Comprehensive Financial Planning

Balance. Confidence. Clarity.

Planning for the Expected

Perhaps Bette Davis said it best when she observed, “Old age is no place for sissies.” ¹

The challenges seniors have met throughout their lives have made them wiser and stronger, preparing them for the unique challenges that come with aging.

As we age, the potential for cognitive decline increases, ranging from simple forgetfulness to dementia. Long-term illness can sap time and energy from tending to your financial affairs in retirement. Even a decline in vision may make it harder to manage your financial affairs.

Fortunately, you can plan ahead to protect yourself and your family against the financial consequences of deteriorating health, and in many cases, insurance may play an important role.

Let’s examine some of the ways you can employ insurance to help protect your 
financial health.

HEALTH CARE COSTS

For some, health-care costs represent a larger share of their budget as the years pass.

Recognizing this, you may want to consider Medigap insurance to cover the expenses that Medicare does not, which can add up quickly. You also might want to consider some form of extended-care insurance, which can be structured to pay for nursing and home-care services—two services that Medicare doesn’t cover.

MANAGING YOUR WEALTH

The involvement you have with managing your investments may change as you age. For many seniors, that sort of day-to-day responsibility is unattractive and even untenable.

If that’s the case, you may wish to consider what role annuities can play. Annuities can be structured to pay you income for as long as you live, relieving you of the concern of outliving your retirement money.² Certain annuities even offer extended-care benefits, which allow you to address two concerns with one decision.

TRANSFERRING YOUR ESTATE

If you’re like many seniors, you have a strong desire to leave something to your children, grandchildren and perhaps a favorite charity. Through the use of life insurance, you can pursue these objectives. For example, life insurance can be used to create an estate or to equalize an estate transfer among your heirs.³

Insurance will never be able to prevent the health issues that come inexorably with age, but it can be used to mitigate the potential financial consequences of them.

1. BrainyQuote, 2015
2. The guarantees of an annuity contract depend on the issuing company’s claims-paying ability. Annuities have contract limitations, fees, and charges, including account and administrative fees, underlying investment management fees, mortality and expense fees, and charges for optional benefits. Most annuities have surrender fees that are usually highest if you take out the money in the initial years of the annuity contact. Withdrawals and income payments are taxed as ordinary income. If a withdrawal is made prior to age 59½, a 10% federal income tax penalty may apply (unless an exception applies).
3. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

Pay Yourself First

Each month you settle down to pay bills. You pay your mortgage lender. You pay the electric company. You pay the trash collector. But do you pay yourself? One of the most basic tenets of sound investing involves the simple habit of “paying yourself first,” in other words, making the first payment of each month into your savings account.

Americans’ saving patterns vary widely. And too often, short-term economic trends can interrupt long-term savings programs. For example, the U.S. Personal Savings Rate jumped from 3.5% to nearly 8% in May 2008 during the housing and banking crisis. It then rose and fell sporadically as the economic environment appeared to stabilize.1

THE GENIUS OF PAY YOURSELF FIRST

Anyone who’s ever managed their own finances knows that saving can be a challenge. There seems to be an endless stream of expenses that demand a piece of each month’s paycheck. Herein lies the genius of paying yourself first: you get the cream at the top of the bucket, and not the leftovers at the bottom.

The trick is to prioritize. Make it a point to put your future first. At first, saving may mean a small lifestyle change. But most individuals want to see their net worth increase steadily. For them, finding ways to save becomes more of a long-term commitment than a short-term challenge.

PUTTING YOUR MONEY TO WORK

What will you do with the money you save?

If retirement is your priority, consider taking advantage of tax-advantaged investments. Employer-sponsored retirement plans, such as 401(k)s and 403(b)s, can be a great way to save because the money comes out of your paycheck before you even see it. Also, as an added incentive, some employers offer to match a percentage of your contributions.2

For money you may want to access before retirement, consider placing the funds in a separate account. When the balance hits your target, you may want to move the money into investments that offer the potential for higher returns. Of course, this may mean exposing your money to more volatility, so you’ll want to choose vehicles that fit your risk tolerance, time horizon, and long-term goals.

In the pursuit of growing wealth, sound habits can be your most valuable asset. Develop the habit of “paying yourself first” today. The sooner you begin, the more potential your savings may have to grow.

UPS AND DOWNS

The U.S. Personal Savings Rate historically has fluctuated as Americans are influenced by the short-term economic environment.

Sources: Bureau of Economic Analysis, 2015, for the period July 1, 2005 through June 1, 2015. National Bureau of Economic Research, 2015

1. Bureau of Economic Analysis, 2015
2. Distributions from 401(k), 403(b) and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.

Measuring the Value of a Financial Advisor

What’s the value of a financial advisor?

Two studies found that working with a financial professional can result in higher returns and potentially lower personal stress.

LOWER STRESS

Seventy-six percent of people within 15 years of retirement are stressed when thinking about retirement savings and investments.¹

Working with a financial advisor to develop a written retirement income strategy, however, can increase your confidence and happiness, according to Franklin Templeton’s annual Retirement Income Strategies and Expectations Survey.

WITH AND WITHOUT²

HIGHER RETURNS

In addition to providing financial guidance, financial advisors may also add about three percentage points in net portfolio returns over time, according to a study by Vanguard.³

FINANCIAL ADVISOR ADVICE COMPONENTS⁴

It’s important to remember that financial advisors also may offer guidance that wasn’t measured in the two studies. Advisors can help develop strategies that protect against the financial consequences of loss of income, and coordinate with other financial professionals on tax and estate management.

1. Franklin Templeton, 2015
2. Franklin Templeton, 2015
3. Vanguard.com, 2015
4. Vanguard.com, 2015

Our team of advisors are well-equipped to serve and educate young professionals, individuals and families on all aspects of their financial world.  Some products we provide include: 

• 
• Life Insurance
• Disability Income Insurance
• Mutual Funds
• Annuities
• Investments
• Registered Investment Advisory Services

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