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Decreasing Benefits Contribute to Retiree Bankruptcy

For most of the 20th century, it was common for employers and unions to sponsor health care insurance for retired workers, which helped pay for some or all of Medicare’s cost-sharing requirements and deductibles. However, this trend reversed sharply in the mid-1990s. A survey by the Society for Human Resource Management found that only 19 percent of U.S. employers still offer retiree health benefits.1 

Many companies that do continue to offer retiree health coverage have curbed cost-sharing and benefits by charging higher premiums or requiring higher deductibles and copays. This cutback in benefits for retirees contributes to the current retirement crisis as cost burdens increasingly shift to retirees.

If you’re concerned about potential medical bills because you live on a fixed income or lack substantial savings, give us a call. We can look at your current situation and recommend a customized insurance strategy designed to fit your needs.

A recent report revealed individuals 65 and older are filing for bankruptcy at a rate nearly three times higher than in the early 1990s. Those 75 and older are filing at a rate of nearly 10 times more. This recent surge in retiree bankruptcy filings is being driven primarily by the greater burden of providing for one’s own income and paying more health care bills during retirement.2

Retirees who are not eligible for an employer-subsidized retiree health plan typically enroll in original Medicare or a Medicare Advantage plan.However, among the greatest health care costs for retirees is the rising price of prescription drugs. Medicare Part D plans, which cover prescription drugs, are sold by private insurers. Premiums vary based on the level and extent of coverage, but the average monthly premium in 2019 is $32.50. The average annual deductible is $415.3

The Bipartisan Budget Act of 2018 reduced the cost of brand-name medications during the coverage gap starting in 2019. That means Medicare beneficiaries are now responsible for paying their deductible, if applicable, and then any copays or coinsurance until they reach a total of $3,820 in prescription drug outlay. After that, the beneficiary will pay 25 percent of the cost of name-brand prescription drugs (37 percent of the cost of generic drugs) until reaching an annual out-of-pocket total of $5,100, after which he or she will pay 5 percent of all drug costs until the end of the plan year.4

When Part D plans were first established in 2006, beneficiaries paid 100 percent of the cost of their brand-name drugs. Under the Affordable Care Act (ACA), the coverage-gap cost was slowly reduced each year. However, it’s worth noting a U.S. District Court in Texas recently ruled to reverse the ACA drug plan provision. If the ruling holds up after appeal, beneficiaries would go back to paying 100 percent of drug costs when they fall into the coverage gap.5

Content prepared by Kara Stefan Communications.

1 Society for Human Resource Management. June 2018. “2018 Employee Benefits.” https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/pages/2018-employee-benefits.aspx. Accessed Dec. 30, 2018.

2 Darwin Bayston. Wealth Management. Oct. 1, 2018. “Taking on the Ugliest Trend in Retirement.” https://www.wealthmanagement.com/retirement-planning/taking-ugliest-trend-retirement. Accessed Dec. 30, 2018.

3 National Council on Aging. 2018. “What Is Medicare Part D?” https://www.ncoa.org/economic-security/benefits/prescriptions/part-d/. Accessed Dec. 30, 2018.

4 MedicareFAQ. 2018. “Medicare Part D Donut Hole will End in 2019.” https://www.medicarefaq.com/faqs/medicare-part-d-donut-hole-will-end-in-2019/?eiid=1448063140.1546215654. Accessed Dec. 30, 2018.

5 Howard Gleckman. Forbes. Dec. 17, 2018. “What Striking Down The Affordable Care Act Would Mean For Seniors.” https://www.forbes.com/sites/howardgleckman/2018/12/17/what-striking-down-the-affordable-care-act-would-mean-for-seniors/. Accessed Dec. 30, 2018.

Our firm is not affiliated with the U.S. government or any governmental agency.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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BRED Slices Mortgages Into Affordable Pieces

Baby boomers have long been the movers and shakers of the real estate market, but millennials are expected to be the biggest buyers in 2019. Millennials are projected to account for 45 percent of mortgages, compared to 37 percent for Generation X and 17 percent for boomers in the new year.This trend is expected to continue well into the future, as millennials climb the income ladder and trade up to homes in mid- to upper-tier prices.1

One big problem is people shopping for homes today tend to have more income than savings to contribute to a down payment. To help younger buyers qualify for a home loan, the mortgage market has rolled out a new type of mixed-rate mortgage, called the blended rate equity driver (BRED).

This type of loan pairs both fixed and variable mortgage structures into a single first‐lien mortgage using a combination of the 30‐year fixed rate mortgage (FRM), the 15‐year FRM and the 5/1 adjustable rate mortgage (ARM).2

The specific mix can be tailored to the buyer, but in each case, the goal is to have equity grow faster through principal payments. Typically, a homeowner garners home equity via three paths: down payment, price appreciation and principal payments over time. However, the real estate market moves fast and is unpredictable. Homebuyers are more transient these days and want the option to relocate, if necessary, so they don’t get stuck with an unaffordable mortgage.

While it’s important to match a home and mortgage to meet your specific needs, it’s also critical to do so with a long-term perspective toward your eventual retirement and financial goals. It’s normally advisable to live within one’s means, but when it comes to buying a home, better advice may be to live below your means. Be sure to consult with a professional mortgage lender or broker to help decide what’s best for your unique situation.

Purchasing a more affordable home frees up more discretionary income that can help create a better financial future. Please contact us if you’re looking for ways to add more confidence to your retirement income plans through the use of insurance products.

Content prepared by Kara Stefan Communications.

1 Aly J. Yale. Forbes. Dec. 6, 2018. “2019 Real Estate Forecast: What Home Buyers, Sellers And Investors Can Expect.” https://www.forbes.com/sites/alyyale/2018/12/06/2019-real-estate-forecast-what-home-buyers-sellers-and-investors-can-expect/. Accessed Dec. 9, 2018.

2 National Association of Realtors. 2018. “BRED Mortgage: More Money in Your Pocket.” https://www.nar.realtor/sites/default/files/migration_files/bred-mortgage-introduction-10-19-2015.pdf. Accessed Dec. 9, 2018.           

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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News Around the Internet

Where there is internet, is there more prosperity? Generally speaking, yes.

It costs much more to lay fiber to outlying communities than it does in larger metropolitan areas, which may contribute to the growing geographical discrepancy between income, education and even health care. Some places, like Indiana, hope to bring rural areas up to speed by expanding broadband access. Indiana, for example, is planning a $1 billion infrastructure update.1

Internet access opens the door for opportunities in a variety of areas, including education. Enrollment for online higher education classes is increasing each year, according to the report “Grade Increase: Tracking Distance Education in the United States.” Most of this enrollment (67.8 percent) is by students attending public institutions, with about half of students also attending on-campus classes. While online educational enrollment is rising swiftly, the number of students studying on a campus dropped by more than 1 million between 2012 and 2016.2

Keeping in touch with friends and the world’s current events is also simplified by internet access. Use of social media websites and apps is widespread among all demographics. According to a Pew Research Center study, while the share of teens using Facebook fell 20 percentage points over three years, a larger share of lower-income teens continue to use Facebook. Sociologists interviewed noted that higher-income teens often seek the prestige of the next “hot” social media platform, whereas lower-income teens continue to rely on Facebook to connect with a diverse network of friends and family.3

Unfortunately, the internet also has become a tool for negativity, particularly when it comes to bullying and misinformation. While social media has done much to establish and strengthen connections among people, it also enables the propagation of cyberbullying, a growing threat for teens and preteens. In 2018, 26 percent of parents reported their child had been a victim of cyberbullying. However, this share has dropped from 34 percent in 2016.4 First Lady Melania Trump has made cyberbullying her primary focus, encouraging adults to provide children with information and tools to develop safe online habits.5

Perhaps one of the most detrimental uses of the internet in recent years has been the spread of misinformation, particularly “fake news” stories that look like legitimate articles but which report inaccurate or fabricated facts and statistics. The problem is exacerbated by social media users who read and believe the stories, then share them with friends and followers.

Worse yet, these fake articles are circulated by bots on Twitter and other websites. A “bot” is an automated account made to look like a human user that is programmed to spread false information. More than 13.6 million Twitter posts shared misinformation linked to bots between May 2016 and March 2017.6

Sadly, people tend to be more interested in dramatized falsehoods than the truth. One researcher found that while true news stories tend to spread to no more than about 1,600 people, shared false stories on the internet tend to reach tens of thousands of readers, even though they originated from far fewer sources.7

Content prepared by Kara Stefan Communications.

1 Lindsey Erdody. Indiana Business Journal. Sept. 14, 2018. “Broadband blitz to lift economy, study says.” https://www.ibj.com/articles/70471-broadband-blitz-to-lift-economy-study-says. Accessed Oct. 4, 2018.

2 Online Learning Consortium. Jan. 11, 2018. “New Study: Distance Education Up, Overall Enrollments Down.” https://onlinelearningconsortium.org/news_item/new-study-distance-education-overall-enrollments/. Accessed Nov. 30, 2018.

3 Hanna Kozlowska. Quartz.com. Aug. 15, 2018. “Do teens use Facebook? It depends on their family’s income.” https://qz.com/1355827/do-teens-use-facebook-it-depends-on-their-familys-income/. Accessed Nov. 30, 2018.

4 Sam Cook. Comparitech. Nov. 12, 2018. “Cyberbullying facts and statistics for 2016-2018.” https://www.comparitech.com/internet-providers/cyberbullying-statistics/. Accessed Nov. 30, 2018.

5 Jordyn Phelps. ABC News. Aug. 20, 2018. “First lady Melania Trump speaks out against cyberbullying.” https://abcnews.go.com/Politics/lady-melania-trump-speaks-cyberbullying/story?id=57284988. Accessed Nov. 30, 2018.

6 Maria Temming. Science News. Nov. 20, 2018. “How Twitter bots get people to spread fake news.” https://www.sciencenews.org/article/twitter-bots-fake-news-2016-election. Accessed Nov. 30, 2018.

7 Maria Temming. Science News. March 8, 2018. “On Twitter, the lure of fake news is stronger than the truth.” https://www.sciencenews.org/article/twitter-fake-news-truth. Accessed Nov. 30, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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The Power of a Healthy Mind

Can having your mind in the right place improve your health? It can’t hurt.

We’re living longer, but we aren’t always prepared for what lies ahead. It’s easy to become disillusioned as new aches and pains crop up or our body doesn’t work like it used to. But just as we exercise and eat right to keep our body in shape and maintain mobility and vigor, the same goes for our mind. There are ways we can prepare for a happy and high-quality retirement.1

For some, the key is to set a goal. Even if you don’t reach it, getting up every morning and looking forward to working on that objective is incentive to stay healthy and positive. For example, centenarian Orville Rogers still competes in track meets all over the country. His secret: “Some people think I run because I can, but that’s backward. I can because I do.”2

Of course, a longer life means planning for a longer retirement. Don’t let concerns about retirement income planning add stress to your life. If you’d like some assistance in assessing your retirement income strategy and how insurance products may fit into that strategy, we’re here to help.

While sleep, nutrition and exercise all contribute to good health as we age, scientific research has found that intimate, loving relationships are also key to a fulfilling life. Alan Mulally, former president and CEO of Ford Motor Co., lives by the edict his mother taught him as a child: “The purpose of life is to love and be loved.”3

We each may have a different purpose in life. On the island of Okinawa, Japan, a community of long-living residents calls this “ikigai.” The philosophy is based on the idea that a person’s passions in life are unique, not universal. There is no one “secret formula” for living a long and happy life. The residents believe that if you do what you love, you will live longer. Even as you grow older and your body changes, your ikigai drives happiness and quality of life.4

While it’s sometimes easy to dwell on the negative, it’s important to focus on the positives that come with aging – self-knowledge, contentment, wisdom about the ways of the world. By focusing on what we have gained, rather than what we have lost, it’s possible to develop a more positive view of ourselves at any age.5

Plus, a positive outlook may do more than just give us a higher quality of life. A recent study found that focusing on a purposeful goal – one that requires cognitive skills such as creative thinking, analysis, decision-making and problem-solving – may even be protective against declines in memory and comprehension.6

Content prepared by Kara Stefan Communications.                                                                                                                     

 

1 Mick Ukleja. Success.com. April 6, 2018. “5 Attitudes For Aging Gracefully.” https://www.success.com/5-attitudes-for-aging-gracefully/. Accessed Nov. 27, 2018.

2 Chris Chavez. MSN.com. Oct. 22, 2018. “100-year-old Track Star Orville Rogers Featured on Cover of Money.” https://www.msn.com/en-us/sports/more-sports/100-year-old-track-star-orville-rogers-featured-on-cover-of-money/ar-BBOJ819. Accessed Dec. 6, 2018.

3 Melanie Curtin. Inc. Sept. 18, 2018. “In Just 10 Words, This Former CEO of a Billion-Dollar Company Explains the Purpose of Life.” https://www.inc.com/melanie-curtin/in-just-10-words-this-former-ceo-of-a-billion-dollar-company-explains-purpose-of-life.html?cid=sf01001. Accessed Nov. 27, 2018.

4 David G. Allan. CNN. Nov. 12, 2018. “Do what you love and live longer, the Japanese ikigai philosophy says.” https://www.cnn.com/2018/11/12/health/ikigai-longevity-happiness-living-to-100-wisdom-project/index.html. Accessed Nov. 27, 2018.

5 Lawrence R. Samuel. Psychology Today. March 3, 2017. “The Joy of Aging.” https://www.psychologytoday.com/us/blog/boomers-30/201703/the-joy-aging. Accessed Nov. 27, 2018.

6 Susan McQuillan. Psychology Today. Feb. 7, 2018. “Research Shows Promise for Aging Brains.” https://www.psychologytoday.com/us/blog/cravings/201802/research-shows-promise-aging-brains. Accessed Nov. 27, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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Protect Yourself from Scams, Hacks and Breaches

According to a telecommunications study of 50 billion telephone calls over an 18-month period, nearly four percent of calls in 2017 were fraudulent. In 2018, that number jumped to 29 percent of all calls. At that pace, the number of fraudulent calls is expected to rise to 44 percent of all calls in 2019.1

You may have noticed one of the latest techniques in spam telephone calls, termed “neighborhood spoofing.”2 This is when your Caller ID shows that the number is from within your area code. You may assume it’s a legitimate call from someone who is not in your contact list, such as your child’s teacher, a neighbor or a colleague. Instead, it turns out to be a telemarketer or scammer who could be located anywhere in the United States, or anywhere in the world.

A good rule of thumb is never give out any personal information over the phone. Don’t even verify your name or address. Tell the caller you will look up the number of the company or agency they’re calling from and give them a call back. Don’t rely on a number that they give you.

Now, more than ever, it’s important to protect yourself from scams. If anyone calls you regarding your insurance needs or policies, we urge you to contact us directly. Any changes to your insurance should be made within the context of your total financial picture, and we can help you with that. Please don’t hesitate to call us.

Just in time for health insurance enrollment season, some Blue Cross and Blue Shield state licensees are warning their customers about a nationwide robocall scam. Apparently, bad actors are making calls claiming to be Blue Cross and Blue Shield representatives marketing insurance products.3 Remember that when you purchase something over the phone, you need to be the one who initiates the call.

Online platforms also are vulnerable to scams. In September 2018, hackers broke into popular social media network Facebook and accessed the records of more than 50 million users. Information that was stolen included private messages, posts, likes, videos and photos. The hackers got in using the website’s “View as” feature, which had a bug allowing hackers to log in as the account holder. They could even use the same credentials to log in to those users’ Instagram and WhatsApp accounts.4

Remember chain letters that used to come in the mail? They claimed that if you sent a dollar to 10 people by mail that you’d get loads delivered back to you. Well, that technique has gotten a new facelift on social media platforms like Facebook. They begin by posting a request to buy a gift of $10 or more and to add your name to a list. Eventually, you’re supposed to receive 36 gifts. However, this is just another pyramid scheme that’s popular around the holidays. Not only are such posts illegal, by sharing your name on such lists that are forwarded to strangers, you may open yourself to the potential of identity theft.5

Then there’s the “grandparent scam,” in which criminals call and pose as a grandchild or other family member in distress, asking you to wire them money. They position it as an emergency, so you may be tempted to send the money immediately before realizing it’s a scam. The fraudster might even beg you not to tell anyone about it because he’s so ashamed. If you get such a call, experts advise not to send money. Ask the caller questions that a stranger couldn’t possibly answer, and if you’re concerned it might be a legitimate phone call, verify the situation in question by hanging up and calling or texting the family member in question directly or another family member.6

Another common scam that makes the rounds during winter is a phone call from someone posing as a representative of the electric, gas or water company, claiming you didn’t pay your utility bill. They threaten that if you don’t give them information to pay it over the phone, your service will be cut off by the end of the day. Here, too, experts say never to give personal or financial information over the phone; hang up and call the utility company directly if you are concerned.7

During the holiday season and into the New Year, please be extra wary of scammers looking to take advantage of your goodwill. You can report possible fraud to the Federal Trade Commission, at www.ftc.gov, or by calling 1-877-FTC-HELP.8

 

Content prepared by Kara Stefan Communications.                                                                                                          

 

1 AfterFiftyLiving.com. 2018. “9 Things You Can Do to Avoid Telemarketing Fraud.” https://www.afterfiftyliving.com/9-things-you-can-do-to-avoid-telemarketing-fraud/. Accessed Nov. 12, 2018.

2 Ibid.

3 Jeff Wyatt. ABC 33/40. Nov. 12, 2018. “Blue Cross and Blue Shield of Alabama warns of robocall scam.” https://abc3340.com/news/local/blue-cross-blue-shield-of-alabama-warns-of-robocall-scam. Accessed Nov. 12, 2018.

4 Lavanya Rathnam. TechGenix. Oct. 16, 2018. “Facebook Data Breach: Why It Happened and What It Means for the Future.” http://techgenix.com/facebook-data-breach/. Accessed Nov. 12, 2018.

5 Keith Darnay. Bismarck News. Nov. 12, 2018. “Scam alert: ‘Secret Sister’ pyramid scheme hits Facebook.” https://www.myndnow.com/news/bismarck-news/scam-alert-secret-sister-pyramid-scheme-hits-facebook/1590851690. Accessed Nov. 12, 2018.

6 Danni Dikes. WSAV3. Nov. 9, 2018. “Grandparent Scam: Criminals pose as relatives to steal your money.” https://www.wsav.com/news/local-news/grandparent-scam-criminals-pose-as-relatives-to-steal-your-money/1591369233. Accessed Nov. 12, 2018.

7 Michael Knight. KPQ News Radio. Nov. 12, 2018. “PUD Scam Alert.” http://www.kpq.com/pud-scam-alert/. Accessed Nov. 12, 2018.

8 Danni Dikes. WSAV3. Nov. 9, 2018. “Grandparent Scam: Criminals pose as relatives to steal your money.” https://www.wsav.com/news/local-news/grandparent-scam-criminals-pose-as-relatives-to-steal-your-money/1591369233. Accessed Nov. 12, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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Social Security Updates

 

Good news for retirees: Social Security benefits are scheduled to increase 2.8 percent in 2019, the biggest bump since the 3.6 percent increase in 2012.The average beneficiary – who received about $1,405 a month in 2018 – can expect to see just over $39 more each month, or about $468 more over the course of the year.1

 

Such cost of living increases are meant to cover household expenses that rise due to inflation. However, if you can absorb those additional costs, you could think about redirecting that additional payout toward helping to meet your long-term financial goals. For example, an emergency savings account or a life insurance policy designed to pay for funeral expenses. If you would like help with this, please give us a call.

 

There are a few more updates to Social Security for 2019. For one, the supplemental benefit paid to those who are blind or disabled will increase to $771 from $750 per individual; to $1,157 from $1,125 for couples. Second, if you’re currently working while receiving benefits, you can earn a bit more before those benefits are reduced. Moving forward, you may now earn up to $17,640 before $1 is deducted for every $2 you earn. In the year before you turn your full retirement age, you may earn up to $46,920 before $1 is deducted for every $3 you earn until the month you reach your full retirement age. And third, for those who are still working and have not yet started receiving benefits, the maximum amount of earnings subject to the Social Security tax will increase to $132,900 from $128,400.2

 

Some advocate eliminating the earnings cap to keep Social Security solvent in the future. That’s because the brunt of taxes dedicated to Social Security comes from lower-income earners, while high earners avoid this tax on earnings above $132,900. In fact, due to the increase in income disparity in the United States, a much higher level of earned income is now exempted from this payroll tax compared to the 1980s – $300 billion in 1983 versus $1.2 trillion in 2016.3

 

Other changes in addition to eliminating the taxable income cap have also been proposed. One option, which could benefit both the Social Security fund as a whole and individual retirees, is encouraging retirees to delay claiming Social Security benefits. For every year delayed, one’s benefits increase 8 percent. Those who wait to take the benefit until age 67 receive about 43 percent more a month; those who wait until age 70 receive about 75 percent more in lifetime monthly benefits.4

 

Social Security benefits – both funding and payouts – can be complex. It is worthwhile to stay abreast of the policies, changes and strategies that can help maximize benefits. For additional information, try out this quiz – which also gives a detailed explanation of the correct answers to help you become better educated about Social Security.5

 

Content prepared by Kara Stefan Communications.                                                                  

 

 

1 John Wasik. Forbes. Nov. 2, 2018. “5 Things You Should Know About Social Security Changes.” https://www.forbes.com/sites/johnwasik/2018/11/02/5-things-you-should-know-about-social-security-changes/. Accessed Nov. 9, 2018.

 

2 Ibid.

 

3 Sean Williams. USA Today. Nov. 9, 2018. “Why the Social Security program will never run out of cash.” https://www.usatoday.com/story/money/2018/11/09/when-does-social-security-run-out/38452267/. Accessed Nov. 9, 2018.

 

4 Knowledge@Wharton. Oct. 3, 2018. “Delaying Social Security: How Lump Sum Payments Can Help.” http://knowledge.wharton.upenn.edu/article/delay-social-security/. Accessed Nov. 8, 2018.

 

5 Matthew Frankel. USA Today. June 2, 2018. “47% of American pre-retirees failed this basic Social Security quiz. Can you pass it?” https://www.usatoday.com/story/money/personalfinance/retirement/2018/06/02/pre-retirees-failed-basic-social-security-quiz/35343701/. Accessed Nov. 9, 2018.

 

Our firm is not affiliated with the U.S. government or any governmental agency.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

 

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

 

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New Laws Passed By Congress

Toward the end of 2018, before the midterms, Congress passed a proliferation of bills, many of which were bipartisan. The following is a roundup of recent legislation designed to provide economic stimulus and additional protections heading into 2019.

The America’s Water Infrastructure Act of 2018 directs the U.S. Army Corps of Engineers to embark on more than 100 water resource projects, ranging from water-pollution control to conservation and development of water resources for rivers and harbors throughout the United States. The bill also enables states to borrow money to develop clean drinking water systems and establishes new federal programs to help communities address water contamination – in hopes of avoiding situations like the one in Flint, Michigan, where improperly treated water leached lead from old pipes into the drinking water.1

The Veterans Treatment Court Improvement Act of 2018 was introduced by Rep. Mike Coffman (R-CO) in April 2017 and enacted in September 2018. The bill requires the Department of Veterans Affairs to hire at least 50 Veterans Justice Outreach (VJO) specialists to help veterans who become involved in the criminal justice system. These licensed social workers will help veterans be referred to veterans treatment courts, which are specialty courts with experience dealing with issues such as PTSD and traumatic brain injury. They are dedicated to helping veteran offenders address underlying issues and get the help they need. A VJO specialist is empowered to customize a rehabilitation program for the unique needs of each veteran defendant and monitor his or her progress through the veteran court system.2 

Until now, many health insurance plans and pharmacy benefit managers, including those offered through Medicare Advantage and Medicare Part D plans, negotiated “gag clause” agreements with the pharmacies in their network. These agreements prevented pharmacists from letting customers know that a drug they purchased at the store would be less expensive if they purchased it out-of-pocket rather than using their insurance. The Patient Right to Know Drug Prices Act, effective immediately, officially prevents this practice among insurance plans offered by employers and purchased on the individual market. The Know the Lowest Price Act of 2018 bans this practice among Medicare Advantage and Part D prescription drug plans effective January 1, 2020. Both bills were signed into law in October 2018.3 Under the new legislation, pharmacists will not be required to tell patients about a lower cost option. If they don’t, it’s up to the customer to ask.4

The Justice Served Act of 2018 amends the DNA Analysis Backlog Elimination Act of 2000 to allocate federal grants to help address the backlog of violent crime cases involving suspects identified through DNA evidence, including cold cases.5

The Orrin G. Hatch-Bob Goodlatte Music Modernization Act of 2018 makes it easier for streaming music providers, such as Spotify, Apple Music and Amazon Music Unlimited, to license music for their subscribers. This bill updates licensing agreements to include digital reproduction and distribution and establishes a nonprofit mechanical licensing collective to administer a blanket statutory licensing system for streaming providers. This entity will be responsible for collecting and distributing royalties for both pre- and post-1972 sound recordings.6

Content prepared by Kara Stefan Communications.                                                                                                     

 

1 John Barrasso and Tom Carper. USA Today. Oct. 23, 2018. “Water Infrastructure Act is a bipartisan win for all Americans, from farms to cities.” https://www.usatoday.com/story/opinion/2018/10/23/americas-water-infrastructure-act-protects-families-bipartisan-flint-flood-column/1669902002/. Accessed Oct. 31, 2018.

2 Austin Igleheart. National Association of Counties. Aug. 28, 2018. “Congress passes bill to expand Veterans Justice Outreach Program and incentivize new veterans treatment courts.” https://www.naco.org/blog/congress-passes-bill-expand-veterans-justice-outreach-program-and-incentivize-new-veterans. Accessed Oct. 31, 2018.

3 Susan Morse. Healthcare Finance. Sept. 27, 2018. “House passes bills prohibiting pharmacy gag clauses on drug prices.” https://www.healthcarefinancenews.com/news/house-passes-bills-prohibiting-pharmacy-gag-clauses-drug-prices. Accessed Oct. 31, 2018.

4 Advisory Board. Oct. 11, 2018. “Trump signs bill to ban ‘gag clauses in Medicare, private health plans.” https://www.advisory.com/daily-briefing/2018/10/11/gag-clauses. Accessed Nov. 16, 2018.

5 Deborah McKeon. Temple Daily Telegram. Oct. 11, 2018. “Justice Served Act to provide funds to prosecute cases.” http://www.tdtnews.com/news/article_4246638a-cd9a-11e8-a3c1-b3ac4a1a5875.html. Accessed Oct. 31, 2018.

6 Bill Rosenblatt. Forbes. Oct. 11, 2018. “Here Are The Loopholes Closed By The Music Modernization Act.” https://www.forbes.com/sites/billrosenblatt/2018/10/11/music-modernization-act-now-law-leaves-one-copyright-loophole-unclosed/. Accessed Oct. 31, 2018.

Our firm is not affiliated with the U.S. government or any governmental agency.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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Real Estate Update

 

According to the Federal Reserve Bank of St. Louis, up to 10 million Americans lost their homes during the last financial crisis. Now, 10 years later, we’re only slightly above 2016’s low of 63 percent home ownership – at about 64 percent as of June 2018.1

 

While many metropolitan areas have experienced robust growth in jobs and home prices, young adults moving to large cities in search of work often are priced out of the home market, and leaving rural areas with smaller populations and lower home prices.2

 

One study found that 30 percent of Americans live in areas where they need to earn at least $100,000 a year to buy a median-priced home. Recently, Denver, Colorado, and its surrounding counties received the dubious distinction of being named the most unaffordable area in the country for housing. Brooklyn, New York, was recognized for costing the highest percentage of one’s income to become a homeowner – 37 percent of the average homeowner’s income goes toward mortgage payments.3        

 

 

The good news for those looking to downsize in retirement is that there remains a strong market of buyers. Also, if you are looking to move into a smaller, more manageable home for retirement, the ability to pay in cash may provide a distinct advantage over others shopping in this market. Be sure to consult with a professional real estate agent or broker to help decide what’s best for your unique situation.

 

It’s not likely to get any easier to buy a home. As of mid-October, 30-year mortgage rates were floating up toward 5 percent, the highest level in more than seven years. Rising rates could serve to discourage potential homebuyers.4

 

The following are some trends real estate experts anticipate on the horizon:5

 

  • Instead of a large second home, we may see conservative (tiny) second homes with a minimal carbon footprint and a luxury feel
  • The price difference between luxury and starter homes will increase
  • In commercial real estate, fewer parking garages and more drop-off spaces in front of dining and shopping venues, as people take advantage of driving services (Uber and Lyft) or driverless car technology
  • Fewer people will need onsite visits to a vast array of homes before making a decision, thanks to virtual reality technology and virtual staging of homes for sale

 

Inventory is expanding. In September, the number of homes for sale increased 8 percent year-over-year, representing the biggest increase since 2013.6 

 

A new VeroFORECAST for 10 of the most populous metropolitan areas in the United States predicts home appreciation ranging from 9.3 percent to 11.7 percent by September 2019. States boasting some of the top markets include Washington, Idaho, Nevada, California and Colorado.7 Robert Shiller, co-founder of the Case-Shiller Index that tracks home prices around the nation, says he doesn’t foresee a large downturn ahead.8

 

Content prepared by Kara Stefan Communications.                                                                        

 

 

1 Rachel Layne and Irina Ivanova. CBS News Moneywatch. Sept. 15, 2018. “A decade since the housing crash, a new story emerges.” https://www.cbsnews.com/news/a-decade-since-lehman-brothers-collapse-housing-market-crash-a-new-story/. Accessed Oct. 29, 2018.

 

2 Ibid.

 

3 Clare Trapasso. Realtor.com. Oct. 4, 2018. “Here’s How Many Americans Can’t Afford to Buy a Median-Priced Home.” https://www.realtor.com/news/real-estate-news/median-priced-home-unaffordable-most-americans/.

 

Accessed Oct. 29, 2018.

 

4 Laura Kusisto and Christina Rexrode. Realtor.com. Oct 12, 2018. “Mortgage Rates Fast Approaching 5%, a Fresh Blow to Housing Market.” https://www.realtor.com/news/real-estate-news/mortgage-rates-fast-approaching-5-fresh-blow-housing-market/. Accessed Oct. 29, 2018.

 

5 Forbes. Oct. 29, 2018. “12 Industry Experts Share Their Near-Future Real Estate Predictions.” https://www.forbes.com/sites/forbesrealestatecouncil/2018/10/29/12-industry-experts-share-their-near-future-real-estate-predictions/. Accessed Oct. 29, 2018.

 

6  Clare Trapasso. Realtor.com. Oct. 3, 2018. “In a ‘Key Inflection Point,’ Number of New Listings Jumps the Most Since 2013.” https://www.realtor.com/news/real-estate-news/homes-finally-hit-market-means-buyers-sellers/. Accessed Oct. 29, 2018.

 

7 Eric Fox. Housing Wire. Oct. 29, 2018. “This real estate market will see almost 12% in appreciation.” https://www.housingwire.com/blogs/1-rewired/post/47246-this-washington-state-msa-will-see-the-most-real-estate-appreciation. Accessed Oct. 29, 2018.

 

8 Michelle Fox. CNBC. Oct. 26 , 2018. “Nobel Prize winner Robert Shiller: I don’t expect a sharp turn in the housing market.” https://www.cnbc.com/2018/10/26/robert-shiller-i-dont-expect-a-sharp-turn-in-the-housing-market.html. Accessed Oct. 29, 2018.

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

 

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

 

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Thinking About Downsizing?

When companies face a rough period, they often look to either increase revenues or trim expenses, including reducing overhead costs.

You can do the same thing for your personal budget, where reducing expenses can give you the opportunity to increase your savings rate. Though this sometimes can seem easier said than done.

Costs have a way of appearing fixed. But that may be because you haven’t considered changing your lifestyle. It may be worth considering the way you live and whether you’re making the most of your budget. We are happy to help you conduct an objective assessment of your budget — and your retirement income strategies.

While some expenses may appear fixed, like utility bills, that may be only because of the house you live in. If you moved to a smaller house, with less square footage to heat and cool, your utility bills would likely decrease. There’s a good chance other costs would decrease as well, such as mortgage payments, homeowner’s insurance, property taxes, home maintenance and even lawn care, if your lot is smaller.

The National Council on Aging has an online calculator that can help you assess whether relocating/downsizing, and all of its related costs, could be a good move for you.1

Note, too, that downsizing doesn’t necessarily mean selling your home and moving to a smaller one. You can downsize your lifestyle while staying right where you are. For example, owning a smaller and more gas-efficient car. Getting rid of a hot tub or other luxuries that are not just expensive to maintain but also may increase your home insurance premiums. Anything that breaks often and is expensive to repair may be worth eliminating or replacing.

You can sell things you don’t need or use anymore. You can learn to be content with what you have — cure that need to buy every new cell phone or gadget that hits the market. Share your tools, books, clothes and other household items with neighbors and friends so that you all support each other in this approach to downsizing expenses.

Buying and owning less not only gives you fewer things to insure, repair and maintain, but it also can provide a liberating feeling, free from material possessions. Live in the moment, for yourself and others, your income not beholden to pay for a lot of stuff.2

While you’re practicing a downsized frame of mind, consider other things that you might be better without. For instance, negative or toxic friends who make you feel out-of-sorts or angry after you’ve spent time with them.3

If you are in retirement or developing a retirement income strategy, consider adopting the downsizing mindset when you think about the lifestyle you want to lead — and can afford. If you want to get out and do more — such as theatre, fine dining, vacations — consider trading the family home for a condominium that doesn’t require as much upkeep. If you want to move out of the suburbs and get a place in the city, consider that you may not need a car anymore.4

Another way to approach downsizing is with a Swedish philosophy: “death cleaning” or döstädning.5 Described in a book by Margareta Magnusson, “The Gentle Art of Swedish Death Cleaning,” it essentially means cleaning out your belongings so your kids don’t have to once you pass away. It’s a kindness. First, you can give them some of your things that you don’t use and which they may greatly appreciate. Second, it’s an opportunity to share stories with loved ones about treasured objects, or even your life, as you clean. Finally, what greater gift to leave your grieving family than not making them take on this large task at a difficult time. Magnusson notes that this process can take place at any point in our lives.

 

Content prepared by Kara Stefan Communications.

1 National Council on Aging. Aug. 28, 2018. “Figure Out How Moving Changes Your Finances.” https://calculator.benefitscheckup.org/calculators/move-or-stay-put?_ga. Accessed Sept. 21, 2018.

2 Joshua Becker. Forbes. Aug. 28, 2018. “7 Reasons To Own Less.” https://forbes.com/sites/joshuabecker/2018/08/28/seven-reasons-to-own-less/. Accessed Sept. 21, 2018.

3 Lindsay Dodgson. BusinessInsider.com. Aug. 7, 2018. “13 signs your friendship with someone is toxic.” https://www.businessinsider.com/signs-your-friendship-is-toxic-2018-2. Accessed Sept. 21, 2018.

4 William P. Barrett. Forbes. Feb. 21, 2017. “The Best Places To Retire Without A Car.”

https://www.forbes.com/sites/williampbarrett/2017/02/21/the-best-places-to-retire-without-a-car/.  

Accessed Sept. 21, 2018.

5 Margareta Magnusson. Time. Jan. 3, 2018. “‘Death Cleaning’ Is the New Marie Kondo. Should You Try It?” http://time.com/5063275/death-cleaning/. Accessed Sept. 21, 2018.

Financial calculators are designed as informational tools to help you estimate answers to common financial questions. They are not intended to predict future results. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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Millennial Generation Impacts

It’s a tough time to be a young adult. Take the housing market, for example. It’s been fairly locked up since the last recession, when many millennials were still in high school. Now that they have jobs and credit history, it turns out millennials struggle to find a house to buy. In many areas, they need cash for a big down payment as well as money for a contractor to renovate a home that hasn’t been touched since the 1970s.

Because so many graduated in an era when jobs were scarce, followed by an era during which wages have stagnated, young adults are not earning as much income relative to previous generations. According to one study, in 1970, 92 percent of 30-year-olds earned more than their parents did at that age, but in 2014, only 50 percent of 30-year-olds could make that claim.1

Impact? “Being a 25- to 34-year old is harder than it’s been in generations.”2

This can put some retirees and late-stage workers in a quandary. Many parents want to help their adult children financially. Some are tempted to use retirement savings to help pay off student loans or contribute to a down payment on a home. Depending on your situation, that might not be the best decision. If you’d like to help your children or grandchildren, we can help you look at your current budget and determine potential strategies.

Due to the high cost of college tuition and the number of students graduating with student loans, millennials now carry an average debt of $42,000. Clearly, this is going to stymie their ability to build wealth and savings. But there are other long-term impacts as well:3

  • Financial stress affects physical and mental health, not to mention focus and productivity on the job
  • Millennials are more interested (95%) in accepting a job from an employer that offers student loan repayment, so certain industries benefit more from college recruits
  • They are reluctant to commit to long-term relationships while saddled with huge amounts of debt, which may reduce birth rates (and the ability to fund future Social Security and Medicare benefits)
  • Among the demographic group just behind millennials – in response to seeing these problems they too will likely encounter – more than half of Generation Z-ers say they want college to teach them more practical life skills, such as financial planning and saving for the future

The number one goal for 94 percent of millennials is paying off debt or becoming debt free.

Impact? Future GDP may suffer if millennials become misers.

Troubled over their debt and financial situation, many young adults are delaying marriage until they are on stronger financial footing. While this may curb births in the United States, there may be a silver lining: the divorce rate dropped 18 percent from 2008 to 2016.4 While baby boomers continue to divorce at unusually high rates, experts say that young adults who marry today have a greater chance of a lasting relationship than marriages even 10 years ago. Another finding is that among those with less money and less education, fewer are getting married but are raising kids and living together.5

Impact? “Marriage is becoming a more durable, but far more exclusive, institution.”6

So somewhere down the road, consider what might be attractive to a debt-free, independent-minded single millennial. Well, 42 percent say they’d like to take extended time away from work. Right now, only 5 percent of employers offer paid sabbaticals (Facebook offers 30 days of paid time off every five years), but this could change as more young people enter the workforce.7

As more young adults become engaged in voting and influencing government policies, U.S. paid time off may start to resemble that of Europe and Australia, where workers get a mandatory minimum of 20 days paid vacation after their first year on the job.8

Impact? U.S. paid time off policies may start to shift.

 

Content prepared by Kara Stefan Communications.

1 Joshua M. Brown. The Reformed Broker. July 25, 2018. “How do you start a life these days?” https://thereformedbroker.com/2018/07/25/how-do-you-start-a-life-these-days/. Accessed Oct. 18, 2018.

2 Ibid.

3 Ryan Jenkins. Inc. Sept. 25, 2018. “This Is the Type of Debt Millennials Have.” https://www.inc.com/ryan-jenkins/this-is-millennials-number-1-life-goal.html. Accessed Oct. 18, 2018.

4 Ben Steverman. Bloomberg. Sept. 25, 2018. “Millennials Are Causing the U.S. Divorce Rate to Plummet.” https://www.bloomberg.com/news/articles/2018-09-25/millennials-are-causing-the-u-s-divorce-rate-to-plummet.

Accessed Oct. 18, 2018.

5 Ibid.

6 Ibid.

7 Kathryn Mayer. Employer Benefit News. Oct. 16, 2018. “The 15 most popular employee perks.” https://www.benefitnews.com/list/the-15-most-popular-employee-benefits. Accessed Oct. 18, 2018.

8  Niall McCarthy. Forbes. June 26, 2017. “American Workers Get The Short End On Vacation Days.” https://www.forbes.com/sites/niallmccarthy/2017/06/26/american-workers-have-a-miserable-vacation-allowance-infographic/. Accessed Oct. 18, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

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

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