Shortlink

Life at Home is Your Business

With a businessman running against a career politician in this year’s presidential race, one topic of discussion has been the pros and cons of running the country like a business. 

The idea has been broached before, with several past presidents boasting more business than public service experience. In fact, 2012 presidential candidate Mitt Romney once said, “I’d like to have a provision in the Constitution to say that the president has to spend at least three years working in business before he could become president of the United States.”1 

With that said, it may not be a bad idea to consider our own financial situation within the context of running a business.2 For example, you don’t want to carry more debt than your current income can cover, and always be mindful of cutting expenses as a means of increasing your savings. If you’re looking for ways to be confident about your financial future while maintaining your current lifestyle, we can explore insurance options to help you work toward that goal. 

Much like a business, most households possess two types of assets: Their own labor and financial capital. One of the keys is to convert the proceeds from today’s labor into capital to support the family — both now and after you retire.3 

During the recession, 15 percent of millennials were unable to find jobs, adding to the issues they faced while starting out adult life, including some with student loan debt. While many are now employed, millennials, in general, have learned early on the fundamentals of a balance sheet.4 

Regardless of whether they document their finances with a “profit and loss” statement, many are well aware of the necessity of managing incoming revenue against the costs and expenses of their day-to-day lives.5 

Having a constant understanding of where you stand financially is important in your professional and personal life, but in some ways, perhaps it’s better to run our businesses like our households instead of running our households like a business. In other words, have a bit more fun. Stop feeling like we have to earn more just to keep up with neighbors or colleagues, opting to live below our means and focusing on more humble and lower-cost desires. 

For many, wealth is defined by the richness of their lives, the depth of their relationships and the comfort of knowing that they have enough.6 

Content prepared by Kara Stefan Communications. 

1 Kara Ohngren Prior. Entrepreneur. Feb. 15, 2016. “8 U.S. Presidents Who Started as Entrepreneurs.” https://www.entrepreneur.com/slideshow/224122. Accessed July 28, 2016.
2 Ken Clark. Investopedia. 2016. “Run Your Personal Finances Like a Business.” http://www.investopedia.com/articles/pf/08/run-finances-like-business.asp. Accessed July 28, 2016.
3 Douglas McCormick. Knowledge@Wharton. July 14, 2016. “Family Inc.: Bringing Business Lessons Home.” http://knowledge.wharton.upenn.edu/article/family-inc-bringing-business-lessons-home/. Accessed July 28, 2016.
4 Mark P. Cussen. Investopedia. May 19, 2016. “Money Habits Of the Millennials.” http://www.investopedia.com/articles/personal-finance/021914/money-habits-millennials.asp. Accessed July 28, 2016.
5 Winnie Sun. Sun Group. March 31, 2016. “5 Surprising Millennial Money Stats.” http://sungroupwp.com/2016/03/31/5-surprising-millennial-money-stats/. Accessed July 28, 2016.
6 Libby Kane. Business Insider. July 26, 2016. “7 signs you’re rich, even if it doesn’t feel like it.” http://www.businessinsider.com/signs-youre-rich-even-if-it-doesnt-feel-like-it-2016-7. Accessed July 28, 2016. 

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.

 AE08165105B

Shortlink

Entrepreneurs on the Rise

Entrepreneurship plays a vital role in the growth of the U.S. labor market. The number of jobs created from startups peaked in the late 1990s before declining steadily through the first 10 years of the 2000s.1 However, from the ashes of the recession comes a phoenix of entrepreneurship. 

In a recent study, 66 percent of American millennials reported wanting to start their own businesses.2 Admittedly, one of the best times to take risks is when you’re young and have little to lose, but inexperience and lack of capital make it tough to get a business off the ground. However, today’s “gig,” “on-demand,” online economy is highly conducive for startups. Recent estimates project the number of people working these types of independent jobs will rise to 7.6 million by 2020 — up from 3.2 million Americans today.3 

One major question budding entrepreneurs must answer is, “what do I want to be when I grow up?” Youth may be the time to take some risks, but few young adults have identified the means by which they intend to make their fortune and mark in the world. Alas, that sage advice to “do what you love” can take some time to figure out; many college grads don’t know what that is yet.4 

While out in the workforce gaining experience, their entrepreneurial efforts may span the range of freelance writing and graphic design to starting their own house cleaning, moving, landscaping or childcare business.5 

While jobs like this are popular starter options for people just entering the working world, they can also be attractive to recent retirees looking to stay busy. The appeal to both demographics is that they can make a little supplemental income without the strict, 40-hour-a-week schedule. 

For those taking on the responsibility of a startup company, the environment is promising. Today’s top five industries for startups are technology services, advertising and marketing, business products and services, health and software. Fortunately, today’s young companies are growing fast, with more companies reaching 50+ employees within the first five years and new firms have added about 200,000 more jobs to the economy than last year.6 

Content prepared by Kara Stefan Communications. 

1 U.S. Bureau of Labor Statistics. April 28, 2016. “Entrepreneurship and the U.S. Economy.” http://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm. Accessed July 14, 2016.
2 Jared Meyer. Forbes. July 20, 2016. “Millennials Want To Be Entrepreneurs, So Why Aren’t They Starting Businesses? Part 1.” http://www.forbes.com/sites/jaredmeyer/2015/07/20/millennials-entrepreneurship-starting-businesses/#1c92f54421f9. Accessed July 14, 2016. (Paste link into browser to access article.)
3 Alex Chriss. Entreprenuer.com. Jan. 7, 2016. “Why the Self-Employed Will Finally Have a Bigger Voice in 2016.” https://www.entrepreneur.com/article/254656. Accessed July 14, 2016.
4 Paula Di Rita Wishart. Inside Higher Ed. July 11, 2016. “Cultivating a Career Calling.” https://www.insidehighered.com/advice/2016/07/11/how-identify-your-career-calling-essay. Accessed July 14, 2016.
5 Rose Leadem. Entreprenuer.com. May 19, 2016. “9 Low-Cost Business Ideas for College Students.” https://www.entrepreneur.com/slideshow/278674. Accessed July 14, 2016.
6 Lydia Dishman. Fast Company. May 19, 2016. “This Is The State Of Entrepreneurship In 2016.” http://www.fastcompany.com/3060037/the-future-of-work/this-is-the-state-of-entrepreneurship-in-2016. Accessed July 14, 2016. 

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. 

 

AE08165102B

Shortlink

What’s New With Social Security?

Before the Bipartisan Budget Act of 2015 passed, the Social Security Disability Insurance Trust Fund was projected to be depleted sometime this year. 

Congress shifted tax revenues from the Old Age and Survivors Insurance Trust Fund to keep disability benefits fully funded. However, Social Security still faces long-term shortfalls under currently scheduled funding and expenditures.1 

While Social Security disability benefits are a good backstop, you may wish to consider purchasing your own disability insurance, particularly if you’re self-employed. And since government disability benefits don’t kick in for at least five months (and even a private insurance policy may have a waiting period), you also should consider setting aside an emergency fund. 

If you’ve retired and are taking Social Security benefits, but also have other substantial income such as wages, self-employment, interest or dividends, you may owe federal income taxes on Social Security benefits. Joint return taxpayers with a household income between $32,000 and $44,000 could pay income taxes on up to 50 percent of benefits. If reported income is more than $44,000, you may have to pay taxes on up to 85 percent of your benefits.2 

If you’re receiving Social Security benefits but have not yet reached full retirement age, earning extra income could result in some of your benefits being withheld. For example, if you earn more than $15,720 a year, $1 in benefits will be withheld for every $2 in earnings above that limit. The year you hit full retirement age, both your earnings limit and benefit amount increase, and in the following years, there’s no limit on earnings.3 

Last April, two strategies that had long helped married couples optimize their Social Security benefits came to an end: 

  • File and suspend – file for spouse but earn delayed credits on their own benefit
  • Restricted application – full retirement age beneficiary files for spouse only benefits 

However, the suspend strategy remains intact for divorced couples: If an ex-husband or wife decides to suspend his or her benefit, the ex-spouse can still apply for a derivative benefit if eligibility requirements are met.4 

In other Social Security news, on July 7, Rep. Walter B. Jones (R-NC) introduced H.R. 5670: Social Security Guarantee Act of 2016. This bill, which was assigned to a congressional committee for consideration, is designed to guarantee the right of individuals to receive Social Security benefits in full with an accurate cost-of-living adjustment each year.5 

Talk to a financial professional and a tax advisor about how Social Security benefits can fit into your complete retirement income strategy. We are able to provide you with information but not guidance or advice related to Social Security benefits. Our firm is not affiliated with the Social Security Administration or any governmental agency. 

Content prepared by Kara Stefan Communications. 

1 Social Security Administration. 2016. “A Summary of the 2016 Annual Reports.” https://www.ssa.gov/oact/trsum/. Accessed Aug. 5, 2016.
2 Social Security Administration. 2016. “Benefits Planner: Income Taxes and Your Social Security Benefits.” https://www.ssa.gov/planners/taxes.html. Accessed July 12, 2016.
3 Social Security Administration. 2016. “Fact Sheet.” https://www.ssa.gov/news/press/factsheets/colafacts2016.pdf. Accessed July 12, 2016.
4 Rachel L. Sheedy. Kiplinger. February 2016. “Government Spells Out New Social Security Rules.” http://www.kiplinger.com/article/retirement/T051-C000-S001-government-spells-out-new-social-security-rules.html#. Accessed July 12, 2016.
5 Congress.gov. July 7, 2016. “H.R.5670 – Social Security Guarantee Act of 2016.” https://www.congress.gov/bill/114th-congress/house-bill/5670/text. Accessed July 12, 2016. 

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. 

 

AE07165100B

Shortlink

America’s Founders: Entrepreneurs and Opportunists

Our nation’s forefathers were reputed for their progressive views, business-minded principals and pursuit of independence through the establishment of a new government. It might help to consider these tenets as we aim for our own goals in our careers and retirement. 

Earlier this year, author Edward Lenge published a book based on the writings of America’s first president. The book, titled “First Entrepreneur: How George Washington Built His — and the Nation’s — Prosperity,” offers tremendous insights into how this former military general and entrepreneur approached his job as “CEO” of the country. For example:1 

  • His mom infused in him the principle that industry and morality should work in concert.
  • He approached running the United States as if he were running a business, with the goal of long-term success and sustainability.
  • When he first became President, there was much political division, uncertainty and fear. Washington’s priorities were to build up the nation’s credit, establish a stable currency, build the national infrastructure and keep the peace.
  • One of his first tasks was to eliminate the country’s international debt, then equivalent to trillions in today’s dollars.
  • To tackle the debt issue, he hired Alexander Hamilton to work with him in a capacity much like today’s Federal Open Market Committee. Washington set the goals and strategy, while Hamilton developed many of the concepts for implementing economic policy.
  • Washington advocated free trade, believing that interconnected reliance would help various factions realize common interests and work together for peaceful relations.
  • Washington grew to oppose slavery, believing that oppression restricted motivation and innovation, which would hold back the nation in the long run.
  • He was a fan of gathering, classifying and disseminating information about business and experimentation, with an emphasis on transparency (he would have loved the internet).
  • He opposed the development of political factions, believing they would be detrimental to national peace.

It’s no coincidence that Washington and our other forefathers enjoyed success in a variety of fields. After helping to obtain our nation’s independence, our earliest Presidents and political leaders have an impressive list of accomplishments, and not just in the political realm.

Our second President, John Adams, became an extremely successful lawyer after he defended the perpetrators of the Boston Massacre. His top-notch client list included wealthy merchants, politicians and the country’s elite.2

Our third President, Thomas Jefferson, created dozens of inventions designed to simplify farming on his estate in Virginia. These included the iron plow, the dumbwaiter, a Great Clock, a pasta roller to make macaroni and contributions to early versions of the polygraph machine.3

John Hancock was not just a wealthy merchant but also a well-known smuggler. Part of his motivation for the American Revolution was to avoid excessive taxes levied by the British government. He later became a politician in an effort to effect change on a more political and diplomatic level.4

Among dozens of other inventions, Benjamin Franklin is the father of insurance in America. In 1752 he co-founded The Philadelphia Contributionship, the first mutual fire insurance company in America.5 The company was responsible for setting new standards for housing construction to help eliminate fire hazards.6

Although the nation has changed in countless ways over the past couple centuries, some of the core values America was founded on remain the same. There are more opportunities than ever available to those who work hard and maintain an entrepreneurial mindset.

Content prepared by Kara Stefan Communications.

1 Knowledge@Wharton. April 19, 2016. “George Washington: America’s First Entrepreneur.” http://knowledge.wharton.upenn.edu/article/ed-lengel-george-washington-myths-book/. Accessed July 8, 2016.
2 John Adams Historical Society. 2016. “After the Boston Massacre.” http://www.john-adams-heritage.com/after-the-boston-massacre/. Accessed July 8, 2016.
3 FamousInventors.org. 2016. “Thomas Jefferson.” http://www.famousinventors.org/thomas-jefferson. Accessed July 8, 2016.
4 EpicTimes.com. Jan. 23, 2016. “John Hancock’s Critical Role in the American Revolution.” http://www.epictimes.com/01/23/2016/john-hancocks-critical-role-in-the-american-revolution/. Accessed July 8, 2016.
5 The Philadelphia Contributionship. 2016. “Company History.” http://www.contributionship.com/history/index.html. Accessed July 8, 2016.
6 Andrew Beattie. Investopedia.com. Sept. 11, 2014. “The History of Insurance in America.” http://www.investopedia.com/articles/financial-theory/08/american-insurance.asp. Accessed July 8, 2016. 

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.

AE07165098B

Shortlink

Will New Health Care Provisions Hold Up Long Term?

New incentives and physician payment updates put in place by the Medicare Access and CHIP Reauthorization Act have helped fix short-range physician payment issues, but as the Boards of Trustees for Medicare noted in its June 22 report, these changes raise some long-term concerns.1 

The board is concerned these measures will not adjust for economic conditions such as inflation, or for the normal upward trend of physician costs. In addition, the board questions how much the Patient Protection and Affordable Care Act will help in the long run. 

The act contains 165 provisions designed to reduce costs and improve the quality of care delivered through the Medicare program. The Trustees believe the cost-reduction measures will continue to work if health care providers are able to realize productivity improvements at a faster rate than experienced historically. However, it’s their opinion that if the health sector can’t transition to the more efficient models of care delivery currently being tested, the availability and quality of health care for Medicare beneficiaries may suffer.2

The good news is that, since 2008, national health spending growth in the U.S. has been below historical averages, even when you factor in that more people now have health insurance coverage.3 

That said, even a healthy 75-year-old can expect to spend upward of $5,000 per year in out-of-pocket medical expenses.4 Naturally, that number is much higher for any retirees who suffer a chronic condition at some point. 

One thing to consider when planning for retirement is how you will pay for possible increased health care expenses. Some insurance products, such as life insurance and annuities, provide various options you may want to consider. We’d be happy to discuss your options based on your unique situation.

As more baby boomers transition from private health care plans into the Medicare system, Medicare Advantage (MA) — the managed-care version of the program — has grown exponentially. More than half of those MA beneficiaries are covered by the four largest insurers in this space: UnitedHealth Group, Humana, Kaiser Foundation Health Plan and Aetna.

This demographic has provided MA insurers with significantly more taxpayer-funded revenue, which many are investing to improve the quality of their plans. For example, UnitedHealth projects that 80 percent of its Advantage members will in 4- to 5-star plans by 2018.5 

Likewise, Medicare is continuing to improve with initiatives for quality care, including its recent announcement of a new Oncology Care Model. The new payment program encourages greater collaboration and information sharing among health care providers, while at the same time lowering costs.6 

Medicare and its partner insurance companies have led the charge to reduce costs and improve care via these types of values-based payment programs. It is projected that 90 percent of all Medicare payments will be tied to quality/value criteria by 2018.7 The goal of this criteria is to base physicans’ pay on their ability to achieve better clinical outcomes for their patients, and not waste money doing it. That’s something from which we can all benefit. 

Content prepared by Kara Stefan Communications. 

1 The Boards of Trustees for Medicare. June 22, 2016. “2016 Medicare Trustees Report.” https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2016.pdf. Accessed July 1, 2016.
2 Ibid.
3 Ibid.
4 Robert Berger. U.S. News & World Report. Jan. 29, 2016. “Retirement Spots With Affordable Health Care.” http://money.usnews.com/money/blogs/on-retirement/articles/2016-01-29/retirement-spots-with-affordable-health-care. Accessed July 1, 2016.
5 Bob Herman. ModernHealthcare.com. March 26, 2016. “Largest Medicare Advantage plans bulk up even more.” http://www.modernhealthcare.com/article/20160326/MAGAZINE/303289995. Accessed July 1, 2016.
6 U.S. Department of Health & Human Services. June 29, 2016. “HHS Announces Physician Groups Selected for an Initiative Promoting Better Cancer Care.” http://www.hhs.gov/about/news/2016/06/29/hhs-announces-physician-groups-selected-initiative-promoting-better-cancer-care.html. Accessed July 1, 2016.
7 Bill Frist. Forbes. June 30, 2016. “From Volume To Value: Achieving Bold Change in Our Healthcare Payment Systems.” http://www.forbes.com/sites/billfrist/2016/06/30/from-volume-to-value-achieving-bold-change-in-our-healthcare-payment-systems/#10617cae31db. Accessed July 1, 2016. (To access site, paste link in your browser.) 

We are able to provide you with information but not guidance or advice related to Medicare. 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.

AE07165096B

Shortlink

For Some Businesses, Success is All in the Family

Twenty-five years ago, business analysts thought the traditional family business model would eventually become extinct. But here it is in 2016, and some of the largest brand names in America are still owned and operated by their original families: Walmart, BMW, Tyson, Samsung, Kohler, Christian Dior, Mars, Ford and Comcast. In fact, public and private family companies represent approximately 80 percent of firms throughout the world.1 

Some benefits of family-owned business include the ability to show other family members the ropes of the business at a young age and an inherent trust among co-workers who are related. Employing family members may also lead to a workforce that’s more interested in running the business than on just turning a profit in order to appease shareholders. That values-based sense of customer service and loyalty to employees is part of why family businesses are often more stable and geared for long-term success. 

Naturally, for a business to be successful long-term, business owners need to be conscientious in their succession planning. Too often, second-generation businesses fail because a family member with the wrong skill set, too little experience or uninterested lack of interest was put in charge in an effort to “keep it in the family.” 

Worse yet, by one set of metrics, the survival rate for a third-generation business is only 10 percent.2 Businesses should consider two tracks for succession planning: (1) a long-term CEO or operational manager and, (2) an immediate — albeit temporary — plan for someone to step into a management role in an emergency situation.3 

Speaking of emergencies, because a family business may be the only income source for multiple households within one family, it’s a good idea to have a business continuity plan in place. When you consider that 90 percent of small companies that experience a disaster end up closing their doors within two years, it could be a good idea to have a disaster preparedness plan and some form of business interruption insurance.4 

Life insurance is another tool that can be used to facilitate business longevity and succession planning. When used with strategies such as an irrevocable life insurance trust, entity redemption agreement or buy-sell agreement, insurance planning can direct how to handle a business owner’s interests in the event of his or her death.5 

An older family business may also be hampered by an outdated legal structure. It’s important to recognize that today’s court systems are predisposed to allow changes to previously irrevocable documents to accommodate new circumstances when consensus exists for change.6 

Content prepared by Kara Stefan Communications. 

1 Knowledge@Wharton. May 31, 2016. “Are Family Businesses the Best Model for Emerging Markets?” http://knowledge.wharton.upenn.edu/article/family-business-model-works-better-markets-others/. Accessed July 8, 2016.
2 Matthew Erskine. The Family Firm Institute. March 16, 2016. “Succession: Business success vs. ownership lifestyle.” https://ffipractitioner.org/2016/03/16/succession-business-success-vs-ownership-lifestyle/. Accessed July 8, 2016.
3 Christophe Bernard. KPMG. Feb. 23, 2016. “Steps to take for succession planning – for the CEO.” http://www.kpmgfamilybusiness.com/steps-to-take-for-succession-planning-for-the-ceo/. Accessed July 8, 2016.
4 Paul Vachon. Crain’s Detroit Business. July 3, 2016. “Disaster insurance experts: Business survival depends on preparedness, business continuity planning.” http://www.crainsdetroit.com/article/20160703/NEWS/160709988/disaster-insurance-experts-business-survival-depends-on-preparedness. Accessed July 8, 2016.
5Vernon W. Holleman. WealthManagement.com. Feb. 26, 2016. “Life Insurance’s Role in Family Business Planning.” http://wealthmanagement.com/insurance/life-insurance-s-role-family-business-planning. Accessed July  8, 2016.
6 Nick Di Loreto and Steve Salley. The Family Firm Institute. March 30, 2016. “Tempering the Power of Irrevocability: The influence of consensus in family enterprises.” https://ffipractitioner.org/2016/03/30/tempering-the-power-of-irrevocability-the-influence-of-consensus-in-family-enterprises/. Accessed July 8, 2016. 

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. 

 

AE06165090B

Shortlink

Americans Entertain Entrepreneurial Ideas

When it comes to TV shows and movies, Americans have shown a recent obsession with the rise of entrepreneurs. “Shark Tank” is an annual Emmy nominee, and the feature film “Steve Jobs” took home a couple Golden Globes earlier this year. 

Perhaps it’s because many people lost their jobs during the recession, or maybe it’s because new technology and the “gig economy” has enabled more opportunity, but people seem to enjoy watching others rise to prominence as a result of their ideas and hard work. 

A look at the numbers may explain why so many Americans can relate to self-starters. One report revealed that one in three workers in the U.S. is a freelancer.1 Another found that all of the net employment growth in the United States since 2005 could be attributed to alternative work. 

Interestingly, the same study found that there are two types of mindsets among workers in “alternative” positions:2 

  1. 84% of independent contractors prefer to work for themselves
  2. 77% of temp-agency workers would prefer a permanent job

It seems a majority of people tend to seek out work best aligned with their mindset and employment prospects. But perhaps there is a middle ground: Using a part-time independent job to supplement income from a more secure job. 

For example, take a look at Uber workers. Two-thirds of the company’s drivers have other full-time jobs, and 48 percent have college degrees. It’s also been a popular income stream for those approaching or near retirement, as 25 percent of drivers are aged 50 and up.3 Certainly the rise in “gig” (short-term assignment) work opens up new opportunities for retirees who need to supplement their savings.   

Despite the increase in workers taking on side jobs, the number of entrepreneurs in the U.S. is actually experiencing a long-term decline. It’s one thing to work extra hours for a little more income, or applaud the initiative Steve Jobs took at the movie theater. But it’s another to act on your own idea and take a leap of faith with your own business ideas. 

Starting up a new business can be a risky endeavor. On average, one in five fail within two years, and 50 percent don’t make it to five years.4 This can at least be partially explained by the way new startups are financed. 

A quick look at headlines might lead you to believe that the majority of startups are funded by venture capitalists (firms that invest other people’s money). While these may make for great news stories, that’s not actually the case. Less than 5 percent of startup funding comes from venture capitalists,5 whereas about two-thirds get their capital from loans, personal savings, friends and family.6 

While it is fun to watch people strike it rich with their inventions on “Shark Tank,” it’s a rare occurrence that the average person has a million-dollar idea. It may not be as exciting, but proper saving and planning continues to be an effective way to ensure you have enough money in retirement. 

Content prepared by Kara Stefan Communications. 

1 Freelancers Union and Elance-oDesk. September 2014. “Freelancing in America.” http://fu-web-storage-prod.s3.amazonaws.com/content/filer_public/c2/06/c2065a8a-7f00-46db-915a-2122965df7d9/fu_freelancinginamericareport_v3-rgb.pdf. Accessed June 17, 2016.
2 Rick Wartzman. Fortune. April 27, 2016. “Working in the Gig Economy Is Both Desirable and Detestable.” http://fortune.com/2016/04/27/uber-gig-economy/. Accessed June 17, 2016.
3 Aparna Mathur. American Enterprise Institute. Feb. 2016. “New Economy, Old Challenges Facing Entrepreneurs.” https://www.aei.org/wp-content/uploads/2016/02/NEG-7_Policy_-MATHUR.pdf. Accessed June 17, 2016.
4 Dane Stangler. Ewing Marion Kauffman Foundation. 2016. “The Looming Entrepreneurial Boom: How Policymakers Can Renew Startup Growth.” http://www.kauffman.org/neg/neg-intro#theloomingentrepreneurialboomhowpolicymakerscanrenewstartupgrowth. Accessed June 17, 2016.
5 Arnobio Morelix. Ewing Marion Kauffman Foundation. May 13, 2016. “Three Facts You Probably Didn’t Know About and Venture Capital and Entrepreneurship.” http://www.kauffman.org/blogs/growthology/2016/5/three-facts-you-probably-didnt-know-about-and-venture-capital-and-entrepreneurship. Accessed June 17, 2016.
6 J.D. Harrison. The Washington Post. March 16, 2016. “No, entrepreneurs, most of you don’t need angel investors or venture capitalists.” https://www.washingtonpost.com/news/on-small-business/wp/2015/03/16/no-entrepreneurs-most-of-you-dont-need-angel-investors-or-venture-capitalists/. Accessed June 17, 2016. 

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. 

 

AE06165089B

Shortlink

Retailers Innovate to Meet Shifting Needs

You can tell a lot about people by reviewing their purchase receipts. Where they shop, what restaurants they favor, where they prefer to buy gas. So, what can you tell by evaluating a huge database of receipts submitted over time by a large population of people? Retail trends. 

When researchers from Wharton School of Economics studied generational buying behavior, they determined millennials spend more money with new, high-tech merchants such as Uber, Lyft, Zappos and Zulily. Baby boomers, on the other hand, frequently shop at Costco, Home Depot, Macy’s and QVC. 

Millennials do more digital shopping; many boomers still go into stores. Millennials buy more gift cards than other generations, and they prefer buying e-cards because it’s easier and the recipient can’t lose them. Another interesting finding is that while boomers usually just buy gas at convenience stores, millennials actually go in and buy groceries, too. In fact, convenience appears to be a driving force among millennials, who prefer to place their Starbucks drink order via the app so it’s ready when they enter the store.1 

Integrating newly created channels for sales, like online service or an app, has been easier for new retailers than older ones. In many cases, despite the fact that a store may have a website where customers can shop online, most of the older brick-and-mortar stores still look the same as they did 20 or 30 years ago.2 That may be comforting to older shoppers, but some younger shoppers find them dated and inconvenient. 

Some innovative retailers have also started focusing on what is referred to as “frictionless shopping.” An example of this is the Amazon Dash button, wherein customers can reorder a regular item with the simple push of a button.3 

Surprisingly, two new trends on the rise actually have been around a really long time: subscription and TV shopping. Not only can you buy things like magazines and Ginsu knives via these channels, everything from beauty products to groceries to clothes can also be purchased via subscription or 24 hours a day on home shopping television networks.4 

Obviously, convenience is a driving theme for today’s shoppers. In response, a designer sunglasses retailer (Warby Parker) sends five pairs of glasses to a customer at once and allows them to send back the pairs they don’t want for free. This in-home convenience has increased their sales exponentially in recent years.5 

Overall, online shopping is on the rise. Fifty-one percent of Americans say it’s their preferred way to shop. One survey found that 96 percent of Americans have made an online purchase at some point in their lives, with 80 percent having made one within the past month.6 

Content prepared by Kara Stefan Communications 

1 Knowledge@Wharton. May 31, 2016. “How Millennials, Gen Xers and Baby Boomers Shop Differently.” http://knowledge.wharton.upenn.edu/article/new-tools-answer-age-old-question-of-what-do-customers-want/. Accessed June 10, 2016.
2 Knowledge@Wharton. May 16, 2016. “Omni-channel Is so 2010 – but Retail Still Hasn’t Figured it Out.” http://knowledge.wharton.upenn.edu/article/omni-channel-2010-retailers-still-struggling-adapt/. Accessed June 10, 2016.
3 VendHQ. May 20, 2016. “Retail trends & predictions: 2016.” https://www.vendhq.com/university/retail-trends-and-predictions-2016. Accessed June 10, 2016.
4 Deloitte. 2016. “Retail Trends 2016: Redefining convenience.” http://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends-2016.html. Accessed June 10, 2016.
5 Arram Kang. KPMG. May 2016. “Three key trends transforming the face of retail.” http://www.kpmgtechgrowth.co.uk/trendsinretail/. Accessed June 10, 2016.
6 Tracey Wallace. BigCommerce.com. June 6, 2016. “What Brands Need to Know About Omni-Channel Retail and Modern Consumer Shopping Habits.” https://www.bigcommerce.com/blog/omni-channel-retail/. Accessed June 10, 2016. 

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. 

 

AE06165087B

Shortlink

Banks Dialing Up Mobile Services

New technology continues to be rolled out to make banking more convenient than ever. 

According to Federal Reserve research data, 53 percent of smartphone owners with a bank account have used mobile banking. Over 17 million customers at Wells Fargo alone use mobile banking, making it the fastest-growing channel in the company’s history.1 

Wells Fargo also announced plans for a mobile wallet that will integrate the bank’s debit and credit cards with its existing mobile apps for Android users. By the end of summer, customers will be able to make in-store purchases by tapping an Android phone at payment terminals worldwide. 

Eventually, Wells Fargo Wallet will enable customers to use an ATM without a debit or ATM card, although the bank says less than half of its ATMs will be enabled for this feature by the end of the year. 

Bank of America was the first to introduce this cardless feature at the bank’s ATMs, which requires a simple tap on the ATM screen. The company expects its cardless technology to be available at 5,000 Bank of America ATMs by year-end, with beta tests already established in a handful of large metropolitan areas (Boston, Charlotte, New York City, San Francisco and Silicon Valley).2 

Javelin Research reports that 29 million more U.S. adults used smartphones and tablets to conduct banking transactions than last year. Indeed, the increase in customers willing to open new accounts via their mobile devices is startling:3 

  • 33% opened accounts with a mobile device in 2015, up from 17% in 2014
  • 30% enrolled in mobile banking with a mobile device in 2015, an increase from 7% in 2014

On the other side of the purchase point, merchants must have the equipment that enables the mobile wallet process. Currently, Android Pay is accepted at more than 1 million stores in the U.S., including Walgreens, JetBlue, Bloomingdale’s, Macy’s and McDonald’s.4 

The Android Pay near field communication (NFC) system provides the option for a user to shut down a smartphone if it is stolen, so no one can use the phone as a credit card.5 In addition, the NFC system processes transactions via individual random account numbers — rather than your actual credit or debit card account number — so thieves can’t find your credit card number for their own phone or online transactions. 

The mobile wallet replaces swipe transactions where a credit card number is exposed, and many consider it more secure than a magnetic card.6 However, the technology is still vulnerable to fraud via an account takeover. This means someone can access your mobile wallet accounts using a device under his or her control. In 2015 alone, more than 112,000 consumers suffered account takeovers via mobile wallets.7 

Content prepared by Kara Stefan Communications 

1 John Ginovsky. Banking Exchange. June 3, 2016. “Wells enters wallet wars.” http://www.bankingexchange.com/news-feed/item/6282-wells-enters-wallet-wars?Itemid=637. Accessed June 10, 2016.
2 Melanie Scarborough. Banking Exchange. May 20, 2016. “No more getting carded at the ATM.” http://www.bankingexchange.com/news-feed/item/6258-no-more-getting-carded-at-the-atm. Accessed June 10, 2016.
3 Javelin Strategy & Research. May 19, 2016. “Top Banks Meet Customer Expectations for Mobile Banking Channel.” https://www.javelinstrategy.com/press-release/top-banks-meet-customer-expectations-mobile-banking-channel. Accessed June 10, 2016.
4 Android.com. 2016. “Shop at these favorites.” https://www.android.com/pay/. Accessed June 10, 2016.
5 Andy Boxall. Digitaltrends.com. May 20, 2016. “Everything You Need to Know About Android Pay.”http://www.digitaltrends.com/mobile/android-pay-guide/. Accessed June 10, 2016.
6 Melanie Scarborough. Banking Exchange. May 20, 2016. “No more getting carded at the ATM.” http://www.bankingexchange.com/news-feed/item/6258-no-more-getting-carded-at-the-atm. Accessed June 10, 2016.
7 Javelin Strategy & Research. April 14, 2016. “Suboptimal Security Solutions Leave Mobile Wallets Vulnerable.” https://www.javelinstrategy.com/press-release/suboptimal-security-solutions-leave-mobile-wallets-vulnerable. Accessed June 10, 2016. 

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. 

 

AE06165084B

Shortlink

Minimum Wage Still Raising Concerns

During this politically charged election year, one of the driving issues involves wages: Gender inequality, overall income inequality and the controversial movement to increase the national minimum wage. 

The fast food industry would likely feel the most effects from a minimum wage increase, and recently some of the largest companies have announced varying plans of action if a raise is instituted. McDonald’s said it wouldn’t reduce jobs in light of a mandated wage increase, as its focus moving forward is on customer service. 

A former CEO of the company pointed out that this may not be the best fiscal approach, as it’s more costly long term to pay workers $15/hour than it is to install a $35,000 robotic arm that bags french fries. The cost may be worth it, as recent numbers demonstrate that McDonald’s focus on employee wages and benefits has improved its customer service scores, which increased by 6 percent in the first quarter compared to the same period last year. 

However, this philosophy is hardly widespread. The CEO of Carl’s Jr. and Hardee’s recently hinted that the overall food and beverage industry would likely engage in more automation if the government mandates a higher cost for labor.1 

The thing about wages is that there is a minimum standard by which a person can live, and any amount of money earned above that reflects his or her lifestyle choices. If you’re not earning what you need to meet all of your expenses — including saving regularly for retirement — then you may need to re-evaluate how you’re spending your income. We all need an insurance backstop for unexpected events such as an automobile accident, major repairs to your home or a health emergency. We’re happy to help you to find options that can optimize your income, so that one high-expense event doesn’t devastate your finances. 

Like most partisan issues, valid arguments can be posited on both sides of the wage war. While corporate profits may decrease by raising wages, those who receive increases have the opportunity to improve their quality of living. This is particularly true for low-income earners. One study revealed there are no U.S. states where a full-time minimum wage worker ($7.25/hour) could afford a one-bedroom apartment at the average fair market rent.2 

Similar arguments can be made for expanding government-sponsored health care benefits. It may cost more for taxpayers, but one recent study demonstrated that there could be direct benefits to employers. When comparing the numbers for low-income, childless adults living in the 14 states that expanded Medicaid in 2014 with those living in the 22 states that did not, two interesting findings emerged. 

First, in the Medicaid-expansion states, adults’ access to preventive care improved. Second, the average number of work days lost due to poor health in those states dropped by 12 percent, which works out to about a full day per month.3 

On the gender income equality front, a new study from the University of Notre Dame revealed the impact of having more women on corporate boards. The research found that public company boards with a large share of female directors correlated to significantly fewer mergers and acquisitions. The study observed that the women’s presence more likely led to smarter conversations about risk management, challenges and things that could go wrong. Indeed, previous studies have found that a more diversified boardroom is associated with better stock performance in tough markets, higher return on equity, fewer leadership-related scandals and less costly mergers.4 

In other discussions about wages, analysts have studied the tradeoff between today’s corporate expectation of boundary-less 24/7 accessibility and less engagement during the regular eight-hour workday, even suggesting that workers make a greater effort to appear busy than to get their work done efficiently.5 

There also are new innovations in the area of flex pay, such as the ability for workers to tap into wages for time already worked without having to wait until payday. One such innovation, called PayActiv, received a Best of Show award at FinovateSpring 2016 for its use of technology to ease the “cash flow struggles of working families.”6 

Content prepared by Kara Stefan Communications 

1 Kate Taylor. Business Insider. May 27, 2016. “McDonald’s CEO reveals how the fast-food chain will use robots in the future.” http://www.businessinsider.com/mcdonalds-wont-swap-workers-with-robots-2016-5. Accessed May 27, 2016.
2 Kelsey Ramírez. HousingWire. May 26, 2016. “It’s officially impossible to rent at minimum wage in most of the country.” http://www.housingwire.com/articles/37130-factsheet-its-officially-impossible-to-rent-at-minimum-wage-in-most-of-the-country. Accessed May 27, 2016.
3 Allison Bell. LifeHealthPro. Mar 26, 2016. “How has PPACA affected people’s health?” http://www.lifehealthpro.com/2016/05/26/how-has-ppaca-affected-peoples-health?page_all=1. Accessed May 27, 2016.
4 Danielle Paquette. The Washington Post. May 24, 2016. “The weird thing that happens when you put more women in the boardroom.” https://www.washingtonpost.com/news/wonk/wp/2016/05/24/when-women-rise-to-power-in-companies-a-weird-thing-happens/. Accessed May 27, 2016.
5 Ilan Mochari. Inc.com. May 18, 2016. “Why Your Employees Pretend to Work 80-Hour Weeks.” http://www.inc.com/ilan-mochari/managing-high-stress-workplaces-employees-work-life-balance.html. Accessed May 20, 2016.
6 Suzanne Woolley. Bloomberg. May 25, 2016. “You Worked Monday. Why Not Get Paid Monday?” http://www.bloomberg.com/news/articles/2016-05-25/you-worked-monday-why-not-get-paid-monday. Accessed May 27, 2016. 

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. 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. 

 

AE06165083B