some retirees try to abide by it, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly.

Talking About Taxes.

It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming your retirement will be long, you may want to assign this or that investment to its "preferred domain," which means the taxable or tax-advantaged account that is most appropriate for it as you pursue a better after-tax return for your entire portfolio.

Retiring with debts.

Some find it harder to preserve (or accumulate) wealth when you are handing portions of it to creditors.

Putting college costs before retirement costs.

There is no "financial aid" program for retirement. There are no "retirement loans." Your children have their whole financial lives ahead of them.

These are some of the classic retirement mistakes. To help you avoid them, take some time to review and refine your retirement strategy with the help of our team of dedicated financial professionals.

Advisory Services offered through CreativeOne Wealth, LLC an Investment Adviser. Boston Independence Group and CreativeOne Wealth, LLC are not affiliated.

How Could the Behavior Gap Affect You During Market Volatility

Mon, 01 Aug 2022 20:00:41 GMT

“It turns out my job was not to find great investments, but to help create great investors,” writes Carl Richards, author of “The Behavior Gap.”1 From increasing our budget mindfulness to taking a steadier approach to investing, Richards has drawn attention to the way our unexamined behaviors and emotions can be to our detriment when it comes to living a happy and financially sound life.

In many cases, we make poor financial decisions when experiencing panic or anxiety as a result of personal or widespread events.

Below we discuss the common financial behaviors driven by such circumstances.

The Behavior Gap Explained

Coined by Richards, “the behavior gap” refers to the difference between a smart financial decision versus what we actually decide to do. Many people miss out on higher returns because of emotionally driven decisions, creating a gap — “the behavior gap” — between their lower returns and what they could have earned.

4 Common Emotions that Can Create a Behavior Gap

#1: Excitement When Stocks Are High

Whether in a bull market or witnessing the hype from a product release, many investors may feel tempted to increase their risks or attempt to gain from emerging investments when stocks are high. This can lead to investors constantly readjusting their portfolios as the market itself experiences upswings. An investor who follows such patterns is likely to do the same with declines and may end up trying to time the market amidst its inevitable, unpredictable movement.

#2: Fear When Stocks Are Low

In response to market volatility, investors may feel the need to choose more secure investments and avoid uncertain or seemingly unsafe investments. When stocks are low, a common response may be to sell and effectively miss out on potential long-term gains.

#3: Engagement in the Search for Alpha

People yearn to make money and take action to do so. Throughout our lives, this emotional desire is likely a constant one. As such, many seek the help of a financial professional to procure above-average returns, otherwise known as “alpha.”1 However, in this search for “alpha,” our humanness — our emotions and our behaviors — may lead us astray. Ironically, studies done by DALBAR have calculated the “average investment return” as compared to investor returns and have shown that investor returns are lower.1 The underlying emotional desire and pursuit of money is exactly the recipe for unwise behaviors in response to emotions — but only if left unchecked.

#4: Short-Term Anxiety and Focus

As humans, viewing aspects of our lives through the lenses of current circumstances is normal. One emotional response to any event, however, is letting the moment consume us, especially if faced with grave consequences — from our personal health being compromised to the loss of loved ones. Many may find it difficult in these times to both think long-term and to remember logic. However, making a rash decision can inhibit the long-term benefit that comes from maintaining a balanced perspective without reactionary behavior.

How to Lessen the Behavior Gap for Your Financial Health

At any given point, the market can go up, down or it can remain the same. While many aspects of the market are out of our control, one thing we can control right now is how we handle our financial strategy. Remembering the likelihood of recovery over time — and the market’s nearly inevitable up-and-down movement — can provide a more logical angle to calm the nerves.

If you’re experiencing financial anxiety, take a breath and also remember the potential for long-term gains. Of course, you can and should always reach out to Boston Independence Group for further clarification and advisement.

https://behaviorgap.com/outperform-99-of-your-neighbors/

Advisory Services offered through CreativeOne Wealth, LLC an Investment Adviser. Boston Independence Group and CreativeOne Wealth, LLC are not affiliated.

8 Step Summer Financial Checkup

Wed, 06 Jul 2022 21:20:05 GMT

It seems like when summertime hits, time slows down. The hustle and bustle of the holiday season is over, the taxes are complete and the vacation days are scheduled. If you find yourself with a bit of extra time on your hands in the upcoming months, you may want to use this opportunity to check in on your family’s finances. While doing a thorough analysis of your wealth may sound intimidating, we’ve broken it down into eight simple steps to keep you focused and on track.

Step 1: Analyze Your Budget

In early 2022, the Bureau of Economic Analysis reported that the personal savings rate is at only 6 percent.1 An effective way to avoid spending more than you’re earning is to step back and take stock of your monthly and annual budget. And if you don’t have a budget at all, use this time to make one.

Many credit cards or banks will offer categorical breakdowns of your spending, which can be a great way to find out what you’re spending the most money on and if there’s room to cut back. To get the best look at your spending habits, you may want to evaluate your savings and spending record over the past six to 12 months.

Step 2: Seek Out Tax Savings

Do you scramble to pull your paperwork together every March and April? This year, try taking a different approach to tax season by evaluating your tax-saving strategies early. You may want to work with your financial planner or tax professional to create a mock tax return, as this can help you understand your withholding options and tax-saving opportunities such as 401(k) or 403(b) options, IRAs and HSA contributions.

Focus on filing any time-sensitive deductions and brush up on changes in tax laws. Reaching out to your tax professional now could mean you have more time to prepare and strategize together for next year’s returns.

Step 3: Tackle Your Debt

An alarming 38 percent of adults carry credit card debt from month to month.2 If you’re guilty of putting off managing your amounting expenses, now’s the time to start planning to pay them off. While most consumers have some amount of good debt on their plate (mortgages, car payments, etc.), it’s the bad debt (credit card debt, student loans, etc.) that you’ll likely want to focus on managing and eliminating.

While you could be tempted to simply pay off what shows up on the bills each month, you may want to create a debt summary to get a better idea of your total debt’s big picture. By creating an annual debt summary, you and your financial advisor can better understand whether you’re gradually working down the amount or falling farther into the hole.

Step 4: Revisit Short and Long-Term Goals

A lot can change in a year - marriage, death, divorce, growing your family and experiencing a major career change. Even seemingly small adjustments, like a job promotion or sending a kid off to college, can have a significant impact on your financial status. That’s why it’s important to regularly review your long-term goals and progress towards them while revisiting and evaluating your shorter-term goals as well.

Step 5: Evaluate Coverage and Providers

As you’re reviewing your budget and expenses, take the extra time to thoroughly evaluate your current providers and coverage options. This includes your internet, cable and wireless service providers in addition to your insurance coverage options. If you tend to set up auto payments and forget about your monthly bills, this could be an opportune time to revisit what it is you’re actually paying for.

Step 6: Reassess and Rebalance Your Portfolio

It’s important to visit your portfolio and risk tolerance regularly to help keep it in line with your tolerance, goals and market conditions. While most managed portfolios will be rebalanced automatically, it’s important to take stock of your investments’ big picture. Doing so can help you determine if you need to diversify differently or reassess your risk tolerance.

Step 7: Review Your Retirement Savings

Whether retirement is decades down the line or within the upcoming year, reviewing your retirement savings on an annual basis is a great habit to start. Take the time to assess whether or not you’re maxing out your retirement contribution options and how the savings you’re making today will translate into retirement income later down the line.

Step 8: Assess Your Estate Plan

It’s not fun to plan for the worst-case scenario, but leaving your family with an outdated will, trust or estate plan can lead to some major issues down the line. As you assess your legacy plan annually, make sure you’re accounting for any newly acquired assets (houses, cars, pets, etc.) while checking that your designated beneficiaries are still willing and able to assist in the event of your passing.

While you’re likely daydreaming of book reading, beach-going and backyard barbecuing this summer, don’t forget to do yourself a favor and squeeze in some financial assessment as well.

Why More Americans Are Retiring Now Than Ever

Mon, 16 May 2022 16:53:39 GMT

They’re calling it the Great Resignation. This unprecedented phenomenon is observing numerous Americans leave their jobs—some for greener pastures, others for extended periods, and still others, especially older Americans, for retirement. While endless column inches on this matter have been published, one of the big questions is why it’s happening here and now.

The most natural answer is that this is an appropriate response in the wake of the COVID-19 pandemic. It’s difficult to find anyone or anything that hasn’t been affected by the pandemic. While some people are choosing to stay home because they aren’t interested in risking illness to go into the office, the full picture is a bit more complex, especially for those with jobs where remote work isn’t an option. But there’s another factor at play here. It’s been a long time coming but hasn’t been talked about much because of other more pressing world events.

The Baby Boom Meets the Retirement Boom

These last few years have been a bit different than they were in the past. Reaching retirement age now doesn’t mean exiting the workforce completely. Many retirees start businesses, shift to part-time work, or change their focus from their jobs to working for charities or nonprofit organizations. In 2008, the oldest baby boomers reached age 62. This coincided with the so-called “Great Recession,” when the economy declined and perhaps represented a less-than-advantageous time to start retirement. Many people decided to hold off on retiring and wait a few years. In 2021, the economy had distanced itself from those events and faced new developments. Just over half of adults aged 55 or older had exited the workforce and retired. For adult Americans aged 65 to 74, the percentage who had left the workforce was 66.9%, just over two-thirds of this population. ¹

Catching Up

So, rather than seeing everyone head to the door simultaneously, what we’re seeing is a bit of a “catch-up” period. We are looking at a picture of what might have been if the Great Recession had gone a bit differently. The pandemic created a transition period in which people decided that it was a natural time to work less, transition to new things, or retire completely. The pandemic has gone on way longer than any of us could have imagined, with the more potent Delta variant making way for the more contagious Omicron variant. Examining this context makes it easier to see why someone reaching the end of a long and rewarding career might choose to exit the pattern of working during COVID-19 and parachute into a less stressful, more enjoyable paradigm.

Is It Your Time, Too?

You might be thinking that this period of mass retirement presents you with an opportunity to cast off the yoke and ease into retirement. Despite the large numbers of people making this big transition, it is important to remember that moving with the crowd isn’t always a justified action.

It’s also possible that now is a great time to transition into a different opportunity for your last few years of work. Maybe you have a business idea you’ve been working on. Now is a great time to put it into action. Or perhaps you want to transition into a new role at work or with a different firm that will be less demanding when you finally transition into retirement. This is also a great idea.

If you think now is the time, your first step is to set up some time to talk with us. We can look at your overall financial strategy to give you a better overview of where you stand and the drawbacks and advantages of retiring in the current environment.

https://www.pewresearch.org/fact-tank/2021/11/04/amid-the-pandemic-a-rising-share-of-older-u-s-adults-are-now-retired/

Bond Market Downturn: What’s the Alternative?

Mon, 16 May 2022 16:51:02 GMT

The first quarter of 2022 was negative on nearly every front for investors. The S&P 500 lost more than 5%. International stocks lost more than 6%. The Russell 2000, which represents U.S. small cap stocks, declined nearly 9%. 1

Even the bond market suffered. Bonds are often used to minimize risk and volatility, but they offered little stability for investors in the first quarter of 2022. The Bloomberg U.S. Aggregate Bond Index lost more than 6% in the first quarter, the worst loss for the index since 1980. 2

The first-quarter decline in the bond market isn’t a new phenomenon. In fact, the Bloomberg U.S. Aggregate Bond Index has declined 10.6% since its peak in August 2020. That’s the largest correction in the U.S. Bond market in the past 25 years. 3

It’s not just U.S. bonds either. The Global Aggregate Index has declined 11%, falling to its lowest point since the 2008 financial crisis. 3

Why are bonds declining?

All financial markets are facing headwinds right now, but the bond market is facing multiple issues that are creating a perfect storm for income investors. The first issue is the ongoing war in Ukraine. Instability is always a risk for financial markets, and this is no exception. The uncertainty surrounding the outcome and Ukraine and the risk that the conflict could expand have investors rattled.

The other issue is the double-edged sword that is inflation and interest rates. In March, the Consumer Price Index (CPI) was up 8.5% from 12 months earlier. That’s the fastest annual rise in prices since 1981. In fact, the CPI has set new 40-year highs for five consecutive months. 4

The sharp rise in inflation has led to a similar rapid rise in interest rates. The Federal Reserve raises interest rates to fight inflation. Higher interest rates makes it more difficult to borrow money, which slows the economy and reduces demand for goods and services.

Fed Chairman Jerome Powell has already indicated a 50-point increase in interest rates at the May meeting. Other Fed officials have suggested that there will be further hikes. The CME Fedwatch website predicts rates to hit 2-2.25% by the end of the year, with an 87% probability. 5

The prospect of increased interest rates has affected the stock market, but it’s also had a significant impact on the bond market. When interest rates rise, bond prices tend to fall. That means the bond market will continue challenges if the Fed continues to raise interest rates.

What can be used as an alternative to bonds?

Although not true for everyone, some people use bonds for income and as an asset to reduce volatility in their portfolio. Many investors shift more assets to bonds as they approach retirement to minimize their exposure to stock market risk.

In the current environment, though, bonds may not perform as they have in the past. In the first quarter, major bond indexes performed worse than stock indexes. 2

Potential Bond Alternative

Fortunately, there are alternatives available. One potential alternative is a fixed indexed annuity (FIA), which could be used in a portfolio to replicate the income from bonds and also protect the portfolio from volatility in the stock and bond markets.

A fixed indexed annuity is a product offered by insurance companies. They are often tax-deferred, meaning you don’t pay taxes on gains as long as the assets stay inside the annuity.

FIAs also provide risk protection in the sense that your value never declines due to market performance. You can potentially earn interest each year based on how market indexes perform, but you never lose any of your premium if the markets decline.

An easy way to think about a fixed indexed annuity is:

F ixed floor value that protects your principal

I nterest based on the performance of a market index

A nnuity that grows tax-deferred, unlike bonds

Most FIAs also offer optional riders that include income benefits which provide predictable lifelong income through retirement. Those benefits vary by product, but they can be used to replicate the income-driven nature of bonds.

A fixed indexed annuity isn’t right for everyone, but it can be a useful tool for those looking for predictable income and protection from market risk.

Now may be the right time to review your strategy and explore alternatives to bond investments. Let’s connect today and start the conversation.

1https://www.google.com/finance/

2https://www.wsj.com/articles/bond-market-suffers-worst-quarter-in-decades-11648737087

3https://finbold.com/u-s-bond-market-wipes-out-over-2-trillion-marking-the-largest-loss-in-recent-history/

4https://www.usatoday.com/story/money/2022/04/12/inflation-rate-cpi-highest-40-years-prices/7284054001/

5https://www.barrons.com/articles/interest-rate-hikes-51650675267

Licensed Insurance Professional. Respond and learn how insurance and annuities can positively impact your retirement. This material has been provided by a licensed insurance professional for informational and educational purposes only and is not endorsed or affiliated with the Social Security Administration or any government agency. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

Annuities are insurance products backed by the claims-paying ability of the issuing company; they are not FDIC insured; are not obligations or deposits of, and are not guaranteed or underwritten by any bank, savings and loan or credit union or its affiliates; are unrelated to and not a condition of the provision or term of any banking service or activity.

Secure Act 2.0: What could it mean for your retirement?

Mon, 16 May 2022 16:35:01 GMT

Secure Act 2.0 is on the way. The bill recently passed the House of Representatives in rare bipartisan fashion, with a 414 - 5 vote in favor.

You may remember the first Secure Act, which was signed into law by former President Trump in December 2019. That law raised the age for required minimum distributions from 70 ½ to 72. It also impacted 401(k) contributions, student loan repayments, and the use of annuities in 401(k) plans. 1

If passed as currently written, Secure Act 2.0 would have an even greater impact. The bill could change the RMD age even further, plus alter things like RMD penalties, catch-up contributions, employer contributions, and more. 2

Below are seven ways Secure Act 2.0 could affect your retirement strategy: 2

Raising the RMD age to 75.

Secure Act 1.0 raised the RMD age from 70 ½ to 72. Part 2.0 would push it out even further:

Age 73 starting in 2023.
Age 74 in 2030.
Age 75 in 2033.

Catch-up contribution expansion.

Current law allows for employees age 50 and older to make catch-up contributions to their 401(k) each year in addition to their regular contributions. This year, the catch-up contribution amount is $6,500. Under Secure Act 2.0, that amount would increase to $10,000 for workers ages 62 to 64, beginning in 2024.3

Catch-up contributions become Roth contributions.

Under Secure Act 2.0, all catch-up contributions are treated as Roth contributions starting in 2023. That means that catch-up contribution dollars will be made with after-tax dollars. They still grow on a tax-deferred basis, and then distributions are tax-free after age 59 ½.3

New Roth matching contributions.

Secure Act 2.0 also allows employees to elect for their employer matching 401(k) contributions be made as Roth contributions. Again, these would be made with after-tax dollars, but would generate tax-free distributions in the future.3

Student loan matching contributions.

Secure Act 2.0 also formalizes an idea that the IRS has already approved. Secure Act 2.0 would allow employers to make matching contributions to 401(k) plans based on employee student loan payments. The contributions would vest on the same schedule as normal matching contributions. 2

Reduced RMD penalties.

Under current policy, the penalty for a missed required minimum distribution is 50% of the missed distribution. Under Secure Act 2.0, that penalty would fall to 25%. 3

Automatic contributions.

Finally, Secure Act 2.0 would encourage retirement saving by requiring new 401(k) plans to automatically set new participants’ contributions at 3%, with 1% automatic increases each year up to a maximum of 10% contributions. Employees would have the opportunity to opt out of the automatic contributions. 4

Secure Act 2.0 would mark a major change in retirement policy, and would also likely impact your strategy. It is not yet law, but given the bipartisan support of the bill thus far, it seems reasonable that it will pass. 5

Let’s talk about your retirement income strategy and how it could be affected. That’s especially true if you will take RMDs or make catch-up contributions in the near future.

1. https://www.cnbc.com/2022/04/05/retirement-savers-may-benefit-from-secure-2point0-what-needs-working-out.html

2. https://finance.yahoo.com/news/secure-act-2-0-passes-120019436.html

3. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/house-passes-secure-act-2-to-promote-retirement-savings.aspx

4. https://www.cnbc.com/2022/02/05/heres-whats-new-with-401k-plans-this-year.html#:~:text=Contribution%20limit%20changes&text=For%202022%2C%20you%20can%20put,not%20count%20toward%20these%20limits.

5. https://www.cnbc.com/2022/03/30/house-passes-secure-act-2point0-heres-what-it-means-for-your-retirement-.html

4 Yearlong Tax Tips for Retirees

Mon, 18 Apr 2022 19:11:19 GMT

Whether you’re just easing out of the workforce or you’ve been in retirement for a few years now, making the right financial moves is critical. If you’re working with an advisor or taking a look at your finances yourself, one central goal during retirement is protecting your wealth from unnecessary taxes.

In many cases, there are ways to avoid owing more taxes - but usually, this requires proactive action beyond tax season. Below we’ll explain four tips you can utilize throughout the year to help minimize your tax obligations in retirement.

Tip #1: Take Your Required Minimum Distributions (RMDs)

An RMD is an amount that must be withdrawn from your retirement account. These required withdrawals begin when you, the retirement plan account owner, reach age 72. The rules apply to employer-sponsored retirement plans, traditional IRA plans and Roth 401(k) accounts, but they don’t apply to Roth IRAs when the account owner is still alive.

Some IRA custodians and retirement plan administrators might find out what your RMD is for you, but the responsibility ultimately falls on you. To find out what your RMD is, the IRS provides life expectancy tables to utilize according to your circumstances. If you do not withdraw the RMD (or the correct amount), the amount not withdrawn will be taxed at 50 percent, which is why it’s critical to take your RMDs and withdraw the correct amount.1

Tip #2: Manage Your Income Combinations

As a retiree, a portion of your income will likely come from Social Security. However, not all of your benefits are taxable, and there are ways to minimize or, at times, eliminate taxes on your Social Security benefits.

If half of your Social Security benefits in addition to your other income is higher than the base amount for your status, your benefits will be taxable. By strategically managing all of your income sources (such as pension payments, dividends or part-time jobs), it’s possible to lower the portion of benefits that will be taxed. Rules regarding Social Security income taxes also vary from state to state, so always check with your state regulations to determine the best solution for you.2

Tip #3: Figure Out if You Need to Pay Quarterly Taxes (If Not, You May Decide to do it Anyway)

If you don’t have taxes withheld automatically, you may need to pay estimated tax payments. Individuals who are expected to owe $1,000 or more - or those whose withholding and refundable credits are 1) less than 90 percent of the tax owed or 2) at least 100 percent of the tax on the previous year’s return - must pay estimated tax.

In some cases, you might decide to pay quarterly taxes, even if you are not required to, in an effort to avoid the inconvenience of paying a large sum all at once. If you miss a payment or underpay, you may be charged a penalty.3

Tip #4: If You’re Moving to a New State, Get to Know Its Tax Laws

If you’re relocating to a new state during retirement, consider the impact of the move on your financial situation, as tax laws vary according to the state. For example, some states, like Florida and New Hampshire, don’t tax on income or only tax on dividends and interest.4 On the other hand, they may have higher property taxes. For example, New Hampshire’s property taxes are high compared to the rest of the country.5 In addition to nicer weather or a more serene lifestyle, you might decide to move to a new state in an effort to save on taxes.

In many cases, an individual or couple is working with a fixed amount of wealth to last throughout retirement, which is why taking the right financial steps is essential. By working with an advisor and keeping these four tips in mind during the year, you can make sure you’re not paying more than you need to. When it comes time to finalize gifting to your children or grandchildren, you can further reduce taxes by incorporating other strategies, like charitable giving, into the equation.6

https://taxfoundation.org/the-effects-of-making-the-charitable-deduction-above-the-line/

What You Need to Know About Bitcoin and Cryptocurrency

Mon, 18 Apr 2022 18:57:46 GMT

Over the last couple of years, cryptocurrencies have become more well known due to the significant increases and swings in the price of popular coins like Bitcoin and Ethereum. Despite reaching an all-time high price last year, only about 16% of Americans have reported investing or trading cryptocurrency.

For investors curious about adding Bitcoin or another cryptocurrency to their portfolio, you should consider the following.

What Are Cryptocurrencies?

Cryptocurrencies are digital assets secured on a blockchain, which is a type of ledger that records transactions using concepts of cryptography and game theory. Some of these concepts include:

· Private and public-key pairing

· Hashing functions

· Elliptical curve encryption

The first cryptocurrency was Bitcoin, a creation of the anonymous Satoshi Nakamoto that started in 2008. However, in the nearly 14 years since Bitcoin’s inception, many other cryptocurrencies now exist, each with its unique value propositions and communities.

How Do You Buy Bitcoin and Other Cryptocurrencies?

The most common method for purchasing is through exchanges such as Coinbase, Kraken, or Binance. Because of Know Your Customer (KYC) laws, exchanges will require users to provide certain identifying information when creating an account. Additionally, exchanges will charge transaction fees when buying, selling, or trading crypto.

What Makes Cryptocurrencies Valuable?

The value propositions of cryptocurrency may vary from coin to coin, which is why it’s important to thoroughly research the fundamentals of a crypto project before investing. However, some of the general attributes of crypto that may be of value include:

Decentralization
Transaction Privacy
Store of value (i.e., digital gold)
Scarcity
Utility through DeFi , NFTs , and other use cases in the metaverse.

Where Do You Keep or Store Your Cryptocurrencies?

Once bought, some users keep their cryptocurrency in the account on the exchange they used to purchase them. However, others may prefer to hold their crypto on any number of crypto wallets .

Cryptocurrency wallets are generally distinguished as a hot or cold wallet. Hot wallets refer to software programs stored online through a computer or phone. In contrast, a cold wallet is held in a USB-connected device capable of offline storage.

What Are the Risks of Owning Cryptocurrency?

The risks of cryptocurrency are threefold. The first is the potential for losing crypto by forgetting a spending password or wallet seed-phrase. Risk also exists through the potential for bad actors to hack and steal cryptocurrency either through manipulation of software or by obtaining an individual’s crypto wallet passwords.

Other Ways to Invest in Cryptocurrency

For people not yet ready to purchase their own cryptocurrency, other options still exist for investors to have some exposure to the cryptocurrency industry in their portfolio. These include:

Investing in companies in the cryptocurrency space
Indirectly obtaining crypto exposure through investment in companies that hold cryptocurrencies on their balance sheets
Investing in an exchange-traded fund (ETF) that holds different cryptocurrencies and related contract assets

What Is a Reasonable Amount of Crypto for Your Portfolio?

No single correct approach exists when it comes to determining the amount of cryptocurrency an investor should have in their portfolio. Rather, the chosen amount will always depend on factors specific to the investor and their financial goals.

Relevant to the discussion might be an investor’s net worth, current income and expenses, retirement savings, and overall risk tolerance. Generally, some experts may recommend allocating only a tiny percentage (e.g., 2-5%) of an investor’s overall portfolio, if any, to cryptocurrencies.

Is Crypto Right for an Investor’s Portfolio?

The cryptocurrency market is still a young industry, and its technologies and investment opportunities are continually evolving and changing. As a result, cryptocurrency investments can be somewhat speculative and subject to short-term volatility.

As always, investors should perform their own due diligence before buying a particular cryptocurrency and only invest amounts they won’t be afraid to lose.

Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.

Sources

1. https://www.pewresearch.org/fact-tank/2021/11/11/16-of-americans-say-they-have-ever-invested-in-traded-or-used-cryptocurrency/

2. https://coinmarketcap.com/

3. https://www.investopedia.com/decentralized-finance-defi-5113835

4. https://www.forbes.com/advisor/investing/nft-non-fungible-token/

5. https://time.com/nextadvisor/investing/cryptocurrency/hot-wallet-vs-cold-wallet/

6. https://money.usnews.com/investing/cryptocurrency/slideshows/best-cryptocurrency-etfs-to-buy?slide=6

7. https://www.bloomberg.com/opinion/articles/2022-02-18/personal-finance-how-much-crypto-should-be-in-your-investment-portfolio

How the Russia-Ukraine Crisis Is Impacting Markets and Retirement Portfolios

Mon, 18 Apr 2022 18:51:57 GMT

Immediately following the news of Russia’s decision to invade Ukraine, the Dow saw a 465-point slide and an 800-point drop in futures. That selloff also came on the heels of investor concerns about the Federal Reserve raising interest rates and inflation costs. Yet, the stock market rebounded shortly after.

Suffice it to say, investors – especially those nearing retirement – may be wondering how this conflict and aftermath of market volatility will impact their portfolios. While the future is unpredictable, here are some points to consider for those retirement portfolios.

Potential Effects of the Russia-Ukraine Crisis on the Economy

The Russia-Ukraine Crisis is the largest European land conflict since World War II. Naturally, its economic and global market effects will be noticeable in both the short and long-term. The ripples from some of those effects may not even be traceable for years to come.

Measuring the Economic Output of Ukraine and Russia

Assessing the possible fallout from this conflict might begin with examining Russia and Ukraine's exports and products to the global economy. The main products of both countries include petroleum-based goods, oil, natural gas, and other energy resources. The European Union reportedly receives about 41% of its gas from Russia.

Both countries are major producers of basic food staples such as grains, wheat, corn, and barley. Despite these countries’ production of essential commodities, their total output only accounts for approximately 3% of the world’s gross domestic product. The conflict may cause the supply of these commodities to increase, leading to increases in pricing that will most directly impact lower-income households.

Will Any Market Sectors Benefit from the Russian and Ukrainian Conflict?

Global conflicts and crises always present market losers and winners over time. For example, the video chat platform, Zoom , saw its stock skyrocket after the start of the Coronavirus pandemic in 2020, but has since cooled as the pandemic has slowed down.

The same logic will apply to the Russia-Ukraine conflict. One possibility will be in the cybersecurity sector as cyberwarfare threats have increased since Russia’s invasion. Companies specializing in cybersecurity products or services may see increased attention to their stock’s price in the market.

Protecting Retirement Portfolios During Times of Crisis and Uncertainty

Investors of all ages, income levels, and backgrounds will be interested in the Russia-Ukraine conflict’s impact on their portfolios. However, those in or nearing retirement may be more concerned over the current market volatility given their shorter investment timeline and greater reliance on their portfolio to supplement income with social security or pensions. Investors in that group may consider several key fundamentals before making any financial or investment decisions.

Assess Cash Reserves and Expenses

Feelings of stress or anxiety over market reactions to significant political and economic events may be a signal of an investor’s current finances. Reflect on whether cash reserves are at a sufficient level to withstand short-term market volatility and explore other financial pressures (i.e., expenses) that may be contributing to feelings of unease.

Avoid Knee-Jerk Responses to Buy or Sell Certain Investments

A decrease in the value of a stock or other investment position is not a loss until locked in after a sale. Avoid the temptation to sell off investments based on fears that their value will continue to decline. Likewise, avoid investing in stocks or markets experiencing significant gains because of the current state of affairs. As with all investments, it’s important to remember the big picture and see the forest through the trees.

Carefully Consider Market Opportunities

Market volatility always breeds opportunities, and savvy investors may find opportunities to plant seeds for long-term gains amidst the doubt and uncertainty. Contemplate the rebalancing of a retirement portfolio by selling off successful investments and reinvesting some of the gains into future opportunities or wealth-preservation vehicles.

In Short: Act Without Panicking The Russian-Ukrainian Crisis will likely leave its mark on the global economy and markets in ways that investors and institutions will not be able to foresee fully. The best course of action during times of uncertainty is to stay informed, avoid panicking, and take decisive action based on reliable information.

Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice.

Sources:

1. https://www.usnews.com/news/economy/articles/2022-02-24/stocks-crater-following-russias-invasion-of-ukraine-dow-futures-off-800-points

2. https://time.com/6152988/ukraine-invasion-markets-rebound/

3. https://www.cnbc.com/2022/02/24/why-europe-depends-on-russia-for-natural-gas.html

4. https://asmith.ucdavis.edu/news/russia-ukraine#:~:text=Russia%20produces%2011%25%20of%20the,accounting%20for%2014%25%20of%20exports .

5. https://www.marketwatch.com/story/zoom-says-a-growth-slowdown-is-coming-and-the-stock-is-plunging-11646083669

6. https://www.marketwatch.com/story/cybersecurity-stocks-gain-on-fears-of-a-significant-ramp-up-of-cyberwarfare-related-to-russian-invasion-of-ukraine-11646082222

7. https://www.marketwatch.com/story/cybersecurity-stocks-gain-on-fears-of-a-significant-ramp-up-of-cyberwarfare-related-to-russian-invasion-of-ukraine-11646082222

8. https://www.investopedia.com/articles/active-trading/121014/protect-retirement-money-market-volatility.asp

4 Easy Tricks to Avoid Getting Emotional About Your Investments

Thu, 24 Feb 2022 22:55:16 GMT

Whether you’re new to the stock market or a seasoned investor, it can be hard to keep your emotions in check. As you hear unsavory news about a company you’ve invested in, your first instinct may likely be to sell your shares. Yes, their stock may drop in the following days or weeks, but when it comes to the stock market - it’s important to think long-term. Selling your stock now based on an emotional response could mean you miss out on significant earnings years or decades later down the line. Before you risk that chance, we have four easy tricks you can use to help avoid investing with your emotions.

Trick 1: Find a Behavior Coach

Working with an advisor can be your first line of defense against behavioral investing. Some investment advisors or financial planners may act as a behavior coach. In doing so, they can prepare you ahead of time to react calmly and unemotionally in times of market change. If you do tend to take an emotional approach to your investment decisions, you may find that an extra set of eyes on your portfolio to be worth it.

Trick 2: Put Your Plan In Writing

Do you have a favorite chocolate chip cookie recipe? You’ve made it so many times, the recipe is practically etched into your head. But let’s say you go to make them, and you get a bit distracted. With your focus astray, you may start to question what you thought you definitely knew. Was it ¾ cup of sugar or a half? I swear I bake these at 375 degrees, but now I can’t remember for how long. Before you begin to panic, you can grab the cookbook and double-check the recipe. Within minutes, you have total peace of mind that you added the right amount of sugar and set the timer correctly.

Think of your investments in the same vein. Putting your investment plan in writing can provide you with that same reassurance when doubts arise and your emotions begin to take over. If you’ve made a proper, thoughtful investment plan, you have likely already prepared for the good and the bad. Seeing this in writing can provide the relief that you’re doing the right thing.

Trick 3: Forget About Your Portfolio… For a Bit

There was a study conducted in 1979 that introduced the “loss aversion” principle. This principle is used to describe instances where the weight of a loss is greater than the benefits of a reward. ¹ For many investors, this principle can hold true - they feel much worse about a loss in value of their stocks than they feel happy when those stocks are performing well. If this sounds like you, it might be time to take a step back from your portfolio. While regular review and rebalancing is often necessary, you may want to resist the urge to check on your stocks too frequently (daily, weekly or even monthly). With the loss aversion principle in mind, doing so may lead to more frustration than elation. This could easily entice you to make an emotionally driven decision regarding your investments.

Trick 4: Read Up On Market History

Depending on your depth of investment knowledge, you may already know what a bull market (on the rise) and a bear market (falling downward) are. But if you’re looking to better prepare yourself emotionally, you may want to do a bit of research into what historically happens in each market type. How long they tend to last, the trends leading up to either market type and the recovery time (in cases of loss), for example. Taking a historical view of the market can help you separate yourself and your stocks from the greater picture. This has the potential to make your investment decisions less behavior-based as you become more informed about past trends.

Removing your emotions from your investments is easier said than done. And in some instances, it can actually be beneficial to take stock of how market changes make you feel. For example, your comfortability with a market downturn can help you understand whether or not your risk tolerance is at the appropriate level. But as you tune in to the nightly news or read about your favorite company online, remember to step back and think about your portfolio’s big picture. Doing so could save you from missing out on major investment wins later down the line.

At Boston Independence Group our philosophy is based on honesty, transparency and loyalty. Our priority is to protect and grow your wealth, and since we’re independent, we work for you, not insurance or investment corporations. We’re dedicated to helping you protect and grow your retirement income through proven, innovative strategies that meet your objectives and goals. Contact us today!

https://www.apa.org/science/about/psa/2015/01/gains-losses

Inflation and Ukraine Rattle Investors Another Week

Thu, 24 Feb 2022 22:48:15 GMT

The Week on Wall Street

Stocks closed lower last week as escalating tensions on the Russian-Ukrainian border added to existing jitters over higher inflation and a pending tightening of monetary policy.

The Dow Jones Industrial Average slid 1.90%, while the Standard & Poor’s 500 declined 1.58%. The Nasdaq Composite index lost 1.76% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.00%. ^1,2,3

Geopolitical Tensions

Markets have been skittish in recent weeks due to persistent, elevated inflation and the uncertainty over how aggressive the Federal Reserve may be with its monetary tightening. As tensions escalated between Russia and the West over a possible Russian invasion of Ukraine, investors moved away from risk assets, such as stocks, and sought the safety of U.S. Treasury bonds.

Stocks were hard hit on Thursday as reports surfaced that both sides were exchanging artillery fire. The slide continued on Friday as prospects of a diplomatic offramp appeared to dim. While geopolitical news dominated trading last week, investors were relieved by the Federal Open Market Committee meeting minutes (released on Wednesday) that suggested the Fed may not act any more aggressively than current market expectations.

An Early Economic Snapshot

Last week three economic reports provided an update on the state of the economy. The first was the Producer Price Index, which suggested that inflationary pressures remain acute. Wholesale prices rose 1.0% last month and posted a 12-month rise of 9.7%, the latter of which was near a record high. ⁴

The consumer showed continued strength as retail sales rose a better-than-expected 3.8%, though some of that gain may be due to higher costs. Meanwhile, industrial production gained 1.4%, nearly triple the consensus expectation. Capacity utilization increased 1.0 percent, reaching its highest level since March 2019. ⁵

This Week: Key Economic Data

Tuesday: Purchasing Managers’ Index (PMI) Flash. Consumer Confidence.
Thursday: Gross Domestic Product (GDP). Jobless Claims. New Home Sales.
Friday: Consumer Sentiment. Durable Goods Orders.

_{Source: Econoday, February 18, 2022 - The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW), Agilent Technologies, Inc. (A).
Wednesday: Lowe’s Companies, Inc. (LOW), The TJX Companies, Inc. (TJX), eBay, Inc. (EBAY), Booking Holdings, Inc. (BKNG).
Thursday: Block, Inc. (SQ), Dell Technologies, Inc. (DELL), VMware, Inc. (VMW), Ingersoll Rand, Inc. (IR), AnheuserBusch InBev (BUD).
Friday: Berkshire Hathaway, Inc. (BRK.B), EOG Resources, Inc. (EOG).

_{Source: Zacks, February 18, 2022 - Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

What Changes Could Retirees Expect in 2022?

Tue, 18 Jan 2022 21:18:12 GMT

The inflation and unstable economic situation caused by the COVID-19 pandemic are expected to remain critical concerns in 2022. Still, despite the measures taken by the government to address the economic crisis, the events that took place in 2021 have already caused legislative changes and social security modifications for U.S. citizens.

As the pandemic continues, especially with the rise of new strains that have heightened uncertainty about the future global response to the pandemic, the United States is taking all possible measures to rebuild the national economy to finally defeat the pandemic and its economic consequences.

Government policies aimed at stabilizing the country's economic situation have significantly adjusted the inflation rate. Still, this aspect has already made substantial changes and has seriously affected the least protected segments of the population.

What Changes Will Be Imposed to the 2022 COLA Policy?

The government applies a cost-of-living adjustment (COLA) to ensure financial benefits. It is designed to enhance Social Security and Supplemental Security benefits to counter the impacts of inflation and adjust the economic well-being of all segments of society, particularly federal retirees.

In general, the process for calculating financial benefits is based on the percentage of current income to the Consumer Price Index for Urban Wage Earners and Clerks (CPI-W) for a given period. The CPI-W index, in turn, reflects the change in the cost of certain goods and services.

For retirement benefits, the process is somewhat different. These calculations are usually based on the year of retirement, the COLA provision previously signed with the former employer, and the current Consumer Price Index. The COLA index fluctuates dramatically depending on the retirement date, as inflation, price fluctuations, and wage growth require the pension to be recalculated to reflect the current financial situation.

The inflation spike, which was estimated at 6.2% , and price volatility in 2021 was unprecedented. Therefore, according to official statistics, the U.S. government is set to increase the cost-of-living adjustment (COLA) to 5.9% at the beginning of 2022, which is a record figure for the past four decades.

What to Expect from the Medicare Part B Premium Policy?

The upcoming increase in the cost of Medicare Part B is partially caused by rising prices and increased demand for health insurance. Since Medicare Part B beneficiaries will have their benefits deducted from their total COLA, a direct relationship between these concepts cannot be denied.

This means that an increase in the cost of health insurance will increase the cash deductible, which will reduce total net income. In addition, experts at The Senior Citizens League (TSCL) predict that an increase in Medicare premiums will greatly affect people who receive the lowest Social Security benefits.

In 2021, Medicare intended to dramatically increase Plan B health insurance premiums. Still, due to the intervention of Congress, the final decision was to postpone the premium increase because of the severe situation caused by COVID-19. As a result, Medicare applied the usual formula , and premiums increased by only $3.90. However, financial sector volatility prompts the health insurance industry to reconsider price increases in 2022, and the monthly premium is expected to be $170.10 as the standard price.

Find the Right Retirement Strategy

Our team at Boston Independence Group is ready to protect your financial stability and help you with any retirement-related issues, providing modern end-to-end solutions and services tailored to your needs. Our experts will design the right individual retirement income plan and take advantage of even the most volatile economic market conditions.

Medicare Part B Premiums to Rise 14.5% In 2022

Fri, 14 Jan 2022 15:57:28 GMT

Medicare Part B Premiums to Rise 14.5% In 2022

Unfortunately, the pandemic was a challenge to the global health care system, and it is no secret that both the global health system and the health system in the United States were not ready for this set of circumstances. Despite government attempts to stabilize the economic and medical sectors after the devastating effects of the Covid-19 pandemic, some changes could not be avoided.

As a result, in addition to the inflation and price increases that started in 2020, all areas of social activities and the public health insurance sector, in particular, have been negatively affected, resulting in price increases for Medicare and Medicaid Part B insurance premiums.

Medicare Part B Premium Changes to Expect in 2022

Basic Medicare services consist of two parts - Part A provides hospital coverage, and Part B is aimed at delivering outpatient care. Besides, Medicare Part B Premium has a wider range of coverage and typically includes:

Physician services
Types of home health care services
The usage of durable medical equipment
Laboratory tests and diagnostic screenings
Some types of wellness services that are not covered by Medicare Part A

Last year, the government succeeded in holding down the cost of insurance premiums for these plans through strict regulations.

Still, this time, Medicare and Medicaid officials have announced that Medicare Part B premiums are definitely expected to increase in 2022. While the reasons for the price increases are relatively transparent, the percentage of price increases will still be higher than initially anticipated by the U.S. government.

Thus, the standard premium will increase by 14.5% over the 2021 figures to $170.10 per month in 2022. These figures are quite high compared to the premium increase in 2020, which was only $3.90 per month.

General price increases have also affected drug costs, thus, making medical treatment less affordable. The Biden Administration is taking steps to address skyrocketing drug costs that will directly affect the Medicare healthcare coverage plans and Medicare-insured residents.

In response to price hikes, the U.S. Department of Health and Human Services released a comprehensive plan to lower drug prices as part of President Biden's executive order to promote competition in the American economy. This plan incorporates legislative and administrative proposals to reduce drug costs in health insurance programs, including Medicare Part B.

The Policy of COLA Index Modifications and Its Impact on Medicare Part B

Since premiums are most often deducted from the benefits that retirees receive, the cost of living adjustment (COLA) will be applied to increase pension benefits as well. According to official figures, the U.S. government intends to increase the COLA to 5.9% in early 2022 , with the highest rate recorded nearly four decades ago, in order to improve and maintain living standards by increasing wages and social benefits.

But despite the recalculation of Social Security COLA benefits, including pensions, the increase in health insurance costs will affect retirees who receive the lowest benefits the most. This situation mainly occurs due to health insurance premiums rising much faster than COLA recalculations. For example, retirees receiving the lowest benefits, at about $365 a month, will have to spend their entire pension to cover health care services.

In addition to changes to insurance plans, many Medicare members will pay higher premiums than regular members because the monthly payments are based on income. Part B enrollees earning more than $91,000 a year will pay more, and the amount for coverage will be calculated on a case-by-case basis, depending on current income.

In general, changes to the health insurance system are inevitable. Nevertheless, these changes can be managed to provide the best possible healthcare for all U.S. residents.

We Are Ready to Help You With Healthcare Insurance

At Boston Independence Group, we understand the need to learn about healthcare and medical insurance regulations, properly assess the current situation, and take effective measures aimed at improving the quality of life. We specialize in retirement income planning, healthcare insurance coverage plans for retirees, and social security benefits.

The professionals at Boston Independence Group are always ready to assist you in choosing the optimal strategy to facilitate your retirement process.

Call us, send an email, or fill in the contact form on the website to get the proper solution and plan your financial future!

Sources:

https://www.hhs.gov/answers/medicare-and-medicaid/what-is-medicare-part-b/index.html

https://www.aarp.org/retirement/social-security/info-2021/cola-set-for-2022.html

https://www.cms.gov/newsroom/press-releases/cms-announces-2022-medicare-part-b-premiums

5 Ways to Reduce Your Taxes in Retirement

Fri, 13 Aug 2021 20:50:07 GMT

What are the biggest expenses you’ll face in retirement? Healthcare? Housing? Travel? All of those costs could be significant, but one of the biggest could be taxes. That’s right. Just because you’re done working, doesn’t mean you’re done paying taxes.

Many sources of retirement income, like Social Security, pensions, and retirement account distributions, are taxable. That doesn’t even include the wide range of other taxes you could face, like property taxes, sales tax, and more.

Taxes may be a part of life, but they can also be a drain on your retirement. Every dollar you pay in taxes is a dollar that can’t be used to support your lifestyle and fund your goals.

Fortunately, you can take action to reduce your tax burden and maximize your retirement income. Below are five steps to consider as you approach retirement:

1) Use a Roth IRA. A traditional IRA is an effective savings vehicle for retirement. You get tax-deferred growth, and potentially tax deductions for your contributions.

However, a traditional IRA can also create tax issues in retirement. Most distributions from a traditional IRA are taxed as income. If you use an IRA to accumulate a sizable nest egg, you could face taxes on much of your income in retirement.

The alternative is a Roth IRA. In a Roth IRA, you don’t get tax deductions when you make a contribution. However, your distributions in retirement are tax-free, assuming you are at least age 59 ½ and you have held the Roth for at least five years.

As a married couple, you cannot contribute to a Roth if your income is greater than $196,000 in 2020. For a single person, that limit is $124,000. ¹ Otherwise, you can contribute up to $6,000 this year, or up to $7,000 if you’re 50 or older. ²

You can also convert your traditional IRA to a Roth. This means paying taxes on the traditional IRA amount. However, after the conversion, you can grow the remaining assets in the Roth on a tax-free basis and take tax-free distributions in retirement.

2) Be strategic about Social Security distributions. Social Security will likely play a role in your retirement income puzzle. However, taxes will impact the net amount you receive from Social Security.

The extent that your Social Security benefit is taxed depends on a number called your “combined income.” Combined income is your adjusted gross income plus nontaxable interest plus half of your Social Security benefit. ³

If you are single and your combined income is between $25,000 and $34,000, up to 50% of your benefits could be taxable. If you earn more than $34,000, up to 85% of your benefits could be taxable. ³

For married couples, if your combined income is between $32,000 and $44,000, up to 50% of your benefits could be taxed. If you earn more than $44,000, up to 85% of your benefits could be taxed.

The key to reducing your combined income is to reduce your adjusted gross income. Non-taxable income is not included in that number. So, for example, you could maximize your Roth IRA to minimize your adjusted gross income. You could also delay Social Security until age 70 to increase your benefit, and draw down your taxable accounts, like a traditional IRA, before Social Security starts.

3) Consider downsizing. Simply moving to a new home could reduce your taxes. Property taxes may be a major tax burden depending on your home. If you no longer need a large home, consider moving to something smaller that has a lower value and thus lower property taxes. You also may look at a neighboring community that has a lower property tax rate.

4) Relocate to a more tax-friendly state. Another option is to move to another state completely. Some states are more tax-friendly for retirees than others. For example, Alabama doesn’t tax Social Security benefits and has a relatively low sales tax rate. ⁴ Florida is another option as it doesn’t have a state income tax. ⁵ Do your research and you may find a new home that is appealing and saves you money.

5) Use an HSA to pay for medical costs. Fidelity estimates that the average 65-year-old couple will pay $285,000 out-of-pocket for health care expenses in retirement. ⁶ If you’re using taxable distributions from an IRA or 401(k) to pay those costs, the impact on your savings could be even greater.

One strategy to minimize the tax burden is to use a health savings account (HSA) to pay for healthcare costs. In 2020, individuals can contribute up to $3,550 to an HSA. Families can contribute up to $7,100. ⁷

You can invest and allocate those funds to match your goals and risk tolerance. The assets grow on a tax-deferred basis as long as they stay in the account. When you’re ready to use the funds, you can take tax-free distributions to pay for qualified healthcare expenses like premiums, deductibles, copays, and more.

By using a tax-free source to pay for healthcare costs, you reduce the amount you need to take from taxable accounts, like an IRA or 401(k). That, in turn, reduces your overall tax burden. A financial professional can help you determine if an HSA is right for you.

Ready to develop your retirement tax strategy? Let’s talk about it. Contact us today at (704) 302-1141. We can help you analyze your needs and develop a plan.

1https://www.irs.gov/retirement-plans/plan-participant-employee/amount-of-roth-ira-contributions-that-you-can-make-for-2020

2https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits

3https://www.ssa.gov/benefits/retirement/planner/taxes.html

4https://money.usnews.com/money/retirement/baby-boomers/slideshows/the-most-tax-friendly-states-to-retire?slide=2

5https://money.usnews.com/money/retirement/baby-boomers/slideshows/the-most-tax-friendly-states-to-retire?slide=4

6https://www.cnbc.com/2019/04/02/health-care-costs-for-retirees-climb-to-285000.html

7https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/irs-2020-hsa-contribution-limits.aspx

The information contained herein is based on our understanding of current tax law. The tax and legislative information may be subject to change and different interpretations. We recommend that you seek professional legal advice for applicability to your personal situation.

Advisory services offered through J.W. Cole Advisors, Inc. J.W. Cole Advisors, Inc. and Blue Financial are unaffiliated entities.

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. 20277 - 2020/7/20