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Finding Peace of Mind With Your Retirement Income

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Even in tough times, you can secure retirement income that lets you maintain your lifestyle, lasts a lifetime, adjusts for life events and leaves a legacy for the kids.

Jerry Golden
November 10, 2022

Investors who’ve recently taken a big hit in the market are struggling to find peace of mind when it comes to achieving lifetime retirement income. Don’t give up; it can be done.

Importantly, peace of mind depends on more than just a pile of cash. Consider this scenario of a self-taught money manager who was lucky enough to move 80% of his holdings to cash in 2021. Along with bragging about it, he is offering his money management skills to friends and family.

However, these Baby Boomers are not as well off, are a little older and, because they did not move to cash, they have recently taken a big hit in the market. Now, in addition to losing a significant portion of their retirement savings, they have another anxiety: Am I going to have enough income to maintain my lifestyle for the rest of my life?

A pile of money is nice, but what they need is more targeted: income that is sufficient to support their lifestyle through their entire lifetime, access to funds in case of a late-in-retirement life event, and a legacy left for the kids and grandkids. With those needs, they will obtain that all-important peace of mind.

Let’s explore the qualities, instead of only the quantities, of a plan for all phases of retirement.

How to Achieve Lifetime Retirement Income

In the beginning of retirement, when you stop working, or are working part-time, you need enough income to enable this major change. Ideally, your plan will be easy to understand so you know where your income is coming from. When retirees had a pension along with Social Security, planning was a lot easier. (And tax planning was a lot simpler.) Now, most retirees or near-retirees need a plan for retirement income, like Go2Income (opens in new tab).

With a Go2Income plan, annuity payments supply some of the guaranteed lifetime income that pensions produced. However, you have many more options with these annuity payments, including:

– Annuity payment start dates.
– Income continuation to beneficiary and to a surviving spouse.
– Choice of level, increasing or laddered income.
– Accounts used as a source of annuity premium.

And since annuity payments also have include tax advantages that will boost your spendable (after-tax) income, you need to consider all of these questions and their related tax benefits and consequences.

The above may sound pretty basic, but the money manager mentioned above doesn’t even think in those terms. He’s looking only at the pile of money and how big it is, not whether it can provide a lifetime stream of income or meet life events, or how to capture the tax advantages.

How to Address Life Events

I make a lot of plans for the future. I also hedge my bets in case things don’t go the way I hope, so I deploy annuities or insurance to protect against actuarial or life risks. In addition, a plan like Go2Income should be designed to be easily adjusted in response to adverse market conditions, and where the changes to your income will be relatively small and hopefully temporary when they do occur.

A life event could be (1) a severe but short-term medical condition, or (2) the discovery that your house needs a new roof. Both can be expensive and could also lead to a significant reduction in the value of your savings.

With a Go2Income plan, you can test your plan for, say, a substantial shock to your retirement savings. In many instances, you will find that you need only small income adjustments to recover. And you always have the option of pushing the market loss to a planned reduction in legacy for the kids and grandkids while you maintain your current lifestyle. In any event, you aren’t left waiting for the market to turn around in order to pay your bills.

With your original Go2Income plan, you could be generating more income (after-tax) than you need each month, and you can use that higher income to pay for long-term care and better health insurance coverage, so the medical condition won’t bankrupt you.

And, if you already have good health and long-term care insurance, you can invest that extra income you’re earning into a legacy account.

How to Provide for a Legacy

The best plan should include not worrying about money, particularly late in retirement. You may be traveling a little less and decide to downsize (getting rid of both the lawn mower and the snow blower), so you won’t be spending as much every month. However, there may be other expenses that replace these.

With a successful Go2Income plan, most of your income — particularly in the late-in-retirement stage — will be “safe” and coming from Social Security, annuity payments, dividends and interest, with less in withdrawals from your rollover IRA.

To ensure either spouse is income-protected (even if one lives many more years beyond the spouse who passes first), you can elect an annuity payment option that continues to the survivor. If you believe the surviving spouse will need less income, then you can use that savings for a larger legacy. You can also elect to have annuity payments continue to a non-spouse beneficiary.

You could be putting extra earnings away toward a financial legacy and investing it in an account like a Roth IRA, which will allow your heirs to receive the money without a tax bite. Or you may want to establish a health savings account (HSA). You will find that having a secure source of income enables those types of decisions.

Finally, while putting your retirement income plan together, you may want to do some estate planning at the same time.

How to Have Peace of Mind

I’ll mention the money manager once again —

Interruption to address inflation…

Wait! I can’t end this article without a discussion of inflation and how Go2Income addresses it. As I wrote in my article Factoring Inflation into Your Retirement Plan, you can create an income plan that anticipates inflation over many years and allows for adjustments. How you decide to address market risk, longevity risk and the risk of inflation will help you decide the best plan for you.

Back to our friend the money manager…

With your Go2Income plan, you are using some of today’s retirement savings to purchase a lifetime of safe income and including other sources not requiring the liquidation of securities. And you’re using a portion of that income for insurance protection and/or legacy growth.

The money manager doesn’t have those future life events on his or her screen. If the future brings something unexpected (and it always does), a pile of cash, in a worst-case scenario, may not meet your needs late in retirement.

What I’m really talking about is the peace of mind that you earn with a plan for lifetime income, the ability to adjust to bad news and the gift of a legacy.

Read more: Investors who’ve recently taken a big hit in the market are struggling to find peace of mind when it comes to achieving lifetime retirement income. Don’t give up; it can be done.

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Importantly, peace of mind depends on more than just a pile of cash. Consider this scenario of a self-taught money manager who was lucky enough to move 80% of his holdings to cash in 2021. Along with bragging about it, he is offering his money management skills to friends and family.

However, these Baby Boomers are not as well off, are a little older and, because they did not move to cash, they have recently taken a big hit in the market. Now, in addition to losing a significant portion of their retirement savings, they have another anxiety: Am I going to have enough income to maintain my lifestyle for the rest of my life?

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A pile of money is nice, but what they need is more targeted: income that is sufficient to support their lifestyle through their entire lifetime, access to funds in case of a late-in-retirement life event, and a legacy left for the kids and grandkids. With those needs, they will obtain that all-important peace of mind.

Let’s explore the qualities, instead of only the quantities, of a plan for all phases of retirement.

How to Achieve Lifetime Retirement Income
In the beginning of retirement, when you stop working, or are working part-time, you need enough income to enable this major change. Ideally, your plan will be easy to understand so you know where your income is coming from. When retirees had a pension along with Social Security, planning was a lot easier. (And tax planning was a lot simpler.) Now, most retirees or near-retirees need a plan for retirement income, like Go2Income (opens in new tab).

With a Go2Income plan, annuity payments supply some of the guaranteed lifetime income that pensions produced. However, you have many more options with these annuity payments, including:

Annuity payment start dates.
Income continuation to beneficiary and to a surviving spouse.
Choice of level, increasing or laddered income.
Accounts used as a source of annuity premium.
And since annuity payments also have include tax advantages that will boost your spendable (after-tax) income, you need to consider all of these questions and their related tax benefits and consequences.

The above may sound pretty basic, but the money manager mentioned above doesn’t even think in those terms. He’s looking only at the pile of money and how big it is, not whether it can provide a lifetime stream of income or meet life events, or how to capture the tax advantages.

How to Address Life Events
I make a lot of plans for the future. I also hedge my bets in case things don’t go the way I hope, so I deploy annuities or insurance to protect against actuarial or life risks. In addition, a plan like Go2Income should be designed to be easily adjusted in response to adverse market conditions, and where the changes to your income will be relatively small and hopefully temporary when they do occur.

A life event could be (1) a severe but short-term medical condition, or (2) the discovery that your house needs a new roof. Both can be expensive and could also lead to a significant reduction in the value of your savings.

With a Go2Income plan, you can test your plan for, say, a substantial shock to your retirement savings. In many instances, you will find that you need only small income adjustments to recover. And you always have the option of pushing the market loss to a planned reduction in legacy for the kids and grandkids while you maintain your current lifestyle. In any event, you aren’t left waiting for the market to turn around in order to pay your bills.

With your original Go2Income plan, you could be generating more income (after-tax) than you need each month, and you can use that higher income to pay for long-term care and better health insurance coverage, so the medical condition won’t bankrupt you.

And, if you already have good health and long-term care insurance, you can invest that extra income you’re earning into a legacy account.

How to Provide for a Legacy
The best plan should include not worrying about money, particularly late in retirement. You may be traveling a little less and decide to downsize (getting rid of both the lawn mower and the snow blower), so you won’t be spending as much every month. However, there may be other expenses that replace these.

With a successful Go2Income plan, most of your income — particularly in the late-in-retirement stage — will be “safe” and coming from Social Security, annuity payments, dividends and interest, with less in withdrawals from your rollover IRA.

Retirees with a Guaranteed Income Are Happier, Live Longer
To ensure either spouse is income-protected (even if one lives many more years beyond the spouse who passes first), you can elect an annuity payment option that continues to the survivor. If you believe the surviving spouse will need less income, then you can use that savings for a larger legacy. You can also elect to have annuity payments continue to a non-spouse beneficiary.

You could be putting extra earnings away toward a financial legacy and investing it in an account like a Roth IRA, which will allow your heirs to receive the money without a tax bite. Or you may want to establish a health savings account (HSA). You will find that having a secure source of income enables those types of decisions.

Finally, while putting your retirement income plan together, you may want to do some estate planning at the same time.

How to Have Peace of Mind

I’ll mention the money manager once again —

Interruption to address inflation…

Wait! I can’t end this article without a discussion of inflation and how Go2Income addresses it. As I wrote in my article Factoring Inflation into Your Retirement Plan, you can create an income plan that anticipates inflation over many years and allows for adjustments. How you decide to address market risk, longevity risk and the risk of inflation will help you decide the best plan for you.

Back to our friend the money manager…

With your Go2Income plan, you are using some of today’s retirement savings to purchase a lifetime of safe income and including other sources not requiring the liquidation of securities. And you’re using a portion of that income for insurance protection and/or legacy growth.

The money manager doesn’t have those future life events on his or her screen. If the future brings something unexpected (and it always does), a pile of cash, in a worst-case scenario, may not meet your needs late in retirement.

What I’m really talking about is the peace of mind that you earn with a plan for lifetime income, the ability to adjust to bad news and the gift of a legacy.

Read more: https://www.kiplinger.com/retirement/achieving-lifetime-retirement-income-in-tough-times

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherFinding Peace of Mind With Your Retirement Income
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‘Quick fix’ concept for IUL illustrations advanced, with some dissent

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John Hilton
November 10, 2022

A state insurance regulator subgroup came up with a “quick fix” Wednesday to address faulty illustration problems within the Actuarial Guideline 49-A.

Sort of.

Members of the Indexed Universal Life Illustration subgroup ended a conference call with a nonbinding “straw poll” vote that favored a fix put forth by Securian Financial and Penn Mutual Life Insurance Co. That was enough for subgroup chair Fred Anderson of the Minnesota Department of Commerce, who agreed to send the poll preference on to the Life Actuarial Task Force.

“We’re really puzzled why you would even consider a proposal to fix this problem from the companies that are causing the problem … it’s like asking a bank robber to design a system to stop them from robbing the bank again.”
Birny Birnbaum, executive director of the Center for Economic Justice

“The proposal accomplishes this task by linking together the option leverage present in the S&P 500 benchmark account with all of the other indexed accounts as an additional limit,” he said. “Under the Securian proposal, any account with the same option budget will have the same option leverage limit.”

‘Could see it dragging on’

While six of ten subgroup members voted for the Securian fix, there remains support for a more “conservative” option, Anderson acknowledged. That option is represented in a letter from the Coalition of Concerned Insurance Professionals.

The coalition proposal grew out of comment letters authored by Sheryl Moore of Moore Market Intelligence and Bobby Samuelson of The Life Product Review. It now encompasses 12 “independent insurance professionals,” Samuelson told the subgroup.

He reminded regulators that the purpose of the original AG 49 was to “standardize the lookback” methodology used in the numerous proprietary indexes insurers are using. Many of those indexes include components that do not have enough performance history available. As a result, efforts to create a history is leading to flawed illustrations, critics claim.

“Every time we’ve been around to do regulation on this, the problem has always been the lookback,” Samuelson said. “That’s part of the reason why the coalition proposal goes all in on the fact that the lookback is flawed, and we should do a hedge budget-based approach. The other groups are taking a similar perspective by using the hedge budget as the basis for the illustrated rate.”

Samuelson sought to clarify perceptions that the coalition opposes the lookback. Not true, he said, but it should be part of an illustration that seeks to properly inform the consumer of the risk and reward.

“The difference is that the industry wants to show risk and reward using a level rate on the illustration,” Samuelson explained. “In other words, they want to show the reward and not the risk. That is the problem with using a lookback, which is inevitably variable. To show a level illustrated rate forever creates the concepts in the client’s mind of perpetual reward with no risk.

“That can also be levered into all sorts of product strategies that can be gamed to maximize illustrative performance, which is exactly why we’ve been through three rounds of these regulations.”

The NAIC adopted AG 49 in 2015, but insurers quickly got around it by offering IUL products with multipliers and bonuses. That led to AG 49-A, adopted in late 2020 after this LATF directive: “designs with multipliers or other enhancements should not illustrate better than non-multiplier designs.”

Time concerns

Anderson expressed concern that advancing the coalition proposal would not be a “quick fix” the subgroup desires.

“The coalition proposal is definitely on the table,” he said. “I understand there may not be much wording [changes], but there are going to be a ton of comments and a ton of issues coming up and I could just see it dragging on and we’ll never get to the core issue.”

In addition to the “quick fix” to AG 49-A, subgroup members are also toying with re-opening the overall Life Insurance Illustrations Model Regulation (#582). Creating regulation #582 was an acrimonious process that took years before the National Association of Insurance Commissioners adopted it in 1995.

The subgroup is accepting comments until Nov. 22 on which subsections of #582 to consider opening and concepts for draft revisions.

Samuelson and other supporters rejected the idea that the coalition fix cannot be done quickly.

“The coalition proposal presents no threat to indexed UL sales and will serve to further consumer understanding,” said Birny Birnbaum, executive director of the Center for Economic Justice. “We’re really puzzled why you would even consider a proposal to fix this problem from the companies that are causing the problem. I mean it’s like asking a bank robber to design a system to stop them from robbing the bank again.”

Read more: https://insurancenewsnet.com/innarticle/quick-fix-concept-for-iul-illustrations-advanced-with-some-dissent

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick Desrocher‘Quick fix’ concept for IUL illustrations advanced, with some dissent
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Jamie Hopkins: Why Debt Is ‘Powerful,’ Annuities Are ‘Underutilized’

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Jane Wollman Rusoff
November 14, 2022

Here’s a crisp and clear message to financial advisors from Jamie Hopkins, managing partner of wealth solutions at Carson Group:

“If you don’t really care about what you’re doing, you’re in the wrong business,” he tells ThinkAdvisor in an interview. “Define your ‘Why.’ Your ‘Why’ should make you cry.”

In his newest book, “Find Your Freedom: Financial Planning for a Life on Purpose” (Harriman House – Nov. 22, 2022), co-written with Ron Carson, founder and CEO of Carson Group, readers have the freedom, of course, to hop among the 26 chapters. But chances are they’ll want to take in this comprehensive, conversational tome from cover to cover.

It provides a trove of financial planning insights as well as the likely repercussions of failing to have a good financial plan.

In the interview, however, Hopkins maintains that there’s typically little need for an all-inclusive plan if, for example, you’re only in your 20s. Estate planning can come later.

Finance professor of practice at Creighton University’s Heider College of Business, Hopkins co-created the Retirement Income Certified Professional designation and developed additional educational materials for the American College of Financial Services’ Certified Financial Planner and Chartered Financial Consultant programs, among others.

In 2017, seven years after Hopkins earned a Juris Doctor degree from Villanova School of Law, The American Bar Association named him one of the top 40 young lawyers in the U.S.

In our conversation, he explores a number of financial planning concepts, including the use of debt as a powerful tool. He also talks about why he thinks annuities are “oversold and underutilized” and why the 4% rule isn’t a rule but “a withdrawal finding.”

ThinkAdvisor recently held a phone interview with Hopkins, who was candid in a brief assessment of financial advisors.

He would hire only “5% of the financial advisors out there,” he declares, and then offers reasons.

Here are highlights of our interview:

THINKADVIVSOR: How do you define “financial freedom”?

JAMIE HOPKINS: People need to define that for themselves. You have to start with understanding your relationship with money, where you want to go with it and who you want to be. Then work backwards toward what financial freedom means to you.

How can advisors take their own personal financial freedom to the next level?

Define your “Why.” I always say, “Your ‘Why’ should make you cry.” If you don’t really care about what you’re doing, you’re in the wrong business — whatever you’re doing in life.

I think most advisors should put their “Why” on their website. Do a video about your “Why.”

Figure out what you actually want to do as an advisor. Make sure you’re only focusing on doing the things that you want to do, whether that means partnering, finding the right tech tools or leaving the firm you’re with and going out on your own or joining someone else’s firm.

You don’t have to feel like you’re stuck in life by default.

What is the Carson “Find Your Freedom Planning Promise”?

It’s following a proven financial planning process that will get you to where you want to go.

Advisors need to help people understand the basics first — saving, income [and so on] — and then get more strategic about the decisions they ultimately have to make, like layering in legacy and more complex planning topics.

What keeps people from wanting to do a financial plan?

Everybody has parts of a financial plan. You might not put it all together [now] — and that’s OK. Not everything has to be wrapped up [at once].

You can be in a part of life where only pieces of a plan are in place because that’s what you need at that [particular] phase.

If you’re 26 years old, for instance, you don’t need to know what your legacy, estate planning and charitable [strategies] are yet.

But you have to align your planning with your objectives and goals. No one plan fits everybody.

To what extent are millennials and Gen Zs involved in financial planning?

It all depends on what phase of life you’re in and where you are at that stage, not how old you are.

The oldest millennials are in their 40s. They might even be thinking about retirement strategies. Some millennials in their 20s are millionaires.

However, most younger people are thinking about housing, managing debt and understanding their relationship with money.

[The last point] is a core part of what [advisors] used to skip over: The behavioral aspect of understanding your relationship with money is incredibly recent. It’s only been two years since that’s been added into CFP education.

And one thing we have to get a better understanding of is whether you’re a debt-averse person or a more risk-tolerant person.

How can “debt be a powerful planning tool that helps us open up possibilities in life that you wouldn’t have expected without it,” as you write?

Take a lesson from the best companies in the world: They almost all leverage debt to grow. Debt is a very powerful growth vehicle.

So you should always look at what [rates] you can borrow at and what you can leverage elsewhere. That should be an annual decision.

For Americans, the two biggest debt decisions are college education and buying a house. Also, you might have debt that comes in on your business side.

Any time you’re borrowing, you’re also making a decision as to how much to borrow vs. how much to invest.

Even if you’ve paid off your mortgage and you’re 62, you’re making an annual decision as to whether, for example, you should pay all taxes [with cash], refinance your mortgage or do a reverse mortgage.

Insurance is very important to a financial plan, you write: “Being without insurance is like having a steering wheel but no car.” But why do you need insurance if you’re investing in the market?

Insurance is often a risk-mitigation or transfer technique. Tax-free death benefits from life insurance can be a more efficient way to transfer wealth.

There are certain things that market returns can’t solve. For instance, no return can [provide] lifetime income.

Read more: https://www.thinkadvisor.com/2022/11/14/jamie-hopkins-how-to-help-clients-find-financial-freedom/

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherJamie Hopkins: Why Debt Is ‘Powerful,’ Annuities Are ‘Underutilized’
read more

Foldes Financial Announces Tax-Free Retirement

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Newsfile Corp.
October 27, 2022

Las Vegas, Nevada–(Newsfile Corp. – October 27, 2022) – Foldes Financial, a financial services company focused on providing tax-free retirement income, has announced the launch of reiterated Tax-Free Retirement Programs to serve business owners & the special needs community. The initiative led by the company’s Founder Peter Foldes Certified Financial Fiduciary® (CFF), takes its tax-free retirement solutions to the special needs community, with the goal to ensure families are adequately prepared for their retirement.

“Many families with children with special needs never realize the financial freedom they dreamed of. I saw firsthand the struggle parents have to support their child’s needs,” Peter Foldes said. “The special needs community has been a large part of my life, which is why we’re catering our programs ”

Peter Foldes leads the team at Foldes Financial to offer retirement planning, with tax-free growth solutions. Collaborating with a team of tax and law professionals to create systems for families with special needs. The goal of the program is to educate and change families’ futures for generations, working in the community and building partnerships with groups providing similar services.

“One of the reasons I love this work is because these structures can be options for businesses and individuals from all backgrounds. All families should know and understand their options but the reality is often they don’t. Helping the special needs community is at the core of our mission, providing help to those that need it most. If we can make even a small impact in our communities on a daily basis, special needs families across the country will hopefully start to close the gap of information and implementation.”

Foldes Financial has continued to expand its offerings across the nation, in line with the goal of Peter Foldes. Foldes Financial is hosting a free masterclass with world-renowned economist and PBS host Tom Hegna.

About Foldes Financial

Foldes Financial has continued to expand its offerings across the nation, in line with the goal of Peter Foldes. Foldes Financial is hosting a free masterclass with world-renowned economist and PBS host Tom Hegna. As shared with 80 million homes around the world, learn the 3 pillars of building and keeping wealth, sign up now https://bit.ly/tommakesmillionaires.

Read more: https://news.yahoo.com/foldes-financial-announces-tax-free-142300018.html

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherFoldes Financial Announces Tax-Free Retirement
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Ten to Watch in 2023: Dr. Preston Cherry

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Dr. Preston Cherry is the founder of Concurrent Financial Planning, president of the Financial Therapy Association and head of financial planning at the Austin E. Chofrin School of Business and director of the Charles Schwab Center for Personal Financial Planning.

Ali Hibbs
November 1, 2022

As a child, Dr. Preston Cherry’s mother taught him about the value in thinking about financial wellness from a psychological perspective.

“The vulnerability, the compassion, how to deal with shame, how to deal with guilt and regret, being open, being honest with oneself, and all of that,” he said. “My mother introduced that into our home at very early ages.”

This has driven much of Cherry’s recent work, and he maintains that there are metrics for measuring the effects of different psychological approaches to finance.

Ten to Watch: https://www.wealthmanagement.com/people/ten-watch-2023

“We’re talking about stages of change,” he said. “What’s inspiring you? What is your willingness and your readiness to change? And there are stages that influence what type of decisions and changes you’re willing and able to make to accomplish your goals. And you can measure that by your levels of perception, your levels of worry and anxiety. Are they high or low? Your levels of satisfaction. Do you feel you’ve accomplished your goals?”

In an article published by Cherry while earning his doctorate, he said the first three steps to achieving financial wellness involved admitting one’s financial truths, acknowledging the feelings those truths create and then taking action to adjust them where needed in small and achievable ways.

He’s now one of the industry’s leading experts in the nascent field of “financial psychology,” a concept he was introduced to while getting his doctorate in personal financial planning from Texas Tech University.

And it’s one approach to financial planning that has quickly gained a following.

Cherry got his start in banking, but quickly got turned onto financial planning through a mentor at Prairie View A&M University, where he got his bachelor’s degree. He earned a master’s degree in financial planning in 2006, then later returned to Texas Tech to earn his doctorate.

These days, he lives in Green Bay, Wisc., heading up the financial planning department at the University of Wisconsin’s business school and serving as director of the new Charles Schwab Center for Personal Financial Planning on the same campus.

Cherry said his speaking engagements and work to promote awareness of financial psychology, as well as financial literacy, are what’s really driving him.

“The terminology and the empirical research and how it’s being delivered nowadays is so important,” said Cherry, who stressed that helping clients to face hard truths and be vulnerable in their own personal journeys is a big part of helping them to achieve a healthy balance between finances and lifestyle.

“You’re going from trying to understand how we process information and those types of things that behavioral finance was focused on in the beginning to really getting into well-being,” he explained. “We’re now talking about how it may not be an irrational versus rational matter, it may really be more about perspective, cultural experiences or your background and what shaped you.”

Read more: https://www.wealthmanagement.com/people/ten-watch-2023-dr-preston-cherry

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherTen to Watch in 2023: Dr. Preston Cherry
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Retire Inspired

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Join retirement expert Mary Beth Franklin and experts from Athene and The Index Standard for strategies that take the focus off current challenges and put it back on what clients want for their future.

Athene
October 31, 2022

Yes, you can help clients navigate a path toward the retirement they envision, even with the significant headwinds that have emerged. In this season of the Retirement Repair Shop podcast series, experts from Athene and The Index Standard speak with retirement income expert Mary Beth Franklin at smart ways to plan around inflation, strategies for handling the recent increase in market volatility, the threat of recession, and more!

Watch and listen here: https://www.investmentnews.com/retire-inspired-227577

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherRetire Inspired
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7 Things To Know About Social Security and Retirement for 2022

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Given that a recent GOBankingRates survey found that 23% of Americans have nothing saved for retirement, it’s clear that many will be relying on Social Security to fund their golden years. And even if you do have retirement savings, you’ll want to be strategic about taking your benefits in a way that’s optimal for you.

You Shouldn’t Rely on Social Security To Fund Your Whole Retirement

If you’re expecting Social Security to fully fund your retirement, you could be in for a rude awakening. The average monthly benefit is $1,542.22 as of June 2022.

“Social Security today only covers a portion of the average American’s expected income needs in retirement,” said Henry Yoshida, CFP and CEO of Rocket Dollar, an investment platform that allows individual investors to use tax-advantaged funds for alternative investing.

If you’re in that 23% of Americans who have nothing saved, start saving ASAP so that you’ll be in better financial standing when you reach retirement age.

Delaying Taking Your Benefits Can Pay Off

You can start to collect Social Security benefits at age 62, but it may pay off for you to wait.

“If you are able to delay taking Social Security after eligibility, you can significantly increase the income [compared to] that minimum amount at the earliest possible access date,” Yoshida said. “For example, if you take Social Security at 62 and your income is $2,364, if you can wait to access Social Security until age 70, the income is $4,194.”

However, Waiting Until Age 70 Isn’t Always the Best Option

It’s true that if you delay taking Social Security until age 70, the amount you receive will be larger than if you start receiving your benefits before, but this doesn’t mean this is always the best option.

“You need to evaluate how that decision impacts your asset balances over time,” said Emily Casey Rassam, senior financial planner at Archer Investment Management. “If you look at the complete picture, which includes a projection of your investment portfolio balance over time, it may make more sense for you to take Social Security earlier. Often, if you delay Social Security until age 70, you are drawing down assets significantly, and that can hurt your long-term asset trajectory. Like all financial decisions, a comprehensive financial plan can tell the whole story and help you make decisions with all of the relevant data organized.

65 Isn’t the Full Retirement Age for Everyone

When deciding when to collect Social Security, it’s important to understand what you’ll receive at what age.

“Age 62 is the earliest you can take benefits. For every year an individual delays taking benefits beyond their full retirement age — which varies depending on when you were born — through age 70, the annual benefit increases by 8%,” said Richard Freeman, senior director and wealth advisor at Round Table Wealth Management. “Conversely, for every year an individual takes benefits earlier than their full retirement age, their annual benefit is decreased 8%.”

Freeman said that his clients often assume their full retirement age is 65, but this is not always the case. If you were born in 1943 or later, your full retirement age ranges from 66 to 67.

Your Benefits Are Calculated Based on your 35 Highest-Earning Years

It’s important to understand how the Social Security Administration calculates your benefit amount.

“The primary insurance amount — or amount you get based on your own record — is based on the worker’s highest 35 years of earnings,” said Herman “Tommy” Thompson, Jr., a certified financial planner with Innovative Financial Group in Atlanta. “Most people think it’s based on your last five years. I’ve been talking about Social Security for 18 years and every time I say this, someone is surprised!”

Your Spouse (or Former Spouse) Can Impact Your Benefit Amount

Thompson said it’s important to understand how benefits are calculated when you are the surviving spouse.

“When a spouse dies, the higher Social Security amount remains for the [surviving] spouse, assuming they were married for at least nine months,” he said. “Not half. Not both. The higher remains. Widows and widowers can claim as early as age 60.”

And if you are divorced, you may be able to claim your ex-spouse’s benefits.

“A divorcee can still claim on an ex-spouse’s record if: (1) The individual is at least 62, (2) they were married for at least 10 years, (3) the individual is currently unmarried and (4) the ex-spouse is receiving a benefit or has been divorced for at least two years,” Thompson said.

Social Security (Probably) Won’t Run Out

You’ve likely seen headlines about Social Security running out in 2035 — but this is a worst-case scenario and not something that should cause you to panic. However, you may need to adjust your retirement plans depending on how the gap in funding will be bridged.

“The death of Social Security has been greatly exaggerated,” said Paul Tyler of Nassau Financial Group in Hartford, Connecticut. “If Congress doesn’t add additional funds to the trust, payroll taxes on current workers will continue to support the program. However, the taxes would not fund 100% of the expected benefits. The gap could be closed by imposing means testing, deferring full retirement ages beyond 67 or increasing taxes on benefits. Any of these modifications would require many people to adjust their retirement plans.”

Read More: https://www.yahoo.com/video/social-security-retirement-7-things-110023638.html

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick Desrocher7 Things To Know About Social Security and Retirement for 2022
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Retirement Planning: One Size Doesn’t Fit All

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Virtually everything can be customized to fit us individually. And that includes a retirement income plan.

BY

New Retirement Rules of Thumb Still Have Issues

I’m not the only one who is advocating a new way of looking at planning for retirement. The New York Times wrote much the same thing (opens in new tab).

In the article, finance reporter Tara Siegel Bernard quoted experts who basically said the 4% rule of thumb (a “one-size-fits-all” rule) is dead. The experts, however, proposed new rules of thumb that aren’t much better. Their ideas were at least somewhat customizable to specific circumstances, but they followed the same narrow path: Pick an income goal and test it to see if it fails. If it fails, cut back on your spending.

A rule of thumb isn’t the best way to determine what is probably the most important financial decision in your life.

Consider Your Major Sources Of Income

To achieve your best plan for retirement income, look at all of the major sources of income that are logical for your situation and create a plan where the lion’s share is in the form of safe income.

That means:

  • Understand and correctly use the different sources of income — dividends, interest, annuity payments and withdrawals (involving sales of securities) — from your savings.
  • Select long-term planning assumptions for the markets and inflation with the understanding that you likely won’t achieve them in the short term.
  • Monitor your plan, re-project the planning results in real time and update your plan if necessary. Note: The more safe income you have, the less volatility you will contend with.

Expect Variability in Results When Planning

Let’s look at how the above approach might work for a consumer who develops a plan with Go2Income guidance. We looked at the results for Go2Income plans ordered over the week ending Sept. 16. The average visitor to Go2Income had retirement savings of $1.6 million (about half was in a rollover IRA), and half of these retirees wanted to leave a legacy of their current savings. Sixty-three percent were married with an average age of 66.

Based on all these stats, the average Starting Income Percentage (SIP) was 5.01%. So, did we declare victory with our new 5% rule of thumb? Nope. It’s not about being the highest, it’s about being the right fit. Also, the SIP is only the start (no pun intended) of a Go2Income plan. It is important because it tells you the contribution of income from your savings to meet your income goal. But a plan also needs to address inflation, lifetime income, legacy and liquidity.

Even so, since it’s the first thing a visitor sees, you ought to know it needs to be personalized. The SIP for these visitors ranged from 3.98% to 7.36%. There are lots of factors impacting that result, but age, gender and marital status are keys, with a male only, female only and couple averaging 5.54%, 4.87% and 4.97%, respectively.

Using SIP to Personalize Your Plan

I apologize for all the numbers, but a plan for retirement income is defined by the kind of retirement you want and deserve. One thing that shows up immediately is how the pricing of annuity payments affects your plan. With the increase in interest rates and improvement in annuity payout rates, all SIPs are higher than they were at the beginning of the year — from 4.55% to 5.01%.

And, of course, there are additional plan options you can adjust to meet other SIP or retirement objectives. For example, if you want to rely on the inflation protection of Social Security benefits or income-producing real estate, you might build in a lower inflation rate. A reduction from 2% to 1% in the assumed annual inflation would increase the average SIP from 5.01% to 5.54%.

Even more than a T-shirt, the plan must be tailored just for you — and your SIP is an efficient way to set started.

Read More: https://www.kiplinger.com/retirement/retirement-planning/one-size-doesnt-fit-all-especially-in-planning-your-retirement

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherRetirement Planning: One Size Doesn’t Fit All
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Most Americans Plan To Rely Heavily on Social Security for Retirement — Here’s What To Know

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The majority of Americans don’t have much faith in the future of Social Security. A recent GOBankingRates survey found that 46% of Americans believe the program will offer a lot less than it does today by the time they retire, and 23% believe the program won’t exist at all by the time they retire. Yet despite this, most Americans plan to depend on Social Security to fund at least some of their retirement — 26% said they plan to use Social Security to fund less than half of it, but 51% said they plan to depend on it to fund more than half (31%) or all (20%) of their retirement.

Can Americans Rely on Social Security as It Stands To Fund Their Retirement?

“With the rise of inflation and the overall cost of living, unless you can truly stick to a budget — which in my experience most people don’t — Social Security is not sufficient for most retirement expenses,” said Frank Murillo, partner and managing director at Snowden Lane Partners.

“What people envision spending in retirement and what they actually spend are two different things,” he continued. “With the clients I work with, we go through an exercise I call ‘recreating the dollar’ where we piece together sources of income to mimic what they had through their working years. Then we stretch that for a reasonable time span, and the results of what they can actually spend are eye-opening.”

Social Security was never meant to be a retiree’s only source of retirement income, said Wade Pfau, co-director of the Retirement Income Center at The American College of Financial Services.

“It is meant to replace about 40% of the average indexed lifetime earnings of someone who worked and earned an average wage over their lifetime,” he said. “Many retirees will seek to replace a higher percentage than this.”

Most experts suggest aiming to plan for retirement income that is at least 70% of your pre-retirement income.

“Since Social Security is likely to make up only a portion of your retirement income, it is important to have a well-rounded strategy to meet your income needs in retirement,” said Katherine Tierney, CFA, senior retirement strategist at Edward Jones. “We recommend you act now to understand what you need to do to achieve your ideal retirement. If you’re unsure where to start, a financial advisor can help you outline your goals, develop a strategy to meet them and measure your progress along the way.”

What To Do If You Must Rely on Social Security To Fund Your Retirement

Although financial experts do not recommend living on Social Security alone, for many Americans, this is their only source of retirement income. The GOBankingRates survey found that 25% of Americans have not started saving for retirement and that 36% have less than $10,000 saved.

“Each situation is unique and some people can live on Social Security only,” said Colleen Carcone, director of wealth planning strategies at TIAA. “If your only source of income is Social Security, remember that continuing to work and delaying the start of your Social Security benefits can close the gap [between how much you need for retirement and how much you have saved] because a delay would mean a bigger check when you do start.”

What Will Social Security Look Like in the Future?

As the survey found, most Americans believe that Social Security benefits will be reduced or cease to exist in the coming decades. As it stands, the Social Security trust fund is set to run out in 2035, so are these concerns warranted?

Most experts believe Social Security will continue to exist, but to keep it going will likely require some changes in the current program.

“There are a few simple solutions that will likely occur,” said Jeremy Finger, CFP, founder of Riverbend Wealth Management. “First, we could eliminate the earnings cap on Social Security tax so that all income above $147,000 is taxed. This could extend the Social Security trust fund. Second, [the Social Security Administration could] increase the full retirement age, which is kind of a pay cut. For example, people who were born after 1970 may not able to get full benefits until age 68 or 69. Third, [they could] increase the payroll tax on Social Security.”

One or a combination of these solutions should balance the Social Security trust fund, Finger said. However, because there are a lot of unknowns, Finger does not recommend relying on Social Security to fund your retirement.

“I would not advise clients to make their Social Security decisions based on what the government may do,” he said.

No matter how the Social Security trust ends up being funded — and most experts believe this will happen before it gets depleted — there is a chance that benefits will be reduced in the coming years.

“Social Security could be reduced to match incoming revenue from individuals and their employers,” Carcone said.

The uncertainty surrounding the future of Social Security should be taken into account when retirement planning.

“While most advisors consider current funding estimates as provided by the Social Security Administration for retirement planning, one should consider possible changes to the system,” said Wendy S. Baum, a financial advisor with Equitable Advisors. “The more saved over time with pension strategies and portfolio building, the less reliant one will be on Social Security benefits.”

Read More: https://www.yahoo.com/video/most-americans-plan-rely-heavily-110242798.html

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Nick DesrocherMost Americans Plan To Rely Heavily on Social Security for Retirement — Here’s What To Know
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7 Money Moves Retirees Almost Never Regret

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We often hear stories about retirees sharing money mistakes they regret in retirement. Looking at the flip side of the coin, what are some financial moves retirees almost never regret?

Working With a Financial Professional
It is incredibly rare for a retiree to regret working alongside a trusted and qualified financial advisor or planner for their retirement needs. These individuals, after all, are here to look out for the retiree’s best interests.Kurt Heineman, financial planner at Vision Casting Financial Planning, uses the example of rising interest rates in the current economy. Financial planners can help retirees think about ways to make low-risk returns on cash they may be holding for short or intermediate purposes they might not be aware of if they were working on their own.“It can be very reassuring to have a retirement plan and someone who will walk alongside you as you transition into retirement,” Heineman said. “Financial planners can help retirees build, monitor and manage a financial plan which can lead to peace so you can enjoy the retirement you worked hard for.”

Planning When To Claim Social Security
According to the Social Security Administration (SSA), retirees at age 62 are eligible to start claiming Social Security. Some retirees may decide to delay retirement until age 70 to receive the full benefit amount.It is often quite difficult to determine the right timing for Social Security, and retirees rarely regret carefully considering when they will claim Social Security to receive a financial boost. Wade Pfau, professor of retirement income at The American College of Financial Services, said claiming Social Security does not have to happen at the same time you retire.“A thoughtful claiming strategy could add more than $100,000 of lifetime benefits to a retirement plan,” Pfau said.

Using Proper Annuity Solutions
Mark Kennedy, founder and president of Kennedy Wealth Management LLC, specializes in helping people who are within reach of retirement or who are already in retirement. The primary money move Kennedy’s clients never forget is building in guaranteed lifetime income and guaranteed growth using the proper fixed index annuity solutions with lifetime income riders.While the market is down everywhere, Kennedy said the lifetime income for retirees is not. Many advisors lean predominantly on the stock and bond markets to provide their clients with incomes for life, but Kennedy recommends taking the time to understand the proper and correct annuity solutions and weaving them into a client’s overall retirement income plan.“I can’t tell you how many clients I’ve spoken to on client review calls this year and they always say, ‘I’m glad you encouraged me to go with that annuity. It’s a lifesaver,’” Kennedy said.

Maxing Out Their Roth IRA
For those who qualify, Rafael Rubio, president of Stable Retirement Planners, said retirees who max out their Roth IRA as opposed to a traditional IRA benefit in retirement. This gives retirees a bucket of tax-free assets they can pull from or create tax-free supplemental income.

Maxing Out Their 401(k)
Retirees who work for companies where employer-sponsored retirement plans are offered, like a 401(k), rarely regret taking the opportunity to max out their contributions. The earlier one can start doing this, and prioritizing contributions throughout their working career, the better especially if you contribute at a level your employer is willing to match.“Doing this almost always gives retirees more options on how to live their lives in retirement,” said Eric M. Jaffe, CEO and founder of Mosaic Wealth Partners. “Typically, it provides greater peace of mind when retirees have adequate funds available in retirement to maintain their desired lifestyle.”

Diversifying Investment Vehicles
Most retirees never regret planning ahead for retirement to meet their goals and investing early to reap the benefits of compound interest. Another money move retirees seldom regret is diversifying their savings and investment vehicles. This includes accounts like IRAs, Roth IRAs, employer-sponsored retirement plans and general accounts that do not necessarily have particular tax efficiencies under the Employee Retirement Income Security Act.“Each of these accounts has different contribution limits and availability as well as varying tax ramifications while saving and also while distributing funds in retirement,” Jaffe said. “For most retirees, having different buckets from which to distribute assets in retirement with varying tax consequences when doing so proves to be beneficial.”

Eliminating Debt
Steve Sexton, CEO of Sexton Advisory Group, said eliminating debt before you retire does more than prepare you to make a smoother transition into the next chapter. It enables you to earn interest rather than paying interest.“Many people carry high-interest rate evolving debt, which means your expenses go up when interest rates go up – making your monthly budget unpredictable in retirement,” Sexton said.Whether you’re planning for retirement or in a completely different chapter of your life, nobody who has ever eliminated debt, like student loans, car payments or mortgages, can say they regret not being in debt. Focus on paying off any existing debt, or paying in full on any big expenses, prior to retirement, before you decide to retire.

Read More: https://www.gobankingrates.com/retirement/planning/money-moves-retirees-almost-never-regret/

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley Saunders7 Money Moves Retirees Almost Never Regret
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