Report: 41% of Americans Say it’s ‘Going to Take a Miracle’ to be Ready for Retirement

Agemy Financial

September 28, 2021

The last two years have made it exponentially harder to stick to those retirement savings goals. As a result, many Americans dipped into the largest chunk of money they have — their workplace retirement savings accounts. Despite the latest retirement study data, it’s not too late to get back on track, and you don’t need a miracle to get you there! 

The Covid pandemic has taken a heavy toll on Americans and their retirement security. Throughout living in a time where everything was uncertain, many lost their jobs. A majority of us had to dip into their savings and retirement accounts just to get by. A recent study found that saving for retirement has fallen behind due to job loss, unexpected expenses, giving financial help to family and friends or dealing with a health emergency.

The top concern is how significant increases in government spending to get the economy back on track will lead to decreases in Social Security benefits. In this article we will do a deep analysis of the Natixis Global Retirement Index study and the things you need to do to prepare for retirement.

Key findings of the study included:

  • 41% of respondents, including 46% of Generation Y, 45% of Generation X and 30% of Baby Boomers, believe they will need a miracle to be able to retire securely;
  • 73% recognize it is their responsibility to fund retirement versus relying on a pension or Social Security, 42% say it will be difficult to make ends meet if Social Security benefits are lower than expected, 31% of those with a net worth of $1 million or more;
  • Nearly six in 10 (59%) accept that they will have to keep working longer, 36% believe they will never have enough money to retire, this includes: 51% of Generation Y, 48% of Generation X and one in five Baby Boomers (20%)
  • Two-thirds (68%) see long-term inflation as a big risk to their retirement security, while 64% worry that healthcare costs will consume savings.
  • Half (50%) are concerned that low interest rates will make it harder to generate income in retirement.

As you can see, the pandemic unfortunately took a toll on many aspects of life. According to the Fidelity Investments’ 2021 State of Retirement Planning Study, more than eight out of 10 Americans (82%) indicate what’s taken place this past year has impacted their retirement plans, with one-third estimating it will take 2-3 years to get back on track, due to factors such as job loss or retirement withdrawals. The good news is that the US Government is looking ahead to what’s to come. Stimulus packages helped stimulate the economy and provide relief for many families. It also cut or froze interest rates, and flooded the capital markets with unprecedented liquidity.

While these policies brought relief to people, the long-term risk is still high for retirees who are vulnerable to low yields and face challenges of generating a sustainable income in retirement. Fortunately for today’s policy makers, low interest rates make debt a little bit more manageable. Still, there are levels of public debt and the need for budgetary solutions that will force tough decisions about government spending, including public retirement benefits, raising taxes, raising the retirement age, and cutting benefits.

Getting Back on Track

There’s further good news: you should not need a miracle to right the wrongs the pandemic threw at us.

Even though everybody knows to expect the unexpected, no one could have predicted how the events of the past 20+ months would change the world. As a result, many people had to shift their approach toward financial planning and retirement savings and are now looking for ways to get back on track. To assist with that effort, try these actionable tips to help your retirement funds rebound:

  • Start now: Even if you are only able to contribute a small amount a month into a retirement account, that’s still better than contributing nothing, thanks to the power of compounding interest. The sooner you start to save again the better.
  • Don’t shy away from investing: It’s important not to become shy about investing while bulking up your savings. Remember, investing remains a critical part of your overall financial planning strategy.
  • Open a HSA (Health Savings Account): HSAs can be a valuable retirement funding vehicle and are considered ‘triple tax advantaged’ accounts and as such have benefits that may outweigh contributions to other types of retirement plans.
  • Get smart with your cash: Eliminating big debt and building back up your emergency savings will help protect you from future financial downfalls. COVID-19 (or whatever else comes along) then becomes a matter of statement pain, not long term financial pain.
  • Seek professional help: Getting back on track is a matter of setting goals, creating a plan to achieve them, and sticking to that plan. Speaking with an experienced financial advisor will help you create a solid foundation to help to withstand financial volatility.

Final Thoughts

While the pandemic has changed our outlook on a lot of things, one thing has remained the same: It’s never too late to start saving for retirement. And while COVID has thrown a curveball to so many Americans who have worked their entire lives to retire comfortably, we are a resilient people – and now is a good time to regroup, reassess your retirement situation and establish a plan based on your goals and your needs.

No matter what your view, there are a number of questions and concerns that should be addressed to help you prepare for retirement living.  For more information on how you can best prepare for retirement, contact the trusted financial advisors at Agemy Financial here today. 

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How Much Will Your Social Security Check Increase in 2022?

Agemy Financial

October 27, 2021

As fall arrives, the changing of the season can be an ideal time to revisit your financial plans with a fresh perspective. This includes what you can expect for your income and expenses for the year ahead. Social Security beneficiaries will soon see the biggest jump in monthly checks in 40 years. Here’s what you need to know. 

The Social Security Administration (SSA) announced a 5.9% cost-of-living adjustment (COLA) for Social Security benefits for up to 70 million Americans, the biggest increase since 1982. This raise will kick in for those who receive Social Security benefits in January 2022.

Americans who receive SSI benefits will see theirs increase a little earlier, starting on Dec. 30, 2021. How much is the new monthly benefit for the average American? And will the bigger payments combat the effects of inflation on household goods and health care? Here’s a look at how much your social security check will increase in 2022.

How the Social Security COLA is calculated

The annual Social Security COLA is based on the change in prices of a market basket of goods. To measure these changes, Social Security uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

For the 2022 COLA, they measured the change in the average CPI-W index from July, August and September of 2020 to the average CPI-W index for the same three-month span in 2021. The percentage change between the two quarterly averages is the COLA starting in January 2022.

The 2022 COLA was so large because prices of goods and services have significantly increased in the past year, due in part to extreme weather and COVID-19 outbreaks, which have driven up energy prices and strained the world’s supply chains. Since Congress initiated automatic annual COLAs in 1975, there have been three years in which benefits didn’t increase at all: 2010, 2011 and 2016.

Social Security Payment Increase

Due to the COVID-19 epidemic, it caused a major increase in goods and services. As the country started opening up, businesses had a hard time keeping up with the increased demand. This created a rise in prices, causing inflation to jump to 5.3%, which is the largest increase since Aug. 2008. The rise in inflation is the major driver for increases in Social Security payments.

The increased Social Security benefits are to be paid by American workers. The SSA announced increases to the wage base, which is the maximum amount an employee pays in Social Security taxes. The maximum amount of an employee’s wages subject to SS taxes has risen from $142,800 in 2021 to $147,000 for 2022, an increase of 2.9%. Even though everybody knows to expect the unexpected, no one could have predicted how the events of the past 20+ months would change the world.

As a result, many people had to shift their approach toward financial planning and retirement savings and are now looking for ways to get back on track.

How Agemy Financial Strategies can help you plan for 2022

At Agemy Financial Strategies, we have an array of will and retirement planning solutions to guide you through the entire process all with the help of our trusted financial planners. For those nearing retirement, reach out to your retirement income advisor. Not all financial advisors have the same level of experience or will offer you the same depth of services. It’s always important to do your due diligence and make sure the advisor can meet your financial planning needs.

It’s never too late to start saving for retirement. And while COVID has thrown a curveball to so many Americans who have worked their entire lives to retire comfortably, we are a resilient people – and now is a good time to regroup, reassess your retirement situation and establish a plan based on your goals and your needs.

No matter what your financial situation, there are a number of questions and concerns that should be addressed to help you prepare for retirement in 2022 and beyond.  For more information on how you can best prepare for retirement, contact the trusted financial advisors at Agemy Financial here today. 

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Should You Max Out Your 401(k)?

Agemy Financial

September 22, 2021

Whether you’re nearing retirement or still in the workforce, you probably wonder if there’s enough in your 401(k) to sustain your golden years. The answer really depends on your personal financial situation. Here’s what you need to know…

A 401(k) is a powerful retirement savings tool. If you have access to it through work, it’s important to take advantage of any employer match. If you still have extra money remaining, there are other ways to boost your retirement nest egg.

Maxing out Your 401(k) and What to Do Next

There are a number of reasons to consider maxing out your workplace retirement account if you’re financially able. Being proactive in your retirement planning will help ensure you will live out your older years in comfort, so it’s important to understand the ins-and-outs of this practice. Here are some of the options you have available to make the most out of your retirement savings strategy.

Employer Matching & 401(k)

Employers offer their employees 401(k) plans, most may match contributions in order to compensate and attract employee involvement. This means that for every dollar you contribute to your employer-sponsored plan, the company matches a certain percentage. This increases the amount of money saved in your account. Some match as much as 50% of your contribution while others do a dollar-for-dollar match up to a certain limit.

Roth 401(k) plans are typically matched by employers at the same rate as traditional 401(k) plans. One notable difference between traditional and Roth 401(k) contributions is that the employer’s contribution is placed in a traditional 401(k) plan—taxable upon withdrawal. Most financial planners encourage investors to max out their 401(k) savings.

On average, individuals earn about $0.50 on the dollar, for a maximum of 6% of their salaries. If you can easily afford to max out your contribution based on the yearly limits, without it causing a large impact to your budget, you might want to do so.

Investing after Maxing out your 401(k)

Although 401(k) offerings can be hard for some newcomers to understand, most programs offer low-cost index funds, which are ideal for new investors. As you approach retirement age, it’s advised to shift most of your retirement assets to bond funds. Those who contribute the maximum dollars to their 401(k) plans can boost their retirement savings with a number of different investment vehicles.

You can contribute up to $6,000 to an individual retirement account (IRA) in 2021, provided your earned income is at least that much. If you’re 50 or over, you can add another $1,000, although some IRA options carry certain income restrictions. When it comes to your future, investing money is always a good thing to do. Diligent savers who max out their 401(k) contributions have other retirement savings options at their disposal.

When it’s NOT a Good Idea to Max Out Your 401(k)

The maximum 401(k) contribution is $19,500 for 2021 ($26,000 for those age 50 or older). But depending on your financial situation, putting that much into an employer-sponsored retirement account each year may not make sense. Rather, you may want to fund other accounts first. 

When trying to decide what route is best for your financial future, meet with your trusted financial advisor to go over the following questions: 

  • Do you have an Estate Plan in place? (This should include a basic will and trust plan.)
  • Do you have an emergency fund saved? (This should be around 6 month’s worth of living expenses)
  • Do you have an Insurance Strategy in place? (This should include health insurance, disability insurance, long term care insurance and life insurance.)
  • Do you have any large debt hanging over you? (If so, pay that off ASAP.)

If the answer is “no” to any of the checklist items above, it is wise to first have these goals in place before maxing out your 401(k). If you’re unsure about your current strategy, it’s best to work with a financial advisor so they can answer your questions as they come up.

Final Thoughts

Whether you need the extra money or not, you’ll need to start taking it out of retirement accounts at age 72. This forces retirees to recognize taxable income and sacrifice future years of tax-deferred growth. Even if you reinvest the money in a brokerage account, you’ll still have to pay regular income tax on withdrawals from pre-tax retirement accounts. This is one of the reasons investors often save for retirement in a diversified mix of taxable, tax-free Roth, and tax-deferred accounts.

Plans that don’t bend will break, so flexibility in your savings strategy is paramount. The more you’ve saved along the way in your working years, the easier it will be to deal with unexpected challenges as they arise. Whether you’re already retired or just starting to think about it, contact the retirement income advisors at Agemy Financial. We’ll help you find answers to some of the most pressing 401(k) and IRA questions, and help set you up for a stress-free retirement.

 

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Why Estate Planning is Not Just for the Wealthy

Simply the word ‘Estate’ alone can throw most people off including an estate plan in their retirement strategy. However, there is a lot more to who gets your belongings when you die. Spoiler alert: You don’t need millions or billions to get planning! 

Estate planning is a financial strategy that prepares an individual to pass on their wealth and possessions to loved ones. Even if you don’t have a lot to give in your eyes, most people have assets they want to pass upon their death. Therefore it’s important to note that an estate plan is not just for the rich or elderly.

A well designed estate plan can do a lot for you and your loved ones. Deciding what happens to whatever is left of your money when you die is often passed over. There are many parts to estate planning, we’ve simplified a couple of those parts and how you can leverage estate planning to cater to you and your families needs.

Wills

A will is a document that spells out who gets what when a person passes. It’s important for everyone to have a will made in case of emergencies. Assets covered by a will go to those named in the will. This might include bank and investment accounts, personal property, collectibles and other assets. It can also specifically exclude those who someone doesn’t want to benefit from their estate.

Both financial advisors and attorneys play a big role in will planning. The right advisor should encourage their clients to review their will and have any needed changes made every few years. This is especially true if there has been a life change such as a marriage, divorce, or death of a spouse. Wills should be prepared by a professional who is well-versed in estate planning, including the laws of their specific state.

Beneficiary Designations

Certain assets pass to heirs based on beneficiary designations. These are known as “will substitutes.” This means that the beneficiary designation overrides anything that might be in the client’s will regarding the distribution of the asset. A couple of examples of these assets would be:

  • IRA accounts
  • Workplace retirement accounts such as a 401(k)
  • Life insurance policies
  • Annuities

It’s important that these beneficiary designations are current, especially after a major life change like getting divorced or getting married.

Trusts

A trust is a legal vehicle that holds assets for the benefit of the trust’s beneficiaries. A trust may conjure images of the rich and wealthy, but trusts can work well for people at various levels of wealth. Trusts can be used to ensure that assets are managed for the benefit of heirs until they are ready to manage them on their own.

Trusts can be established to hold assets while clients are alive and also be funded upon their death in other cases. An irrevocable trust is a trust that allows the creator of the trust to get the assets placed in the trust out of their estate and not be subject to any estate taxes. In exchange they surrender all ownership of and control over these assets.

A Couple of Things to Consider

Once you have your estate plan made, it is not something that you can forget about. As you approach your review process, you are looking to ensure that your intentions have not changed, that the right people are included, that major life changes are reflected, and that all other major changes are notated.

Effective estate management enables you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and ensure that they’re carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.

At Agemy Financial Strategies, we have an array of will and estate planning solutions to guide you through the entire process of creating last wills and testaments, living trusts, powers of attorney, and living wills — all with the help of our trusted financial planners.

If you have any questions on our company, services, values or more, contact the retirement income specialists at Agemy Financial here today. Our financial advisors in both Denver, Colorado and Guilford, Connecticut are waiting for your call.

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5 Facts About Survivors Benefits

More than 5.9 million people were receiving Social Security survivor benefits in May 2021. Typically, monthly payments go to the spouse, or children of the person who was receiving Social Security benefits. In certain situations, parents, grandchildren or stepchildren of a late worker may also qualify for survivor benefits.

Survivor benefits are based on the amount the deceased was receiving from Social Security at the time of death. Here are 5 facts about survivor benefits and how it will better prepare you and your family in the case of a loved one passing.

  • Social Security benefits are paid monthly

The government pays Social Security benefits monthly. The benefits are paid in the month following the month for which they are due. For example, you would receive your July benefit in August. Generally, the day of the month you receive your benefit payment depends on the birth date of the person for whose earnings record you receive benefits.

For example, if you get benefits as a retired worker, we base your benefit payment date on your birth date. If you receive benefits based on your spouse’s work, we base your benefit payment date on your spouse’s birth date.

  • They don’t pay benefits for the month of death

If a person receiving Social Security benefits dies, the social security office needs to be notified. They can’t pay benefits for the month of death. That means if the person died in July, the check received in August (which is payment for July) must be returned.

If the payment is by direct deposit, notify the financial institution as soon as possible so it can return any payments received after death. Family members may be eligible for Social Security survivors benefits when a person dies.

  • Survivors’ benefits can replace a percentage of the worker’s earnings for family members

The eligible family members of a retired or disabled beneficiary may receive a monthly payment of up to 50 percent of beneficiary’s amount. Survivors’ benefits usually range from about 75 percent to 100 percent of the deceased worker’s amount.

  • Work credits determine eligibility for benefits

You can continue to work and still get Social Security retirement benefits. Retired workers need 40 work credits to be eligible for benefits, but your work credits alone do not determine how much you will receive each month. Your lifetime earnings are used to calculate your monthly benefit amount. When we figure your retirement benefit, we use the average of your highest 35 years of earnings.

Your earnings in and after the month you reach your full retirement age won’t affect your Social Security benefits. They will reduce your benefits, however, if your earnings exceed certain limits for the months before you reach your full retirement age. The full retirement age is 66 and 10 months for people born in 1959 and increases to 67 for people born in 1960 or later.

  • If you receive retirement benefits before you reach age 65, you will be automatically enrolled in Medicare.

When you’re already receiving retirement benefits, we automatically sign you up for Medicare Parts A and B when you turn 65. Medicare Part Ais hospital insurance and it helps pay for inpatient care in a hospital or skilled nursing facility following a hospital stay. It also pays for some home health care and hospice care. Medicare Part B is medical insurance, and it helps pay for services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and some preventative services.

When you’re signing up for a plan, you can decline Part B if you decide you choose not to take part in it, this plan requires a monthly premium. It’s important to know your options and all the costs that come with healthcare plans when you’re planning for retirement. If you are not receiving retirement benefits as you approach age 65, you should contact Social Security three months before age 65 to sign up for Medicare Part A and B.

Learn More 

Survivor Benefits could help take care of your loved ones if you die prematurely. The most accurate way to determine your potential survivors’ benefits is to create an account at www.ssa.gov and view your Social Security statement. In addition to information about your own benefits, you can find estimated survivors benefit amounts, whether you’ve earned enough credits for your family to qualify, and the maximum total survivors benefits that could be collected on your work record.

As always, the team at Agemy Financial Strategies are here to help you plan for retirement, including making sure you’re aware of every financial benefit available to you as you enter your golden yeas. Contact us here today to learn more.

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