Should I take my Social Security – 2020

[et_pb_section fb_built="1" _builder_version="3.22"][et_pb_row _builder_version="3.25" background_size="initial" background_position="top_left" background_repeat="repeat"][et_pb_column type="4_4" _builder_version="3.25" custom_padding="|||" custom_padding__hover="|||"][et_pb_text _builder_version="4.4.4"]The last couple of months, I am seeing the same questions quite a bit. Primarily from my 64 and 65-year- old’s. I’ve been laid off or furloughed. I was going to wait a few more years to retire, but I think I want to retire now. Should I take my Social Security income now or wait. Oh, and that Medicare part B that I was going to wait on, let’s get that started now too. The SS question really depends on you. How’s your health? What kind of longevity do you have in your family? Are you married and have some additional choices? Are you divorced and not re-married and have even more choices? I would have to write a book on Social Security to answer all the variables. But let’s tackle a couple here. Medicare is the first thing you need to think about. Call your HR department and let them know that you are Medicare-eligible. Ask if you can keep your current coverage after your employment is finished and how much will it cost. Remember to break out the cost for employee only and employee and spouse. Ask if you must have Medicare with your retiree insurance. Then look at all your Medicare options and decide if you want to stay on the retiree plan or go to a Medicare plan. If possible, give yourself as much leeway as you can, preferably 3 months from your retirement date. If you decide to go on a Medicare plan, you will need to ask your HR department for a Letter of Creditable Coverage. You will need that, so you don’t get penalized for not getting Medicare in time. As for collecting Social Security now or waiting, that too will depend on your needs as well as your life expectancy, among other things. If you’re healthy and think that you have a long-life expectancy and don’t need the money, waiting till your 70 will give you the most monthly income. This strategy will also give your spouse a larger spousal benefit should you die first. Your Social Security income will increase by 8% every year that you wait past your full retirement age. That said, if you take it early, you collect a smaller monthly amount, but you will be collecting, presumably, longer. So, what’s best? The answer will be different for everyone. But, if you need the income, by all means, take it no matter how much it could have grown to. If you get rehired, you can always stop it and start again later. -Stay safe, stay cool. [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Toxic Money Thoughts – 2020

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Toxic Money Thoughts. This can ruin even the biggest nest eggs. Ready to retire and just going for it without doing calculations is a mistake. You have your lump sum and decide, “I’m going to buy a motorhome and travel the country. I’m going to pay cash! I’m going to pay off all my debts”.

I’m not saying don’t. I’m saying look before you leap. Take an inventory of your current monthly expenses. Project into the future as best you can and incorporate the projection in your plan. Decide how much risk you can afford to take, then build a plan around your risk tolerances. Incorporate your Social Security, pensions, 401(k)s, IRAs, and whatever else you have. Calculate the best time to turn on your Social Security benefits. Run scenarios to figure out the best pension income option to choose from. Do you need long-term care insurance? Do you still need the life insurance that you have at work? Is downsizing your home a good idea? Maybe move to a one-story house just in case walking up the stairs gets too difficult. Dizzy yet? No worries. Starting is usually the hardest part. It just looks too overwhelming.

We, at American Retirement Advisors, are here to help. We provide this service to our clients, free of charge. I’m not kidding, and, no, there is no catch. We have a full in-house financial team standing by, ready to help. We assist folks through this process, culminating in a well thought out and expertly prepared Retirement Income Plan. This customized plan is presented to you in writing and fully explained. If you like it and need help with the implementation, we are happy to help. Either way, still no charge for building your plan. If you would rather start by attending our (for now, online) Retirement Income Planning workshop, no problem. This newsletter has our schedule and how to register. We hold them every month. Don’t want to do a workshop but want to get started? Just give us a call and schedule a financial appointment with your advisor.

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Discounts from senior organizations – 2020

This month we’re going to look at some financial perks of getting older. Discounts on nearly everything! There are discount programs through some Medicare supplement companies as well as Medicare Advantage companies. There are discounts from senior organizations like AARP and AMAC. There are also a ton of discounts without even joining anything. Your proof of age is all you need. I like my free donut with my coffee, personally.

Tax deductions! Folks age 65 and older are eligible for several extra tax deductions. You are eligible to claim a bigger standard deduction than younger taxpayers. The standard deduction is $1,300 more for each spouse who is age 65 or older, or $2,600 if both members of a married couple meet the age requirement. Individuals age 65 and older can increase their standard deduction by $1,650 in 2020.

Larger retirement account limits! Workers age 50 and older can defer paying income tax on as much as $26,000 that they contribute to a 401(k) plan, $6,500 more than younger workers. The IRA contribution limit is also $1,000 higher for workers 50 and older, or $7,000 in 2020. Also, no more early withdrawal penalty. Once you turn age 59-1/2, there's no more 10% penalty to withdraw money from your IRA. And if you leave your job at age 55 or later, you can begin taking penalty-free 401(k) withdrawals from the account associated with the job you left. You should also probably think about rolling the funds out of the 401(k) and into your own IRA for more flexibility, control, and safe choices for your assets.

You can sign up for reduced Social Security payments as early as age 62 or claim the full amount you have earned at your full retirement age of 66 and 2 months to 67, depending on your birth year. If you delay claiming your payments past your full retirement age up until age 70, you will earn delayed retirement credits that will further boost your monthly benefit.

Usually, you will have the opportunity to have much less expensive health insurance. I can’t wait for this one!

So, enjoy being a Seasoned Citizen. You’ve earned it!

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How to prepare for something that hasn’t happened before – 2020

This month, I would like to talk about the elephant in the room. The nation’s Black Swan Event. Well, really the world’s Black Swan Event. In the past, we have almost always been able to point to something we, as humans, did to mess up the stock market. World wars, dot com bubble, bad loans, and derivatives causing the simultaneous crash of the housing and stock markets, among other things. This time, we can point to a pandemic. When the world shuts down, for the most part, revenue and profits shut down too. We have never shut down the United States before. This is truly a first. How do you prepare for something that has never happened before?

Well, our clients were set up to not lose the nest egg. We almost always have at least half of our client’s assets in guaranteed accounts that make a reasonable rate of return and can participate in market-like gains but protect your hard-earned money from loss. Some of these accounts do not even have fees! The other half of your portfolio is likely to be in the market directly, but not typically the broad stock market. We will mitigate risk by selecting specific sectors as a hedge on world events and domestic issues.

We have learned a few things from this event and are repositioning some assets to give our clients even greater protection should this happen again. Our financial planning team has been getting a lot of phone calls from our clients thanking them for having their back and giving us words of encouragement. Words that are greatly appreciated! We have also been getting a lot of very appreciated referrals from you, our clients. Folks are calling asking us how we can protect them the way that we protect their friend. For those of you that have decided to extend your furlough into full retirement, we are happy to review your 401(k)s and pensions to see if they are positioned for safety.

So, this month’s Financial Tip is more of a ‘thank you’ note to our clients. Thank you for your understanding. Thank you for your praise. Thank you for your encouragement. I, and our entire planning team at American Retirement Advisors, thank you for being a part of our client family.

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Reverse Mortgage? – 2020

What is a reverse mortgage? There are many myths and misconceptions on just what a reverse mortgage is, so let’s first talk about what it is not.

The reverse mortgage of old, the one you hear about from your neighbors, your best friends, or a family member, is not what the reverse mortgage is today!

It used to be that the bank would not only charge interest on the loan amount but also took a large percentage (often up to 50%) of the remaining equity in your home after the loan was paid off. That meant your heirs would receive a lot less than expected after the loan was paid off.

This was not fair, and so the Federal Government stepped in, and in 1989 changed the guidelines so the banks could not take more than the accumulated interest on the loan, and all the appreciation of the property would belong to the heirs.

So, what really is the reverse mortgage of today? A reverse mortgage is a loan for borrowers 62 years of age and older that converts some of their home’s equity into cash. The cash can be used for anything you like. Pay down debt, take a trip, or even invest the proceeds to create a higher income. The unique benefit is the borrowers do not have to make monthly mortgage payments.

The new reverse mortgage program is called HECM; it stands for Home Equity Conversion Mortgage. Today, the seniors are completely protected from such practices by the Federal Government, and so are their heirs. When the last borrower moves out of the house, passes away, or sells the house, the loan is due, just like any other mortgage. What is due the bank is just the original loan balance plus the interest accrued over the time that the seniors have had the use of the reverse mortgage. All remaining equity belongs to the seniors’ estate and their heirs. The bank does not retain any equity in the home.

In fact, since the seniors own the home, they can sell it anytime they wish, and move to another home; if they financially qualify, they can purchase another home using the Reverse for Purchase Program.

One of the greatest benefits of the program, as I see it, is the security it offers married seniors because the loan is on both lives (unlike any other mortgage), and as long as one senior/owner occupies the property, the loan is in full effect. This means that should something happen to one spouse, nothing happens to the loan, and therefore, nothing happens to the remaining spouse!

I see this as a great feature because if a senior passes away or goes into an assisted living or nursing home, in many instances the other spouse loses an income but still must continue to pay the current mortgage, but now with only having the one income. In many cases, the remaining spouse cannot make the payment; eventually, they lose the home to foreclosure or are forced to sell it.

This cannot happen with a Reverse Mortgage since the loan is on both spouses’ lives. The only responsibility one has is to continue to pay the Real Estate taxes, homeowner insurance, any HOA fees, and maintain the property. That’s it. Stay in your home and live your life without the worry of having to make a monthly mortgage payment, and with the security of having a roof over your head.

Ask your American Retirement Advisor if this may be right for you. We may be able to refer you to a reputable Reverse Mortgage Specialist. There are a lot of mortgage brokers out there that do not specialize and know just enough to be dangerous.

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How to safely recover your portfolio – 2020

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Hi all! So, if you’re a regular reader of my articles, you know that I was going to talk about home equity lines of credit (specifically, reverse mortgages) this month. Well, we thought it best to hold that one over until next month. Today, let’s discuss how you can safely recover your portfolio. I’m mostly talking to those of you that are not yet utilizing our own in-house retirement income planning team. The reason is that our clients most likely have around half of their portfolio in products that are fully insured and are completely protected from market volatility. Now, for those of you that still have your assets in Mutual Funds inside of your 401(k)s and folks that are still using a retail broker who’s shooting for the stars, I’m sorry. You most likely saw a sharp decline of your entire nest egg over the last few weeks. It’s horrible. But we’ve been here before. Granted, it’s easier to stomach when you have time on your side and aren’t relying on your assets for current retirement income. So, what should you do now? Wait for the market to bounce? Sell everything and try to time the market? Just put what’s left under your mattress? These are all choices that some will make. Everyone’s decisions should be tied to their individual needs. There is only one right answer and that is to NOT PANIC! If you are reading this, you are most likely nearing or already retired. You should consult with a Financial Advisor that specializes in Retirement Income Planning for seniors. We understand that safety is key. Did our clients come out unscathed? I wish. But because we specialize in working with folks that need safety, our clients fared much better than most and are positioned to recover. Our rule is that a large portion of assets should be out of harm’s way and your principle and retirement income are guaranteed, while still having access to principle. Keep fees at zero or as low as possible. I can’t make a blanket statement as to what to do now because everyone’s needs are different. It may make sense to look at all of your options!

Warmest fist or elbow bump. Be safe, be healthy

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Thinking of downsizing? – 2020

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] I’ve had quite a few conversations lately about clients downsizing. The kids have moved out and you may not need as much space as before. Maybe you’re just done walking up and down stairs. Not using the pool anymore? Well, downsizing might be a good idea. In many cases, we can give up some square footage, get rid of clutter, and simplify our lives. If we’re really lucky, we can make out financially at the same time. One option is to rent out our existing house and, if it’s paid off, use the rental income to pay the monthly expense of a new home, or, maybe you decided to rent this time around; maybe a condo or townhome. Some folks decide that they don’t want to be a landlord and would rather just sell the existing house and use the proceeds to buy the new, smaller, less expensive, home. Well, that could be a double win! The excess gain can be invested and used to create additional income. Who couldn’t use additional income? Even if you decide to have a mortgage on the new home and only use some of the proceeds from your last house as a down payment, the balance can be used to invest and create an income to maybe cover the mortgage payment and then some. Our financial team here at American Retirement Advisors is equipped to assist you with running the numbers to see if these are good options for you and your family. It doesn’t hurt to explore your options. If you want to stay in your home but would like to have some extra income, next month I will write about Reverse Mortgages. Are they a good idea or just a bank gimmick? [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

What does the SECURE Act mean to you? – 2020

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Have you heard anything about the SECURE Act? Well, the first week in January, President Trump signed the SECURE act into law. What does that mean to me, you ask? Well, it will inevitably effect most retirement savers, for better or worse. The SECURE legislation — which stands for “Setting Every Community Up for Retirement Enhancement” puts into place provisions intended to strengthen retirement security across the country. It focuses on those who do not have access to workplace retirement accounts. The SECURE Act is a nice thing — currently, anything we can do on a bipartisan basis is something of value. A few of the changes may be good but some of the changes can hurt savers such as incorporating annuities in 401(k) plans and eliminating the rule that lets account beneficiaries stretch distributions across their lifetimes. Annuities in 401(k) plans The SECURE Act opens the gates for more employers to offer annuities as investment options within 401(k) plans. Currently, employers hold the fiduciary responsibility to ensure these products are appropriate for employees’ portfolios, but under the new rules, the onus falls on insurance companies, which sell annuities, to offer proper investment choices. Annuities aren’t in and of themselves bad. Some are fantastic and some are less than advisable. Especially when you’re left to figure them out on your own. Employees should review their options and consult a financial adviser before moving forward with a plan. Preferably not the company’s advisor but your own independent advisor. Increasing the required minimum distribution (RMD) age and contribution age Previously, qualified account holders, such as those with a 401(k) or IRA, had to withdraw RMDs in the year they turned age 70.5. The SECURE Act increases that age to 72, which may have tax implications depending on where the account holders fall in their tax bracket in the year they withdraw. The 70.5 age was based on life expectancies in the early 1960s, the House said, and had not been updated since. The bill also eliminates the maximum age for traditional IRA contributions, which was previously capped at 70.5 years old. “As Americans live longer, an increasing number continue employment beyond traditional retirement age,” the House Committee on Ways and Means said in a summary of the bill. But be warned: Americans who turned 70.5 years old in 2019 will still need to withdraw their required minimum distributions this year, and failure to do so results in a 50% penalty of their RMD. No more stretch IRAs RMDs have also changed for non-spousal account inheritors. Under the current law, beneficiaries who did not inherit their accounts from a husband and wife are in some cases allowed to withdraw RMDs for the span of their lives, which could be a few years or a few decades. The amount of the distribution is calculated based on a few factors, including life expectancy and beneficiary age. The SECURE Act requires beneficiaries withdraw all assets of an inherited account within 10 years. There are no RMDs within those 10 years, but the entire balance must be distributed after the 10th year. This change can be problematic for some beneficiaries, especially if they are in their 40s and 50s and at the peak of their earning years. Limiting the timeframe in which someone can distribute money from an inherited account means potentially boosting the tax burden those distributions will cause. So, to sum up, there are changes that can affect you and your retirement. Feel free to ask your American Retirement Advisor for help. We’re here for you [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Are you or your broker a genius? – 2020

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] Happy New Year! So, are you or your broker a genius? Did your investment portfolio do absolutely fantastic for year end? Brokers and portfolio man- agers tend to think that they are geniuses when portfolios perform well. But when they don’t perform well, they blame the market, or the White House, or world events. The true test of a good manager is how they perform in down markets. Mutual fund managers that manage, in large part, your assets inside of your 401(k)s and your IRAs are focused on asset accumulation and beating the markets and their peers. Ok, if I’m in my growth stage of life, or as we say, the Go-Go stage, that’s probably not an issue for us. But, if we are in our slow-go (about to retire) or no-go, stage of life (retired), we can’t afford to have that aggressive outlook. We can’t afford to lose our nest egg shooting for monster returns or being with an advisor or portfolio manager who’s trying to be a superstar. We need an advisor and portfolio manager who understands the specific needs of a senior client. We need someone who specializes in helping retired or soon-to-be-retired folks. So, if you’ve done well, great. Now, let’s keep what we have, make a reason- able rate of return, and live a stress-free financial life. It may be time to change your retail broker to a retire- ment income specialist. Please call us for a no-charge, no-obligation planning meeting. Let’s start the new year with a financial plan that gives us a warm cozy feeling this winter. [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Is gold and silver a good investment? – 2019

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text _builder_version="3.0.101" background_layout="light"] It’s OK to like shiny things but are they good invest- ments? You can invest in gold and silver by buying the actual physical products, or, through ETFs and stock in gold mines or mutual funds. But, I keep seeing commercials on TV; Mr. So ‘n So thinks it’s a great idea and can’t lose. He’s an actor, so I’m sure he knows a lot about investing. He makes gold sound like a ‘can’t lose’ proposition. Not so much! How about silver? The commercial also seems to think that’s a ‘can’t lose’. How are they getting away with this deceit? Buying gold is the oldest type of investing. The reason why gold cannot be an investment, is because it belongs to a class of investments that will never produce anything. Growth in its value depends entirely on the belief that someone else will eventually pay more for it. Gold is an unproductive asset. A pile of gold will always be just that, a pile of gold. An equivelent amount of money deployed into a business can generate actual wealth and grow larger in a fundamental way. The value of gold has always been driven by the fear that other assets will lose value. Does this mean that nobody should invest in gold or other precious metals? No. Not necessarily. It can have a place in a diversified portfolio, but understand, it’s not all that the commercials make it out to be and it’s not a sure thing. [/et_pb_text][et_pb_image _builder_version="3.0.101" src="https://americanretirementadvisors.com/wp-content/uploads/2019/12/Gold-chart-1.png" show_in_lightbox="off" url_new_window="off" use_overlay="off" always_center_on_mobile="on" force_fullwidth="off" show_bottom_space="on" /][et_pb_image _builder_version="3.0.101" src="https://americanretirementadvisors.com/wp-content/uploads/2019/12/silver.png" show_in_lightbox="off" url_new_window="off" use_overlay="off" always_center_on_mobile="on" force_fullwidth="off" show_bottom_space="on" /][/et_pb_column][/et_pb_row][/et_pb_section]