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LTC Considerations

Long-term care insurance (LTC) has experienced some growing pains in recent years. Sustained low interest rates and coverage limitations have made it difficult for some to find policies that meet their needs.1 

As a result, many LTC insurers have exited the business because they couldn’t make a profit.Today, there are only 14 carriers still writing stand-alone LTC policies in the United States, and only about 8 percent of U.S. adults own this type of insurance.2 

As a general rule, LTC benefits are triggered when a policyholder can no longer perform two of six designated “activities of daily living” (ADLs) due to physical or cognitive impairments, or if he or she requires substantial supervision due to a severe cognitive impairment, such as Alzheimer’s disease. 3 

The six ADLs are: eating, bathing, dressing, the ability to move from bed to chair, continence and using the toilet independently.4 Some individuals may experience mobility issues that require help bathing and dressing, yet cognitively they remain sharp and otherwise healthy for many years. 

Of all people age 65 and older, 75 percent will eventually need long-term care, and mental disorders, such as Alzheimer’s, account for half of all LTC claim dollars paid.5 

The LTC industry has changed substantially over the past decade. With lifespans extending longer than ever, many carriers have altered policies to incorporate benefit restrictions. As a result of some contracts being held longer than expected, some of the companies that still offer LTC policies have had to raise premiums and reduce benefits.6 

In addition to stand-alone policies, there are also life insurance and annuity contracts with long-term care benefit riders. These riders are generally optional and available at an additional cost. Options may vary by insurance company and product. They may also be subject to eligibility requirements and may not be available in all states.   

Content prepared by Kara Stefan Communications. 

1 Allison Bell. LifeHealthPro. Sept. 7, 2016. “5 ways Genworth wants to reboot LTCI.” http://www.lifehealthpro.com/2016/09/07/5-ways-genworth-wants-to-reboot-ltci. Accessed Sept. 9, 2016.
2 Ibid.
3 The Federal Long Term Care Insurance Program. “Qualifying for Benefits.” https://www.ltcfeds.com/programdetails/qualifyingbenefits.html. Accessed Oct. 6, 2016.
4 Ibid.
5 LTC Tree. Aug. 15, 2016. “Long Term Care Statistics.” https://www.ltctree.com/long-term-care-statistics/. Accessed Oct. 13, 2016.
6 Wade Pfau. Forbes. Jan. 19, 2016. “Potential Concerns and Risks for Traditional Long-Term Care Insurance.” http://www.forbes.com/sites/wadepfau/2016/01/19/potential-concerns-and-risks-for-traditional-long-term-care-insurance/#32adb3361a61. Accessed Oct. 6, 2016. 

Long-term care insurance policies are contracts between you and an insurance company. Insurance product guarantees rely on the financial strength and claims-paying ability of the issuing insurer. 

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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Long Term Care Premiums Got You Down?

3 Things to Consider Before Cancelling Your LTC Policy

Flashback to a month ago: my fiancé and I were having a discussion regarding finances and where we could trim things down in the coming year.  Instantly I began to consider items that might arrive at the chopping block (surely she wouldn’t ask me to drop my Amazon Prime membership….would she??).  As our conversation developed, we needed to weigh what was important and we worked together to cut out expenses that did not contribute to our overall happiness or well-being.  The first item to walk the plank?  Cable.  A consistently rising expense over the years that had ultimately grown to a level we were no longer comfortable with paying.  It also just so happens that this conversation took place after the Superbowl; it is much easier to cut out items that are out-of-sight, out-of-mind.

When conversations around essential expenses come up, we should all evaluate the importance of our line items and determine if those costs are still meeting our needs and whether or not they have grown to levels that are no longer affordable. Most of the “fun” items might be the first to go, but other expenses may begin to receive scrutiny if we cannot understand the need. In retirement, one expense that has the potential to increase is the cost of healthcare, specifically long-term care coverage.  Due to industry factors and rising healthcare costs in general, premiums for this coverage have seen a spike.  And if the need is not immediately seen or met, it can be difficult to understand why keeping this coverage around is a good idea. Out-of-sight, out-of-mind.

According to the 2015 Genworth Cost of Care Survey, the average annual out-of-pocket cost of private room nursing care was $91,250 with a five year growth projection of 4% per year.  As our population ages, many have already experienced the rise in healthcare costs with either spouses or parents- and understand how much of a burden it can potentially be on retirement savings.  Along with the rising cost of care, many have seen subsequent premium increases on traditional long-term care policies with rate hikes anywhere from 20% to as much as 80%. While the need for long-term care coverage may be understood by those who have experienced it firsthand, it is often difficult for others to grasp- especially when the costs exceed what is comfortable.

This increased expense can easily find its way into dinner table conversations alongside cable packages and that gym membership we haven’t used for the last 6 months (guilty as charged).  The cost of coverage continues to increase on an annual basis, and there is a chance that some will never need to use it in the first place…right?  What is the benefit of paying the immensely higher premium if the item cannot be utilized immediately or guaranteed to be used down the road? If your thoughts mirror these notions, you are not alone.

The hard truth is that LTC is and will be more prevalent each year going forward.  The Center for Retirement Research claims that 44% of men and 58% of women will need care at some point in their life.  With those percentages, it becomes vitally important that we understand the risk and have a conversation about the potential effects that dropping coverage has on our retirement savings down the road.  Luckily, forgoing coverage is not the only option when we look to reduce household expenses.  Traditional LTC policies have a number of working pieces that can be adjusted in order to make premiums more affordable.  Make sure you entertain these 3 options before you decide to cancel your insurance all together.

  1. Lengthen your Elimination Period

The elimination period on a LTC policy serves the same purpose as a deductible in our heath care insurance plans.  From the day we qualify for care, the elimination period is the amount of time we must wait before our insurance benefits kick in.  The most common time frame we see in policies is 90 days (the maximum allowable by law is 365 days).  By asking the insurance company to extend our elimination period we can subsequently lower our premiums, similar to buying low-premium, high-deductible health care insurance.  We as the insured then bear more of the burden up front in case of a need, while the insurance company covers care on the back end.  Notably, this still retains our coverage while providing a buffer on our retirement assets.

  1. Reduce the Benefit Period

When we look at the benefit period on policies established in the earlier days of LTC, many of them pay benefits for life should you ever need coverage that extends over several years.  While there are certainly conditions that require 5, 10, or even 15 years of care (think Alzheimer’s), the average long-term care stay according to the AALTCI is 2.5 years.  If you have a family history of cognitive decline or other health concerns that have required extended stays, you may want to hold on to your lifetime benefits.  If not, it may be a great way to reduce premiums on a monthly basis by reducing the benefit period from lifetime to 3-5 years in order to avoid paying for extended coverage you may not need.

3. Stop the Inflation Rider

Your policy may have a rider attached to it that allows the overall benefit to grow with inflation over time.  Based on the numbers, we know that the cost of healthcare will continue to increase and these riders can be vitally important to keep up with the growing expense.  If your policy is at least 10 years old, or you are in the later stages of your life, this can be an effective premium-reducing strategy.  At this point, you have already taken advantage of much of the leverage these increases have provided, and you are nearing an age where you might be submitting a claim sooner.  If you are younger (think 50’s and 60’s) you might want to keep your rider in place in the instance the healthcare inflation battle continues for 20-30 years.

The bottom line is that long-term care planning is paramount in making sure our assets outlive us at the end of the day.  It is likely that even with the increases in premiums, policies that have been in place for numerous years are still cheaper and have more extensive benefits than current products on the market.  If the dinner table discussion around expenses comes down to your insurance policy, consider the effect these three options will have before cancelling your entire coverage. You may be able to find a balance. In the instance of cable, my fiancé and I compromised on an HD antenna to substitute the need; This insured a drastic reduction in annual cost, and we do not miss out on (most) football games. Win-Win.

content prepared by Corey Sunstrom, CFP®

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The Far-Reaching Applications of Insurance

When most people hear the word “insurance,” the things that come to mind may be home, auto or life. However, the scope of what can be covered by insurance extends far beyond everyday needs. 

Unfortunate as it may be, the news is often filled with natural and man-made disasters. The role insurance plays in these situations may not make the headlines, but when something goes wrong, insurance can make recovering from a setback less stressful.

Here’s a look at some national headlines you may have heard about over the past few months, and how insurance came into play in the aftermath:    

 

  • When a rocket blows up on takeoff, like the multimillion dollar SpaceX rocket did at Cape Canaveral in September, is all lost? The answer is no, thanks to the coverage of space insurance policies. The space insurance industry receives around $750 million in premiums each year to cover about 50 space launches, with a one in 20 failure rate. Interestingly, despite the fact that it’s an expensive and volatile business, premiums for space rockets are actually dropping, closing in on the lowest rates in history.1 
     
  • Sadly, people in Louisiana are learning the hard way that flood damage isn’t covered by standard policies such as property or business interruption insurance. Many people mistakenly believe that if you don’t live (or own a business) in an authorized flood zone, you don’t need flood insurance. The reality is about one-third of flood claims are made by owners who are not in flood zones.2 
     
  • As technology use becomes increasingly regular in our everyday lives, so has the frequency of cyberattacks. To address this issue, specialized “cyber” insurance has become popular for businesses to cover the fallout from cyberattacks and data breaches. Because it’s a relatively new facet of the industry, there is no standard policy. 3 Therefore, these policies can range from targeted incidents to broad-based business coverage that could overlap with other types of insurance.4 
     
  • As if cyberattacks aren’t enough cause for concern, imagine feeling the need to purchase terrorism insurance — an issue business owners in Europe are currently dealing with. While some business insurance policies cover building damage, terrorism is becoming its own distinct coverage. One aspect is destruction of property, but business owners are seeing long-term ramifications of terrorism in terms of economic losses as well.5 
     
  • Businesses aren’t the only ones worried about terrorism. International Travel and Healthcare became the first company to offer a terrorism travel insurance policy. The “Safe Journey” policy costs about £4.60 for a single two-week trip and covers the “disinclination” to travel should your vacation plans fall within six weeks of a terrorist attack in your destination.6 It also makes it easier to cut your visit short if an attack happens while you’re there. The insurer offers the policy as a supplement to its regular traveler’s insurance policy.7

 

Content prepared by Kara Stefan Communications. 

1 Mark Fahey. CNBC. Sept. 1, 2016. “When a rocket blows up, space insurers pay for it.” http://www.cnbc.com/2016/09/01/when-a-rocket-blows-up-space-insurers-pay-for-it.html. Accessed Sept. 2, 2016.
2 Stephanie Riegel. Greater Baton Rouge Business Report. Aug. 18, 2016. “Flooded business owners realizing business interruption insurance won’t do any good.” https://www.businessreport.com/article/flooded-business-owners-realizing-business-interruption-insurance-wont-good. Accessed Sep. 2, 2016.
3 Peri N. Mahaley. Corporate Counsel. Sept. 1, 2016. “5 Tips for Buying Cyberinsurance.” http://www.corpcounsel.com/id=1202766529954/5-Tips-for-Buying-Cyberinsurance?slreturn=20160802113633. Accessed Sept. 2, 2016.
4 Ibid.
5 Louie Bacani. Business Insurance Magazine. Aug. 8, 2016. “Europe terror attacks to increase insurance demand.” http://www.insurancebusinessmag.com/uk/news/breaking-news/europe-terror-attacks-to-increase-insurance-demand-35888.aspx . Accessed Sept. 2, 2016.
6 Louie Bacani. Insurance Business Magazine. June 8, 2016. “UK’s first terrorism travel insurance launched.” http://www.insurancebusinessmag.com/uk/news/breaking-news/uks-first-terrorism-travel-insurance-launched-32981.aspx. Accessed Sept. 2, 2016.
7 Ibid. 

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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Health Care Spending Trends

For the 40+ year period of 1961 to 2002, health care expenses followed a pretty steady upward trend, thanks to things like the introduction of Medicaid, coverage expansion and occasional price increases.1 

But between 2003 and 2007, that rampant growth slowed down considerably, and the impact of the recession was felt from 2008-2013.2 Many Americans lost their health care insurance during this time period or stopped going to the doctor because of the money they had to pay out of pocket. Several drug patents also ran out during this 10-year stretch, so the market began to be flooded with new, cheaper generic drugs.3 

Since then, however, spending has creeped back up. The cost of large employers providing insurance to their workforce is projected to increase by 5 percent in 2017, while premium increases for public exchange plans are expected to average about 10 percent.4 Employers report they plan to offset increases by:5 

  • Managing pharmacy spending for high-cost specialty drugs
  • Increasing enrollment in high-deductible health plans with tax-advantaged savings accounts
  • Steering plan members to hospitals and medical centers with a good track record for treating things like back, knee, cardiac and infertility issues
  • Moving to benefit designs that require employees to participate in health-related activities to reduce employee cost-sharing 

Pharmaceutical costs represent approximately 20 percent of employer medical spending, and are increasing at a rate that accounts for roughly half of medical cost inflation.6 Just recently, drug manufacturer Mylan NV came under fire for its 500 percent price increase (since 2007) for the EpiPen emergency allergy injection.7 

Meanwhile, specialty drugs, such as those developed for cancer, can cost thousands of dollars per month. Last year, spending on specialty drugs increased by 18 percent compared to less than 1 percent for standard prescription drugs.8 

Four of the largest health insurance companies believe the way to reduce spending is by consolidating, but the Justice Department isn’t so sure. The Anthem/Cigna and Aetna/Humana merger deals are being heavily scrutinized since they would substantially reduce competition within the industry.9 The question remains whether the big five — which potentially could become the big three — would pocket profits resulting from consolidations or pass those savings on to customers.10 

Content prepared by Kara Stefan Communications. 

1 Aaron C. Catlin and Cathy A. Cowan. Centers for Medicare & Medicaid Services. Nov. 19, 2015. “History of Health Spending in the United States, 1960-2013.” https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/HistoricalNHEPaper.pdf. Accessed Aug. 26, 2016.
2 Ibid.
3 Ibid.
4 David McCann. CFO.com. Aug. 9, 2016. “Specialty Drugs Drive Health Care Cost Trend.” http://ww2.cfo.com/health-benefits/2016/08/specialty-drugs-drive-health-care-cost-trend/. Accessed Aug. 26, 2016.
5 Willis Towers Watson. Aug. 8, 2016. “U.S. employers expect health care costs to increase 5.0% in both 2016 and 2017.” https://www.willistowerswatson.com/en/press/2016/08/us-employers-expect-health-care-costs-to-increase-5-percent. Accessed Sept. 2, 2016.
6 Willis Towers Watson. Dec. 15, 2015. “Employers Take Aim to Curb High Cost of Pharmacy Benefits.” https://www.towerswatson.com/en-US/Press/2015/12/employers-take-aim-to-curb-high-cost-of-pharmacy-benefits. Accessed Sept. 2, 2016.
7 Toni Clarke and Ransdell Pierson. Reuters. Aug. 25, 2016. “Mylan offers discounts on EpiPen amid wave of criticism.” http://www.reuters.com/article/us-mylan-nl-pricing-idUSKCN11017J. Accessed Aug. 26, 2016.
8 Alison Kodjak. NPR. March 14, 2016. “Cancer And Arthritis Drugs Drive Up Spending on Medicines.” http://www.npr.org/sections/health-shots/2016/03/14/470417680/cancer-and-arthritis-drugs-drive-up-spending-on-medicines. Accessed Aug. 17, 2016.
9 Jay Hancock. NPR. Aug. 11, 2016. “In Battle of Health Care Titans, Should Insurers Act Like Wal-Mart?” http://www.npr.org/sections/health-shots/2016/08/11/488891554/should-big-insurance-become-like-walmart-to-lower-health-costs. Accessed Aug. 26, 2016.
10 Ibid. 

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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Pension Matters

When it comes to preparing for retirement, headlines about underfunded pensions can be troubling. One study found that 21 state pensions held less than 40 percent of the assets needed to pay benefits. To make up for that shortfall, each taxpayer would have to contribute an extra $1,385 per year.1 

While not every worker in America is fortunate enough to have an employer-sponsored pension, it appears that even some who do may still have reason for concern. If you’re contemplating other options that could help you save for retirement in the event that your pension is underfunded, it may help to meet with a financial professional. We can discuss your individual situation and recommend insurance products to help create an additional retirement income stream. 

One of the issues associated with traditional pensions is the lack of portable benefits for many public workers. In some instances, when teachers move to new states, previous years of service don’t automatically rollover and pension benefits stop growing.2 The same holds true for many police officers and firefighters.3 

However, not all news on the pension front is negative. Many public pensions have become more flexible in allowing workers to retain their pension benefits even if they switch jobs.4 In addition, a new report from the National Institute on Retirement Security revealed that most public retirement systems that offer defined benefit pensions are on track to provide modest, but stable and lasting retirement income, for their workers.5 

In fact, the study found that these plans are highly cost-efficient compared to individual defined contribution accounts.6 Better yet, with so much instability in layoffs, turnover and lack of 401(k) participation among private sector employers, some job seekers are returning to old-fashioned values of job security and financial stability. Public employers are able to recruit and retain well-qualified candidates who value retirement benefits over higher pay.7 

By contrast, the median retirement balance held in private-sector 401(k)s is only $2,500 for all working-age households; $14,500 for those approaching retirement.8 And while the issue of portability is something many 401(k) plan sponsors tout as an advantage to help employees build a retirement nest egg throughout their careers, in reality, many employees cash out and spend their 401(k) savings when they leave one job for another.9 Individuals are encouraged to consult with a qualified professional before making any decisions about cashing out their 401(k) savings. 

Content prepared by Kara Stefan Communications. 

1 Mark J. Warshawsky and Ross A. Marchand. Forbes. Aug. 17, 2016. “A Proposal for Allowing State Pension Buyouts.” http://www.forbes.com/sites/pensionresearchcouncil/2016/08/17/a-proposal-for-allowing-state-pension-buyouts/#66d7c6e57965. Accessed Aug. 19, 2016.
2 Leslie Kan. Education Next. June 24, 2016. “Why Teachers Need Portable Benefits.” http://educationnext.org/why-teachers-need-portable-benefits/. Accessed Aug. 19, 2016.
3 Pennsylvania Municipal League. March 14, 2016. “Why Pension Portability is Important for PA Public Safety Personnel.” http://fixthenumbers.com/municipal-pension-reform/why-pension-portability-is-important-for-pa-public-safety-personnel/. Accessed Aug. 19, 2016.
4 Alicia Munnell. ThinkAdvisor. Aug. 12, 2016. “Pension Benefits May Be More Portable Than You Think: Retirement Think Tank.” http://www.thinkadvisor.com/2016/07/12/pension-benefits-may-be-more-portable-than-you-thi. Accessed Aug. 19, 2016.
5 Ibid.
6 William Fornia and Nari Rhee. December 2014. “Still a Better Bang for the Buck: Update on the Economic Efficiencies of Pensions.” http://www.nirsonline.org/index.php?option=com_content&task=view&id=871&Itemid=48. Accessed Sept. 1, 2016.
7 Alicia Munnell. ThinkAdvisor. Aug. 12, 2016. “Pension Benefits May Be More Portable Than You Think: Retirement Think Tank.” http://www.thinkadvisor.com/2016/07/12/pension-benefits-may-be-more-portable-than-you-thi. Accessed Aug. 19, 2016.
8 Ibid.
9 Ibid.  

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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Spending Influences

Everyone has their own unique way of spending money. Even people who live in the same house or grew up under the same parental influences can turn out drastically different. Some people are minimalists while others simply like to buy stuff. 

A variety of factors can shape our values when it comes to spending and how we approach money. For example, the recession of 2007-2009 taught us a lot about how Americans spend money. Some learned to “tighten the belt” and have never stopped. Others “tightened the belt” for a while, but then eventually went back to their spending ways. 

Interestingly, while the former set may use their saving and spending habits to help better prepare them for retirement, it’s the latter that has helped spur our economy back to recovery.1 However, while retail sales in the first half of 2016 were solid, by midsummer they became unexpectedly flat as Americans cut back on discretionary spending.2 

This could be attributed to the summer heat and the lack of desire to go out and spend money, but online buying tends to shore up areas that experience seasonal influence. Perhaps it’s the uncertainty of the presidential election and concern that, regardless of who wins, an economic downturn could follow. 

Gas prices are down and incomes have gone up this year, but one change in consumer habits has vexed retailers: people are now more inclined to make purchases that enhance their lifestyle and well-being. 3 

For example, more people tend to buy “experiences” facilitated via travel or athletic gear. They also spend less time at the mall and more time at home, where they are investing substantial sums in home renovation and remodeling. Today, the average household spends about $182 a month on home improvements.4 In July alone, spending on building supplies and gardening equipment rose 6.4 percent and home furnishings grew by 4.2 percent from the year before.5 

New research has revealed that people are happier when they buy things aligned with their primary personality traits, which psychologists allocate into five different categories: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism.6 For example, an introvert may be happier buying a book, while an extravert would rather buy dinner at a crowded restaurant.7 

Whether you make purchases based on your personality or simply to meet your everyday needs, it’s important that everyone has a strategy for their long-term retirement goals. As financial professionals, we’re here to help you prepare for what’s down the road as you work toward your desired financial future. 

Content prepared by Kara Stefan Communications. 

1 Osmond Vitez. The Houston Chronicle. “The Importance of Consumer Spending.” http://smallbusiness.chron.com/importance-consumer-spending-3882.html. Accessed Sept. 1, 2016.
2 Lucia Mutikani. Reuters. Aug. 12, 2016. “Weak U.S. retail sales, inflation data dim prospect of Fed rate hike.” http://www.reuters.com/article/us-usa-economy-idUSKCN10N1DL. Accessed Aug. 12, 2016.
3 Lauren Zumbach. Chicago Tribune. June 10, 2016. “Consumer spending moves up but shoppers still cautious with their dollars.” http://www.chicagotribune.com/business/ct-consumer-spending-0612-biz-20160610-story.html. Accessed Sept. 1, 2016.
4 Columbia Threadneedle. Winter 2016. “Spending Trends Shift Toward Experiences — Gym Memberships vs. Handbags.” https://www.investor.columbiathreadneedleus.com/content/columbia/pdf/WINTER_2016_NEWSLETTER.PDF. Accessed Aug. 12, 2016.
5 Patrick Gillespie. CNN Money. Aug. 12, 2016. “Americans still love spending on their homes.” http://money.cnn.com/2016/08/12/news/economy/us-economy-home-spending/index.html?sr=twmoney081216us-economy-home-spending0604PMVODtopLink&linkId=27608043. Accessed Aug. 12, 2016. 
6 Science Daily. April 7, 2016. “Spending that fits personality can boost well-being.” https://www.sciencedaily.com/releases/2016/04/160407155550.htm. Accessed Sept. 1, 2016.
7 Kira M. Newman. The Greater Good Science Center at the University of California, Berkeley. June 6, 2016. “How Spending Influences Happiness.” http://greatergood.berkeley.edu/article/item/how_spending_influences_happiness. Accessed Aug. 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. 

 

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Men in Contemporary Society

With an increased focus on the pay disparity between genders, women in the workplace are a frequent subject of studies. How many work? How many out-earn their husbands? How many make less than their male peers? 

Meanwhile, we don’t often see many studies about men. Just how are men faring in today’s society? For starters, they’re still the majority household income earners. In the U.S., only 15 percent of men earn less than their spouses, a number that skews more toward the younger generations than older men.1 

Traditionally, men have handled many aspects of finances in the household, including making decisions on insurance options. Today, however, it’s important for wives to be involved in these decisions. After all, women tend to live longer and may have to deal with the financial aftermath of their husband’s passing — ranging from issues such as a decreased pension to Social Security benefits to how to request a life insurance payout. 

We encourage both members of a couple to meet with us when discussing their long-term retirement goals. Please feel free to schedule a meeting during which we can review your retirement income strategy with the both of you. 

Another study found men may reap more benefits from work, or at least from working long hours. Women triple their risk of cancer and heart disease if they work more than 60 hours a week, while men tend to get healthier the longer they work.2 Men who work between 41 and 50 hours a week have a lower risk of heart disease, lung disease and depression than those who work 40 hours or less.3 

With more women in the workforce, some husbands have picked up the slack in household chores; this is particularly true among younger generations. The view of traditional masculine roles and masculinity in general is transitioning. Researchers say we are currently at a crossroads between the conventional hallmarks of masculinity (toughness, stoicism, heroism, etc.) and more inclusive, caring and displaying emotionally expressive characteristics.4 

That said, men also suffer from depression at a greater rate than previously acknowledged. The issue is that their symptoms may be different than what is known as typical. Instead of lethargy and isolation, some men exhibit depression through “substance abuse, anger, excessive risk-taking or other more stereotypically masculine behaviors.”5 

Content prepared by Kara Stefan Communications. 

1 Dan Cassino. Harvard Business Review. April 9, 2016. “Even the Thought of Earning Less than Their Wives Changes How Men Behave.” https://hbr.org/2016/04/even-the-thought-of-earning-less-than-their-wives-changes-how-men-behave. Accessed Aug. 5, 2016.
2 Sarah Knapton. The Telegraph. June 16, 2016. “Working long hours harms women but protects men, study shows.” http://www.telegraph.co.uk/news/2016/06/16/working-long-hours-harms-women-but-protects-men-study-shows/. Accessed Aug. 5, 2016.
3 Ibid.
4 Brendan Gough. The Society for the Psychological Study of Men and Masculinity. June 23, 2016. “Using Traditional and Contemporary Masculinity to Enhance Men’s Health.” http://division51.net/homepage-slider/using-traditional-and-contemporary-masculinity-to-enhance-mens-health/. Accessed Aug. 5, 2016.
5 Michael Addis. The Society for the Psychological Study of Men and Masculinity. July 8, 2015. “Men, Depression, and the Medical Model.” http://division51.net/homepage-slider/men-depression-and-the-medical-model/. Accessed Aug. 5, 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. 

 

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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.

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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. 

 

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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. 

 

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