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Catching up on Retirement After COVID
NewsThe pandemic has had a big impact on saving for retirement, but things are starting to change now. With the economy rebounding, it’s a good time to get your retirement back on track with Agemy Financial.
Since the pandemic started 16 months ago, hundreds of thousands of Americans have lost their lives, millions have lost their jobs and practically every family in America has endured online classes or work from home for months on end. We’ve changed how we work, how we shop and how we socialize.
In addition to everything else, the COVID-19 pandemic may have put a real dent in your retirement savings progress by hindering those who hadn’t started saving for retirement, the number of workers taking withdrawals from their 401(k)s last year jumped, and some companies cut their 401(k) matching contributions.
Regardless, it was probably the right move at the time, and you did what you had to do. But things are starting to change now. With the economy rebounding, it’s a good time to get your retirement back on track. To assist with that effort, here are three ways you can shore up your retirement plan for a financially secure future.
1. Reassess your plan
If you’re currently working and saving for retirement through a 401(k) or similar plan, it’s smart to stay the course, even if your employer, like many, temporarily suspended its match as a result of the pandemic. According to a November 2020 survey by the Plan Sponsor Council of America, nearly 95% of employers indicated they had not changed their retirement plans. That’s a much better outcome than what went down during and after the Great Recession.
If you had to take a 401(k) loan or withdrawal, empty an IRA out or dig into your Roth, there are ways you can get back on track without it greatly affecting your retirement goals. The first thing you need to do is take a look at where you are today and where you need to be in order to accomplish your goals.
Adding a little extra each month above your normal contribution and setting a calendar reminder every couple of months to nudge your contribution a bit higher are great ways to ramp up on saving opportunities. Big change is hard, but commit to small incremental changes to get your plan back on track. Consult with a financial advisor or planner to conduct a retirement income analysis, the results can guide you on the right path.
2. Revisit your investment portfolio
The COVID-19 outbreak has put tremendous pressure on stock prices, prompting some investors to blindly and indiscriminately sell positions at a time when the entire market is trending lower. As the world adjusts to a new normal after coronavirus, it’s time for associations to consider whether they need a new normal for their investment portfolios. It’s important to ensure your asset allocation remains appropriate for your goals, risk tolerance, time horizon, or length of time you have to invest before reaching retirement, and rebalance as necessary.
When stock prices are trending lower, some investors can second-guess their risk tolerance. But periods of market volatility can be the worst times to consider portfolio decisions. A retirement strategy formed with a financial professional has market volatility factored in. As you continue your relationship with that professional, they will also be at your side to make any adjustments and help you make any necessary decisions along the way. Their goal is to help you pursue your goals.
3. Having a back up plan
As always, it’s important to have a backup plan. Many advisors suggest doing so to protect yourself from unexpected events, like say, a pandemic. Pulling from retirement accounts should be your last resort. A backup plan can combat the need to access funds earmarked for retirement during future financial crises.
Establishing an emergency fund is critical — most Americans cannot cover an unexpected expense of $1,000. Having savings set aside for emergencies means you don’t need to tap your retirement accounts for financial surprises. Most advisors suggest three to six months of living expenses. Others suggest you can start smaller, with a goal of building your emergency fund up to $500, and add to it over time.
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.
How to Have Enough Money for an Early Retirement
NewsThe road to retiring early isn’t easy. It takes time and discipline to earn, save, and invest as much as you possibly can.
Many Americans dream of having more free time in their later years. Perhaps you want to relocate some place warmer. Or maybe you feel led to do volunteer work, or even set off on a brand new business venture. Whatever the reason, the question is the same: What would it take for me to retire at 60? Or even younger? Unfortunately the reality of quitting work can be far different from the fantasy.
In order to retire from your job early entails finding a way to replace the income it provides, or produce enough income to fund your lifestyle. which is why unfortunately, early retirement isn’t for everyone. In fact, it isn’t for most people. Just 11 percent of today’s workers plan to retire before age 60, according to an Employee Benefit Research Institute (EBRI) survey. For many of those who do take the plunge, the reality of early retirement can turn out to be far different than the dream. But it’s not impossible.
5 questions to ask yourself before retiring early include:
Here are three moves to help make the early-retirement fantasy a reality.
1. Making Adjustments to your Current Budget
You can get by with less if you’ll have other sources of income. Retiring early means making some changes to how you earn and spend money, so in the future you get to relax. For many people, that means cutting their budget to the bare minimum. To learn to budget is a very important life skill. Here are some tips you can use to budget successfully.
− Where you can reduce your expenses on unnecessary items.
− Whether your budget is perhaps unrealistic.
− Whether you have to adjust your budget.
2. Calculate your Annual Retirement Spending
Living on a small portion of your income translates into needing less money for retirement. To do that, take a look at your current monthly spending and consider what will go down, what could go up, and what might be added or eliminated altogether. Add your final monthly expense estimates up, multiply by 12 and you have the magic number: your annual retirement needs. Most financial advisors recommend increasing it by 10% to 20% so you have some wiggle room.
There are a few exceptions to the early distribution rules. One popular among early retirees is to start a series of substantially equal periodic distributions, which are allowed by the IRS provided you follow specific protocol. Working with a financial planner to develop a strategy for tapping your investments while ducking taxes — where you can — and avoiding penalties.
3. Invest for Growth
When it comes to investing, there’s no shortage of ideas. At the risk of stating the obvious, retiring early means (1) you have a shorter period during which you can save, and (2) you have a longer period during which the money you’ve saved needs to support your spending.
Both of those mean investment returns are going to be your best friend. And to achieve the best returns, you need to invest in a balanced portfolio geared toward long-term growth. We recommend low-cost index funds, with an allocation that is tilted toward stocks for as long as you can stomach it. Here are5 smart investing strategies to follow when investing for growth.
And remember, you can’t control all the risks associated with early retirement, but what you can control is having a plan. Work with a financial advisor that is knowledgeable in early retirement planning to develop a customized portfolio, and help you manage your finances before and during retirement.
Summary
It takes planning and discipline to retire early. The earlier you start investing, the more you can benefit from compounding. That’s why you need to get going as soon as possible!
Not all financial advisors have the same level of experience or will offer you the same depth of services. So when contracting with an advisor, do your own due diligence first and make sure the advisor can meet your financial planning needs.
If you have any questions on our company, services, values or more, contact the retirement income experts at Agemy Financial here today. Our trusted advisors in both Denver, Colorado and Guilford, Connecticut are waiting for your call.
How Retirement Planning and Life Insurance go Hand-in-Hand
NewsLife insurance, first and foremost, is about protecting loved ones after you’re gone. But some insurance types can actually help you in retirement as well.
Most people think of life insurance in terms of the payout it provides beneficiaries after the policyholder dies. But did you know that certain life insurance policies can financially assist you through your lifetime and into your golden years?
Why Life Insurance is Vital
Life insurance plays a significant role in protecting you and your family during your primary income-earning years. Ultimately, striking the right balance between investing for your future so you can retire when and how you want to, and purchasing the right amount of life insurance to protect your interests today is ideal.
What’s more, insurance transfers the financial risk of life’s events to an insurance company, and a sound insurance strategy can help protect your family from the financial consequences of those events. A strategy can include personal insurance, liability insurance, and life insurance.
The Retirement Planning Connection
For many of us, life insurance is something to worry about “later.” Or, if provided by an employer, just another part of the employee benefits package. But life insurance can and should be an important aspect of retirement planning.
During retirement, it is well advised to financially prepare for unexpected expenses. Did you know that medical bills are the leading cause of bankruptcy in America? This disturbing fact is that over half of those who are forced to file for bankruptcy have health insurance. Without an emergency cash fund, where will you come up with the money to pay the doctor if your health insurance is denied?
You may be able to cover income shortfalls by using your life insurance for retirement income.
Using Life Insurance for Retirement Income
First things first, you need to understand the different types of life insurance and how they can assist your cash flow in retirement. Unlike ‘term’ life insurance, which covers only a set number of years, ‘permanent’ life insurance is meant to be for life. Permanent life insurance can provide a source of supplemental retirement income, which include whole life, universal, and variable life insurance policies. Here’s a breakdown of the differences you should be aware of:
Determine a Retirement Plan That’s Right for You
Before deciding on an insurance plan, you should decide what you want your golden years to look like. Some key questions to consider include:
Since choosing a life insurance policy with a cash value component requires a bigger investment, it’s important to understand how this aspect of your policy works and what your options are for using it.
What Can I Do With the Cash in a Permanent/Cash Value Plan?
Permanent/Cash Value policies provide a living benefit, or a perk of your policy that you can use while you are in fact alive and well. Here’s a look at the ways you can use your life insurance to accumulate cash value:
Income Tax Advantages
While its primary function is to help protect loved ones in the event of your passing, life insurance, in particular whole life insurance, can also help you and your beneficiaries manage tax consequences. The following three advantages apply to whole life insurance and other permanent insurance policies:
1. The death benefit is generally paid out income tax free: Life insurance policy payouts can be pretty hefty and avoiding a major tax bite can be consequential.
2. The total cash value accumulates on a tax-deferred basis: Whole life insurance builds up cash value over time as you pay premiums. This is money that grows without the IRS dipping their hands in.
3. You can access the cash value of the policy on a tax-advantaged basis: Money borrowed or taken from the cash value of a life insurance policy is not subject to taxes up to the “cost basis” – the amount paid into the policy through premiums.
Conclusion
Generating income during retirement is challenging. Fortunately, your life insurance policy can be a valuable source of funds to cover retirement expenses by offering tax-free income, (be part of a tax management strategy), and enhance the overall returns from an investment portfolio.
And don’t forget that life insurance only gets more expensive the longer you wait, so starting as soon as possible will only help you in the long run. For more information on how you can best utilize your life insurance policy in retirement, contact the trusted financial advisors at Agemy Financial here today.
Why Choose Agemy to Achieve Your Personal and Financial Goals?
NewsNot working with a financial planner? You could be missing out. If you are serious about building long-term wealth, Agemy Financial Strategies offers a variety of services you aren’t getting that you may not even know about.
Deciding whether to get a financial advisor or manage your own investments is a big decision. But did you know financial planners assist in more than just managing your money? A good financial planner can organize your overall financial picture and implement strategies that will help you achieve your goals, from organizing your estate to retiring when you want.
To answer the common question of “Do you need a financial advisor?” consider the services and benefits of a financial advisor:
Whether you’re a busy executive, business owner, working parent, caretaker or even retired – the truth is, everyone can use professional advice.
About Agemy Financial Strategies
Financial advisors aren’t exactly hard to come by. But not all financial advisors are created equal. Finding the right fiduciary for your financial needs, objectives, and unique circumstances is a must when it comes to building a solid working relationship that helps you make smart financial decisions.
At Agemy Financial, our services specialize in retirement income planning, or as we like to say, “helping you make it down the mountain.” Many financial advisors and financial planners will help you to build your assets and “get up the financial mountain.” However, Mr. Agemy, “a financial sherpa,” and his team focus on helping investors who have already “climbed the wealth accumulation mountain, plan and strategize to have enough income in retirement to have a safe and pleasurable journey “back down” and enjoy the best of life. Agemy Financial’s objective is to see that our clients can retire and stay retired.
Our purpose is to educate investors – whether that be planning for retirement, legacy planning, wealth management, or just holding your hand when it’s time to leap into retirement. Celebrating 30 years in business, and we remain steadfast in our dedication to serve and educate investors.
Our Process
We understand personal finance isn’t interesting to everyone! And it doesn’t have to be. But if you’re neglecting your finances, it’s likely worth giving us a call. When we get started working with you, our initial assessment includes gathering a complete picture of your assets, liabilities, income, and expenses.
We then synthesize all of this initial information into a comprehensive financial plan that will serve as a roadmap for your financial future. Our full spectrum of financial services includes:
Estate
Manage personal affairs while you’re alive and control the distribution of wealth upon your death.
Insurance
A well-structured insurance strategy can help protect your loved ones from the financial consequences of unexpected events.
Investment
Create an investment strategy that’s designed to pursue your risk tolerance, time horizon, and goals.
Lifestyle
How to strike a balance between work and leisure is just one aspect of the wide-ranging Lifestyle matters.
Money
Managing your money involves more than simply making and following a budget.
Retirement
Steps to consider so you can potentially accumulate the money you’ll need to pursue the retirement activities you want.
Tax
Understanding tax strategies can potentially help you better manage your overall tax situation.
Our Core Values
Our firm exists for the purpose of helping people achieve their personal and financial goals. Our philosophy is to deliver quality financial programs and teach principles for successful living. We live, work and breathe by the following three values:
Summary
Not all financial advisors have the same level of experience or will offer you the same depth of services. So when contracting with an advisor, do your own due diligence first and make sure the advisor can meet your financial planning needs.
If you have any questions on our company, services, values ore more, contact us here today. Our trusted advisors in both Denver, Colorado and Guilford, Connecticut are waiting for your call.
Your Easy-to-Understand Guide on Retirement Planning in 2022
NewsDecember 29, 2021
The road to retirement may seem rocky at best, especially with the ever-changing legislation. Although everyone’s retirement is different, 2022 is going to have some big differences from 2021 that will affect almost every retiree and retirement saver to some degree. But fear not, Agemy Financial Strategies is here to help simplify the process and help set you up for a positive retirement outlook.
The ultimate goal for so many is a wonderful and relaxing retirement. Ideally, the road to retirement would come off without any major snags and roadblocks in your plan. Unfortunately that is not normally the case and retirement plans always face challenges. This can be from the volatility of the markets, healthcare plans and the affordability factor or even the risks posed by annual inflation. In addition, you’re likely to face decades on a fixed income, and won’t necessarily have flexibility in your finances like you may have had in previous years.
Retirement planning in 2022 can seem more difficult and complex. There are more volatile conditions than ever with healthcare costs going up, and uncertainty with Social Security. This is why it’s so important to be as prepared as possible before you’re retired and always make room in your planning for unexpected problems. Here is an easy-to-understand guide on retirement planning in 2022 to make sure you’re ready for anything the future may bring.
Review Your Current Financial Retirement Plan
Your life isn’t set in stone, and your financial plan shouldn’t be either. When’s the last time you tweaked yours? Where will your retirement money come from? If you’re like most people, qualified-retirement plans, Social Security, and personal savings and investments are expected to play a role. Once you have estimated the amount of money you may need for retirement, a sound approach involves taking a close look at your potential retirement-income sources.
If you haven’t already, the first thing we recommend to do before creating a retirement plan is to review your financials. It’s important to assess the current retirement plan that is tailored to their goals and factors in things like cost of living, Social Security, and medical expenses. Paying off your debt before retirement to give you more financial flexibility. Financial planning is a process, and it’s one that requires proactivity to work well. While some of the other milestones listed here are good indicators that it’s time to review your plan, don’t wait until something happens to do something about it.
Planning Your Retirement Distributions
Saving money for retirement is only part of ensuring a financially secure future. The other half involves making smart decisions about withdrawing that cash.
The typical “Retirement Age” or the date at which you plan to retire is always established by the contribution plans defined in plan documents. The important thing to remember, this date cannot be later than when you or the retiring party reaches 65 years old. 65 is additionally the age of retirees where the defined benefit plan is calculated.
To make it simple, when you reach this age of retirement, you have the option to receive your benefits in full. If it is a defined benefit plan, then your benefit will come in installments similar to salary paychecks.
There’s a lot of retirement distribution strategies that can be used to stretch money further for a long retirement, and these can be combined and changed over time. Current market conditions, tax rates and a person’s expected longevity are all factors that need to be considered.
Rather than pick a single method to use throughout retirement, talk to Agemy Financial Strategies about how to make the following retirement withdrawal strategies work together.
With the right professional guidance, selecting the right combination of methods can help ensure retirement accounts don’t run dry.
Prepare for Inflation
A study by the National Endowment for Financial Education showed that 96 percent of Americans experienced four or more such “income shocks” by the time they reached age 70. As shown in 2021, inflation can really pick up at times that are unexpected and can severely impact anyone who isn’t prepared. It can also devastate a financial plan that relies heavily on fixed income investments like bonds. If you don’t have the option to re-invest your retirement income, inflation will hit your purchasing power hard. Over time, your dollars will be worth much less.
What this means is you need a financial plan that already factors in for inflation. What we typically recommend is building up a financial plan that has growth assets included. This way your income has more potential to rise over time and you won’t be left making the same income you did for the last decade or more.
With prices rising at their fastest rate in decades, people in retirement or approaching it should take extra care to protect their savings.
Plan Healthcare Carefully
This may or may not come as a surprise; but retiring present day is equal to how much health insurance costs. If you’re someone that is putting off retirement until you’re old enough to get Medicare, double check that this is the cheapest alternative for you and look into all healthcare options.
If you retire before age 65, you have several options for health insurance until you reach eligibility for Medicare. Which options you are eligible for and are best for you depend on your individual circumstances. You may enroll in the state health insurance marketplace, continue your employment-related benefits through COBRA or state continuation, enroll in your spouse’s health plan, or apply for Medicaid. The Affordable Care Act (ACA) has made health insurance coverage when retiring before age 65 a much less challenging situation. This is especially true for people with medical conditions or limited finances—both of which could be obstacles for early retirees seeking coverage in the pre-ACA era.
While planning for retiring in 2022, it’s important to have an affordable healthcare plan. However, it’s not as simple to know what the options are and set up a plan as it was when you were employed and working with your employer on a healthcare plan that worked for you. The retirement income advisors at Agemy can help you achieve your healthcare goals in a safe and secure manner.
Final Thoughts
A retirement plan in 2022 may seem like a daunting task, but financial advisors at Agemy Financial Strategies are here to help you put yourself and finances in the best position for success.
Finding the right financial advisor that fits your goals and lifestyle doesn’t have to be hard. The trusted team at Agemy Financial Strategies is here for your every step of the way to make some real progress on your journey to financial freedom this coming year.
After the stress of the end of a year has settled down for 2021, give us a call to get your retirement plan on track in 2022. Our team at Agemy Financial Strategies wishes you a happy, healthy, and prosperous New Year!
Volatility Returns to the Stock Market, and May Well Stick Around
NewsSeptember was a rocky month for the stock market and may have offered a stark preview of what the final weeks leading up to the presidential election will be like for Wall Street. Towards the end of the month, both the Dow Jones Industrial Average and the S&P 500 were flirting with correction territory, which officially means a 10% decline from their peak highs.* Meanwhile the Nasdaq was down by more than 10%, as the tech rally that has helped buoy the index and the markets in general throughout the Covid-19 crisis ended. With one of the most contentious elections in American history now just weeks away, and the coronavirus still pummeling parts of the economy, a nervous, mostly down-trending market may very well be the norm right up to November 3rd, and possibly beyond that.
In truth, what we saw in September was typical from a historical perspective. The two months before a presidential election are almost always a volatile period for the markets for two reasons. One is simply uncertainty over the election’s outcome, and that’s obviously a big factor where this race is concerned. Most polls continue to show Joe Biden leading among voters, and Wall Street knows a Biden victory would likely mean a rollback or amendment of the Trump administration’s corporate tax cuts. That, of course,
could further undercut economic growth at a time when it’s already shrunk massively due to the pandemic. On the other hand, there is plenty of debate as to whether a Trump victory would automatically be better for the economy and trigger a new market rally—particularly in light of the pandemic.
The other issue that typically makes big investors nervous just before an election is the legislative inertia that occurs. Politicians are too focused on politics to get anything done, and that’s a major concern this year since the House and Senate have yet to agree upon a follow-up to the Coronavirus Aid, Relief and Economic Security (CARES) Act approved in March.** This is true despite the fact that lawmakers and economists almost universally agree that additional relief measures are needed, especially with all the uncertainty still surrounding the pandemic as we head into fall.
Autumn’s Unknowns
As I’m sure you’re aware, the U.S. surpassed 200,000 deaths linked to Covid-19 in September, the most of any nation in the world.*** Meanwhile, infection rates began spiking again across much of Europe, and in parts of America as schools reopened. Will that trend continue as autumn deepens? It’s possible, and the economic impacts could ramp up again too as outdoor seating options that have allowed many restaurants and other businesses to hang on during the summer months disappear in colder parts of the country. The dining industry has already been hit extremely hard by the pandemic. According to an economic impact analysis by Yelp, over 50% of its restaurants had already closed permanently by early summer, and the number has likely increased since.****
Even if no major resurgence in infections does occur this fall, the economic fallout of the coronavirus crisis seems likely to drag on for other reasons. Those include the psychological impact of the pandemic, and the comfort level most consumers have attained with alternative forms of shopping and recreation. Already, major chains have announced they will not host traditional in-store “Black Friday” sales this year, and for the first time ever, the Macy’s Thanksgiving Day Parade will be an entirely virtual event!
So far, the massive shift to things like e-commerce, videoconferencing, and virtual entertainment has managed to offset the impact of business closures and social distancing rules and helped limit some of the economic damage from Covid-19. However, the longer-term repercussions of this shift have probably yet to be felt as they relate to things like jobs, bottom-line corporate growth, and overall economic stability. Big investors know this, and it’s another reason they’re likely to keep “one finger on the trigger” in the last quarter of the year, ready to pull out if nervousness gives way to fear and triggers another major market downturn.
Uncommon and Unprecedented
While a nervous market in the months before an election is historically common, there also some things about our current situation that make it very uncommon—namely the pandemic and the highly divisive political climate surrounding this election. So far Wall Street has shown amazing resilience in the face of these issues, but that’s due largely to another factor that isn’t merely uncommon but entirely unprecedented. That is the massive amount of artificial stimulus the Federal Reserve has pumped into the economy since the Financial Crisis 10 years ago— which has become even more massive as a result of the pandemic.*****
Will the Fed’s “steroids” continue to pump up Wall Street and stave off another major correction even if coronavirus cases see another major spike this fall? Or even if another relief and stimulus package is not approved? Or even if there is a lengthy legal and congressional battle over the results of the election that prolongs legislative inertia and keeps Washington stuck in the muck like a stalled Jeep?
The bottom line is that these are all important questions to consider as you review your financial strategy this fall. Are you playing smart and sufficient financial defense at this crucial time? Are you well-positioned to take advantage of new opportunities that may emerge one day when the markets and economy are more stable again? Because, rest assured, that day will come!
*Marketwatch.com **“Virus Bill Blocked in Senate as Prospects Dim for New Relief,” AP, Sept. 10, 2020 ***“Unfathomable US Death Toll from Coronavirus Hits 200K,” AP, Sept. 22, 2020 ****“Yelp Finds 53% of Restaurants Have Permanently Closed,” Eater.com, June 26, 2020 *****“Stock Markets Have Now Seen the Peak of Fed Stimulus,” MarketWatch, Sept. 17, 2020