January 6, 2019

Mistakes to avoid when claiming Social Security Retirement Benefits

This is one of the best articles I've read about factors to consider when claiming SS retirement benefits. It is critical to focus on SS as longevity insurance and recognize that each individual and each couple is different. There is NO one size fits all answer to when to claim SS. Although targeted at CPAs, this article is readily accessible to anyone contemplating retirement and when to claim SS. Retiring and claiming benefits are two separate decisions and don't necessarily need to take place at the same time.
Take the time to read:

Top seven mistakes when claiming Social Security benefits

By Paula S. McMillan, CPA/PFS, CGMA
December 1, 2018
https://www.thetaxadviser.com/issues/2018/dec/seven-mistakes-claiming-social-security-benefits.html?utm_source=mnl:adv&utm_medium=email&utm_campaign=03Dec2018

Do you have a child with special needs?

"Clients who have a child with special needs face 'a special set of financial considerations,' writes Brooke Hawley, a financial adviser and mother of a child living with special needs. The most important thing to do, according to Hawley, is set up a special needs trust in the child's name."
Check out this excellent article: https://www.wealthmanagement.com/client-relations/speaking-experience-financial-planning-special-needs-families

December 26, 2018

How much are you paying your financial advisor? How much are they earning in commissions?

Now that the Trump administration has nixed the fiduciary standard which would have required financial advisors to hold the best interests of their retirement clients above their own pocketbooks. The Obama administration's Labor Department had proposed a rule that financial sales people/brokers/advisors who deal with retirement accounts and clients would have to follow a fiduciary standard whereby they would have to act in their client's best interests rather than selling the client a financial product that produced the highest commission.  Well forget that! Unless you work with a certified financial planner (CFP) or other professional who follows a fiduciary standard don't trust your "advisor" to do what is in your best interest.
Currently the Securities and Exchange Commission (SEC) chair is proposing a new ruling to protect consumers that would require brokers to disclose their sales incentives, sales contests and commissions.
"Most brokerage firms pay their employees more for selling certain products over others, depending on how lucrative they are. This can result in customers paying more for products and services than they need to, though brokers defend the practice as the only way to reasonably offer a range of investment options." ("Brokers fight to keep pay perks, by Gabriel T. Rubin. The Wall Street Journal, 12/26/18 p. B1.

December 20, 2018

Widow(er)s get help for the IRS

Widow(er)s are eligible to file a joint income tax return with your deceased spouse for the year the death occurred (assuming you have not remarried). Also, for the next two years, you may be eligible for special benefits as a "qualifying widower" See IRS Publication 501 for details. https://www.irs.gov/forms-pubs/about-publication-501
Click on the Publication 501 link in the website to get a PDF. It says it's for filing 2017 returns but the website indicates there are no recent changes. See page 9 of the PDF for "Qualifying Widower" status.
"This filing status entitles you to use joint return tax rates and the highest standard deduction amount (if you don't itemize deductions) for the two years following the year of spouse's death.

So you can file a joint return for the year the death occurred and then use "qualifying widower" status forthe following two years.

Difference Between Socially Responsible Investing (SRI) and Environmental, Social and Governance (ESG) Investing


Samual Adams, writing for Advisor Perspectives (12/17/18), explains the difference between SRI and ESG:

"SRI was originally developed to allow investors to avoid companies they disliked for ethical or values-based reasons. This original form of SRI is now called “exclusions” or “negative-screen” investing. Other SRI strategies have been developed, including positive screen or thematic investing, where only companies aligned to the investors’ values are bought. More recently, impact investing has become popular; here investors provide capital to innovative companies working to solve social problems like endemic unemployment or recidivism." SRI is also known as: "sustainable, responsible and impact investing."

 Check out the online article for a helpful infographic that distinguishes between ESG, SRI and impact strategies. "Both conventional and ESG strategies aim to maximize financial return for the risk taken. They put financial return first, before any other issues are addressed. The values-driven' categories... include strategies that consider financial return after the investors' values have been satisfied." https://www.advisorperspectives.com/articles/2018/12/17/the-difference-between-sri-and-esg-investing

ESG strategies focus on the inclusion of environmental, social and governance risks and opportunities into traditional financial analysis . "ESG is about economic value. SRI is an attempt to incorporate ethics and social concerns into portfolios. SRI is about individual values."

Read the article for more detailed explanation.

December 18, 2018

What you need to know about dealing with disasters

"We all hope disaster won’t strike, but statistics show that most U.S. residents live in areas at risk for floods, earthquakes, hurricanes or other natural disasters. While you might not be able to avoid a disaster, you can reduce your financial risk by taking steps to insure yourself properly and by understanding how FEMA assistance can help, and where it could fall short."

"Consumer Action’s new Disaster Coverage educational module helps prepare homeowners and renters for the possibility that their home and possessions could be damaged or destroyed and that they could be displaced if their home becomes inhabitable."

In Homeowners and Renters Insurance: What you need to know before and after a natural disaster, readers learn which disaster losses are—and are not—covered under a standard homeowners or renters insurance policy, how to make sure they are adequately insured, what steps to take to recover their losses after disaster strikes, and what their options are if their insurance falls short.
https://www.consumer-action.org/modules/articles/disaster_insurance

In FEMA Spells Disaster Relief for Homeowners and Renters, readers learn about the types of FEMA assistance available, program eligibility and the application process. The publication also highlights the limitations of FEMA assistance and stresses the importance of purchasing adequate personal insurance coverage.
https://www.consumer-action.org/modules/articles/fema_assistance

"Consumer Action empowers low- and moderate-income and limited-English-speaking consumers nationwide to financially prosper through education and advocacy."
 
For more information about Consumer Action email info@consumer-action.org or call 800-999-7981.

December 17, 2018

US budget deficit skyrockets due to Trump tax cuts

"The US government's budget deficit stood at $305 billion in October and November, the first two months of fiscal 2019, compared with $202 billion in the same period a year earlier, according to Treasury Department figures. A shift in the timing of some payments and lower receipts from individual taxpayers due to the tax cuts earlier in the year are cited as factors contributing to the increase." Retirement Security SmartBrief 12/17/18. Source: The Wall Street Journal article by Kate Davidson.
"A strong economy typically leads to narrower deficits, as rising household income and corporate profits help boost tax collections, while spending on safety-net programs tends to decline. But that isn’t happening now, primarily because of the tax cuts."
"The federal budget deficit is projected to hit $1 trillion in the current fiscal year, up from $779 billion in the previous fiscal year, " according to the White House and the Congressional Budget Office (CBO).
What does the future hold for taxpayers, our children and grandchildren? "Overall, federal deficits are projected to rise in the coming years as spending on programs such as Medicare and Social Security grows and interest costs rise."
Aren't you glad you got a tax cut this year? Maybe you should use it as a down payment against your child's future.

December 13, 2018

How to Avoid the Holiday Debt Trap

It's that time of year... when diets and spending plans get ignored until the pain hits in the new year. FINRA (Financial Industry Regulatory Authority) provides some good tips and reminders.

"Thanksgiving came early this year, and media sources have already reported record-breaking holiday spending in the wake of Black Friday and Cyber Monday sales. The holiday shopping season is in full swing. But beware—more time to shop means more time to spend.
Let's face it, there's no escaping the aftermath of too much holiday cheer, whether it's a few extra pounds or the dreaded hangover. Binging on gifts and entertaining can leave a lasting pain, too: credit card debt."
  • Make a Budget and Check it Twice

  • Track Your Spending

  • Consider Shopping Solo

  • Reward Yourself With Your Credit Card Rewards

  • Get Smart About Credit Card Offers

Details and pep talk at: 
http://www.finra.org/investors/highlights/avoid-holiday-debt-trap?utm_source=MM&utm_medium=email&utm_campaign=S%5FAI%5F121118%5FFINAL

Fixed Indexed Annuities

Know These 3 Things Before You Invest in a Fixed-Indexed Annuity

"To evaluate whether a FIA is right for you, you need to understand how you'd make money on the investment, how the insurer profits and how and at what point you can get access to your funds" explains David Stone, Founder and CEO of RetireOne, writing for Kiplinger's. He explains: Offering some upside potential with a guarantee against losses, these investments are principally a trade-off: You transfer some risk to the issuing insurance company in return for limited participation in the gains of an index. On the other hand, equities offer more growth, but … they can't guarantee anything."
Who should consider fixed indexed annuities and why? "Because of the low interest rate environment, finance experts like Dr. Wade Pfau and economist Roger Ibbotson have recommended that financial advisers and their clients think of FIAs as another asset class, framing them as an alternative to fixed-income investments like bond funds."
Stone explains the big 3 factors to understand:
  • How you earn money with that investment.
  • How the insurance company earns money.
  • How access to your money may be limited for a period of time.
Read his explanation at:
https://www.kiplinger.com/article/retirement/T003-C032-S014-know-this-before-you-buy-a-fixed-indexed-annuity.html

December 12, 2018

Health Insurance Exchange open enrollment deadline less than a week away; 3 things Utahns need to know


Check out this info from the St. George News:
The deadline to sign up for coverage is Saturday, Dec. 15
The average price for premiums has decreased and the number of plans has increased
Select the plan that best meets your needs 
Utah consumers can get help filling out their application in three ways:
  • By phone. Consumers can call the Marketplace Call Center at 800-318-2596 (TTY: 855-889-4325). Available every day, except certain holidays.
  • In-person help. Consumers can use the Find Local Help tool on healthcare.gov to see if they can get in-person help in their community.
  • Health insurance agents & brokers. Agents and brokers can help consumers enroll through the exchange or handle the whole process. Search for health insurance agents and brokers using the Find Local Help tool.
 Full article available at: https://www.stgeorgeutah.com/news/archive/2018/12/11/prc-hw-health-insurance-exchange-open-enrollment-deadline-less-than-a-week-away-3-things-utahns-need-to-know/#.XBE2F817mM8
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