News

How FIUL Can Help You Save on Taxes in Retirement

Fri, 24 Apr 2026 15:49:49 GMT

How FIUL Can Help You Save on Taxes in Retirement

If you're planning for retirement, you've probably heard about 401(k)s, Roth IRAs, and traditional savings accounts. But there's a powerful strategy that often flies under the radar: Fixed Indexed Universal Life insurance (FIUL). When structured correctly, an FIUL can offer a three-part tax advantage that's hard to find anywhere else, and it could make a meaningful difference in how much of your money you actually keep.

What Makes FIUL Different?

FIUL is a type of permanent life insurance that builds cash value over time. That cash value is linked to a market index (like the S&P 500), which means your savings have the potential to grow, but with a floor that protects you from market losses. On top of that, a properly structured FIUL comes with three distinct tax benefits that work together.

The Triple Tax Advantage

Tax-Deferred Growth Your cash value grows inside the policy without triggering annual taxes. No tax bill each year, your money compounds without the drag.

Tax-Free Retirement Income You can access your cash value in retirement through policy loans. Because it's a loan, not a withdrawal, it's generally not treated as taxable income.

Tax-Free Death Benefit When you pass away, your beneficiaries receive the death benefit income-tax-free. Unlike inherited 401(k) balances, there's no ordinary income tax owed.

Tax-Deferred Growth: Let Your Money Work Harder

Inside an FIUL, your cash value earns index-linked credits without generating a taxable event each year. That means no annual capital gains tax, no income tax on interest, nothing.

The growth remains in the policy and keeps compounding. Over a 20–30 year accumulation period, that tax deferral creates a real, measurable difference. Every dollar that would have gone to taxes instead stays invested and keeps growing on your behalf.

Tax-Free Income in Retirement: The Policy Loan Strategy

Here's where FIUL really shines as a retirement planning tool. Rather than making withdrawals from your cash value (which could be taxable), you can borrow against it. A policy loan isn't considered a distribution by the IRS, so there's no taxable event and no required repayment schedule.

Traditional retirement accounts like a 401(k) require you to pay ordinary income tax on every dollar you withdraw. With a properly structured FIUL, your retirement income can come out tax-free, which is especially valuable if you expect to be in a higher tax bracket later in life.

The key phrase is "properly structured." If a policy is overfunded past a certain IRS threshold, it loses this tax-free loan treatment. This is why working with an experienced advisor matters. Getting the structure right from day one is what makes the strategy work.

Is FIUL Right for You?

An FIUL tends to be a strong fit for people who have already taken advantage of their 401(k) employer match and want additional tax-advantaged savings. It's especially useful for those who expect tax rates to rise in the future, or who want a retirement income stream that won't push them into a higher bracket. It's a long-term strategy, typically most effective over 20 or more years of consistent funding, but as part of a well-rounded retirement plan, it can fill gaps that other accounts simply can't.

A properly structured FIUL lets your money grow tax-deferred, gives you tax-free income in retirement through policy loans, and passes a tax-free death benefit to your loved ones. That's a combination you won't find in a 401(k) alone.

Ready to see how an FIUL fits your retirement plan?

Learn more by joining us at one of our upcoming dinner seminars! Contact us today for our seminar schedule, or to schedule a complimentary consultation with our team at Summerlin Benefits Consulting. We're here to help you protect your money and protect your future!

Market Volatility and Retirement: Protecting Your Nest Egg

Fri, 06 Mar 2026 16:19:57 GMT

For many people approaching retirement, market volatility becomes a major concern. While fluctuations in the market are normal, they can have a greater impact on your finances when you are close to relying on your savings for income.

After years of building your retirement nest egg, protecting those assets becomes just as important as growing them.

Why Volatility Matters More Near Retirement

When you're early in your career, market downturns are usually easier to recover from because you have time on your side. As retirement approaches, however, that timeline becomes shorter.

A significant drop in the market right before or during retirement can reduce the value of your portfolio at the exact moment you begin withdrawing income. This is often referred to as sequence-of-returns risk , where early market losses can affect how long your retirement savings last.

A common guideline some retirees consider is the ‘Rule of 100,’ which suggests subtracting your age from 100 to estimate the percentage of your portfolio that may be appropriate for market-based investments, with the remainder potentially allocated to more conservative or protected strategies.

At Summerlin Benefits Consulting , we provide guidance and strategies for the best way to make your money safe based on your long-term goals.

Creating Balance in Your Retirement Strategy

Many retirement portfolios are heavily exposed to the stock market. While these investments can offer growth potential, they can also introduce volatility.

A balanced retirement strategy often includes a mix of solutions designed to help manage risk while still allowing for growth. This may include professionally managed investment portfolios, annuity products that can provide protected income, or insurance-based strategies that offer additional financial flexibility.

The goal is not to avoid growth, but to build a strategy that can better withstand different market conditions.

Building Reliable Retirement Income

In retirement, the focus shifts from accumulation to income. Social Security can provide a foundation, but many retirees need additional income sources to maintain their lifestyle.

Some financial strategies can help create income that is less dependent on day-to-day market performance. Having multiple income sources can help provide stability and reduce the pressure to withdraw funds during market downturns.

Planning with Confidence

A thoughtful retirement plan considers growth, risk management, and income planning. By incorporating a variety of strategies, retirees can feel more confident about navigating market ups and downs.

At Summerlin Benefits Consulting , we help individuals explore options designed to help protect retirement savings while supporting long-term financial goals.

If you would like to review your current retirement strategy or learn more about ways to help protect your savings from market volatility, we invite you to schedule a consultation with our team!

Our goal is simple: helping you protect your money and your future.

Understanding 2025–2026 IRA Contribution Limits: What Savers Need to Know

Wed, 04 Feb 2026 20:51:51 GMT

Planning for retirement means making your savings work as hard as possible, and knowing the annual IRA contribution limits is a key part of that strategy.

What’s New for 2026

The IRS has increased the amount you’re allowed to contribute to Individual Retirement Accounts (IRAs) for the 2026 tax year:

�� Under age 50 — You can contribute up to $7,500 .
�� Age 50 and older — You can contribute up to $8,600 (including catch-up contributions).
These limits are up from $7,000 and $8,000 in 2025, respectively.

You have until the federal tax deadline , typically in April of the following year, to make contributions for the prior tax year.

Key Things to Keep in Mind

The total annual limit applies across all IRAs you own. That means if you have both a traditional IRA and a Roth IRA, the combined contributions can’t exceed the limit.
You can’t contribute more than your earned income for the year. If you earn less than the limit, your maximum contribution is capped at your income.
Traditional and Roth IRA rules differ , traditional IRAs may allow a tax deduction depending on your income and workplace retirement coverage, while Roth IRA eligibility is phased out at higher income levels.

Why It Matters

Rising limits mean more opportunity to boost your retirement savings in a tax-advantaged account . Whether you contribute to a traditional IRA, a Roth IRA, or both, knowing these thresholds helps you maximize your long-term retirement plan.

How Summerlin Benefits Consulting and SBC Wealth Management Can Help

We help clients understand their options and create strategies that work to achieve their goals. Let us help you set up your personal retirement plan or learn how to enhance your existing portfolio. Contact us here or call us at 855-809-2894!

Begin the Year with a Plan

Tue, 06 Jan 2026 14:44:31 GMT

As we move into 2026 , now is the perfect moment to set the tone for your financial future. Just like reflecting on the past year, planning ahead gives you clarity, confidence, and peace of mind, especially when it comes to your financial goals. Whether you’re looking to grow your wealth, protect what you’ve built, or ensure income for retirement, having a thoughtful financial plan is key to long-term success.

At Summerlin Benefits Consulting and SBC Wealth Management , we combine strengths to help you craft a plan that works for 2026 and beyond. With decades of experience helping individuals secure their financial futures, our combined services offer a full suite of solutions tailored to your unique goals and life stage.

�� Why Start 2026 with a Financial Plan?

A solid financial plan does more than track numbers - it provides direction. It helps you:

Clarify your goals for retirement, income, investment growth, legacy, and protection.
Understand your risks and opportunities in today’s evolving financial landscape.
Take action now , so you can look back at year-end with confidence instead of questions.

Whether you’re newly focused on your finances or continuing a lifelong journey, proactive planning changes outcomes, and gives you control over your future.

�� How Our Services Can Help

Summerlin Benefits Consulting specializes in financial safety and retirement planning. We help our clients build comprehensive strategies using tools such as:

Annuities - providing reliable income streams that you can’t outlive, with protection from market downturns.
Fixed Indexed Universal Life Insurance (FIUL) - combining life insurance protection with potential cash value growth linked to market indexes without direct market risk.
Fixed annuities and indexed strategies - designed to give you growth potential while safeguarding your principal.

SBC Wealth Management , serving as a fiduciary to actively manage your investment portfolio, helps by focusing on:

Custom wealth management strategies that align with your personal financial goals.
Active money management - not set-and-forget investing, but ongoing monitoring and adjustments as markets and your needs evolve.
Holistic financial planning - considering your entire picture, including retirement income, risk tolerance, and legacy.

Together, we help you balance growth, protection, and flexibility - so your 2026 goals don’t stay goals, but become achievements!

�� Your Next Steps

Starting 2026 with a plan doesn’t have to be overwhelming - it starts with a conversation:
Schedule a complimentary consultation to review where you are now.
Evaluate your retirement income needs and savings gap.
Review your investments and consider professional management options.
Assess your life insurance coverage and legacy strategies.

At SBC Wealth Management and Summerlin Benefits Consulting, we provide ongoing support, personalized planning, and a partnership that grows with you. Whether you’re focused on retirement, wealth growth, or financial security, we’re here to help you build the plan that will take you confidently into the future.

�� Start your year with purpose -- begin with a plan!
Contact us today to begin your financial journey for 2026 and beyond.

Year-End Financial Planning: Securing Your Future This Holiday Season

Wed, 03 Dec 2025 21:07:34 GMT

As the year winds down and we gather with loved ones, it's the perfect time to reflect on what truly matters, and to act on securing your financial future. At Summerlin Benefits Consulting , we help clients build comprehensive strategies using three essential tools: annuities, professionally managed assets (AUM), and Fixed Indexed Universal Life Insurance (FIUL).

Annuities provide reliable income streams that you cannot outlive. We offer fixed annuities with guaranteed rates and fixed indexed annuities that protect your principal while offering growth potential tied to market indexes. We analyze your retirement income needs and existing resources to determine the right annuity type, funding amount, and payout structure. Our goal is to ensure you have reliable cash flow throughout retirement without worrying about market volatility.

Our Assets Under Management (AUM) service means we actively manage your investment portfolio, handling everything from initial strategy development to ongoing rebalancing and performance monitoring. We assess your risk tolerance and financial goals, then construct and actively manage a diversified portfolio tailored to your needs. You receive transparent reporting and regular reviews, with strategic adjustments as markets evolve and your life changes.

Fixed Indexed Universal Life (FIUL) provides both life insurance protection for your family and tax-free cash value growth linked to market index performance, without direct market risk. It offers flexibility to adjust premiums and access funds during your lifetime. We evaluate your life insurance needs and income objectives to determine if FIUL fits your strategy. We help structure policies for optimal coverage and cash value growth, explaining when and how to access funds for retirement or other needs.

This holiday season, give yourself the best present, a sense of financial clarity:

Schedule a complimentary consultation to review your current situation
Evaluate your retirement income gap —will Social Security and savings be enough?
Review your investment portfolio performance and consider professional management
Assess your life insurance coverage —would your family be financially secure?

Need help developing your action plan? Summerlin Benefits Consulting provides our clients with:

Specialized Expertise: We focus specifically on annuities, managed investments, and life insurance strategies, giving us deep knowledge in these critical areas.

Personalized Plans: Every client receives a customized strategy based on their unique goals—no cookie-cutter solutions.

Ongoing Partnership: We provide continuous support and adjustments as your needs evolve, ensuring your plan stays on track.

Our Process:

Comprehensive financial assessment
Gap analysis and strategy development
Product selection and implementation
Regular reviews and adjustments

Contact us today to schedule your consultation and start the new year with confidence! Let's discuss your goals and create a comprehensive strategy using annuities, professional asset management, and FIUL products tailored to your needs.

Rethinking Retirement: How Life Insurance & Fixed Index Annuities Can Play a Strategic Role

Thu, 23 Oct 2025 12:36:13 GMT

At Summerlin Benefits Consulting, we believe retirement planning should go beyond simply accumulating savings. In an era of longer lifespans, market turbulence, and uncertainty around how to generate income in retirement, it’s wise to consider how you’ll draw income, what risks you face, and which tools can help you meet both income and legacy goals.

In this article, we’ll explore how life-insurance-based strategies (particularly indexed universal life – IUL) and fixed index annuity solutions can complement traditional investments, improve outcomes and enhance flexibility.

1. The Changing Retirement Landscape

More people are facing three major shifts:

Longevity – Retirees now may spend decades in retirement, increasing the risk of outliving their savings.
Market & inflation risk – Traditional portfolios are exposed to sequence-of-returns risk, equity downturns and low returns in fixed income.
Fading pensions, rising responsibility – With fewer defined benefit plans, the burden for securing income falls on individuals and their advisors.

Given these dynamics, strategies that simply rely on “save and invest” may not fully address the income and legacy challenges many clients face.

2. Beyond Investments — Why Add Life Insurance and Fixed Index Annuities?

Traditional portfolios serve an important role, but certain additional tools bring features that can fill gaps:

Fixed Index Annuities can offer guaranteed income for life, principal protection in many designs and relief from market timing risk.
IUL (Indexed Universal Life) can build cash value with downside protection, offer tax-deferred growth, and potentially tax-free access via policy loans (when structured correctly) as well as a death benefit.
Combined, these can create a hybrid solution that allows portfolio growth, income certainty, protection from downside, and legacy potential.

3. What the Research Shows

Recent modeling (via Monte Carlo simulation across many market scenarios) reveals interesting patterns:

Strategies that mix insurance tools (IUL + indexed fixed index annuities + investments) often outperformed investment-only strategies when looking at two key outcomes: sustainable retirement income and legacy value.
For example, in one scenario with a 65-year-old couple allocating 30% of retirement assets to an IUL and 30% to a fixed indexed annuity (with the rest in investments), the result showed about a 5.5% increase in retirement income and roughly a 29.6% higher legacy value compared to an investment-only portfolio.
Insurance solutions were treated in the model as part of the “fixed income” or conservative bucket thereby allowing reduction in traditional bond holdings and freeing up more room for equity growth.
The tax-efficient nature of IUL (growth not taxed until withdrawn/loaned, death benefit typically tax-free) and fixed index annuities (tax-deferred accumulation) helped improve net outcomes after taxes.

4. How to Think About the Roles

When picking which tool to lean on, consider these points:

Income maximization → Fixed Index Annuities (especially those with lifetime income features) tend to shine when the primary objective is reliable cash flow in retirement.
Legacy preservation / wealth transfer → IULs can be structured to provide death benefits and tax-efficient access so they favor clients with strong legacy goals.
Balanced objectives → A mix of both (e.g., some allocation to IUL, some to fixed index annuities, rest in investments) offers flexibility and allows for tailored outcomes.
Liquidity & flexibility → While fixed index annuities often reduce access to capital (in exchange for guarantees), IULs can provide an accessible cash value buffer that can be used in downturns instead of tapping equities at the wrong time.

5. Why Partnering with Experienced Advisors Matters

Successful implementation of these tools often requires a deeper understanding of product features, tax implications, design trade-offs, and long-term modelling. At Summerlin Benefits Consulting, we support clients by:

Reviewing how insurance-based solutions fit into your overall portfolio.
Customizing allocations based on individual goals (income, legacy, risk tolerance, time horizon).
Coordinating with tax and legal advisors to align distributions and estate planning.
Keeping an eye on the evolving market, regulatory or product developments so the strategy remains current.

If you’re interested in exploring how these tools might support your retirement plan, or want a tailored modelling scenario, please Contact us to schedule a consultation. At Summerlin Benefits Consulting we’re committed to helping you build a retirement strategy that goes beyond saving, to delivering confidence in income, flexibility, and legacy.

Is an Annuity the Right Fit for Your Retirement Plan?

Thu, 31 Jul 2025 19:10:14 GMT

With retirement planning top of mind for many Americans, annuities are gaining attention as a potential solution for creating steady income in retirement. Recent changes like the SECURE Act 2.0—which makes it easier to include annuities in 401(k) plans—have only increased their appeal.

In fact, a LIMRA survey revealed that 7 in 10 working Americans not yet retired would be inclined to choose an annuity option within their retirement plan if offered. Their top reason? The opportunity to receive guaranteed lifetime income.

This growing interest is reflected in the numbers: annuity sales hit a record $432.4 billion in 2024, up 12% from the previous year, marking the third straight year of record growth, according to LIMRA.

With more employers incorporating annuity options into workplace retirement plans, many people are asking: Should I consider adding an annuity to my retirement strategy? The answer depends on your unique financial situation and retirement goals.

When Might an Annuity Make Sense?

Here are five scenarios where adding an annuity could be a smart move:

1. You’re worried about outliving your savings.

If you’re concerned your retirement funds might not last, an annuity can offer peace of mind. Annuities work by turning a lump sum or a series of payments into income you receive later—often for the rest of your life.

There are two main types of income annuities:

Immediate Income Annuities, which begin paying out within a year of purchase.

Qualified Fixed Index Annuities , which allow your money to grow tax-deferred before beginning income payments at a future date you select.

These products are sometimes referred to as “personal pensions” because they can offer a dependable income stream for life—something few other financial tools can guarantee.

2. You want better returns than a CD but with minimal risk.

Fixed annuities, especially multi-year guaranteed annuities (MYGAs), can deliver better returns than bank CDs while still preserving your principal. Because insurers invest your funds over a longer period, they can typically offer more competitive interest rates, and growth is tax-deferred.

3. You’ve maxed out other retirement savings vehicles.

If your 401(k) and IRA contributions have reached their limits but you still want to put more away for retirement, an annuity can be a tax-efficient option. Contributions made with after-tax dollars grow tax-deferred, and withdrawals of those original contributions are not taxed again.

4. You want stock market growth but without the full risk.

Fixed indexed annuities allow for market-linked growth while protecting your principal. These annuities offer the opportunity for higher returns than traditional fixed-income investments, but without the full downside risk of stocks.

This option appeals to savers nearing retirement who want some market exposure but can’t afford major losses. It’s a tool to help preserve capital while still participating in some market gains.

5. Your retirement income sources aren’t diversified.

According to some financial advisors, an ideal retirement income strategy includes:

One-third from Social Security

One-third from investment withdrawals

One-third from guaranteed lifetime income (like annuities)

Relying too heavily on market-based income opens you up to volatility. Adding a guaranteed income component can bring greater stability to your retirement finances.

How Summerlin Benefits Consulting Can Help

At Summerlin Benefits Consulting, we understand that every retirement journey is unique. That’s why we offer customized strategies to help protect your retirement income—so you can spend less time worrying and more time enjoying what matters most.

Whether you're considering an annuity for the first time or looking to evaluate your current retirement income plan, we’re here to help you make informed, confident decisions. Our team can walk you through the different types of annuities available, explain how they may fit into your overall financial picture, and tailor solutions based on your long-term goals.

We specialize in building retirement income plans designed to:

Provide predictable, lifelong income

Preserve your principal and reduce market risk

Maximize the benefits of tax-deferred growth

Protect what you've worked hard to earn

With access to top-rated annuity products and a client-first approach, we’ll guide you toward strategies that align with your financial priorities and retirement timeline.

Ready to explore whether an annuity belongs in your retirement strategy?

Let’s talk. Schedule a consultation with Stacy Summerlin today, and take the next step toward retirement with confidence.

The Hidden Benefits of Working with a Financial Advisor

Tue, 17 Jun 2025 20:11:47 GMT

The Hidden Benefits of Working with a Financial Advisor: More Than Just the Money

When most people think about working with a financial advisor, they tend to focus on the dollars and cents, building wealth, managing investments, and planning for retirement. But what often goes overlooked are the profound emotional and psychological benefits that come with having a trusted financial professional in your corner.

Here’s how working with a financial advisor can improve your financial life and your peace of mind:

1. Less Stress, More Clarity

Money is one of the most common sources of stress in people’s lives. Whether it’s uncertainty about the future, fear of making mistakes, or anxiety during economic downturns, financial worries can take a toll on mental health. A financial advisor brings structure and perspective, helping to ease that burden. By offering clear plans and expert guidance, they reduce the weight of financial decision-making, especially during uncertain times.

2. Confidence in Your Financial Future

It’s not just about having a plan, it’s about knowing that plan is being professionally managed. Many people feel more confident and secure when they know an expert is helping them make informed decisions. Whether you're saving for a home, paying off debt, or planning for retirement, the peace of mind that comes from knowing you're on track can be priceless.

3. A Greater Sense of Control

One of the most empowering effects of working with a financial advisor is the feeling of being in control of your financial life. Advisors help clients get organized, streamlining budgets, clarifying goals, and making sense of the bigger picture. Instead of feeling overwhelmed, clients often feel empowered to take action with purpose and direction.

4. Sharper Goals and Priorities

A good advisor does more than just crunch numbers, they help you define what success looks like. Whether you're unsure about which goals to tackle first or need help prioritizing competing financial demands, advisors bring focus to your planning. With clear, achievable milestones, you can stop second-guessing and start moving forward with confidence.

5. Emotional Support During Tough Times

Markets fluctuate. Life throws curveballs. And sometimes, emotions get in the way of smart financial choices. That’s where a financial advisor can act as a behavioral coach, helping you avoid rash decisions like panic selling during a downturn or overspending during a windfall. Their steady, experienced perspective can keep you on course when emotions run high.

6. A Relationship Built on Trust

Over time, the advisor-client relationship can become one of deep trust and support. Clients often describe their advisors as sounding boards, accountability partners, and even friends. Knowing there’s someone who understands your financial goals and genuinely has your best interest in mind is a source of comfort, and security.

Backed by Research

Studies from respected institutions like Vanguard, Morningstar, and the CFP Board have consistently shown that the value of a financial advisor extends beyond investment returns. This added value, sometimes referred to as “advisor’s alpha”, includes the emotional and behavioral benefits that ultimately lead to better financial and personal outcomes.

Final Thoughts

At Summerlin Benefits Consulting, we understand that true financial wellness goes beyond spreadsheets and stock portfolios. Our team takes a personalized approach to planning, focusing not just on growing your wealth but on empowering you to live with purpose and confidence. Whether you're navigating complex life transitions or simply seeking a clearer path forward, we aim to be more than just advisors—we’re your long-term partners in financial peace of mind. With a deep understanding of both the technical and emotional aspects of financial decision-making, Summerlin Benefits Consulting is here to support you every step of the way.

What You Need to Know About Gift Tax

Fri, 11 Apr 2025 18:43:15 GMT

What You Need to Know About Gift Tax

If you’re feeling generous and planning to share your wealth with family or friends, you might be wondering whether the IRS is going to come knocking. The good news? Most people can give freely without owing a dime in gift taxes — but there are limits you should be aware of. Let’s break down how the gift tax works and what the exclusion amounts are for 2025.

What Is the Gift Tax?

The gift tax is a federal tax on the transfer of money or property when the recipient doesn’t provide something of equal value in return. This could apply to giving cash, real estate, stock, or other assets.

There are two main limits that determine whether a gift may trigger IRS reporting or potential taxation:

The annual gift tax exclusion
The lifetime gift tax exemption

Understanding how these limits work can help you give generously—without any unpleasant tax surprises.

2025 Annual Gift Tax Exclusion

In 2025, you can give up to $19,000 per recipient without needing to report it to the IRS. This is a $1,000 increase from 2024. If you’re married, you and your spouse can each gift $19,000 to the same person, for a combined total of $38,000.

Key Notes:

The limit is per person, not per total gifts. You could give $19,000 to your child, $19,000 to your grandchild, and $19,000 to a friend—all in 2025—without filing a gift tax return.
If you want to combine your gift with your spouse’s to give $38,000 to one person, you can use a strategy called gift splitting. This requires filing IRS Form 709, even if no tax is owed.
Gifts to your spouse (if a U.S. citizen) are unlimited and generally don’t require a gift tax return.

What If You Go Over the Limit?

Giving more than $19,000 to one person in 2025 doesn’t mean you’ll owe taxes—but it does mean you’ll need to file Form 709 to report the gift. The amount that exceeds $19,000 simply counts against your lifetime exemption.

2025 Lifetime Gift Tax Exemption

The lifetime gift tax exemption allows you to give away a significant amount over your lifetime—beyond the annual limits—without paying gift tax.

In 2025, that limit is $13.99 million per person
For married couples, it’s $27.98 million

Let’s say you give your adult child $50,000 in 2025. The first $19,000 is covered by the annual exclusion. The remaining $31,000 reduces your lifetime exemption—but no tax is due at the time.

Pro Tip: The IRS uses this same lifetime exemption for estate tax. Any amount you use for gifts during life reduces the amount that’s shielded from estate tax when you pass away.

Heads-Up for 2026

Unless legislation changes, the lifetime exemption is set to drop significantly in 2026—down to about $5 million per person, adjusted for inflation. If you're considering large gifts, 2025 may be an ideal time to act.

Gifting and Fixed Indexed Annuities (FIAs)

At Summerlin Benefits Consulting, we specialize in what we call “safe money strategies”, one of which is Fixed Indexed Annuities (FIAs). Many of our clients own one or more fixed index annuities, so we will dive a little deeper into how gift tax rules may impact those with annuities.

Gifting Funds Into an Annuity

If you give someone money to fund an annuity—whether it’s a parent helping a child get started or a child helping a parent or grandparent with their retirement strategy—it counts as a financial gift. If the amount exceeds $19,000, you’ll need to file Form 709 and apply the excess to your lifetime exemption.

Receiving Gifted Funds for an Annuity

If you receive a gift to help fund your own annuity, the gift tax rules apply to the giver, not you. However, you may still want to document the gift in case it raises questions later, especially for larger contributions. Receiving gifted funds to begin your annuity allows the gifter to help you establish a lifetime income stream for retirement, that will grow safely and securely for your future.

We help our clients understand the best way to structure these kinds of gifts—whether that’s contributing over time to stay under annual limits or using lifetime exemption strategically.

Gift Tax Triggers to Watch For in 2025

Even with the generous 2025 limits, here are a few scenarios that can unexpectedly trigger a gift tax filing requirement:

Funding a 529 college savings plan with more than $19,000 in a single year
Gifting large amounts for weddings, vacations, or home purchases
Buying a car or luxury item for someone without compensation
Paying medical bills or tuition on someone’s behalf—but not doing it directly to the provider
Forgiving a personal loan or giving an interest-free loan
Adding someone as a joint owner on your bank account

Is the Gift Tax Deductible?

No—gifts to family and friends aren’t tax-deductible. Only donations to qualified nonprofits may be deducted from your income taxes.

Final Thoughts

While most people won’t ever owe gift tax, many will trigger filing requirements—especially as they share their wealth through larger gifts or estate planning moves. When combined with strategies like annuities or trust planning, gifting can become a powerful tool.

At Summerlin Benefits Consulting, we provide expert guidance to help you protect your retirement income, preserve your wealth, and pass it on wisely. We feel that it’s important to be well informed along every step of your retirement planning journey. If you have questions about your current strategies, or would like a no-obligation financial review with one of our licensed professionals, please reach out today.

Summerlin Benefits Consulting is a financial and insurance services firm and does not provide tax, legal, or accounting advice. The information provided is for general informational purposes only and should not be construed as tax advice. We strongly recommend consulting with a qualified tax professional or advisor to assess your individual situation and ensure compliance with applicable tax laws.

Annuities: A Key to Retirement That Many Americans Overlook

Mon, 10 Mar 2025 17:39:48 GMT

Annuities can play a vital role in retirement security, yet many Americans fail to understand or take advantage of them. Social Security provides a guaranteed income stream in retirement but often retirees find that to be their only guaranteed income source in retirement. Annuities can help to supplement social security and other pensions by providing additional income for life, yet they are often underutilized with only a small percentage of Americans owning one. We are going to dive deeper into annuities and how they can be a powerful tool for ensuring long-term financial stability.

The Knowledge Gap Around Annuities

Surveys reveal a striking lack of awareness about annuities. The American College of Financial Services found that older adults scored just 12% on an annuity literacy quiz, ranking their knowledge lower than Medicare, life insurance, and long-term care. Another study from the TIAA Institute and Stanford University asked participants how best to prevent outliving their savings. Only about half correctly identified purchasing an annuity as the solution.

A major reason for this knowledge gap is the complexity of annuities. In fact, many Americans don’t even fully understand Social Security, which is a fundamental part of retirement income. This lack of understanding is the primary reason annuities, which can be complex, remain a mystery to many. While the concept is simple—receiving fixed payments over time—annuities come in multiple forms, including fixed, variable, and indexed options, each with different terms and conditions. This challenge of finding what will work best for you is often what discourages people from considering them as a viable retirement tool.

Why Annuities Matter

There are some specific differences that are important when considering annuities as part of your retirement plan. Fixed Indexed Annuities (FIAs) can offer financial security by providing growth potential without market risk while Variable Annuities can fluctuate based on market performance and are often fee heavy. Fixed Annuities provide a conservative “fixed” interest rate (usually with lower albeit steady growth for a specified period of time). As a retirement tool, FIAs are often preferable because they are tied to an index, such as the S&P 500, so they give the owner the best of both worlds. Meaning, they provide a more reasonable rate of return over time than Fixed Annuities but still protect against losses , unlike Variable. Even if the market declines, an FIA ensures that your principal AND your year-over-year gains, all remains intact.

Since FIAs provide a balance between growth and security this makes them an attractive alternative to traditional savings or investment accounts. Retirees can benefit from tax-deferred growth , and many FIAs also offer lifetime income , ensuring a steady stream of payments throughout retirement just like a pension would.

So why are annuities important? Well, the average Social Security benefit in early 2024 was $1,907 per month, while the average household run by someone 65 or older spends $4,345 per month. This gap can put some retirees at risk of outliving their savings if they are constantly having to pull from retirement accounts to close that gap. By using an annuity instead, you can fill that gap with another source of guaranteed monthly income and allow yourself to draw less from your other savings every year- making it last longer. Plus, in the annuity even if your balance hits zero, it will keep paying you the monthly income for the rest of your life, so you truly will never run out of money.

Despite their benefits, annuities can be overlooked due to lack of understanding as we’ve described, but also due to a misperception of high costs, complexity, and even some mistrust. Some annuities, such as variable annuities, may come with hidden fees and lengthy contracts. Unfortunately, this can create an overall negative perception about ALL annuities, especially for a consumer that doesn’t understand the differences between Variable and FIA. Most FIA’s can be structured with little to no fees, for example.

Unfavorable perceptions have also been reinforced by financial firms’ advertising and misrepresentation designed to paint annuities as lackluster financial products. Statements like, “the market outperforms everything” further feed this agenda. At the end of the day though, not all annuities are created equal. FIAs stand out because they do not typically include heavy fees, and they eliminate market risk while offering upside potential —a key advantage over other annuity options. Are annuities right for everyone? No. But can the right annuity be a good retirement tool for the right person based on their goals and objectives? Absolutely.

The Shift Toward Annuities in Retirement Planning

A step forward for annuities in the financial planning world has come about as recent policy changes aim to make annuities more accessible in employer-sponsored retirement plans. Legislation now allows 401(k) plans to include annuity options, helping retirees build their own lifetime income pool, as many employers are no longer offering pensions. Companies like BlackRock have introduced products that allow workers to allocate a portion of their 401(k) contributions into annuities, simplifying the purchasing process. This has been common for teachers and municipal employees for years but is becoming more mainstream for private sector employers more recently. These changes should help create awareness and ensure that people start learning about the way to effectively use annuities in their retirement planning, at a younger age.

Additionally, as life expectancy increases the risk of outliving savings grows. In today’s world, financial experts stress the importance of planning ahead, especially for those within a decade of retirement. While annuities may not be the right fit for everyone, Fixed Indexed Annuities can provide a reliable option for those seeking principal protection with growth potential . Firms like Summerlin Benefits Consulting , a leader in retirement income protection, specialize in FIAs as a key strategy for bringing safety and guaranteed income into retirement portfolios.

Conclusion

Annuities are a crucial yet underutilized component of retirement planning. A lack of understanding, complexity, and historical mistrust contribute to their low adoption. However, with Social Security alone often being insufficient to support retirees, Fixed Indexed Annuities can play a key role in ensuring long-term financial security. Summerlin Benefits Consulting helps clients navigate FIA options to protect their financial future, ensuring they have a stable and secure retirement. As awareness grows and access improves, more Americans may begin to see FIAs as an essential part of their retirement strategy. Reach out today if you’d like to learn more about Fixed Index Annuities and how they can be beneficial for your retirement portfolio!

Understanding IRMAA Surcharges and How to Mitigate Their Impact

Fri, 24 Jan 2025 17:36:22 GMT

For retirees navigating the complexities of Medicare, the Income-Related Monthly Adjustment Amount (IRMAA) is an important factor to be aware of. This surcharge increases Medicare premiums for higher-income individuals, potentially reducing disposable income. Below we will dive deeper into how IRMAA is calculated, as well as some proactive steps to take for those that are affected by IRMAA.

What is IRMAA?

IRMAA is a surcharge added to Medicare Part B (medical insurance) and Part D (prescription drugs) premiums, whenever the insured’s income falls above certain thresholds. Unlike standard Medicare premiums, IRMAA is income-adjusted, meaning the more you earn, the more you pay for your Medicare health coverage.

The Social Security Administration (SSA) determines IRMAA based on your Modified Adjusted Gross Income (MAGI) from two years prior. For example, your 2024 IRMAA is calculated using your 2022 tax return. MAGI includes adjusted gross income plus any tax-exempt interest, such as municipal bond income.

How are Income Brackets Calculated?

IRMAA brackets are indexed annually for inflation, meaning they change over time. These brackets determine the surcharge amount applied to your Medicare premiums. If your MAGI exceeds the lowest bracket, you’ll pay an additional premium based on your income level. Additionally, exceeding a threshold even by just $1 can place you into a higher surcharge tier.

2025 IRMAA Brackets

Here are proposed income thresholds for 2025 and the Part B adjustments, as published by CMS.gov:

Income Level (MAGI, Single) Income Level (MAGI, Married Filing Jointly) Part B Surcharge Total Monthly Part B Premium

$106,000 or Less $212,000 or Less $0 $110.40

$106,001 - $133,000 $212,001 - $266,000 $73.60 $184.00

$133,001 - $167,000 $266,001 - $334,000 $184.10 $294.50

$167,001 - $200,000 $334,001 - $400,000 $294.50 $404.90

$200,001 - $499,999 $400,001 - $749,999 $404.90 $515.30

$500,000 or Greater $750,000 or Greater $441.70 $552.10

Additional surcharges could be applicable on your Part D premiums as well. Please visit www.CMS.gov for more information and as always, seek the help of a certified tax adviser for guidance.

How and When Are IRMAA Fees Paid?

IRMAA surcharges are added directly to your Medicare Part B and Part D premiums. For retirees receiving Social Security benefits, the premiums, including any IRMAA surcharges, are deducted automatically from their monthly checks. This reduction in Social Security income can significantly impact retirees’ monthly cash flow and can often cause a financial burden. But, there are some proactive steps that you can take in order to minimize the impact of IRMAA.

Strategies to Minimize the Impact of IRMAA

1. Tax-Efficient Withdrawals : Strategies such as Roth IRA conversions can reduce taxable income over time, as qualified withdrawals from Roth accounts are not included in MAGI. Additionally, utilizing funds from Health Savings Accounts (HSAs), which offer triple tax advantages, can help pay for medical expenses without affecting MAGI. Properly sequencing withdrawals from taxable, tax-deferred, and tax-free accounts (such as loans against a cash value life insurance policy) can also help smooth out income levels and avoid IRMAA bracket spikes.

2. Timing of Income : Careful timing of income recognition is another critical strategy. One-time events, such as selling a property, cashing out stock options, or taking large distributions from tax-deferred accounts, can push MAGI above an IRMAA threshold. To mitigate this, consider spreading such events over multiple years or deferring them to years when income is expected to be lower. Charitable giving strategies, such as Qualified Charitable Distributions (QCDs) from IRAs, can also reduce taxable income while supporting philanthropic goals.

3. Annuities : Fixed Indexed Annuities (FIA) can serve as a reliable income source that help offset the costs associated with IRMA. FIAs provide a guaranteed income stream and offer growth potential linked to market indexes without the risk of direct investment losses. By using annuity payouts to supplement retirement income, clients can reduce their reliance on Social Security and better manage their overall cash flow.

4. Cash Value Life Insurance: Fixed Indexed Universal Life Insurance (FIUL) can also provide you indexed market growth without risk of investment losses. FIUL can serve as a reliable and tax-free income source in retirement as it allows the policy owner the option to pull money from the cash value each year in the form of a policy loan, without increasing MAGI or triggering IRMAA surcharges. It can often also provide you with additional living benefits for certain health occurrences and long-term care needs that you can draw out tax-free as well. This can be a valuable tool for later in life, to cover your care expenses, without increasing your taxable income.

Conclusion

IRMAA surcharges can significantly affect retirees’ financial plans, particularly for high-net-worth individuals. By understanding the intricacies of IRMAA and implementing strategies such as the ones outlined above, retirees can better manage their income and maintain financial stability. As a financial firm specializing in retirement planning, Summerlin Benefits Consulting is here to help clients navigate these challenges and secure a comfortable retirement. Contact us today to learn more about how fixed indexed annuities can fit into your retirement strategy.

Use This Year-End Checklist to Stay on Track With Your Retirement Savings Goals

Fri, 06 Dec 2024 15:57:59 GMT

The end of the year offers a perfect opportunity to evaluate your progress toward retirement savings goals. Below, you'll find tips to help ensure you're making the most of your resources as we approach 2025.

1. Reassess Your Savings Strategy

Retirement savings goals are deeply personal, varying significantly based on the lifestyle you envision. Additionally, the retirement saving strategies that may have worked for you 10, 20, or 30 years ago may need to be reassessed at this stage of your life. So, what better time to assess your goals and strategies than before the New Year?

A good place to start is to look at the lifestyle you envision for retirement. If you are still working, you may want to consider your lifestyle now and determine how it may be similar or different in retirement. For example, will you travel more? Have more hobbies? This will help to give you a baseline for expenses in retirement and determine if you should be saving more or less.

If already retired, it's a good idea to reflect on the year, or past couple of years, and determine if there have been any significant changes that could potentially affect your retirement strategy. For example, what is inflation doing? Where are interest rates at? If we ask these questions currently as we near the end of 2024, we know that interest rates and inflation are still high. Thus, it could be the right time to assess your current investments, such as annuities and life insurance policies, to determine if there are options to potentially upgrade them. At Summerlin Benefits Consulting, we have helped many of our clients take advantage of the current economic climate in order to better reinforce and grow their retirement nest eggs.

2. Maximize Your 401(k) Contributions

If your employer offers a 401(k) match, aim to contribute enough to capture the full match — essentially free money to grow your retirement savings. Additionally, many 401(k) plans allow for automatic annual contribution increases, often by 1%. If this isn’t available, there should also be the option to manually adjust your contributions to stay proactive. Even a small percentage increase can significantly impact your long-term savings.

On the flip side of things, many people have 401Ks with previous employers and fail to do anything with those accounts once they leave the job. To put it plainly, they have left their retirement nest eggs in the hands of their former employers. It is a good time to take back control of those accounts and Summerlin Benefits Consulting can help you do that.

3. Stay Within Updated IRA Contribution Limits for 2024

For 2024, the IRA contribution limits are:

$7,000 for individuals under age 50.
$8,000 for those aged 50 or older (including the $1,000 catch-up contribution).

Remember, these are "use-it-or-lose-it" limits. Contributions not made by the deadline (April 15, 2025, for the 2024 tax year) cannot be rolled over to subsequent years. If you haven’t maxed out your IRA, consider catching up before the deadline.

4. Contribute to Other Retirement Saving Vehicles

You may have other retirement saving vehicles that you can also contribute to. For example, many Fixed Index Annuities offer the option to add funds, however you should be aware that there may be a timeframe within which you must do so. It’s important to make note of your deadline so that you don’t miss it.

If your annuity is a Tax Qualified IRA, it will also follow the same contribution limits listed above in Checklist Item #3. The annuity will have the same “use it or lose it” limits, so be sure to set reminders if you intend to add funds, that way you don’t miss out.

If you have retirement saving vehicles, but aren’t sure what you have, Summerlin Benefits Consulting can do the leg-work for you so you don’t have to. An account gathering call is often a great first step into diving deeper into your investments to make sure you are confident in what your investments are doing to grow your money for you. In fact, we’ll talk more about that in the next checklist item.

5. Rebalance Your Investment Portfolio

Year-end is an excellent time to revisit your portfolio to ensure it aligns with your goals and risk tolerance, which may shift as you experience significant life changes. You should be decreasing risk as you age, because you have less time to make up any significant losses. A general, helpful guideline to determine a reasonable level of risk to keep in your portfolio is called “The Rule of 100”. This rule states that you subtract your age from 100 and the result is an acceptable percentage of your portfolio to keep in a more risky financial vehicle. For example, if you are 60 years old, then it makes sense to keep no more than 40% of your assets in riskier areas such as stocks and mutual funds. Under this rule, 60% of your investments should then be in safer environments such as fixed index annuities or bonds.

6. Consult With a Financial Professional

If you have questions about any of the above checklist items, or simply don’t know where to start, a financial professional can help. If you are already established with a good financial advisor, then that person would be a good one to go to. But, if you’ve always managed your own retirement savings, or maybe you have a financial advisor but don’t feel like you’re getting enough support from them, it could be a good time to “shop around” and make an appointment or two to ensure you find the right fit. You should feel comfortable with your advisor and confident that you and your investments are getting the most out of the relationship.

A good financial professional will help you diversify your portfolio by balancing safety and risk, assess your financial plan during times of transition, such as job or life changes, and will help guide you through the best options for your personal needs while keeping you in the driver’s seat to make the decisions. At Summerlin Benefits Consulting, we do all of this and more, while keeping things simple and easy to understand for our clients.

Bottom Line

Whether retirement is decades away or just around the corner, an end-of-year financial review is a smart move. Revisiting your contributions, aligning with updated limits, and seeking expert guidance can set you up for continued success. Don’t hesitate to leverage the expertise of a financial planner to refine your strategy — your future self will thank you. Call Summerlin Benefits Consulting today and we are happy to provide a complete, no obligation financial review to get you started off on the right track in 2025!

Is Fixed Indexed Universal Life Insurance a Smart Choice for Adults in their 30s and 40s?

Mon, 09 Sep 2024 17:48:30 GMT

Life insurance isn't just about providing financial security for your loved ones; it can also be a strategic tool for building wealth and planning for the future. One option that stands out, especially for younger adults, is Fixed Indexed Universal Life (FIUL) Insurance. But what makes FIUL a compelling choice for those in their thirties and forties? Let’s explore!

Understanding Fixed Indexed Universal Life Insurance

FIUL is a type of permanent life insurance that combines a death benefit with a cash value component that grows over time. The cash value’s growth is linked to the performance of a stock market index, such as the S&P 500, allowing you to enjoy potential market gains without directly investing in the stock market. Importantly, FIUL policies typically include a protective floor, so your cash value won’t decline during market downturns.

Key Benefits of FIUL for Younger Adults

One of the standout features of FIUL is the potential for cash value growth linked to a market index. This offers a chance to accumulate more cash value over time compared to traditional whole life policies, which often have fixed, lower rates of return. For younger adults, who have the advantage of time on their side, this means their money can grow substantially over the years.

Flexibility is another major benefit of FIUL. Life can be unpredictable, especially when you’re balancing career growth, raising children, or making major purchases like a home. FIUL policies offer flexible premiums and death benefits that can be adjusted as your financial needs change. Whether you need more coverage at certain points or want to adjust your premiums, FIUL’s flexibility allows you to tailor the policy to your current circumstances.

A significant advantage of FIUL is its tax treatment. The cash value within an FIUL policy grows on a tax-deferred basis, which means you won’t pay taxes on the gains as long as they stay within the policy. Additionally, you can access this cash value through loans or withdrawals, typically tax-free, provided the policy is managed correctly. This can be a valuable resource for meeting unexpected expenses or planned financial needs, like funding a child’s education or making a large purchase.

For this reason, FIUL can also serve as a supplemental tax-free income stream during retirement. The accumulated cash value provides additional financial flexibility in your later years, complementing other retirement savings and helping to secure a more comfortable retirement.

Of course, at its core, FIUL is still life insurance. Beyond the investment component, it offers a death benefit that ensures your loved ones are financially protected. This can be crucial if you have dependents or significant financial obligations. The death benefit can help cover mortgage payments, replace lost income, or fund your children’s education, offering peace of mind that your family’s future is secure.

Considerations to Keep in Mind

While the benefits of FIUL are compelling, it's important to be aware of a few considerations. FIUL policies can come with various fees and charges, including costs related to the insurance coverage and administrative expenses. These costs can typically be offset by the policy's growth potential, but understanding them helps ensure the policy aligns with your financial strategy.

FIUL policies also include caps on the maximum return you can earn from market gains. These caps are designed to protect you from market downturns but also limit your potential upside. For those who value stability and a protective floor against losses, this trade-off can be a worthwhile compromise.

Lastly, FIUL is generally best suited as a long-term commitment. To fully benefit from the policy’s features and growth potential, it’s advisable to maintain the policy over the long term. While there can be charges for early withdrawals or surrendering the policy, staying the course allows you to maximize the benefits of tax advantages and cash value accumulation.

Final Thoughts

Fixed Indexed Universal Life Insurance can be a powerful tool for younger adults who want to combine life insurance protection with the potential for cash value growth. Its unique features, like tax-advantaged growth, flexibility, and a protective floor against market losses, make it a compelling choice for those planning their financial future.

At Summerlin Benefits Consulting, we specialize in helping individuals navigate the complexities of FIUL to find the right fit for their needs. Our team is dedicated to providing personalized guidance, ensuring that your FIUL policy aligns with your financial goals and offers the protection and growth potential you’re looking for. Reach out to us today to learn more about how FIUL can be a part of your financial strategy.

Reading a Financial Plan From My Advisor Shouldn't Require a Degree in Economics!

Thu, 08 Aug 2024 16:00:39 GMT

Have you ever received a 100-page financial plan from your advisor only to find out that less than 10 of those pages were useful? Typically, only a few pages of a financial plan will focus on strategy and investment choices; the rest usually cover fee breakdowns, risk and return explanations, and regulatory compliance disclosures. This may seem overwhelming when only a fraction of the pages are actually helpful! You’re not the only one that may be thinking, “Is this standard or should I consider finding a new advisor?”

It's a common frustration to receive such extensive documentation from financial advisors, and you're not alone in feeling overwhelmed by the sheer volume of compliance and disclosure paperwork. However, understanding the reasons behind this paperwork can help clarify its purpose and whether your current advisor is meeting your needs effectively.

Why So Much Paperwork?

The bulk of the paperwork you received is largely due to regulatory requirements, as much of it is mandated by the government to ensure transparency and protect clients. This is intended to prevent advisors from withholding critical information and to mitigate potential liability issues.

These compliance documents are standardized across the industry. While they might seem redundant or excessive, they are required for maintaining legal compliance and ensuring that all advice provided aligns with regulatory standards. This practice safeguards clients by ensuring consistent and transparent financial guidance.

Is The Paperwork Really Worth It?

Despite the apparent redundancy, the inclusion of comprehensive disclosures and compliance documents can actually add value to the financial services you receive if done properly. Some certified financial planners have pointed out that these documents are akin to the terms of service agreements we routinely accept without reading. They are there to validate the rationale behind the recommendations made by your advisor. While the majority of clients might not initially engage with these detailed reports, they often find them valuable as they revisit and review their financial plans over time.

With that said, that still doesn’t mean that your advisor should leave you to your own devices when trying to interpret the lengthy plan. In fact, a good advisor should put things in a simple, easy-to-understand format so that you feel comfortable and confident with your plan. For example, an advisor should be willing to explain the necessity of these documents and provide clear, concise key points and summaries that align with your goals and understanding. Unfortunately, we often see that some advisors fail to take these extra steps.

Evaluating Your Advisor

If you’re feeling frustrated and overwhelmed, it’s essential to assess whether your advisor is truly meeting your expectations. If you feel that your advisor is not providing adequate explanations or personalized attention, it might be time to consider a change.

You also want to be sure that your advisor isn’t more focused on fulfilling compliance obligations than addressing your specific needs and concerns. While compliance is a necessity, it’s not going to help you build your nest egg for a long and happy retirement.

Finally, you’ll want to take a look at the fees your advisor is charging you. Remember, he or she is likely charging you the same amount of fees whether your investments are making money or losing money, so it is their job to make sure you understand and feel confident in your financial plan.

Moving Forward

Regardless of the length of the financial plan, if you feel that communication with your current advisor is lacking, or that they are adding further stress to your financial planning process, it may be time to consider a change. Furthermore, you shouldn’t have to pay a ton of fees in order to get the service you are looking for.

At Summerlin Benefits Consulting, we specialize in safe strategies for retirement using proven insurance products to accomplish this. We don’t charge our clients management fees, as our goal is to help clients build their nest eggs, not deplete them. And, simplicity is one of our three core values. We work hard to keep things simple and easy-to-understand for our clients. If you’d like a no-obligation financial review from a team of financial insurance professionals, give us a call today!

Why Gen Z is Getting a Jump Start on Retirement Planning

Thu, 16 May 2024 13:48:32 GMT

When you think of "retirement planning", you probably don’t associate this topic with someone in their twenties. But saving for retirement is becoming more and more important to the younger generations for many reasons.

According to a recent report by Handshake, which surveyed undergraduate students, nearly two-thirds (65 percent) stated that they would not accept a job offer lacking an employer-provided 401(k) or similar retirement benefit. While time off and healthcare coverage remain the top two essential benefits desired by students, retirement benefits followed closely behind.

More than a quarter of the students surveyed consider retirement planning to be moderately important, with 15 percent giving it significant thought. In fact, they even considered retirement planning over student loan repayment in terms of importance when it comes to employer benefits. The respondents hailed from 601 U.S. colleges and universities, all pursuing bachelor's degrees.

In response to the question, “ Why is retirement planning so important to the younger generation?” a report titled, Gen Z Brings New Expectations to the Workplace, will tell you it is because they have witnessed their parents' retirement plans being affected by financial crises and pandemics, leading to economic instability and mounting student loan debt. Even so, much of Gen Z anticipates facing even greater challenges than their parents in saving for retirement, primarily due to heightened cost of living.

In alignment with Millennials, a significant portion of Generation Z does not envision a traditional retirement. Instead, 32 percent aspire to pursue passion projects, while 27 percent aim to establish their own businesses post-retirement. As a result, many of those who have already started planning for retirement actually wish they had done so sooner.

Many young savers are of course making contributions to a 401K through their employer, investing in brokerage accounts, or building their own IRAs. But, with the volatile retirement saving circumstances they have seen their parents endure, many Gen Z members are seeking safer vehicles within which to build their nest eggs. One such vehicle is called a Fixed Index Annuity (FIA).

FIA’s start with an initial payment that grows over time and is then used down the road to provide income during retirement. The money that is put into an FIA usually grows at a conservative, yet reasonable, rate of return over time. It typically follows specific market indices; however it is backed by the insurance company and therefore is not put at risk during down-markets. This “safety” feature of an FIA is especially important given the market volatility we have experienced and are likely to keep experiencing.

FIA’s are also appealing to younger generations because they follow a “set it and forget it” strategy, which means it’s one less thing to think about during the hustle and bustle of work, school, and socializing. Alternative strategies like this, especially those dedicated to retirement income needs, can diversify one's portfolio to better prepare for their future.

At Summerlin Benefits Consulting, we specialize in retirement income protection and finding the best and safest strategy for each individual client, regardless of where they are in their retirement planning journey. We applaud Gen Z for realizing the importance and urgency of planning for their future early in life. If you’d like to discuss simple, personalized strategies for building a retirement nest egg, give us a call today for a no-obligation meeting. You don’t have to use the same strategies your parents did!

Tax laws will change in 2026. Are you ready?

Wed, 24 Apr 2024 18:37:04 GMT

The Tax Cuts and Jobs Act of 2017 (TCJA) made many changes to U.S. tax laws. However, some of those changes included sunset provisions that will cause them to expire at the stroke of midnight on January 1, 2026, unless Congress acts to extend them. For today’s retirees, these changes will have significant impact. The three key components of the TCJA that will impact retirees in 2026 are going to be the changes pertaining to income-tax, estate taxes, and gift taxing. Here is a breakdown for you.

Not only can Americans expect standard income tax deductions to be reduced, but the upcoming changes to the marginal tax rates will also have an impact. The short explanation of the marginal tax rates is that as your income increases, you move up through the brackets. Under the TCJA of 2017, the tax rates in force today are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. On January 1, 2026, the rates return to their pre-TCJA amounts of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The income brackets to which those rates apply will also be different and will continue to be adjusted for inflation each year going forward. Additionally, some people who have used estate and gift tax exemptions in the past can expect those exemptions to be cut almost in half in 2026.

An increase to tax-brackets creates some additional pain for all of us, but even in today’s current tax climate and without considering these anticipated changes, many retirees are already finding their taxes increasing in retirement. You may be asking, “How is this possible?” as it’s contrary to what you’d expect. Let us explain.

First, a retiree is likely to experience a loss in deductions due to less or no contributions to retirement accounts, no work or childcare expenses, and oftentimes no mortgage payments. Furthermore, many retirees have the bulk of their savings in a pre-tax environment, such as an IRA or 401K account, so when they start pulling income from these accounts that means more taxes due. This can often be a factor for someone to consider when turning age 73, which is the age a retiree must begin taking Required Minimum Distributions (RMDs) from their retirement accounts. Even if they don’t need the income, they are required to take a taxable withdrawal, which can increase taxable income and sometimes bump you up a tax bracket.

Another problem that some retirees unfortunately face, is that when one spouse passes away, the tax disparities become even greater. Although the “household” income will be the same or less without the second spouse, oftentimes the single filing person will be taxed more than they would have been under married-filing-jointly status. This will be even more of a problem when the brackets change in 2026. It will be important for a widowed spouse to see which new bracket they will now fall into and how much of an increase they may experience.

When people consider possible risks to their retirement nest egg, they most often think of investment risk (ie. market losses) and inflation. As we’ve described though, future taxes can also present a significant risk. So, if the old saying is true, “ the two sure things in life are death and taxes ”, what can be done about it? At Summerlin Benefits Consulting we’ve got a great option that can help you save on taxes, keeping that money in your pocket. The financial vehicle we’re referring to here, is called Fixed Indexed Universal Life (FIUL).

Now, please don’t stop reading right there because we’ve mentioned the dreaded term “life insurance”. Hear us out on this one and you might be pleasantly surprised by how this financial vehicle is often used to help clients reduce tax obligations in their future!

FIUL policies are funded with an initial payment, or several smaller payments over the first few years of the policy. From there on out your cash (ie. “premium”) deposits into your FIUL policy grow tax-free and earn a reasonable rate of return over time. You’ll see higher earnings on market up-years but will not lose on down-years; your money is protected. You’ll also have access to penalty-free withdrawals from your cash value after the first year of the policy, should you need it.

For the purpose of growing your cash value, the best FIUL policies have low fees/charges and are max funded. Typically, the cost structure of an FIUL policy is set up so that your costs are highest in the beginning years when you have less money in the policy and then tend to go down over time. When structured correctly, FIUL can be designed to carry less fees overall throughout the lifetime of the policy than many other types of investment vehicles.

Additionally, you’d want a FIUL policy that offers “living” benefits as well as a death benefit. FIUL can not only provide you with tax-free income in retirement but can also help pay for long term care tax-free as well; should you need it in your future. Most people age 65 and older will have at least one “long term care event” during their retirement years, and that is usually when cost of living can sky-rocket for a retiree. The long-term care benefits offered from your FIUL policy can be invaluable during that time. Let’s think about this further… imagine, having to pull much larger amounts of money from your IRA’s every year to pay for long term care costs. Not only would you be depleting your retirement savings at a faster rate during that time but it would also increase your taxable income, possibly even bumping you up a tax-bracket. Now imagine being able to, instead, pull that extra income from your FIUL’s death benefit, while you are still living. Not only does this protect your retirement savings but it will keep taxes down, since life insurance benefits are paid out completely tax-free! This can be a game changer later in life, especially for higher net-worth, higher taxed individuals.

You may be thinking, “This all sounds good, but how do I find out if it’s right for me?” The next step to finding out whether you will qualify for a FIUL policy would be to work with a licensed professional who specializes in this strategy, so that they can help you find the right FIUL policy for your specific needs. There will be some health questions and underwriting to go through but now is definitely a good time to look at this, in case you want to try to transition some of your current pre-tax retirement savings into a tax-free environment before the TCJA laws change in 2026.

At Summerlin Benefits Consulting, we have a team of licensed professionals who specialize in retirement income strategies, helping people mitigate taxes in retirement, preparing for future long term care expenses, and how to best use FIUL for these purposes. We can help guide you through the process in a simple and easy-to-understand manner. Let’s get you started on the road to a tax-free income in retirement and a tax-free legacy for your loved ones!

Three risks you may encounter if you're unprepared for retirement.

Mon, 25 Mar 2024 18:33:41 GMT

Those who feel underprepared for retirement will need to be extra strategic when navigating their retirement income plan. Obviously, the primary goal is to have enough income in retirement so as not to outlive your means, however one should also anticipate and account for potential risks when developing or tweaking their plan.

Some do achieve the goal of “having enough”, however most people worry about running out of money in retirement. In fact, in a study conducted by Allianz Life last year, over 60% of Americans said they were more afraid of outliving their nest eggs than of dying.

So, what can be done to reduce some of these feelings of unrest? We are about to cover three areas of risk to your retirement nest egg, as well as potential strategies one can use to combat these areas of risk.

Risk #1: Withdrawing from an underperforming account

One of the largest risks to a retirement portfolio occurs when one takes withdrawals from an underperforming account. This quite frankly solidifies the underperformance as it makes it more difficult to recoup from any market losses.

Before making any decisions to withdraw when things are looking grim, it is best to consult a financial professional who can help you consider your options. He/she will likely advise you to diversify your portfolio so that you don’t have “all your eggs in one [underperforming] basket” and may even be able to recommend better long-term options.

One such option could be moving your funds into a safer environment, such as a Fixed Index Annuity (FIA), where the funds can grow while being safe from market volatility. FIA’s also offer a guaranteed source of income in retirement, which goes back to our primary goal mentioned above: making sure you don’t outlive your money.

Risk #2: Longevity

Most of us envision an early retirement and a long life, right? I mean, that’s what we are all ultimately aiming for! While spending many years in retirement and living well into your 80’s, 90’s, or even 100’s is clearly a great thing, it can also be considered a risk as you would be drawing from your assets for a longer period of time. Over a longer period of time, there is more opportunity for unforeseen circumstances or events, such as potential market fluctuations.

This again affirms our earlier recommendation to involve a financial professional in your retirement planning process and possibly even considering more safety in your portfolio. Someone who feels underprepared for retirement may want to decrease the level of risk even further so as to not lose any more of their nest egg, especially in the last few years before they actually might need to start using it.

Risk #3: Balancing risk and reward

The “Rule of 100” (ie. taking 100- your age, to determine acceptable risk) offers a helpful guideline when deciding how much risk to maintain in your portfolio, however we know that the decision can be much more complicated in reality. We also understand that, regardless of where you are in your retirement journey, you would still like to maintain some level of growth for your assets as much as is reasonable. Can you have your cake and eat it too?

We believe you can. But again, it is about picking the right strategy for your situation and personal goals and a financial professional can help you with that. Overall, FIA’s can be good options for some, because they can offer a reasonable rate of return over time while backing your premiums and interest so that you never lose money. The same Allianz Life study mentioned above found that over 50% of Americans are leery of investing any more money in the stock market any time soon. There is just too much uncertainty in today’s market for a more mature investor and some are thirsting for other areas to put their money. Many FIA’s can offer some of the upswing of the market without the downside.

Don't be consumed by risk

While we certainly want you to be aware of the potential risks you may encounter in retirement, we are not trying to be all doom and gloom. Don’t stress! Just work with someone to help you plan accordingly. With the right strategy that incorporates a steady retirement income AND potential risk mitigation, you will be well on your way to a sandy beach somewhere, with a pina colada in your hand!

We at Summerlin Benefits Consulting specialize in Retirement Income Protection and reassure our clients day in and day out so that they feel confident in their retirement planning journey. You don’t have to feel underprepared any longer- give us a call today.

Millions of people will turn 65 this year and here's what you need to know if you're one of them.

Mon, 04 Mar 2024 14:33:44 GMT

This year, we will experience record-breaking levels of Americans entering retirement. In fact, nearly 11,000 people per day are expected to turn 65 this year, and if you do the math, this will total over 4 million by the end of 2024. Furthermore, this trend is not expected to slow down any time soon. The same projection remains true for the next 3 years. Experts have begun calling this wave of retirement the “silver tsunami”, or “peak 65”. So, if you yourself will be celebrating a 65 ^th birthday in the next few years, there are a few things you may want to consider.

Should I retire?

If you are still working, a question you may be eagerly asking yourself is, “When should I retire?” The answer is going to be different for every individual and depends on several factors. Will you receive a pension when you retire and, if so, will it continue to grow if you work a few more years? Do you feel prepared financially to retire so that you don’t outlive your nest egg? What will you do with all of the free time if you quit working?

Ways to fill your free time in retirement may be the more fun ideas to entertain; think grandchildren, travel, and hobbies. But, if you truly love what you do for work and are healthy enough to keep working, there is nothing that says you must retire at 65. In fact, a study by Pew Research Center found that 1 in 5 people over 65 actually choose to continue working. If you are ready to take a step back from the 9-5 grind you’ve been on for so many years, but don’t like the thought of fully stepping away from the working world, there are also other options like part time jobs and volunteering.

Financial Plan

Before you decide to leave the workforce altogether, however, you’ll want to make sure you have a solid plan for how you’re going to pay for retirement and ensure you don’t outlive your nest egg.

Many people have 401k’s with an employer that they’ve been contributing to for at least some portion of their working years. Sometimes the 401k is from an employer that they have since moved on from, and in that case, we like to call those “stray 401k’s”. Others may have IRAs, or ROTH IRAs, which are individual plans that are separate from an employer.

So the question is, what do you do with your 401k or IRA in preparation for retirement? First of all, if you have a stray 401k, it is a good idea to take back control of it. This is something that our team at Summerlin Benefits Consulting can help you with.

Furthermore, as you age and get closer to retirement, many experts will tell you to reduce the amount of risk you have in your financial portfolio. In fact, there is a general guideline, called “The Rule of 100” that recommends subtracting your age from 100 to get a reasonable level of risk to maintain in your portfolio; the rest should be kept safe in low or no-risk vehicles. When your money is in a 401k or IRA, it is entirely at risk and is at the mercy of a volatile stock market. There are other options, such as Fixed Index Annuities (FIAs) that you can move your money into, which will keep it safe from market declines while it still continues to grow over time.

FIA’s are sold by insurance companies and involve an upfront payment by the owner. If moving the funds from a 401k or IRA, the upfront payment would occur by means of rollover or transfer, respectively. The annuity grows at a reasonable rate of return based on a specific market index, but is protected by the insurance company during times of down-markets so that you never lose money. FIA’s can also offer tax-deferred savings and monthly income for life so that you never have to worry about outliving your money.

If you would like to learn more about FIA’s and keeping your money safe from risk, a good step forward would be to reach out to Summerlin Benefits Consulting.

Don’t procrastinate!

Even if retirement may seem light years away, it’s truly never too early to start planning. The financial strategy of a younger person in their 40’s may look different than someone in their 60’s, but the point is that everyone should have a plan. Someone who starts contributing to a retirement plan early in life will have the opportunity to earn compounding interest and will also have time to recover during times of market volatility. Someone who is closer to retirement however, may make financial decisions focusing on growth accompanied by safety and stability. As you get older, there are also other concepts to consider, such as leaving behind legacy funds for your children or grandchildren, for example.

Of course, getting a handle on your retirement plan can be stressful. That’s why many people choose to put it on the back burner for a time when they think they’ll have less debt, student loans, mortgage payments, etc. But, there is no time like the present to solidify your plan so that you feel confident going into retirement, whenever that may be. At Summerlin Benefits Consulting, we believe in keeping things simple and helping you relieve some of the stress.

Medicare Eligibility

In addition to being the general age at which many people choose to retire, age 65 typically gets a lot of recognition because it is the year you become eligible for Medicare benefits. Most people will enroll in Medicare at this time, unless they are still receiving health insurance from an employer; in which case they may want to reach out to a Medicare expert to determine whether they should still enroll.

Medicare benefits can be broken down into Part A, which covers in-patient hospital stays, rehabilitation at skilled nursing facilities, and home health care, and Part B, which covers outpatient services and doctor appointments. You can also enroll for “supplements” to enrich your benefits further, if needed.

Riding the wave

Turning 65 may sound overwhelming, but it doesn’t have to be. Our main goal at Summerlin Benefits Consulting is to support our clients on their path in or towards retirement while offering retirement income protection guidance in a simple and easy-to-understand method. We fondly refer to our team of professionals as “Safe Money Experts”! Reach out today if you’d like to get started with a no-obligation financial review.

Do you need to step up your game when it comes to retirement saving?

Thu, 08 Feb 2024 16:53:58 GMT

We are well into the new year and resolutions are in full swing. Maybe this year it’s not about eating better or getting more exercise, but instead about your financial health, which can have a profound impact on living comfortably down the road. Even if you are several years off from retiring, there’s no time like the present to take a deep dive into your retirement plan to make sure you feel confident about your future.

Generally speaking, most people don’t feel like they are saving enough, or they simply don’t know how much to save in order to retire with the lifestyle that they envision. Instead of being a catalyst for action, however, these feelings can sometimes have the opposite effect and cause decision paralysis. Without knowing what steps to take, people will often choose not to think about the topic of retirement planning and will therefore let more time slip by without a solid plan.

It’s never too late to start planning, though. Some groups, such as AARP, have started campaigns to help people at any stage of their retirement planning process. AARP calls their campaign, “ This is Pretirement ” with hopes that it will raise awareness and alleviate some of the stress people may be feeling when they think about saving for the future. The campaign features ads on radio, tv, and social media, and has a website, ThisIsPretirement.org, where you can take a quiz and begin building your plan.

There are also some “baby steps” you can take in order to move forward in the planning process.

Budgeting

Many experts will tell you to start with a simple budget outlining your income and expenses. If not sure how to get a budget set up, a financial professional, such as Summerlin Benefits Consulting, can assist you. You and/or the financial professional can then dive deeper into the areas where you are spending your money in order to better identify where you can save. You can then set goals as to how much you’d like to “put away” towards retirement each month. Having a written budget may also hold you more accountable to your spending (and therefore goals) once you get started.

Take a look at your contributions

If you are still working and your employer offers a 401(k), you can set up contributions that will come directly out of your paycheck. For those who don’t have access to an employer-sponsored plan, or those who are retired or self-employed, there are individual retirement accounts, such as IRAs, that can be set up to do the same thing. You will just have to make the contributions as opposed to them pulling directly from a paycheck. Even if small, contributions can help build a nest egg for you to use in retirement.

What if you have been making contributions, but wish the contributions had been larger? There is something called a catch-up contribution for individuals who are age 50 or older, which allows you to make additional contributions each year beyond the standard limits and can help you make up for those lower contributions earlier in life. Effective this year, catch-up contributions for 401(k)s and IRAs have increased by an additional $7500 and $1000 (respectively) beyond the standard contributions. So, new contribution limits are as follows.

401k contributions:

Under age 50 may contribute up to $23,000

Age 50+ may contribute up to $30,500

IRA contributions:

Under age 50 may contribute up to $7,000

Age 50+ may contribute up to $8,000

Estimate your income

Start to identify the sources of income you’ll have in retirement, including pensions, social security, and other investments. Did you know you can go to the Social Security Administration website, SSA.gov and see how much you will get depending on when you choose to initiate your Social Security benefits?

If you anticipate needing more money in retirement to offset the expenses you’ll have, you can also look into other sources of income, such as Fixed Index Annuities (FIA). Some FIA operate similar to a pension and allow you to turn on income when you need it. Some even include long term care benefits, which can be a huge benefit considering the cost of long-term care should you need it. FIA will grow your initial premium at a reasonable rate over time until you are ready to initiate the income.

Work as long as you can

Retirement is viewed as the time of life when you finally get to relax from the continuous, daily grind of working, raising a family, etc. Many picture their retirement taking place on a sunny beach with a drink in one hand and a book in the other. While this can certainly be a reality, you may want to entertain the idea of working a little longer than expected or doing part-time or consulting work once you have retired.

While you may think this sounds crazy, there are also several benefits to consider. First, the additional income that you weren’t accounting for could certainly help boost your nest egg and make it last longer, if needed. Additionally, working in retirement may help you maintain the sense of productivity that some tend to lose when they quit working. A job can become a large part of one’s identity while in their working years, and leaving the job when beginning retirement can often put an unexpected strain on one’s mental health.

But, not all are healthy enough to continue working in retirement, so it is probably best to look at it as an “added bonus” to your nest egg if you are able to do so and not rely on the extra income.

Hopefully you’ve picked up on the theme by now, and that is to put aside as much as possible. It is never too late to start and there are baby steps you can take if the topic of retirement planning overwhelms you.

You can also ask for help from a financial professional, such as Summerlin Benefits Consulting. We keep things simple and walk our clients through each step of the way! Don’t spend another day stressing about your retirement plan- call us today for a free, no-obligation meeting.

Why being a grandparent has positive effects on your mental health and overall well-being.

Mon, 22 Jan 2024 18:24:59 GMT

As a grandparent, you hold a special place in the family structure. Your wisdom, experience, and unconditional love have a profound impact on the lives of your children and grandchildren.

“And how does this relate to retirement planning?”, you may ask. Well, being an involved grandparent requires time, attention, and for some- travel and financial means.

In today’s society, where families often lead busy lives, the role of a grandparent has evolved and expanded to become more important than ever. Once retired, grandparents tend to have a little free time on their hands and can help families navigate hectic schedules; especially when both parents work. As a grandparent, you can sometimes provide a wider support network for your own children. For example, some grandparents help provide after school care or will participate in commuting kids to sports activities and so on. This not only gives a grandparent extra quality time with the grandchildren but can help relieve both stress and financial burden from the household.

Regardless of the supporting roles you may play in your children’s and grandchildren’s lives, the most important part of being a grandparent is the experience, for all of you!

Being a grandparent comes with many benefits. According to a few recent articles quoting and surveying grandparents across various sources, some of the best things about being a grandparent include:

Watching your family grow from near and far
Unconditional love, without the responsibilities
Children can re-energize you
An opportunity for mischief and memories
You become a valuable resource to your family
Sharing stories and old photos
Experiencing the ‘firsts’
You don’t have to change diapers
Your job is to play with your grandkids and appreciate the magic of a developing mind.

Boy, isn’t this all true! And as such, according to Psychology Today, being a grandparent can also have positive effects on your mental health and well-being, especially in retirement. Sometimes when we retire, we can go through a period where we struggle to find our place. However, some people feel as though being a grandparent gives them a new sense of purpose and fulfillment.

The flip side is of course the impact you can have on your grandchildren and the unique contributions you can make to their lives.

Dr Alan Ralph, Head of Training and Clinical Psychologist at Triple P International, and a grandparent himself, stated in a recent publication, “Nowadays, grandparents tend to live longer and stay active more than in previous generations. This can create a broader range of experiences and expertise to draw on by both parents and children.” He went on to describe how this might play out in the lives of you and your grandchildren:

– Mentorship:  Grandparents often step into a mentorship role, offering guidance and advice that is distinct from what parents can provide. They’ve “ been there, done that ”, and their life experiences can be educational and sometimes entertaining for grandchildren navigating their own life’s challenges.

– Resilience and coping skills:  Grandparents can share how they’ve specifically overcome obstacles and dealt with life’s ups and downs. This can help instill a sense of resilience, strength, and teach practical coping skills to their grandchildren.

– Emotional support and wisdom:  Grandparents have the experience and wisdom that is both beneficial but also essential for a child’s development. Their stories and life lessons can enrich the child’s perspective and offer a deeper understanding of the world around them.

– Family traditions:  They are usually seen as the bridge to the family’s history and culture. Through stories, traditions, and family rituals, grandparents can share this sense of belonging and identity with their grandchildren, which is key in shaping their values and beliefs.

– Unconditional love:  The love between grandparents and their grandchildren is pure and unconditional. It’s a relationship that’s less about discipline and more about acceptance. They offer a safe space, where children feel heard and valued, which can be incredibly reassuring and comforting for them.

– Learning:  Grandparents often have the patience and time that parents might struggle to find. They can participate with their grandchildren in many learning activities: from reading and playing games to gardening and cooking, which in return support children with both intellectual and practical skills.

Now, grandparenting is not all hopscotch and ice cream. There can be challenges as you learn to navigate shifting relationships, difference in parenting styles, and the new issues of today that you may not have had to face when your children were growing up (ie. Social Media, Gaming, Health & Safety Risks, etc). But, with some open communication and a little flexibility, you can build strong and positive relationships with your adult children and grandchildren.

When you are preparing for your retirement years, don’t forget to plan for the “extras” you might want or need if you one day step into the role of grandparent. Will you want to have the time to participate and help with daily activities? Would you like to have the financial means to take your grandchild to the zoo, or out to eat, or on a fun trip from time to time? Would Nana like to host a sleepover or would Pop like to plan a camp-out in the backyard on occasion? Life offers many joys. With a little financial planning, time, and a whole lotta love, this is surely one of them!

1 The essential do’s and don’ts for first time grandparents - Starts at 60 | Pub. 10/12/2023

2 The Value of Being a Grandparent - Psychology Today | Pub. 05/18/2020

I'd like to retire this year. How do I know if I have enough saved up?

Thu, 11 Jan 2024 14:36:08 GMT

There is no “one size fits all” answer to how much is enough when it comes to retirement. That is why retirement planning is often thought of as a complicated and taxing topic. But it doesn’t have to be. At Summerlin Benefits Consulting, we believe in making things simple for our clients. Below, we will outline some of the basic steps one should take when determining how much they will need to have in their retirement nest egg to live comfortably when they retire.

Expenses 

The first step is to look at your current expenses and then try to determine which expense categories (if any) will change once you retire. Generally speaking, one’s interests and habits during their working years are not likely to change drastically when they retire. For example, someone who likes to travel and eat out a lot in their working years is likely to continue traveling and eating out in retirement. Of course, with more free time in retirement, these habits could change, but are not likely to do so overnight.

Lifestyle

Next, you’ll need to consider the larger-expense items pertaining to your lifestyle, such as your car and your home. For example, your vehicle may be paid off; however, you’ll need to look ahead and determine whether you may need to purchase a new one at some point during your retirement. When it comes to your home, someone who has a primary residence that they own outright and intend to remain in the rest of their lives will have fewer monthly expenses in this category than someone who may have multiple vacation homes and mortgages to pay off. A complete financial inventory and lifestyle assessment is key to retirement income planning.

Unforeseen Circumstances

There are other factors you’ll need to keep in mind when planning for retirement, even if they may be somewhat out of your control; these include inflation, home or vehicle repairs, medical emergencies and the possibility of future long-term care and/or healthcare costs. Of course, you can't put an exact amount on some of these items when determining how much they’ll cost you in retirement, but you can be proactive by including them in your estimates.

When it comes to healthcare, remember that you won’t be eligible for Medicare until age 65. So, if you and/or your spouse are planning to retire before that age, you’ll need to account for the purchase of private healthcare insurance. Additionally, if you’re planning to set aside anything for potential long term care needs, this can be extremely costly. If anything, it is ideal to make sure you have a cushion in your nest egg that can help with these kinds of “what-ifs”.

How to add it all up

Try to come up with an estimate of how much you’ll be spending each year during retirement given the factors listed above. Our list is not all-encompassing though, so be sure to include any expenses unique to you and your lifestyle and don’t forget to plan in some travel and fun! Then, add a healthy cushion of somewhere around $10,000 per year for any emergencies; this may differ from person to person depending on their health, age of their home, marital status, and risk tolerance, etc.

Compare those expense factors to your guaranteed retirement income, such as Social Security, pensions, and other benefits that you know you’ll be receiving. More benefits can help offset your retirement expenses so leave no stone unturned and also incorporate your spouse’s retirement income, if applicable. That will give you an idea of how much additional income you will need to pull from your retirement savings accounts to supplement those other income sources. A good guideline to use when determining if you have “enough” saved, is to use the 5% Rule; this rule tells you to try to only spend about 5% of your nest egg each year in retirement. Of course, the percentage could go up or down depending on the person, but this offers a good starting point for how much to have on hand before retiring.

Example, if your “bottom line” spending, after accounting for other income benefits coming in, still leaves a deficit of $20,000, you know you’ll need to pull at least $20,000 per year from your retirement nest egg. Is that 5% of what you currently have saved or do you need to save a little more, before you take the leap into retirement? You can figure that out by taking the $20,000 and dividing it by .05 which, in this example equals: $400,000. The 5% rule says that having $400,000 set aside will allow you to pull $20,000 per year and will still last you 30 years based on your current rate of spending. If you retire at age 65 that means your savings should be enough to last until you are 95.

There are other factors to consider such as inflation and, as mentioned, unforeseen events, but the 5% rule is a good baseline to start with. A professional financial firm like Summerlin Benefits Consulting can help you dig into this a little deeper and also plan more specifically to your current and future needs.

Making the decision

Once you’ve done all the math, it is time to decide whether you can retire this year or if you may need to keep saving. But you don’t have to make this decision alone. It is always a good idea to have a financial professional take a look at your plan so that you can feel confident about the path you’re on. A good financial professional should also be able to offer assistance with understanding market trends and how they may impact inflation and interest rates during your retirement.

At Summerlin Benefits Consulting, we help our clients navigate retirement planning in a simple, easy to understand manner, so that they can realize their individual, unique retirement goals and work towards those goals. Give us a call today for a no-obligation meeting to review your financial plan so that we can help get you on the road to retirement.

SECURE Act 2.0 Changes to Age Stipulations for Required Minimum Distributions (RMDs)

Wed, 13 Dec 2023 14:45:58 GMT

You may remember back in 2019 when Congress passed the SECURE Act to enhance various rules around retirement saving. Then along came what’s now being referred to as SECURE 2.0, or “The Securing a Strong Retirement Act”, which expanded the original act. This impacted retirement planning and wealth management even further and some retirees are struggling to keep up with these new changes to the law.

One such outcome of the Act involves changes to the rules surrounding required minimum distributions (RMDs), which are the minimum amounts you must withdraw from a retirement account, such as a 401k or IRA, each year in order to avoid tax penalties. Some of these changes have already gone into effect earlier in 2023, while others will take effect in 2024, or even as late as 2033.

Changes to RMD Age

Generally speaking, someone with a tax-deferred qualified retirement plan must begin taking RMDs in the year that they turn age 73. Technically, you should pull your RMD by December 31 ^st of that year but they will allow you, one time only, to pay yourself your RMD up until April 1 ^st of the following year after turning age 73 as long as you haven’t filed your taxes. In all years after that, RMDs must be pulled every year before December 31 ^st , for the rest of your life and in some cases, even after your death.

Until 2020, the specified age for RMDs was 70 1/2, and it was the original SECURE Act that increased the age to 72. SECURE 2.0 further extended the required age to age 73 for participants who turn 73 in 2023, and it will again increase to age 75 in 2033.

What Spouses Need to Know About RMDs

Prior to SECURE 2.0, if someone passed away before initiating their required RMDs, their surviving spouse would automatically become the “participant” in the calculation of RMDs if that would result in a later commencement date for the RMD payments.

Now, effective in 2024 under SECURE 2.0, a surviving spouse must choose to be treated as the participant, for RMD purposes; it’s no longer automatic. If the surviving spouse elects to be treated as the participant, they can choose to delay their RMDs until they (the surviving spouse) reach RMD age. This benefits a surviving spouse who may be much younger than their deceased spouse. If the surviving spouse does not elect to be treated as the participant, they must pull RMDs at the same time the deceased spouse would’ve had to take them.

RMDs can also potentially be paid over a longer period of time for surviving spouses, since the Uniform Lifetime Table, as opposed to the Single Lifetime Table, will now be used to calculate the surviving spouse’s RMDs. The Uniform Lifetime Table typically has lower RMD amounts since it incorporates the younger spouse’s age.

How was the Excise Tax for RMD Errors Affected by SECURE 2.0?

Previously, anyone who missed an RMD, or miscalculated the RMD amount, would be hit with a 50% excise tax. A waiver can be requested if the RMD error can be proven to be a reasonable one and if steps were taken to correct the mistake, however the IRS has the discretion to decide whether they will grant the waiver.

Fortunately, SECURE 2.0 has reduced the excise tax from 50% to 25%, effective in 2023. And, the excise tax is lowered even further to 10% if the RMD error is corrected according to certain guidelines.

The reduction to the RMD excise tax and the flexibility to correct errors for a lower penalty not only alleviates some stress on those who fail to take their RMDs, but may also potentially lessen the amount of waiver requests received by the IRS.

Other Changes to Know About

SECURE 2.0 also includes changes to facilitate the provision of annuities with certain features, such as period certain guarantees and guaranteed annual increases, in qualified retirement plans. This change is consistent with the trend toward enhancing lifetime income options.

Finally, SECURE 2.0 changed the RMD rules pertaining to certain special needs trusts so that the distributions are spread out longer over, for example, a disabled beneficiary’s lifetime.

This can be beneficial to the recipient of a family member’s qualified retirement plan when the family member passes away. And, it allows certain individuals to better help their disabled or medically disadvantaged loved ones. A special needs trust must be established, and it’s recommended to use an attorney who specializes in this field to help set it up, so that it’s all in good order before you pass away.

To Sum it All Up

The SECURE Act 2.0 included many changes to rules surrounding retirement planning and saving. Many of these changes, such as the increase to RMD age and the decreased excise tax, are already in effect for retirees, but there are even more changes to come in the future.

With recent market volatility, anything that can lessen financial and emotional stress to senior citizens in retirement is welcomed and often much-needed.

If you are someone who needs help navigating your retirement plans, understanding new regulations, or protecting your retirement nest egg from market declines, contact Summerlin Benefits Consulting today for more information.

Why women, especially, should have a solid retirement plan.

Fri, 10 Nov 2023 18:17:21 GMT

While getting an early start on retirement planning is important for both men and women alike, women tend to face some unique challenges in life that make it even more urgent. Moreover, if you're a woman who feels behind in retirement planning to begin with, the disparities can be even larger.

According to the U.S. Bureau of Labor Statistics Report 109 (from March of 2022), women comprise almost half of the workforce and contribute one third of total household assets. Yet, many women end up with lower lifetime incomes and therefore lower social security benefits upon retirement. This could be for a variety of reasons, but one of which is the gap in wages earned by men versus women. Due to potential gender inequalities in wages, women may have less to set aside for a retirement nest egg.

Another contributing factor, and likely the largest one, is women taking time away from the workforce to care for children, spouses, or other family members. According to AARP, 38 million people provided unpaid care to a family member or close friend in 2021 and the majority of caregivers are typically women. Providing care to another person, if unpaid, takes time away from a job or other income-earning source. This results in billions of dollars of unpaid care being provided each year, and again puts women farther behind in saving for the future.

Another factor that can affect retirement planning is unexpected financial events or emergencies, such as having a spouse or partner pass away. The CDC reports that women tend to have a longer average life expectancy than men (79 years versus 73 years according to 2021 statistics), which means women are more likely to be widowed and must therefore deal with the physical, emotional and financial implications of their spouse’s death. Life events like this can also drain one’s retirement savings if there is no cushion or emergency fund to cover potential medical expenses and funeral costs.

So, what can you do to feel more confident about retirement planning? Whether you have a solid retirement plan, or no plan at all, it can be beneficial to seek the help of a financial professional, such as Summerlin Benefits Consulting, Inc. Our team of experts offer educational seminars geared towards understanding different retirement strategies, as well as complimentary, no-obligation financial reviews. Regardless of where you are in your journey, we can provide simple, easy to understand options to help you define and/or meet your retirement goals. Don’t spend another minute feeling behind!

I have a 401(k) with an employer I no longer work for. What should I do?

Fri, 27 Oct 2023 15:23:28 GMT

It is quite common for people to make contributions into an employer-sponsored 401(k) retirement plan. If the employee stays with that employer for their entire career, then the 401(k) will continue to grow and will be waiting for them when they retire. But we know that many people will have more than one job during their working years and that these 401(k) accounts are often left behind after a job change. For this reason, this type of account is often called a “Stray 401(k)”.

Essentially, these Stray 401(k)s are left in the control of the ex-employer. Regardless of the scenario surrounding the separation of employee and employer, it is a good idea for the employee to take back control over their 401(k). So, what can be done?

How to Rollover your 401(k)

If still working, you can easily move your 401(k) into the financial institution used by your new employer, as long as they offer a 401(k). The new 401(k) plan administrator could help you with this process. But what if the new employer does not offer a 401(k) plan or you are now retired?

In that case, the best option is to rollover the retirement funds into a self-directed IRA plan. This is simply a plan that an employer does not oversee, and you choose how your retirement funds are invested. There are no tax penalties incurred during a rollover and it can be a great opportunity to diversify your funds and select options that protect your nest egg from a volatile stock market or economic swings.

What if I have an IRA I want to move?

We talked about 401(k) plans, but what if you have an IRA that you’d simply like to move from one custodian, or financial institution, to another? This would be called a qualified transfer, as opposed to a rollover. The transfer would be initiated by the company where you are moving your IRA to. It involves the completion and submission of a transfer form by the “new” custodian and then the physical transfer of funds from the existing institution. No tax penalties are incurred during a qualified transfer.

Why choose a Fixed Index Annuity for your rollover or self-directed IRA transfer

Now that we have talked about rollovers and transfers, the next question is where to rollover or transfer your retirement funds to. Remember how in the past we’ve mentioned protecting your nest egg from a volatile stock market? Let’s revisit that topic.

It is important to determine the level of risk that you’d like to carry in your retirement portfolio. If you are young, let’s say in your 20s or 30s, you may be open to carrying more risk as you have plenty of time to make up any losses incurred during market declines. However, if you are of a more mature age, time may not be so much on your side. We at Summerlin Benefits Consulting like to use the “Rule of 100” when determining an appropriate level of risk for each individual. Simply subtract your age from 100 and the resulting number is a good rule of thumb for the amount of risk you can maintain in your portfolio.

If protecting your retirement nest egg from market declines is a primary goal of yours, a Fixed Index Annuity may help you do that. Fixed Index Annuities (FIA’s) are offered by insurance companies. The annuity grows based on a particular market index but is backed by the insurance company so that you never lose money. FIA’s are a good option for rollovers and qualified transfers because, in addition to safety, they offer a reasonable rate of return over time for the purpose of turning on retirement income later in life. Some FIA’s even offer long term care benefits should you need them.

Our team of industry professionals at Summerlin Benefits Consulting is well versed in rollovers and transfers, as well as “Safe Money” vehicles, such as Fixed Index Annuities. If you’d like assistance with a 401(k) or IRA account, or if you simply have questions, please reach out to schedule a no-obligation meeting with us today. We can help you take back control of your retirement savings.

I'm in my 40s. Could annuities be right for me?

Thu, 12 Oct 2023 13:52:25 GMT

Before we dig into whether annuities make sense for a younger person in their 40s, let’s take a look at what annuities are. Annuities are insurance products that involve the owner making an upfront payment, which then earns interest and grows at a reasonable rate over time. Often, annuities are designed to provide guaranteed income in retirement, but that does not mean that they are only for retirees. A younger person that purchases an annuity before they retire will then have more time to watch it grow in order to see larger “paychecks” later in life.

There are different types of annuities that vary in ways such as how the payouts occur or interest is accumulated. We, at Summerlin Benefits Consulting, most often prefer Fixed Index Annuities for our clients. Fixed Index Annuities (FIA) are tied to a specific market index, such as the S&P 500 for example, and are backed by the insurance company so your account will earn interest on up-years in the stock market but won’t lose during down markets. As a result, the client can achieve both safety and a reasonable rate of return over time.

There is no overarching rule that sets an age minimum and maximum for purchasing annuities; the individual insurance companies are the ones that set the age restrictions for each of their products. The minimum age requirement is sometimes as low as 18, while the upper limit is typically between 75-95.

Generally speaking, most people who purchase an annuity are somewhere between 45 and 75. Where one falls in this age range may determine the type of annuity that they choose, as each product is designed to meet specific needs and goals. The needs and goals of a 40-year-old may differ vastly from those of a 70-year-old. This is where having the guidance of an annuity expert, who is well-versed in how best to use the products in your retirement strategy, can be crucial in finding the best option for you.

For example, someone who is younger and still working may purchase an annuity which allows them to add funds continuously over time so that they can continue to grow their nest egg before retiring. Furthermore, a younger person may be open to longer time commitments, for the same purpose of seeing more growth along the way, while an older person may opt for shorter time commitments or products that allow them to turn on the income sooner. An older person who chooses a longer time commitment may be doing so to grow the money for their beneficiaries in what’s called a “Lifetime and Legacy Product”.

These are just a few examples of age-specific considerations when looking at annuities. Another factor that may affect the purchase of an annuity depends on what type of funds (qualified or non-qualified) you are considering moving into the annuity. Qualified annuities are most commonly funded by pre-tax dollars, such as funds that are transferred from a 401(k) or IRA plan and will sometimes have limits on how much you can fund per year. You can roll over funds at any age without any penalties, from one of these qualified plans, but often can’t access the funds until you are 59 ½ per IRS rules. If your plan is to purchase a non-qualified annuity using after-tax funds, such as extra cash you might have on hand, you have a little more flexibility on how much and how often you can add funds to your annuity. In some cases, you can even start withdrawing income as early as age 50 with a non-qualified annuity.

A final age-related consideration is your payout amounts. The value of your annuity payments may change depending on when you choose to annuitize or turn on your income stream. Generally, the younger you are when you annuitize, the smaller your payout percentages are because it’s preparing for longer life expectancy. Some people prefer to wait until they are in their late 60’s or even their 70’s to turn on income, simply because the payout will be higher.

To sum everything up, yes- an annuity could be a great part of a 40-year-old’s retirement plan. Starting an annuity early and adding to it over the rest of your working life can be a terrific way to build yourself a retirement income source that will pay above and beyond other sources like social security and pensions. Starting a Fixed Index Annuity in your 40s also lets you take advantage of stock market performance to help your asset grow for many years before you get ready to retire.

Annuities are a great option for anyone who is trying to grow and protect their nest egg in preparation for retirement, regardless of age. The specific insurance company will set the age minimums and maximums for each annuity product that they offer, and Summerlin Benefits Consulting can help you navigate your options based on your age and needs. If you’re considering an annuity but aren’t sure if it’s right for you, call us today and we’ll schedule your no-obligation meeting with one of our licensed professionals.

Ever wondered how much you should save for retirement? The 4% rule can help.

Mon, 18 Sep 2023 16:48:55 GMT

Retirement saving can be a daunting topic, especially if you don’t know where to start. But luckily, there is a general guideline, called the 4% rule, which can help you determine how much you can comfortably spend each year from your retirement savings. This rule not only forecasts how much money you’ll need when you retire, but also what steps to take before retirement in order to meet your goal.

The 4% rule, which was developed in the ‘90s, states that you should be able to comfortably live off 4% of your money in investments in your first year of retirement, then slightly increase or decrease that amount to account for inflation each subsequent year. Nowadays, some financial planners suggest a percentage closer to 3.3%, however even following 4% as your guideline should allow you to use your retirement portfolio to cover expenses for 30 years.

The variation in the recommended percentage for the rule comes as a result of people living longer and therefore needing more money. Additionally, factors such as the specific environment in which you live, as well as your specific needs, can affect the amount that you’ll need to save up in order to have a comfortable retirement. Not to mention, if you live 25-30 years after you retire, there are sure to be changes in the market and economy that will need to be accounted for.

If the 4% rule is a guideline for how much you can spend during retirement, you may be wondering how this helps on the saving end of things. The answer is quite simple: you need to have an idea of how much money you’re going to spend in your non-working years so that you know how much you need to save now. This rule helps you work backwards to figure out that amount.

To start, you’ll want to first estimate how much money you’ll spend each year in retirement. Think about any large expenses you may have, such as a mortgage, healthcare costs and medications, groceries and necessities, travel, etc. While this list offers a good place to start, everyone’s expenses will be different as factors such as your health and lifestyle play a huge role. Regardless of how healthy you are, however, healthcare costs are widely underestimated by most people. Additionally, most people don’t think to add a cushion when planning out how much they’ll need. It is a good idea to add an additional $5,000-$10,000 or so to your annual spending for unforeseen circumstances.

The next step would be to calculate how much you’ll be receiving from benefits, such as Social Security or pensions. The Social Security Administration has an online calculator that can assist you with this. The higher the benefits amount, the less you’ll need to pull each year from your retirement savings and investments.

Now that you’ve got your annual retirement spending figured out, you can use the 4% rule to figure out the total amount you’ll need to have saved up before you exit the workforce. For example, if your annual retirement spending is estimated at $20,000, simply take that number and divide it by 0.04 to get $500,000.00; this amount will last you 30 years if you only withdraw $20,000 (4%) a year. It’s important to also note that if you want to take a more conservative amount and use the 3.3% as your guideline, the amount you’ll need to save will go up.

Next steps to start saving

Now that you have calculated how much you’ll need to save, the next steps are to start saving. There are various calculators out there that can help you determine how much money you’ll need to start with depending on the risk level of the "vehicles” you are using.

One such vehicle option is a 401(k), which may be offered through your employer. With a 401(k), a percentage of your paycheck is automatically invested for you each pay period; just keep in mind that the money being invested is pre-tax, so you’ll owe taxes on the amount you withdraw in retirement. A traditional IRA works the same way, except it is not a company-sponsored account so you would have to set up the account on your own.

There are also post-tax retirement accounts — like a Roth IRA or Roth 401(k) — which allow you to invest money that has already been taxed. Those contributions will grow over the years, and you won’t owe any taxes on withdrawals in retirement.

All of the above investment vehicles carry with them some sort of risk, as they are tied to the U.S. stock market and we all know how volatile it can be. The level of risk is important to take into account, especially if you have already been saving for most of your adult lifetime and are getting closer to retirement. The older you get, the less time you have to make up for any losses due to down markets. For this reason, many people also consider Fixed Index Annuities (FIA) as great savings vehicles for retirement.

Fixed Index Annuities (FIA’s) can be started with cash or from a transfer of your 401(k), IRA, or other account mentioned above (if you’ve already been saving). They have varying levels of time commitments and are backed by insurance companies; as a result, your money is protected during down markets, but grows at a reasonable rate during up-years. We like to say, “Zero is Your Hero,” when it comes to FIA’s, because when others are losing money in their investments you won’t lose money in your FIA. These accounts can also offer guaranteed lifetime income and some even have long term care benefits, which can help with some of those unforeseen healthcare costs we referenced above.

Regardless of where you are in your retirement saving journey, Summerlin Benefits Consulting can help. We help our clients achieve their unique, individualized retirement goals every day and we do so by laying out options in a simple, easy to understand manner. Retirement planning can be overwhelming and scary, but you don’t have to do it alone. Reach out today for a free consultation!

Wanting to retire early? Factors to consider before taking the plunge.

Tue, 29 Aug 2023 15:03:05 GMT

Most of us dream about the day we’ll retire and imagine doing so while we are still young enough to enjoy it. Oftentimes, though, people who retire early find themselves “unretiring” and returning to work just a short time later.

There are many reasons why this may happen, but the most common one is people underestimating their expenses. While we are still working, the typical rule of thumb is to have an “emergency fund” on hand for those unforeseen medical events, car problems, and other surprises. So yes, we should also plan for these unforeseen events even in retirement.

Here are some tips to think about before you jump headfirst into retirement.

Prepare for the costs   of healthcare and leisure.  

Healthcare is one of the biggest expenses in retirement. Let’s say you plan to retire at 55 years old. That means you’ll no longer be able to rely on health insurance from your employer and may have to pay for healthcare out of pocket for the next 10 years. Given what healthcare costs are today, there is no telling what that would look like 5 or 10 years from now. Furthermore, just one major illness or hospitalization can deplete your savings in an instant if you are uninsured. Ask yourself, “How healthy am I?” and “Will major healthcare costs potentially be part of my retirement future?”

Being healthy is always the ultimate goal so that we can enjoy our retirement years, in which case you may spend more money on experiences and travel than you do on healthcare. To prepare for these potential costs, you must take a close look at your current investments. Will they keep up with rising costs? Also ask yourself, “Is travel important to me in retirement?” and think about where you may want to go once you have the free time to do so. With these answers, you can begin to devise your financial plan.

Determine which investment vehicles are best suited for your retirement needs.

Once you stop working, you will likely stop contributions to your 401K and/or IRA. As you begin drawing from these retirement accounts to pay for everyday expenses, the growth of these assets may slow, therefore decreasing your savings potential. To many, this is the most important time to transition such accounts into a safe environment, so that the money you do have saved for retirement is protected as you transition into this new phase of life. These types of accounts, as well as other investments such as brokerage accounts, are tied to the stock market and can also carry a lot of risk. One could work hard their entire life putting money into a 401K or IRA just to see the savings depleted in a down market.

It may be beneficial to consider transferring your 401K or IRA money into a new kind of retirement savings vehicle, like a Fixed Index Annuity (FIA). Fixed Index Annuities are offered by insurance companies and grow by following a specific market index. When the index is doing well, the account will earn interest; when the index is not doing so well, your values are protected by the insurance company and you don’t lose any money.

An FIA will allow you to grow your asset at a reasonable rate of return with the intent of turning on income in the future. This income can be beneficial in supplementing your social security benefits and other income sources, which can go a long way towards helping you pay for healthcare and/or travel in retirement. Some FIA’s even offer long-term care and assisted living benefits, which offer a sense of security when planning for those unforeseen medical needs that could arise in your future.

Account for the cost of taxes.  

Taxes are a huge factor to consider in estimating your costs in retirement, including property tax, sales tax, and income tax. The type of asset from which you withdraw your retirement income will also determine the different tax implications. Taxes may also vary from state to state, making where you plan to live in retirement an important consideration.

Your retirement plan should include the total cost of taxes and it all starts with location. Ask yourself, “Where do I plan on living in retirement?” If you plan to move, research how the cost of living in the new city compares to your current city. If you plan to purchase a new or additional home, find out what those property taxes cost. These are all factors that will help you better plan for your income needs, regardless of the age at which you hope to retire.

Decide how you will keep busy.  

Finances are one aspect, but having too much time on one’s hands is another thing that drives people back into the workforce after they have retired. We need a sense of purpose, a reason to get out of bed in the morning.  As blissful and dreamy as early retirement sounds, few actually think about all of that additional time and how they’re going to fill it.

Think about what your days will look like without the structure and routine of work. Remember, you can only go out to eat, to social events, and travel so much, especially when living on a retiree’s budget. Then what? If most of your friends are still working full-time, you may need to come up with some hobbies or other ideas to fill your time. It is important for you and your spouse to maintain individual interests as well, as you likely didn’t spend 100% of your time together before retirement so this can be an overwhelming transition for some.

Plan for the extra costs that new hobbies or activities might bring and incorporate those additional expenses into your retirement income plan as well.

Know what your plan is before you retire.

The bottom line is that life is expensive and can often throw you curveballs. It’s ok to dream, and it’s important to work toward goals, but it’s imperative to be realistic and proactive when it comes to planning for your financial future. This is especially true if you want to retire early.

At Summerlin Benefits Consulting, we help clients of all ages and in all stages of life, whether they have already retired or are just beginning the planning process. Our process generally begins with a free educational seminar for potential clients and a no-obligation consultation so that we can help you navigate which savings vehicles are best suited to reaching your retirement goals. We then make things simple and easy-to-understand as we lay out potential options and how those options affect retirement. Contact our office today, if you’d like to learn more.

It may be time to ditch savings accounts and mutual funds for fixed index annuities.

Fri, 18 Aug 2023 14:19:14 GMT

At the end of July, the Federal Reserve raised its benchmark interest rate by 25 basis points to 5.25%-5.50%. This is the highest rate we have seen in 22 years. So, what does that mean for people who are trying to save up? Of course, cash savers may see a slight boost to their accounts any time interest rates go up, but there are other factors and options to consider, especially if you are planning to use your savings for retirement and expecting it to last throughout the remainder of your life.

Looking at yields alone, some savings accounts now have annual percentage yields of around 4%, which is up from an average of .5% just a year ago. Anyone can see that this makes savings accounts a more desirable option. Money-market mutual funds — mutual funds composed of holdings like government debt, repurchase agreements and corporate debt — are hovering even higher at 5%, up from an average of .43% last year.

One might think this creates a no-brainer decision and that these high yield savings accounts, or even more so, mutual funds, are the obvious way to go based on rates alone. It is important to look a little deeper, however, as mutual funds can have a lower liquidity than savings accounts due to the minimum balance stipulations and monthly withdrawal limits. They also tend to be much riskier and are not covered by FDIC insurance. With both of these strategies though, there is also the fact that when the Fed cuts rates, both money market mutual funds and savings accounts tend to drop their rates. This makes both of these options much less appealing to those who have their sights set on long-term growth for the future.

Overall, savings accounts and money market mutual funds may not be the “safest” option with the most “reasonable rate of return over time” for protecting your nest egg.

So, what if there is another investment vehicle that is currently thriving due to Federal Reserve increases but will also provide longer term returns? Well, there is! And, it’s one that can potentially check all of the boxes today’s savers are looking for. We are talking about Fixed Index Annuities (FIA). Fixed Index Annuities provide an environment for your savings with no risk at all, as the money is protected from market declines while still typically making a reasonable rate of return. FIA’s grow based on the performance of a specific market index. When the index goes up, the asset grows, and when the index performs poorly, the investment is backed by an insurance company and protected, so there is no loss is incurred.

FIA’s allow your money to grow safely over time, while still providing you with access to your funds if you need it, since most FIA’s offer a free 10% withdrawal each year. This provides today’s savers with security, growth, and liquidity. For these and other reasons, we at Summerlin Benefits Consulting call FIA’s “safe money vehicles” and consider these to be a better option for many of our clients, especially during these uncertain times.

We would be happy to take your call today if you’d like to speak with one of our safe money experts and learn more about how you can maximize your savings and prepare for your future, safely in today’s market climate.

How to plan for a comfortable retirement?

Fri, 04 Aug 2023 14:22:32 GMT

Various experts on retirement like to give their own estimates regarding how much you need to save: some say, “close to $1 million”, while others say, “80% to 90% of your yearly income before quitting work”. It’s also been said, “to save 12 times what you used to make annually”.

You may be wondering, “Is this true? How much do I really need to retire? Why are all of these answers so different from one another?”

The fact is, when it comes to retirement planning, there is no “one size fits all” answer, as there are several variables to consider.

A good general rule of thumb is to try to save about 15% of your current gross income towards retirement each year. If you are starting late in your retirement planning or have a shorter time horizon to save, you may need to save more than 15% of your income each year to catch up. On the other hand, if you start saving early, you may be able to save less than 15% of your income each year and still meet your retirement goals.

You also need to consider the appropriate level of risk for your age. A high-risk tolerance might be ok in your early and middle years, but those who are in the later stages of life don’t have as much time to make up any potential losses that occur. Decreasing risk as you age is important.

The bulk of your nest egg, especially that which you have allocated for lifetime retirement income, should act as your foundation for retirement. In such, it should be kept safe. A key part of retirement planning is protecting one or some of your retirement savings accounts so that the funds will grow safely in order to supplement Social Security Income, etc. One way to do this might be with an annuity.

What does an annuity have to do with retirement income?

Annuities typically provide an option for lifetime income or for income over a specified period of time. Some annuities have the option to “turn on” immediate income for life with tax-deferred growth in the interim. This can be valuable when combating inflation, especially for people who haven’t been able to save as much. Other beneficial features of certain annuities, like a Fixed Index Annuity, also include benefits for future financial needs like nursing home, assisted living, or home health care. Many can also provide valuable legacy benefits for your heirs after you are gone.

The idea behind most annuities is to achieve a reasonable rate of growth over time, without risking your nest egg to obtain that growth. This isn’t true for all annuities; for example, Variable Annuities can still experience losses and are often loaded down with fees. But safe money experts like those at Summerlin Benefits Consulting can help you assess your savings, prepare for longevity in life, and consider your options. Regardless, when used correctly an annuity should help extend the savings you do have, even if you haven’t been able to save as much as you had hoped to for retirement.

Still working and wondering how much you need to save?

There is no magic dollar amount that can answer this question because everyone’s needs are different. When you retire, the goal should be to receive a monthly paycheck that covers your annual expenses and provides an adequate cushion for you to be able to enjoy life as well. A stress-free retirement usually also means having a little overage that you can set aside for emergencies.

First, figure out how much money you will need each month for your mortgage/rent, car payment, and utilities, etc. Exclude discretionary expenses.Then determine how much money you will get from Social Security Income and/or any pensions you may have.

If these guaranteed income sources do not cover your monthly expenses, determine how much you would need to pull from other retirement accounts like a 401(k), Roth IRA, IRA, or an annuity. Prepare for life expectancy well into your 80’s or in some cases longer and apply those figures. This should give you an idea of how much money you need to save.

If your savings don’t seem to be on track, make adjustments where you can and/or consider ways to stretch your savings. This might seem daunting, but it doesn’t have to be. Consider the following example about Joe’s Story.

Joe’s Story:

Joe is 60 and plans to retire at 67. He estimates his retirement expenses will be about $3,000 per month. He will get $1,700 from SSI and has a $600/mo pension. This means he will need to pull, at the least, $700 per month from his IRA. He wants a cushion for occasionally going out for dinner and drinks with his significant other, so he decides that he will need to take $1,000 per month from his IRA. His IRA has $100,000 in it. Joe is healthy and both of his parents lived into their late 80’s.

If Joe’s IRA is invested and averages a 5% return over the next 10 years (also assuming there is no market correction and he doesn’t lose any money along the way), he will unfortunately run out of money in year 11 of his retirement, and Joe may very well be around for much longer than that.

Joe needs to make a change to his plan. Joe may either have to work past age 67 to accumulate more wealth before retirement or he might need to compromise on his quality of life either now or in retirement to save more. Or he will need to take a key step to ensure that his $100,000 doesn’t run out on him in 11 years, like introducing a Fixed Index Annuity with a Protected Income Value.

One of the ways a Fixed Index Annuity can be key to your retirement planning is because with an FIA you won’t have to worry about running out of money. Even if your account balance eventually does hit $0.00, the annuity contract will still continue to pay a monthly income to you for the rest of your life- so you are certain to never outlive your savings.

In Joe’s case, if he rolls his $100,000 IRA into a Fixed Index Annuity with a Protected Income Value and begins taking income payments in 7 years when he retires, he potentially could receive as much as $1,026 per month from his annuity. This is based on the annuity terms and market performance of course, but even if his account balance does still hit $0.00 in 11 years, it won’t matter because his monthly payments will still continue well beyond that; as in, for as long as Joe is living.

Taking the first step

There are a lot of options for savers of all kinds. Big savers, small savers, and everything in between- everyone needs guidance at times. With the right strategy, you can take back control of your savings and prepare for the future. Regardless of where you are in your retirement planning journey, Summerlin Benefits Consulting can help you navigate the best practices towards reaching your personal retirement goals. Give us a call today to schedule time with one of our professionals!

What should you be doing with your money right now?

Wed, 19 Jul 2023 17:02:27 GMT

After 10 consecutive rate hikes in the first half of 2023, the Fed has hinted that rates may remain stable for at least some time. So, what should you — and what should you not — do with your money right now?  From annuities to high-yield savings accounts, here are some things the pros say you may want to consider right now.

Do: Put your emergency savings in a high-yield savings account

Because most banks are still paying pennies on traditional savings accounts, some financial planners recommend looking at high-yield savings accounts, as some are paying 4% or more.

“Savings accounts currently have flexibility, liquidity and higher rates, which could go away if rates were to drop, but there are no penalties for early withdrawal, which gives you flexibility and liquidity,” says certified financial planner Mark Struthers at Sona Wealth Advisors.

Ken Tumin, founder of DepositAccounts.com, says the average online savings account yield in May is 3.87%, which is much higher than the overall average savings account yield of 0.38%. “That’s a difference of about 3.5 percentage points and for a $10,000 balance, the difference would result in an extra $350 of interest in a year,” says Tumin. 

But with inflation high, is this wise?  To a point, yes, pros say. “Everyone needs an emergency account, why keep your savings in one that pays less,” says Thiederman. Pros say Americans need somewhere between 3-12 months of essential living expenses in their emergency savings fund. 

Do: Take a look at Treasuries

Another option to look into are individual US Treasuries, pros say. “You want to lock in these higher rates before they drop. Your money market or savings account rate could disappear overnight, but with individual US Treasuries, you can lock in your rate if you hold them to maturity,” says Struthers.

We’re currently dealing with an inverted yield curve, which means interest rates are higher in the short term and lower in the medium and long term. “This is highly unusual and likely will not last. It may be a good time to try and lock in these higher interest rates. Of course, you need to assess your short-term needs and make sure these funds are not needed for the duration of the fixed income holding period,” says Peter Salkins, certified financial planner at Integrated Partners. 

Do: Consider a Multi-Year Guaranteed Annuity or Fixed Index Annuity

Another investment option to consider, if wanting the security of a guaranteed rate, is to choose a Multi-Year Guaranteed Annuity (MYGA). This type of annuity offers shorter terms, such as 3 years or 5 years, and gives the flexibility of taking the money out and putting it elsewhere once the term has ended. They typically offer higher rates than CDs and give a 10% free withdrawal each year.

For those who are willing to park their money for longer periods of time, such as 7-10 years, with the potential to watch it grow, Fixed Index Annuities (FIA) may be a good option. FIA’s follow a specific index, such as the S&P 500, and offer a reasonable rate of growth during up-markets, while protecting the owner’s investment in down-markets. In fact, if the market is down, the worst you can do is a zero; as in you won’t lose money but will stay flat, safely riding out the down market.

Do: Pay down your high-interest debt ASAP

Ultimately, even if the Fed is done raising rates, the cost of borrowing still remains high. “Credit card rates are over 20% and home equity lines of credit are the highest in more than 15 years, so paying down debt remains critically important. Utilize a 0% balance transfer offer to accelerate credit card debt repayment because paying down debt and boosting emergency savings will put you on firmer financial footing regardless of what happens in the economy in the months ahead,” says McBride. 

Barring a financial crisis, Tumin says the Federal Reserve is unlikely to quickly lower rates. “Thus, consumers shouldn’t expect any quick reduction of interest rates on their credit cards and other variable-rate loans. Consequently, consumers should continue to prioritize the reduction of their debt that has high interest rates,” says Tumin.

Moreover, rate hikes coming to an end should give consumers more confidence in making decisions. “We can all succeed in this new higher-rate normal if rates are stable. We might not have the growth we had when rates were 0%, but consumers and businesses can plan when rates are stable, especially if they’re coming down a little,” says Struthers.

Don’t: Assume the housing market will suddenly change

Mortgage rates remain heavily influenced by Fed rates, but they’re also affected by a number of other factors. “Lower inflation and a slowing economy are the prerequisites for lower mortgage rates,” says McBride.

Thiederman says buyers and sellers can expect home prices to stop dropping soon as real estate picks up. “It also means rates will likely start falling again mildly or at least stabilize,” says Thiederman. Still, with inflation near 5%, McBride says it has to start dropping faster before mortgage rates will see a meaningful and sustained decline. “If the economy slows significantly in the second half of the year and recession fears are validated, mortgage rates will fall even if the Fed doesn’t immediately cut rates,” says McBride. 

If you’re buying a new home, be conservative with any assumptions and don’t assume rates will improve anytime soon. “The home loan market has accounted for all the Fed rate hikes in advance, because mortgages have fixed rates that are priced with a far longer timeframe in mind compared to other types of loans. If the Fed stops rate hikes, mortgage rates should also stabilize,” says WalletHub analyst Jill Gonzalez. 

While refinancing may be an option down the road, don’t count on that happening right away. “Just because rate increases stop or pause does not mean rates will go down anytime soon. The Fed could keep rates at the same levels for some time,” says Thomas. Struthers says the error for rates is on the downside, so if you’re considering buying a home, it might pay to wait. “Prices will often stabilize once people get used to the new lower rate. Trying to time affordability and the combination of rates and price can be difficult,” says Struthers.

While a lot of homeowners might be tempted to sell, many who refinanced in the last couple of years are now likely reluctant to give up their low mortgage rates if it means having to take out a mortgage at a higher rate. “But if mortgage rates fall to 5.5% or lower, that might be low enough to motivate a lot of people to sell and move,” says Holden Lewis, home and mortgage expert at NerdWallet.

Do: Consider meeting with a safe money expert

You may be thinking, “This all sounds fine and dandy, but where do I start?” If so, it may be a good idea to meet with a financial professional who specializes in “Safe Money Strategies”, like those at Summerlin Benefits Consulting. To learn more about these strategies, please reach out today to set up your free, no-obligation financial review. We can help you get started on the right path to protecting your money.

How will decreased buying power affect my retirement?

Mon, 12 Jun 2023 18:05:21 GMT

The buying power of Social Security has dropped 36% since 2000, meaning the oldest adults who retired before 2000 would need more than $500 a month extra just to maintain the same level of buying power, according to a new study by the Senior Citizens League, a pro-senior think tank.

The Senior Citizens League also said it expects the 2024 cost-of-living adjustment for Social Security to be 3.1% or lower, compared with the 8.7% increase in 2023’s COLA.

The buying power of Social Security benefits can erode when the annual COLA fails to keep pace with rising costs. Inflation is now moderating but the lower rate of inflation has not necessarily meant that prices have come down, according to Mary Johnson, a Social Security and Medicare policy analyst for the Senior Citizens League.

This year, the study found that the loss of buying power slightly improved — by 4 percentage points — to 36% from 40%. However, this year’s number is still one of the deepest losses recorded by the study, exceeded only by the loss in 2022. Last year’s drop was the deepest loss in buying power since the start of the study in 2010. 

How the buying power adds up

The average Social Security benefit is $1,827 per month in 2023, according to the Social Security Administration. To maintain the same level of buying power as in 2000, it would take $516.70 for those aged 85 and older who retired before then, Johnson said.

The prices consumers are paying are not rising as fast as a year ago, but many prices on key items through February 2023 remain stubbornly high. The declining rate of inflation points to a significantly lower COLA for next year, Johnson said.

The study compared the growth in the COLA since 2000 with increases in the price of 38 goods and services typically used by retirees over the same period. This year’s buying power was most affected by sharp increases in food items, electricity, rental housing, repair and maintenance costs of motor vehicles, plus a 16% increase in the cost of dental care. 

Topping the list of fastest-growing items? Eggs. No other spending item on the list grew faster during the survey reference period, which compared the average price change from February 2022 to February 2023.

“Without an accurate cost of living adjustment (COLA) that keeps pace with rising costs, beneficiaries lose purchasing power, especially over the course of a retirement that could last 25 to 30 years,” The Senior Citizens League said. “This loss is cumulative and grows deeper as retirees age. It can cause significant hardships, including more rapid depletion of savings than expected, growing debt and worse health outcomes. In short – a significant deterioration in an older household’s standard of living.”

From January 2000 to February 2023, Social Security COLAs increased benefits by 78%, averaging 3.4% annually. Meanwhile, the cost of goods and services purchased by typical retirees rose by 141.4%, averaging about 6.2% annually over the same period. For every $100 a retired household spent on groceries in 2000, that household can only buy about $64 worth today, the group said. 

“For long-retired people, this has a major impact. For people in their 80s, that’s usually the time they’re spending through their savings, maybe needing long-term care, and potentially on tighter budgets,” Johnson said.

But, even if you have already entered retirement, there are still some things you can do to plan ahead and combat these startling statistics. The first is to meet with a retirement planning professional, such as Summerlin Benefits Consulting, to explore your options.

One such option to consider is a Fixed Index Annuity (FIA). FIA can protect your nest egg during down markets, and many can even offer a reasonable rate of return during up markets. Some FIA products also offer lifetime income and long-term care benefits that can help with a higher cost of living later in life. Having this retirement “paycheck” from a fixed index annuity might give you the peace of mind you’re looking for, especially during uncertain times like those we are living in today.

If you would like to learn more about Fixed Index Annuities, please reach out today to schedule your no-obligation meeting with our financial professionals, Stacy and Keith Summerlin. Our primary objective when meeting with our clients is to keep things simple and easy to understand. We can guide you through your options and help you feel more secure about retirement!

The U.S. Dollar remains the world’s reserve currency for three reasons

Wed, 24 May 2023 15:57:12 GMT

With inflation steadily increasing and a reduced speed of the economy, there has been a great concern over the long-lasting stability of the U.S. dollar. Rumors of competing currencies emerging, such as the Brazil, Russia, China, and India economies calling for de-dollarization, have caused individuals to question if the U.S. dollar will stay on top. While we may experience a slight decline in dollar trade, the demise of the U.S. dollar is not a credible theory for these reasons:

Global reserves are still dominated by the U.S. dollar.

The U.S. dollar controls the foreign exchange reserves held by global central banks in foreign currencies. These foreign reserves were originated to use for trade payments or if needed, to help support a currency. The U.S. dollar has lessened in the percentage of reserves it holds within the past few decades, but it still remains as the most held currency. As of 2022, about 60% of global reserves are held in U.S. dollar. The next largest reserve is the euro which makes up about 20% of reserves. The other currencies just do not compare, even the Chinese renminbi only makes up 2.7% of global reserves. These statistics just show the powerful hold that the U.S dollar still has.

Global trade is in majority conducted with U.S. dollars.

Oil trade, which accounts for about 6% of all global trading, is still predominantly conducted with the dollar. While we may see a slight decline in this sector overall, the dollar will still be used for a long time with this trade. In fact, the Federal Reserve has estimated between 1999 and 2019, the dollar had been used for 96% of overall trading conducted in North America, 74% in the Asia-Pacific areas, and 79% for the rest of the world. The only region not included in this is Europe, which is where the euro remained the primary currency for trading.

There are deep, liquid, and regulated financial markets backing the U.S. dollar.

The United States holds the largest stock and bonds market in the world. This alone has assisted the U.S. economy with obtaining strength and stability which in turn, has led to the dollar becoming a global dominant currency. These deep and liquid U.S. financial markets are highly regulated which assists the U.S. overall to have the world’s largest economy with increasingly deep capital markets.

At this time, there are no comparable alternatives to the U.S. dollar. Possible alternatives such as the euro would not be a good fit due to the political risk in the past, and the renminbi has always had restricted capital flow in the Chinese government. Since these hurtles remain constant, the dollar will likely keep its dominant hold in global trade and finance for the foreseeable future.

So, what are the next steps for investors who are concerned with safeguarding their savings?

There are many headlines circling around about the U.S. dollar and it may raise some concerns for today’s investors. There may continue to be fluctuations in the dollar’s value but that will be completely normal due to factors such as inflation, economic growth, and central bank interest rate policies. Unfortunately, due to events like the Great Recession of 2008 and the 2020 pandemic shutdown, financial market volatility has become a norm. The primary thing investors can do is to remain diversified within their portfolio and follow the Rule of 100 when exposing your funds to the market.

The Rule of 100 is when you take your age and subtract it by 100, this gives you the ratio of how much of your money should be at risk in the market and how much should be in a safe place where you can’t lose any of your principal or gains. For instance, if you are aged 60 then no more than 40% of your portfolio should be at risk. Many financial professionals use this rule to help guide consumers during times of economic turmoil.

At Summerlin Benefits Consulting , we are “Safe Money Experts” and can help you review your portfolio to ensure you are on the right side of the Rule of 100. This will help you not only remain diversified but also to ensure you have a retirement nest egg to lean on in the future when you need it. We specialize in products that have benefits such as Safety, Long Term Care, and Lifetime income which contractually protect every dollar in your nest egg, if you choose to. If you want to learn more about our safe money strategies, contact our office today.

How to donate your RMD using Qualified Charitable Distributions

Tue, 09 May 2023 14:03:18 GMT

You have moved your Qualified account out of risk in the market into a “Safe Money” account with Summerlin Benefits Consulting , but now you need to take your Required Minimum Distribution (RMD) and you don’t really need those funds. Is there a way to give a portion or all your RMD to a charity? For Individuals who are of the age group and have these distribution requirements, the answer is yes! Many retirees don’t realize that they can donate a portion, or even all of their RMD directly to a charity of their choosing. This is referred to as a qualified charitable donation (QCD).

Qualified charitable distributions can reduce your taxable income

RMD’s can increase taxes that you may need to pay. By doing a QCD, you would be sending a check directly from your IRA to the charity, which can allow you to exclude the amount from taxable income. Here are some examples of how your RMD can increases your tax obligations:

· Your RMD can put you in a higher tax bracket. Your distributions are normally considered taxable income, which can move a retiree into a higher tax bracket.

· Medicare surtax. RMDs increase your modified adjusted gross income, or MAGI. This could consequently trigger the standard 3.8% Medicare surtax. The surtax would apply to the lesser of either net investment income or MAGI more than $200,000 for individuals or $250,000 for married couples filing jointly.

· Social Security tax. Withdrawals from a retirement account could cause Social Security benefits to become taxable. This happens to 85% of single filing individuals with an annual income above $34,000 or joint filing married couples with an annual income above $44,000.

· Medicare Part B & D premiums. These premiums are calculated by using the MAGI from the last two years. If you take a large RMD, this could increase your Medicare costs.

You should consult your tax advisor to see if any of these could be applicable if you take your full RMD amount. A qualified charitable distribution could be the solution you need. Keep in mind that a QCD does not provide a charitable donation for taxpayers, this is just to assist with your taxable income amount. If your tax advisor thinks this is a good idea for you, get with your Summerlin Benefits Consulting team to help you execute a QCD from your qualified policy.

What are the rules and regulations for a qualified charitable distribution?

To be able to do a QCD you need to be have a qualified IRA such as a traditional, rollover, inherited, inactive SEP, or a SIMPLE and be already of age for RMD’s. This means individuals who turned age 70 ½ as of 2019 and have been taking RMD’s since then, or who turned 72 in 2020 and began RMD’s then, or most currently, those who are turning 73 in 2023). Your qualified charitable donations must go directly from the qualified retirement account to the charity of your choice, you can’t move your RMD into your own bank account and then redistribute to the charity. The annual limit for QCDs is $100,000.

If you are already taking distributions or making contributions, it would be beneficial to consult with your Summerlin Benefits Consulting advisor on how to complete the QCD request. The distributions would satisfy your RMD since the IRS counts any withdrawals taken throughout the year. If you’re still working and make IRA contributions, these can also reduce your deduction for QCDs if both are made in the same year.

Major tax benefits when using qualified charitable distribution

QCDs can offer some big tax savings if it’s the right option for you. If you consulted with your tax advisor and they helped you figure out that you don’t benefit from itemizing your tax deductions and they think a QCD would be beneficial then Summerlin Benefits Consulting can help you complete the request. Our team is knowledgeable about all the forms and procedures to assist you with completing your QCD.

Don’t have account with us? Then this is a great opportunity to give our office a call to meet with one of our Safe Money experts. They can assist you with moving your at risk funds into a safer vehicle and will touch base with you every year to help satisfy your RMDs. Call our office today to make your retirement nest egg safe from market declines.

Assisting the Senior in your life to prepare for Long Term Nursing Care/Living Assistance

Fri, 28 Apr 2023 14:35:43 GMT

“Stand Up for Seniors” seems to be a rallying phrase in 2023. But what does it mean?

If you have a parent or loved one who needs assistance with activities of daily living or round-the-clock nursing care, you know better than anyone what all goes into "standing up" for them. Trying to advocate for their needs, managing the financial aspect of long-term care, and ensuring good quality care can be difficult especially when there is very little guidance available for a personal caregiver.

It's not as simple as being handed the dreaded nursing home list. You know the one- every doctor or hospital nowadays seems to have one of these contact sheets of skilled nursing facilities that they give to families when they want to discharge a patient who is deemed not sick enough to stay in the hospital but is not well enough to go home. Most people are under the impression that Medicare covers confined care stays and though it can cover some of the costs- it doesn’t take care of everything. And, it covers even less if it’s home health care.

The actuality is that Medicare pays up to 90 days of inpatient care, which resets if you have 60 days between incidents, and you have 60 lifetime reserve days. That’s it! And, it all has to be justified by doctors which means it can often work out to much less time in reality, not to mention it's not always “enough” when longer terms or permanent residency come into play.

What initial roadblocks, might I run into as an advocate for my Senior?

Unfortunately, when advocating for our loved ones, we don’t get clued into the nuances of hospital discharge policies, confinement limitations, or care requirements until we are standing in the hallway talking to a case manager. Even then, the details of how the care will be covered (ie. the financial impact of care) aren't usually even discussed.

Another reality check often hits when the patient arrives at the skilled nursing facility and you realize there’s a countdown clock on that stay, too. Medicare covers up to 100 days in a skilled nursing care facility , but only when deemed medically necessary. The caseworker is likely to come looking for you on or before the 20 ^th day of confinement and will want you (the advocate) to make a discharge decision. That’s primarily because, after 20 days, Medicare will start charging a $200 copay per day. If a Medicare patient has secondary coverage, such as a Medicare Advantage plan or a Long-Term Care policy, that might pick up the cost of the remaining 80 days of care, but it does not mean the doctors will deem it medically necessary to stay that long and it definitely doesn’t change things if a longer or more permanent stay is warranted due to living assistance support and not an actual medical need.

How can I be proactive? Or the least, get on top of things quickly?

As you try to help advocate for your senior, it definitely important to have the number from the Medicare disclosure form the patient is given at admission- which should have a designated “quick appeal” contact . That way, if a longer stay is likely going to be needed you can jump on it well before the time of discharge. You can also ask to speak to the hospital's/care facility's patient representative. If you need to take things further, you can pay out-of-pocket to hire an independent patient advocate but this can be extremely costly since most charge by the hour.

You can also buy some time going through a re-evaluation and working your way up the chain of command. Be mindful that you may eventually be on the hook for charges you weren’t expecting, which is another reason to stay in good communication with the facility.

When it comes to longer-term care needs, not all Medicare-approved skilled nursing facilities are equal, and there could be some options available to you that aren’t on the official hospital list you’re given at discharge. Many family members who are trying to advocate for their seniors, will check reviews online and ask around at the hospital or if they know people locally. If you want to dig further, you can check state websites for violations and complaints . If you can, always go check out the facilities in person though. It’s important to see with your own eyes how the care facility is managed and ask questions about safety protocols, visitation, etc.

What does managing long-term care look like for the advocate?

Once you do choose a facility, keep an eye on your loved one once they are transferred there. The inspection process shouldn’t stop once the patient moves in. You'll want to stop by and check on things unannounced, on varying days of the week, and at random times. You can tell a lot on a single visit with your Senior, like how frequently someone checks in on them, cleanliness, toileting and hygiene routines, and nutrition protocols. Ask about their procedures to minimize a run of illness through the facility, not just Covid but the flu and/or other communicable diseases. Lastly, it might also be a good idea to test how long it takes for nurses to respond to a call button; and frankly, it wouldn’t hurt to become friendly with, or at the least, get to know the staff caring for your Senior. Little things like that can make the world of difference in their quality of life.

What kind of financial planning support is there?

Often the most tedious aspects of advocating for a loved one’s long-term care needs are the finances. There’s been talk in politics about shoring up the Social Security trust fund and securing Medicare and Medicaid funding . Those are big things that the government needs to do for sure, but every financial situation is different. Preparing in advance for the cost of care can be essential. Some financial vehicles like long-term care insurance policies, indexed universal life insurance, and even annuities can help you and your loved one prepare for the future cost of care.

At Summerlin Benefits Consulting we know that regardless of your Senior's circumstances, one thing is almost always the same. Along the way, someone is going to have to stand up for and advocate for them. This means not only helping them prepare but also ensuring they receive the care they need when the time comes. The Summerlin Benefits 2023 Caregiver’s Readiness Guide (available to all clients) is designed to help with the planning and many of our financial vehicles are designed to help with the cost. It’s just a matter of you and your Senior doing a little preparation before the need is imminent.

If you are someone who knows you may be a loved one’s advocate in the future, or if you are actively planning a loved one’s care right now, it’s a good time to ask for help. At the least, we can present some options to help plan for the cost of future care now so that there's one less thing to worry about later.

Older Employees' Retirement Expectations are Changing

Tue, 11 Apr 2023 15:08:36 GMT

Boy! This is an important topic to stay on top of in today’s economic times as more and more of our Baby Boomers continue to face the decision to either make the transition into retirement or keep working for a while longer. This should also be a time where these workers can get some help.

In fact, if you are within 5 to 10 years of possibly retiring, get proactive! Have a sit down with a financial professional like you will find at Summerlin Benefits Consulting, to get some guidance and do some planning for your financial future. Why? Read on to find out…..

Declining Retirement Confidence

It’s unfortunate, but in a recent publication by SHRM (Society for Human Resource Management), retirement confidence is down amongst today’s employees, with fewer workplace savers seeing themselves on track to retire in the time frame they originally planned to.

In fact, workers outlook on retiring have seen a reversal from the last few years, where confidence remained steady and even increased. Most workplace savers now say they're unsure about the economic outlook given the rising inflation, interest rates, and steep market declines in 2022. In recent studies, only 63% of savers feel they are on track for retirement. The current status reflects a steadily decreasing expectations and confidence for the last several years, since just a year ago the percentage was at 68%.

SHRM surveyed 1,308 people and confirmed that inflation is the main driver for the decline in confidence amongst respondents, all of which who do already participate in their employer's 401(k) or 403(b) plans. 87% of those workplace savers reported that they have concerns about inflation affecting their retirement.

It was also found in this survey, that older workers may have a more realistic view of retirement expectations than younger workers. Nearly half of Baby Boomers said they'll need to save between $1 million and $3 million for a comfortable retirement, which is at least four times the amount that those from Generation Z anticipate needing. This data could also lead to the conclusion that many of today’s workers may also not be getting the proper education and guidance in the workplace to properly prepare for their financial future.

Delayed Retirements

A more pressing issue is that half of those who planned to retire in 2023 are reconsidering or have put that plan on hold, according to a mid-2022 survey of 1,000 U.S. consumers by software-maker Quicken Inc. And workers ages 58 to 74 who were not planning on retiring in 2023 are now considering delaying retirement even further.

Among those who are considering delaying retirement, or "unretiring" and returning to the labor force, the changing economic climate is top of mind. Respondents cited the following factors as reasons they will need to continue working:

Inflation pushing up costs (cited by 65 percent).
The decline in the stock market (45 percent).
Increased interest rates (30 percent).

Even before this years economic challenges, retirement ages have been rising. People are just working longer. The major drivers for delaying retirement in recent decades, as researchers noted, include the shift from guaranteed defined benefit pensions to defined contribution 401(k)s, and the decline of retiree health insurance, as well as extended life spans and the desire to remain active and engaged.

Protecting Your Retirement Savings

At Summerlin Benefits Consulting we know that today’s more mature employees want help with saving for retirement and safely transitioning into retirement when the time is right. It would be good if all employers provided resources to help their employees make informed decisions about their long-term savings, but unfortunately not all employers do.

Advisors at Summerlin Benefits Consulting can help because they will know what guidelines should apply to you and will be familiar with strategies that the average worker isn’t made aware of.

For example, did you know that employees in their mid to late 50’s are often allowed to do an In-Service Transfer from their 401k to a safe external environment, like rolling the funds over into an IRA that’s protected by a Fixed Index Annuity. This will allow the employee to move their money to safety NOW- even while they are still working, so that they won’t experience the impact of major losses in their lifesavings right before they get ready to retire.

Would You Like Help?

Stacy J. Summerlin, President of Summerlin Benefits Consulting Inc. was recently quoted saying " More mature investors, even when still employed, should be considering making the shift- as in, moving their retirement savings focus to Safety 1 ^st . It’s not just smart, but vital that in the months and years leading up to retirement, you protect the money you already have while still getting a reasonable rate of return over time. This is the only way that today’s more mature workers are going to regain some of their confidence to retire."

At Summerlin Benefits Consulting we are focused on helping today’s more mature employees prepare for their retirement future. Contact us today for a no obligation planning meeting.

Not sure what to do with your large lump sum pension payment?

Thu, 30 Mar 2023 15:07:14 GMT

Consider this scenario: You are about to receive a lump-sum payout from a pension plan that you were in and it’s around $130,000. You are turning 60 in April and do not have a 401(k) or an IRA plan already established. You need some advice on the best way to invest this money. This is the majority of your retirement savings, and you need to make it last!

First, it’s good to be proactive and think about your options for moving a major sum of money like this. A little planning before you move the assets can save you a lot of pain later on. Too many people move the money first and ask questions after, which can cost quite a bit in taxes and lost gains.

“I can’t tell you how often I’ve been asked for help after a consumer has made an incorrect rollover decision or an unadvisable Roth conversion incurring hefty tax liability. At that point, when they call me to ask for help it’s after the damage is done, and most times- there just isn’t much that can be done for them,” says Stacy J. Summerlin, President of Summerlin Benefits Consulting Inc.

In the example above, if this $130,000 is an essential part of your retirement income plan and since its available to you as funds that have not yet been taxed, the first place to start would be to consider setting up and doing a direct rollover into an Individual Retirement Account (IRA).

Your pension plan administrator should be able to send the money directly to a new financial institution with whom you have set up a Traditional IRA. This is done via a process called a Qualified Transfer- meaning funds move from one financial institution to another without the consumer receiving a direct distribution of funds. “With a qualified transfer of this nature,” said Stacy, “you won’t owe taxes on the rollover and it can continue to grow in a tax-deferred status for you until you start taking income distributions later.” Stacy went on to say, “if you also utilize a product like a lifetime income annuity within the Rollover IRA you can protect your lump sum savings so that it will grow safely from here on out and potentially will even improve your future income dollars down the road.”

If by chance, you have already received your lump sum pension payout as a distribution (ex. the check was made out to you), then you still help yourself avoid taxation now by depositing it into a Traditional IRA within 60 days of the distribution. As such, you can still likely defer the tax but the timing can be tricky and if you miss your window, you’ll owe the IRS income tax on the full amount. On an amount like $130,000, those taxes can take away a huge chunk of your money.

Taxes are not the only thing to think about because frankly if you’re putting your lump sum pension rollover directly into an IRA and following the IRS guidelines when doing so, taxes becomes a moot point for now. The bigger questions consumers should ask themselves before taking a lump sum pension distribution of any kind are (1) how much of this money can I afford to lose in a volatile stock market, and (2) how do I intend to use these funds during retirement? That’s where the true strategizing begins.

When rolling over a lump sum pension there are safer and more simple strategies that can be used, instead of the risky investment funds often found in a rollover IRA. Being conservative with an asset like this can mean the difference between making your money last vs outliving your savings.

So what is the best vehicle for a lump sum rollover pension into an IRA?

Well for some, using fixed income options like indexed annuities, multi-year guaranteed annuities, and lifetime income annuities is one solid way to go. All three of these vehicles will help you ensure you will not lose money during market declines and can prepare for you a valuable income stream to supplement your Social Security benefits. [ Remember, if you are about to retire the longer you wait to take social security means you will increase the payout that you qualify for. You can claim Social Security as early as 62, but for many people, it might be advisable to try and wait until age 70 if you can hold out that long. ]

“Safe Money Strategies” are key to every savvy investor’s retirement plan. For today’s retiree it’s all about protecting your principal during market declines while offering a reasonable rate of return during market upswings. It can truly be that simple.

At Summerlin Benefits Consulting Inc. we specialize in helping clients figure out if taking their pension as monthly income payments OR taking it as a lump sum pension rollover would be best for them. We’ll work with you to develop the right strategy based on your unique needs. Our goal is to help our clients feel secure in their personal financial future.

No matter how large or how small your retirement savings fund is, your money is important to you, and making it last the rest of your life is essential to your financial health. If you need help deciding how to do a pension rollover or with any other Safety-First oriented retirement strategy, contact Summerlin Benefits Consulting today!

2022 was the worst year on record for U.S. bonds. What can we expect in 2023?

Wed, 15 Mar 2023 15:55:45 GMT

U.S. bonds are coming off their worst year in almost a half-century of record-keeping, but the question is, do they look poised for a better performance in 2023?

THE BOND UNCERTAINTY PROBLEM

Most of us know that inflation started demonstrating signs of easing in late 2022, giving Federal Reserve policy makers a chance to switch to a less-aggressive rate hike for 2023. Forecasters see the 10-year rate ending at around 3.5% this year, which could make an attractive entry point for some potential buyers to come in.

A lot of repricing of Treasury yields already took place in 2022, and this is the best core bonds have looked in over a decade; that’s why economists think the prospects for fixed income are pretty attractive at current levels, and the consensus is that fixed-income returns are going to be better this year.

Of course, this is hopeful thinking, but how do we know for sure? The fact is- We Don’t. And is it smarter for today’s retirees to PREPARE for best-case scenario or worst-case scenario?

At Summerlin Benefits Consulting, we believe in helping clients prepare for the worst while still positioning them to succeed when our market experiences best-case outcomes. The simple truth is that in 2023, there are still too many risk factors at-play to be certain in your bond yields.

ONGOING RISKS TO BOND YIELD

One big risk to bond performance would be if inflation doesn’t fall below 4.5% or 5% by mid-2023, which would force the Fed to push the fed-funds rate up toward 6% from 3.75% to 4%.

A toxic combination is the ongoing “hot” inflation combined with the string of Fed rate hikes since last March. This has led to a punishing sell off in Treasurys over much of 2022. In short, 2022’s sharp rise in the 10-year rate has been accompanied by a falling price in the underlying note, hurting existing bondholders.

An example of this is the Bloomberg Aggregate Bond Index — the broadest domestic measure of the core fixed-income market and which includes Treasurys, agency mortgage-backed securities and investment-grade corporate debt. It declined 11.2% in 2022. That’s the index’s worst annual showing since 1976, the earliest period that data collecting began.

Unfortunately, it has become obvious that the bond sector’s poor performance for 2022 has come as a rude surprise to investors accustomed to the steady performance that fixed income investments have experienced over the last several decades. Fixed income planning is a fundamental component of any savvy investor’s retirement plan.

A BETTER OPTION TO BONDS IN 2023

What it boils down to for 2023 is that there are other alternatives that may prove to be the better options for fixed income- without the uncertainty.

One option is a fixed index annuity, where your return can be tied to a market index, but your principal is protected in down years. These accounts commonly follow market indexes like the S&P 500 or larger bond funds like Bloomberg, etc. But, this year, some fixed index annuities are also offering the option to just follow a fixed interest rate- many of which are ranging between 3% to 5% in comes cases, in lieu of following an actual market index. This means during a time when almost all investments, including bonds, are losing value, you may be able to guarantee a return that will help you safely ride out the recession and negate its impact to your retirement savings.

Fixed index annuities (FIA’s) can also generate more income than bonds of similar maturity purchased at the same time and be better at holding value while generating a more predictable cash flow. FIA’s offer consumers Safety first and foremost, with a Reasonable Rate of Return over time, and guaranteed Increasing Lifetime Income- thus, solve the uncertainty of your bond portfolio.

Of course, just like with stocks, bonds, or other investment options- not all annuities are created equal, especially during uncertain times like these, its important to use a safe money expert to help guide you through your options.

At Summerlin Benefits Consulting, we specialize in helping our clients eliminate the uncertainty in their retirement planning and determine what path is best for their specific situation.

How will you replace your salary when you retire?

Thu, 02 Mar 2023 14:31:13 GMT

WHETHER BY CHOICE OR CHANCE — an illness or layoff, for example — nearly 50% of us retire sooner than we’d planned.

Retiring earlier means living in retirement longer: The assets you’ve saved over your career will need to stretch farther, even as you stop contributing to your 401(k) or other retirement accounts.

“Retiring at 55 can have meaningfully different implications versus retiring at 65,” says David H. Koh, managing director and senior investment strategist in the Chief Investment Office for Merrill and Bank of America Private Bank. “Fiftysomethings will likely need to make their retirement savings last an extra decade or more.” In addition, early retirees often have higher expenses than those retiring later in life; for instance, you may still be paying a mortgage or tuition bills. On top of that, you might have to cover the entire cost of health insurance until you’re eligible for Medicare.

As a result, the strategies early retirees choose to create their “retirement paycheck” can take on heightened importance. Will I still be able to pay all of my bills and live the life I want in retirement? How much will I be able to withdraw monthly without jeopardizing my long-term financial security? What are the tax implications — and tradeoffs? Your financial and tax advisors can help answer those and other questions as you work together to create an income stream custom designed to support you throughout your life.

SO HOW DO YOU ENSURE AN INCOME STREAM IN RETIREMENT?

First, sit down with your spouse or partner — if you have one — and your financial advisor and calculate your regular expenses, which generally include housing, food, transportation and insurance. Other expenses to consider are charitable donations, education costs, travel and gifts.

Next, you’ll want to identify the income sources you can draw from to create a monthly “paycheck.” Your list may include a severance package, a pension and retirement accounts — such as traditional or Roth 401(k) or 403(b) plan accounts, and traditional and Roth IRAs — in addition to Social Security benefits and possibly even rental income, disability benefits, or other income streams such as annuities.

Once you have a clear picture of your finances, your financial and tax advisors can help you determine an appropriate overall withdrawal strategy. This strategy will be determined based on your assets, age, income sources, tax considerations and other factors. If it looks like you’re currently spending more money than your projected monthly retirement income, then your financial advisor may suggest ways to help you adjust your finances. This may be by delaying retirement or taking on part-time consulting work, perhaps, or moving the date at which one or both of you begin claiming Social Security benefits. You might also begin to look for ways to trim expenses in one area or another.

It isn’t enough to know how much you can afford to draw from your income sources each month. You’ll need to consider the tax and investment implications of withdrawing money from each source, among other factors. Again, that’s where your advisors can help you understand your choices.

Now let us take a dive into Social Security. Though you can begin collecting Social Security at age 62, your benefits will increase each year you wait on collecting; up to age 70. “If you can afford to delay tapping your Social Security benefits, you’ll likely have greater funds available later, when you may need them most,” says Koh. Still, sometimes it might make sense to consider claiming benefits sooner. For one, doing so might allow you to delay withdrawing money from your retirement savings accounts to give them more time to grow.

Lump sum or monthly payments? Pensions and some retirement packages may offer you a choice: take a lump-sum payout or begin monthly payments immediately, or, if you retire early, delay those regular payments until the normal retirement age under the plan or later. It’s a good idea to consult your tax advisor on the implications of each option.

When it comes to withdrawals from your retirement accounts, the tax rules and implications can be complex. If, for instance, you leave your job during or after the year you turn 55, the Rule of 55 generally allows you to tap your account under your employer’s retirement plan, such as a 401(k), without owing the 10% early withdrawal tax.

From a tax perspective, in general, it’s wise to withdraw from your taxable accounts first, then tax-deferred, then tax-free. That’s because the money you take from a taxable account (such as a brokerage account) may be taxed as capital gains at a lower rate than what you’d owe on distributions from traditional 401(k) plan accounts, traditional IRAs and some other tax-deferred savings, which are taxable as ordinary income.

“Your financial advisor can help you determine the best mix of withdrawals,” says Merrill Financial Advisor Lisa Kent. “As you create your drawdown plan, you’ll want to try to avoid landing in a higher tax bracket or derailing your preferred asset allocation,” she notes, adding, “When clients convert their retirement assets into cash, we generally help transfer them someplace liquid and secure until they need them.”

After you’ve addressed your short-term income needs, it’s time to review your portfolio to see whether it has the potential to last 30 or more years. In a low interest-rate environment, “an overly conservative portfolio is unlikely to provide the growth you may need for a longer-than-expected retirement,” says Koh — especially in a high-inflation environment. So you may want to consult with your financial advisor on the appropriate asset allocation mix.

While a fixed income provides diversification and potentially offers a ballast to market volatility, “for purposes of growth, you should engage with your financial advisor to determine what the right fixed income solutions would be, given your risk appetite and tax sensitivity,” suggests Koh. For purposes of income, some alternatives include dividend-paying equities, real estate investment trusts (REITs), or other options such as Fixed Index Annuities.

Fixed Index Annuities (FIA) offer a reasonable rate of return while protecting one’s principal from market declines. Essentially, with a FIA you will never lose. Zero is your hero! Many FIA also offer a free 10% withdrawal each year, which can help provide an income stream with no taxable consequences. Another great feature is that some FIA's offer additional benefits that can even help cover the cost of long term care should you need it.

Diversification is vital, adds Merrill Financial Advisor Mary Jo Harper. “The biggest mistake I see among retirees is a portfolio overly concentrated in the stock of a former employer or in one sector, usually the sector the client worked in,” she explains.

At Summerlin Benefits Consulting, we recommend using the “Rule of 100” to determine how you should diversify your portfolio. The Rule of 100 suggests subtracting your age from 100 to determine a benchmark of how much of your money you should keep at risk versus putting it in safer strategies. For example, for a 70 year old, 30% of their money in a truly diversified portfolio could remain at risk, while 70% should be made safe.

It’s a good idea to review your plan with your financial advisor regularly so that you can make adjustments depending on market conditions, inflation, personal goals and other factors. That way, you can take comfort in knowing you’re managing the retirement assets you’ve saved over your career in the most thoughtful way possible.

Summerlin Benefits Consulting does this day in and day out with our clients. Our top priority is safety first; we help our client family protect their nest eggs so they can do less worrying and enjoy retirement.

Social Security and Retirement. What does "Full Retirement Age" Mean?

Fri, 17 Feb 2023 17:22:42 GMT

An informal survey of staff at the Center for Retirement Research asking “What is the current retirement age for Social Security?” produced a range of responses. About half — mostly the “old hands” — said 67. The other half — generally younger and newer staff members — gave answers including 62, 65, 66 and 68. Essentially, they are all wrong. Social Security’s full retirement age is based on the year you were born so the fact that people are confused is not surprising.

You can start receiving your Social Security retirement benefits as early as age 62. However, you are not entitled to full benefits until you reach your full retirement age and even then, if you actually delay taking your benefits until age 70, your benefit amount will be increased further for you.

Why did the Full Retirement Age change?

Full retirement age, also called "normal retirement age," was 65 for many years. In 1983, Congress passed a law to gradually raise the age because people are living longer and are generally healthier in older age. The law raised the full retirement age beginning with people born in 1938 or later. The retirement age gradually increases by a few months for every birth year, until it reaches 67 for people born in 1960 and later.

If age 70 is the age at which Social Security pays the highest possible benefits, why do we still talk about full retirement age? 

Before the delayed retirement credit became actuarially fair, full retirement age was a meaningful concept. It was the age at which lifetime benefits were the highest. But once the delayed retirement credit became actuarially fair, full retirement age became largely meaningless. It does not describe the age when benefits are first available: That is age 62. It does not describe the age when monthly benefits are at their maximum: That is age 70. It really doesn’t have any meaning in terms of an official retirement age.  

But, it is important to note that a number of specific Social Security provisions are linked to the full retirement age: An earnings test applies before the full retirement age but not thereafter, and benefits for widows and spouses are reduced if claimed before the full retirement age and not thereafter. 

These provisions are relatively small however and do not undermine the basic fact that 70 is the age that your full, maximum monthly benefits become available under Social Security. 

So, how do I decide when to start taking my benefits?

There is no right or wrong answer to this; it truly does depend on the individual. You want to think about life expectancy, health, and other income sources when making up your mind.

There are other options one can consider if they are in need of a retirement paycheck but do not want to start pulling from their social security benefits until later. For example, some opt to start taking from their 401k as a source of income, or they look to other income sources, such as pensions or annuities. One option, called a Fixed Index Annuity (FIA), allows the consumer to obtain a reasonable rate of return over time, while shielding them from losses when the market is down. Most FIAs also allow for a penalty-free 10% withdrawal per year, which therefore makes for a potential source of income you can pull from instead of turning social security benefits on too soon.

At Summerlin Benefits Consulting, we specialize in helping our clients preserve and grow their nest eggs so that they can focus on enjoying their retirement instead of worrying about their means. We also help our clients consider ALL of their retirement income options, including social security benefits, so that they can make the best decision for themselves. One of our core values is educating our clients and making things simple to understand so that they feel empowered to choose the path that is right for them!

401K and IRA Contribution Limits for 2023

Thu, 02 Feb 2023 14:03:06 GMT

It may be time to up your 401(k) contributions. The IRS has increased the limit by $2,000 for 2023, the agency announced in October.

Cost of living adjustments have brought the 2023 limit to $22,500 (up from $20,500) for individual contributions to retirement accounts including 401(k)s, 403(b)s, most 457 plans and Thrift Savings Plans.

Individuals 50 and older can contribute an additional $7,500, increasing for the first time since 2020. That brings the total contribution limit for those 50 and older to $30,000.

Taxpayers who contribute to individual retirement accounts (IRAs) can now put away an extra $500, effective 2023. The limit increased to $6,500, plus $1,000 in catch-up contributions for those 50 and older. The catch-up contribution limit is the same as last year.

Income limits for Roth IRA contributions have increased as well. The income phase-out range for Roth IRAs will be between $138,000 and $153,000 for single filers and heads of household (up from between $129,000 and $144,000).

The range for married couples filing jointly has gone up to $218,000 to $228,000 (from between $204,000 and $214,000). The phase-out range for married individuals filing separately remains at $0 to $10,000.

Individuals can contribute up to $15,500 to SIMPLE accounts (savings incentive match plan for employees), up from $14,000 in 2022.

If you’d like to discuss how Summerlin Benefits Consulting can assist you with new options designed for safety, to help you secure your principal and future contributions into your retirement plans, feel free to reach out for a no obligation meeting.

What you need to know about the SECURE Act 2.0

Tue, 10 Jan 2023 01:35:38 GMT

Even if you’ve covered all of the retirement planning bases – such as income generation, taxes, and inflation – there are still items to consider that could impact your future financial security. One such thing is new legislation.

For instance, the SECURE Act (Setting Every Community Up for Retirement Enhancement) of 2019 enhanced various rules around retirement saving, such as eliminating the age limit on traditional IRA contributions and raising the required minimum distribution (RMD) age. Now Congress has passed the SECURE Act 2.0.

This has also prompted changes in RMDs, as well as penalties for not taking such withdrawals. Other SECURE Act 2.0 provisions center around early withdrawals from retirement plans and “catch-up” contributions. With that in mind, you may wonder if the SECURE Act 2.0 could help or hinder your retirement.

What are the Provisions of the SECURE Act 2.0?

When passed in 2019, the initial SECURE Act did a number of things in an attempt to help Americans retire more comfortably. These included:

Allowing certain part-time employees to participate in employer-sponsored retirement plans.
Pushing back the age for traditional IRA and retirement plans required minimum distributions (RMD) from 70 ½ to 72.
Giving the thumbs up for 401(k) plans to offer annuities (which in turn could help retirees from outliving their income while it is still needed).
Eliminating the Stretch IRA, now requiring beneficiaries to use all inherited IRA funds within 10 years of the original IRA owner’s death.

As a companion bill, the SECURE Act 2.0 – also referred to as the Securing a Strong Retirement Act – expands upon the original act by:

Increasing the limit for catch-up contributions under a retirement plan for individuals ages 60 to 63 to whichever is greater: $10,000 or 150% of the regular catch-up amount for 2024.
Emergency withdrawals are now permitted from your employer sponsored plans (like your 401k) for unforeseeable or immediate financial needs relating to personal or family emergency expenses, with limits.
The age for minimum required distributions is increased to 73 effective Jan. 1, 2023, and to 75 effective Jan. 1, 2033.
Exempting investors/retirees who have less than $100,000 in retirement savings from having to make required minimum distributions at all.
Allowing employers to offer matching retirement contributions to employees who are paying off their student loans.
Providing a searchable national “lost and found” registry for missing retirement funds.

While there appears to be some enticing updates in this new act, for those who are already retired, it may not necessarily be of much help. Especially for more mature investors who are still building their retirement plans, it is very important to not only be aware of new legislation but to properly plan for longer life expectancy and guaranteed retirement income, even when new laws are passed.

Conclusion

SECURE Act 2.0 is one of the broadest pieces of retirement plan legislation in decades. It impacts virtually all types of retirement plans and reflects Congress’ desire to increase retirement coverage and access, protect retirement plan assets, and simplify retirement plan operation and administration. SECURE Act 2.0 will have lasting impacts on retirement plans. Employers sponsoring retirement plans need to be ready to implement the various changes on the various compliance dates and retirees need to be prepared for their future regardless of new or old legislation.

Summerlin Benefits Consulting helps our clients navigate the rules and requirements of their retirement plans and works with you to ensure you have a good solid strategy in place.

Finding Good Value in Life Insurance

Fri, 02 Dec 2022 17:15:08 GMT

Life insurance can be an important part of your financial plans. After you have decided which kind of life insurance is best for you, it's always good to compare similar policies from different companies to find out which one is likely to give you the best value for your money. A simple comparison of the premiums is not enough. There are other things you should consider such as:

Do benefits or premiums vary from year to year?
How much do the benefits build up in the policy?
What part of the benefits or premiums is not guaranteed?
What is the effect of interest on money paid and received at different times on the policy?

Once you have decided which type of policy to buy, you can use a cost comparison index to help you compare similar policies. Life insurance agents, like Summerlin Benefits Consulting (SBC), can give you information about different kinds of indexes that each work a little differently.

One index may help you compare the costs between two policies if you give up the policy and take out the cash value. Another may help compare your costs if you don’t give up your policy before its coverage ends. Some options could help you decide what future income needs could be met. Each index is useful in some ways, but many can provide tax- free growth. It’s all about what you need specifically for your individual situation.

Remember that not one company offers the lowest cost at ALL ages for ALL kinds and amounts of insurance. Other factors you should also consider:

How quickly does the cash value grow? Some policies have low cash values in the early years that build quickly later on. Other policies have a more level cash value build-up. A year-by-year display of values and benefits can be very helpful.
Are there special policy features that particularly suit your needs? Some may even offer benefits for long term care financial planning.
How are non guaranteed values calculated? For example, interest rates are important in determining policy returns. In some companies increases reflect the average interest earnings on all of that company’s policies regardless of when it was issued. In others, the return for policies issued in a recent year, or a group of years, reflects the interest earnings on that group of policies; and amounts paid are likely to change more rapidly when interest rates change.

Selecting the insurance policy that is right for you may seem like a daunting task, but Summerlin Benefits Consulting helps people with this every single day. It’s what we do! We take the guesswork out of things and present options in a simple, easy to understand manner. Call us today and we can help you too!

How To Make Sure You Have Enough For Retirement

Mon, 14 Nov 2022 15:25:38 GMT

Many Americans are surprised to see they have not prepared as well as they had hoped for retirement when they finally get ready to call it quits. Having a medical condition certainly does not help the situation either.

The good news is you have time, especially if you’re still working, and have another five to seven years. If you’re lucky enough to have a pension, which is something many Americans these days cannot rely on, you’re also off to a good start.

The bad news is, you may have to make some realistic assumptions of what your retirement will look like. If you’ve lived primarily paycheck to paycheck in your working years, that may continue to feel like the case in your retirement.

Think very carefully about the sort of income you’ll be receiving until you can begin claiming Social Security at whatever age that should be. If you retire and your spouse is still working, you may want to try and rely solely on his/her income for a while as opposed to taking social security or dipping into your 401(K), so that the money in there can continue to grow over time. It is hard to tell how long anyone will live, but you should plan to live a couple more decades at least, and you’ll need all the savings you have to last that timeframe.

For most people, filling in that income stream gap can also be achieved with a fixed index annuity, which can take an asset like your 401(k), and turn it into a lifetime income stream for you.

Whether you’ll be able to live a comfortable and simple lifestyle in your retirement depends largely on how you’re planning. Assess how much income you’re bringing in now and compare it to what you will be getting from your account withdrawals and Social Security, when the time comes.

Also make realistic assumptions for how much everything will cost in your retirement – your housing and utility bills, groceries, healthcare , taxes, and some of the fun stuff. You have worked all these years, you and your spouse deserve to enjoy this next chapter.

We can help further by providing a few useful tips. First, try using an annual withdrawal rate of 3% from your qualified retirement accounts.

Then see how much you can expect to get from Social Security. You can do this by making an account on the Social Security Administration’s website. You’ll be able to view your work and earnings history (which is important—your benefits are based on that, and you want it to be accurate), and you’ll also get an estimate for your benefits at various claiming ages. Add those numbers together and see what you get. How does that compare to the amount of money you’re bringing in now, and will it cover the bills and then some for the future? If not, seek the help from an annuity expert to see if an income annuity could help.

Next, live within your means. A few other suggestions include not putting extra payments toward the house, especially if you have a low interest rate. If you’re able to pay the mortgage, just keep doing what you're doing, and stash away any excess money for your future. The equity in your house is important, but that money becomes illiquid when you put it towards your mortgage, and you may want to focus on assets you can easily tap into because one crucial account you’ll need, for now and in retirement, is an emergency fund.

As for your cars, now may be a good time to sell. The current auto economy is a seller’s market, quoted by Ford, and you may be able to sell them for a higher price now than in a few years when interest rates jump and supply chain issues are less of a problem.

Also, consider reviewing your 401(k)- asset allocation. Even if you’re not aggressively invested, it may still require a review. Bond values are not too hot these days and riskier investments can lose money. If you’ve tuned into the news at all, you’ll likely see that the stock market has been hit hard lately, with inflation and the war between Ukraine and Russia, you may want to find a financial professional who can offer you safe strategies to "stop the bleeding" in your accounts ASAP.

Finally, be conscientious of your spending habits and how they affect your savings. Money is a very personal topic, and everyone approaches it differently based on how they view it, which may be the result of how they were raised or what they saw happen to their parents, their grandparents, or their peers during major financial events (i.e the 2008 housing crisis). Savers may always feel a reluctance to spend and spenders might find trouble fighting the desire to splurge, but small, meaningful changes are possible.

At Summerlin Benefits Consulting we help clients protect the assets they have and prepare for the future with what they have saved.

Is U.S. Recession Arriving in 2023 or 2024?

Fri, 04 Nov 2022 17:13:49 GMT

As the world waited for the Federal Reserve to deliver its third “jumbo” interest-rate hike, Bridgewater Associates founder Ray Dalio shared a warning for anybody still hanging on to the hope that beaten-down asset prices might soon bounce back.

In Dalio’s estimation, the Fed must continue to substantially raise interest rates if it hopes to succeed at taming inflation. Because of this, and other factors like the ongoing war in Ukraine, Dalio anticipates that stocks and bonds will continue to suffer as the U.S. economy likely slides into recession either in 2023 or 2024. When stocks and bonds suffer, so do many retirement “nest eggs”. This, combined with the rising cost of goods and services, makes it necessary to really take a good look at spending and saving habits.

Fed Chairman Jerome Powell has pledged that the central bank will do everything in its power to curb inflation, even if it crashes markets and the economy in the process. Dalio addressed this by stating, “…the only way the Fed can successfully fight inflation is by doling out economic pain.”

In the U.S., inflation has eased slightly after hitting its highest level in more than 40 years over the summer, but it’s not the true reprieve that everyone hoped for. Financial markets were sent into a tailspin recently as elements of “core” inflation, like housing costs, appeared more stubborn in October than economists had anticipated. The ongoing energy crisis in Europe has led to even more severe increases in the cost of everything from heat to consumer goods.

Unfortunately, some might say that increasing interest rates are actually doing more harm than good to our financial assets, investments, and other property assets like real estate.

Simply put, when interest rates rise, investors must increase the discount rate they use to determine the present value of future cash flows, or interest payments, tied to a given stock or bond. Since higher interest rates and inflation are essentially a tax on these future revenue streams, investors typically compensate by assigning a lower valuation. That’s what makes the overall financial markets rise and decline, together.

Dalio’s recent warning was clear. He, along with many economists, expects that stocks will endure more losses, but that the more immediate area of concern is actually the bond market.

In September, the Fed set forth a plan to double the pace at which Treasury and mortgage bonds will roll off the central bank’s balance sheet. “Who is going to buy those bonds?” Dalio asked, before noting that the Chinese central bank and pension funds around the world are now less motivated to buy, partly because the real return that bonds offer when adjusted for inflation has moved substantially lower.

So, what can Americans do to help themselves counteract this ongoing financial volatility, as both stocks and bonds continue to lose value?

Now is a very good time for people to start considering alternatives to bonds. One such alternative, called a Fixed Index Annuity (FIA), is considered to be a “safe money strategy” because of the manner in which an FIA protects consumers’ savings and growth in down markets, while still achieving a reasonable rate of return over time. Annuities can also generate more income than bonds of similar maturity purchased at the same time. And because annuities aren’t priced daily in an open market as bonds are, they can be better than bonds at holding their value while generating a more predictable cash flow.

Additionally, retirees are encouraged to have some cash on hand so as to avoid tapping into their investment portfolio during market volatility, so retirement savers often find value in the fact that accounts like Fixed Index Annuities provide just enough access to their cash (typically allowing a 10% free withdraw yearly) to ensure liquidity needs are met during turbulent times.

In closing, Dalio offered a humorous retort when asked to share his thoughts on where markets might be headed. “There’s a saying: ‘he who lives by the crystal ball is destined to eat ground glass’.”

No one knows what the future may bring but it is important to follow market trends and overall economic circumstances. Especially during uncertain times like we are in now, it may be wise to work with a financial professional who specializes in safety over risk, someone who can assess your portfolio and help you restructure in a way that makes the most sense for you.

We at Summerlin Benefits do this day in and day out with our clients. Call us today so that we can help walk you through your options in a simple, easy to understand way!

Florida makes the list of best states for retirement.

Tue, 25 Oct 2022 17:12:27 GMT

A comfortable retirement is a lifelong goal for people of almost any age, in any profession, and from every state.

But that isn’t to say retirement has equal value across state lines. Taxes, cost of living, and even climate give certain states an upper hand when it comes to retirement; the same income and investments can have much different values in different parts of the country. In this blog, we will be looking at a ranking of the most ideal states for retirement.

Before making any plans, we recommend speaking with a financial professional who can help you find the state that makes the most sense for your financial situation.

The value of working with a financial professional varies by person, however research suggests people who work with a financial professional feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

Best States for Minimizing Taxes in Retirement

If shrinking your tax liability is high on your list of priorities, a few states stand out. The winners on the list below either have no state income tax, no tax on retirement income, or a substantial discount on the taxes levied on retirement income. But that’s just the start.

While several additional states have no state income tax, the states that made the list also have favorable sales, property, inheritance, and estate taxes.

Alaska
Florida
Georgia
Mississippi
Nevada
South Dakota
Wyoming

f those seven locations aren’t ideal, consider the next tier of tax-friendly states. Tax benefits aren’t quite as high as those above, but they do stand out in one specific category: no taxes on social security income.

That’s not to say they don’t make up for it in other areas, however. Washington State, for example, has no state income tax, but does have a 6.5% state sales tax. Still, it’s always beneficial to avoid income tax when possible.

Alabama
Arkansas
Colorado
Delaware
Idaho
Illinois
Kentucky

Top States Favored by Retirees

While Alaska may have favorable tax policies, lounging in Anchorage may not be your idea of a relaxing retirement. To uncover where retirees actually want to live, let’s dive into another set of numbers.

According to the Federal Interagency Forum on Aging Statistics, six states are the standout favorites among the over-65 crowd. No other states surpass their density of residents over the age of 65:

Maine (20.6%)
Florida (20.5%)
West Virginia (19.9%)
Vermont (19.4%)
Montana (18.7%)
Delaware (18.7%)

Best Overall State for Retiring

Now, let’s compare. By cross-referencing the list of “Best States for Minimizing Taxes in Retirement” with our list of states most densely populated with retirees, we find that only one state makes both lists.

The Sunshine State offers favorable taxes, pleasant climate, and reasonable cost of living.

The Bottom Line

Wherever your retirement dreams take you, it’s important to keep the above in mind and make the right decision for your financial situation.

A financial professional can help you consider not only the tax implications of a move, but also other factors specific to your situation.

Not sure where to start? Summerlin Benefits Consulting can help. We have been helping clients across Northern Florida and Southeast Georgia since 2012. We would love to know what is important to you in retirement!

Financial Planning Steps to Take Before Retirement

Tue, 18 Oct 2022 17:07:14 GMT

The decade leading up to your retirement is one of the most critical periods for retirement planning. There are a number of financial planning issues to consider during this time period to help ensure a financially secure retirement.

1. Prepare a retirement spending plan

This is the time to take a hard look at how you plan to spend your time in retirement and how much your desired retirement lifestyle will cost. This can encompass a lot of things including your housing. Will you stay in your current house or perhaps downsize? Will you relocate to another part of the country?

You should also consider the types of activities you will be doing in retirement. Perhaps you will be doing a lot of traveling. This is the time to look at what you think you will be spending in retirement and to equate that to a monthly spending budget.  

2. Focus on Safety, as well as a reasonable rate of return over time

You might think this step is easier said than done with the state of the stock market these days, but believe it or not, there are investment options that protect the investor’s principal during market declines and offer a reasonable rate of return during market upswings. Summerlin Benefits Consulting specializes in “safe money strategies”, and we help our clients maintain safety of their existing nest eggs while still achieving growth over the rest of their lifetime.

3. Review your Social Security record

This is an ideal time to review your Social Security earnings record. It’s important to ensure that it is accurate and that nothing is omitted. The top 35 years of your earnings record are used in the calculation of your benefit. If you have less than 35 years’ worth of earnings then those missing years are added in as zero earnings, reducing your benefits.

The next 10 years’ worth of earnings will likely help increase your benefit levels. This is also a good time to begin thinking about when you will claim your Social Security benefit.

4. Plan for your retirement healthcare needs

One of the biggest expenses for retirees is the cost of healthcare. In their most recent estimate, Fidelity Investments indicated that a couple aged 65 in 2022 will need $315,000 to cover their healthcare costs in retirement. This does not include long-term care costs.

For most people Medicare will be their prime source of healthcare coverage in retirement. As you get closer to Medicare eligibility it is important to learn all that you can about how the various parts work.

While you are working, consider contributing to a health savings account (HSA) if you have access to one. These are medical savings accounts associated with a high deductible health insurance plan. Contributions to an HSA are made on a pretax basis, meaning earnings on the money grows tax-free. Withdrawals for qualified medical expenses are tax-free as well.

The beauty of an HSA for retirement is that the money in the account can be carried over from year-to-year if the money is not used. Money in the account can often be invested. The money can be used in retirement to cover the cost of Medicare premiums, any deductibles and a host of other healthcare expenses in retirement.

5. Inventory all sources of retirement income

It’s important to get a handle on all potential sources of retirement income before retirement. These may vary somewhat based on your individual situation. The list often includes IRAs, pensions, social security, real estate holdings, and annuities, just to name a few.

With annuities specifically, it’s a good idea to have a financial professional help you analyze the policy you have in force in order to clarify exactly what the income benefits are and how they will pay throughout retirement. Some annuities only offer a shorter periods that might not be long enough if you have longevity on your side. Some annuities have hidden fees, which can eat away at your earnings and future income availability.

Summerlin Benefits Consulting specializes in this field and can help you ensure you have the right annuity for you to achieve your income goals during retirement. When set up correctly, your annuity will serve as a good supplement to other sources of lifetime income, like social security and pensions.

6. Run retirement projections

As you calculate your retirement spending and review all of the resources that could be turned into income during retirement, this is a good time to begin running some retirement projections to see where you stand. There are a number of online retirement calculators that will let you run projections to see if your various sources of retirement income are enough to support your projected level of spending for your life expectancy.

If the projection indicates that the likelihood of outliving your retirement assets is low, that’s great. If the outcome is unfavorable, then it’s time to rethink your retirement planning a bit. Perhaps you will need to consider engaging the services of a financial professional, such as Summerlin Benefits Consulting, to help with this stage of your retirement planning.

This projection should be run at least annually as you approach retirement and begin to enter retirement. Things can change over time, and you want to stay on top of the potential impact on your retirement. If the results come up as unfavorable you may still have time to make some adjustments in your retirement planning strategy or consult your financial professional.

7. Formulate a retirement withdrawal strategy

As you head into retirement, it’s important to take all of the information you’ve gleaned from the steps outlined above to formulate an initial withdrawal strategy to fund your retirement spending needs. Which accounts will be tapped first? Your withdrawal strategy will depend upon a number of things including your tax situation, whether or not you have reached age 59 ½, and when you decide to claim Social Security.

Your retirement withdrawal strategy will evolve over time as you move through retirement and it’s important to revisit your withdrawal strategy on a regular basis in retirement. This is also something that your financial professional can assist with.

The decade leading up to retirement is prime time to get your planning in order as you move into retirement. But, if you are on the brink of retirement and are only in the beginning stages of your planning, do not fret. Summerlin Benefits Consulting helps clients through every step of their financial path leading up to and during retirement. Give us a call today and we can help you find the path that is right for you!

How much are you paying your financial advisor?

Mon, 10 Oct 2022 17:05:55 GMT

Many financial advisers charge fees based on how much money they manage on your behalf, and typically 1% of your total assets is the standard fee. It can be more or less than this based on the size of your portfolio. Regardless, you shouldn’t feel locked into this. There are options when investing in order to minimize the impact of fees in your growth modeling.

You can choose an investment advisor that charges based on a flat fee structure, for example. But there are also safe and effective money strategies for retirees that will eliminate fees all together for you. In fact, a fee free strategy is often preferable to retirees, when every penny you make in your portfolio becomes an essential part of your future income plan.

Flat Fee Modeling

Let’s begin by looking at the flat fee structure. This may make more financial sense if you have an account balance of $1 million or more under the management of your advisor. For example: If you have, say, $3 million to invest and you hire a financial adviser at a typical fee — 0.8% to 1% — that is going to cost you $25,000 – $30,000 a year. But a flat fee can often be far more affordable than that, says Kaleb Paddock, certified financial planner at Ten Talents Financial Planning. He says on a portfolio like this you might pay a little under $10,000 a year with a flat fee, which “would save them between $15,000 and $20,000 annually,” he notes.

In general, clients would do well to understand that percentage fees work well on smaller balances while flat fees are best for larger asset balances — and using the $1 million dollar threshold can be an easy way to draw a line in the sand for a client.

Now, consider this: If you rolled a $500,000 balance into your $1 million dollar account — and now had to pay a set percentage of the now $1.5 million balance — is it really worth it to pay 50% more (that’s more than $400 a month) just because you put more money into the account? Although the 1% fee is standard and normal, it does not align with the time, energy, and expertise required to provide you with financial services. It’s just too much to spend.

Many consumers don’t feel the cost of these fees until they start losing money.

If your portfolio value drops 20% during a market correction, has your adviser provided 20% less value? Percentage-based pricing is only affordable for both advisers and clients within a small portfolio range, say between $250,000 and $1 million dollars and even then, there may be a better “fee free” option for you to consider. Though the 1% assets under management (AUM) fee is normal it does not have to be your normal.

A Common Question: “Can I negotiate the percentage I pay my adviser?”

The short answer is yes. While a 1% fee may be common, advisers who charge based on AUM will often scale down from 1%. But should you have to pay fees at all?

Fee Free Modeling

One might think the only way to invest is to pay an advisor to manage your money. But, when you are paying fees, this fee is coming out of your nest egg, out of your growth/gains, and is going straight into your advisor’s pocket. This can affect your compounding growth over time. Some financial professionals, like Summerlin Benefits Consulting, practice “safe money strategies” that protect clients from losses and also eliminate fees.

You might be thinking “this is too good to be true”, so we will go a bit further into how exactly this works. Summerlin Benefits Consulting focuses on investment vehicles called Fixed Index Annuities (FIA’s). This type of annuity offers a reasonable rate of return over time utilizing a variety of steadfast market indices (like the S&P 500 for example). When these indices experience growth your FIA will grow based on the index values. However, during years where the stock market is in correction and/or certain indices are losing money for other investors, your FIA will be protected, and you will not lose any value during market declines.

With this approach, when utilizing a Fee Free model, not only is your savings and growth protected for you, but the financial professional is paid a commission by the insurance company holding your FIA, thus there are no fees taken out of the client’s account for the adviser or the financial institution.

In summary, you don’t have to pay large amounts of money in fees for a financial plan that is tailored to your retirement needs. And you can protect your assets along the way so that your money is always there when you need it. No fees mean a higher principal, reasonable growth margins, and therefore a solid nest egg for you in retirement or to pass down to your loved ones.

Laddering Annuities- A Strategy that may be of Interest to Retirees

Mon, 03 Oct 2022 17:02:23 GMT

Annuity laddering is a financial strategy of purchasing several annuities of lower value over a period of several years. When interest rates are low, laddering can offset the small returns from annuities by allowing the owner to stagger the end dates of the contracts.

What is Laddering?

Financial laddering is typically a method of investing in bonds and CDs, but it’s also a good financial strategy for maximizing the value of annuities.

Financial expert and Forbes contributor Matt Carey said, “Laddering spreads out maturities of different fixed income instruments so that you are consistently able to access some funds for liquidity, while simultaneously taking advantage of higher rates on longer-term instruments.”

So, it’s basically a way to increase the chance of earning more money when interest rates swing upward. You might, for example, open a new CD, invest in a different  bond or buy an annuity  every year for several years to get the best deal available under the economic conditions of the time period during which you make each transaction.

Those conditions include changing interest rates, which the insurance companies determine using factors that include your age and life expectancy, your age at the time of an annuity purchase and, more importantly, your age when payouts begin will affect the offer you get for an annuity.

Why This Strategy Makes Sense

Laddering annuities is meant to offset slow returns. There is a significant opportunity cost to investing in a long-term product when the market is performing poorly. This strategy serves to mitigate this loss.

Laddering is attractive to investors for other reasons, too. “The main benefits of laddering are spreading interest rate and reinvestment risk over time and getting short-term liquidity while taking advantage of longer-term rates,” Carey told Forbes.

This can be especially consequential when you’re talking about setting up your retirement funds, which should not be so rigid that your income can’t keep up with the increases in your cost of living.

In other words, you don’t want to tie up all your money in low-rate vehicles and forgo the opportunity to move it into investments that would perform better. At the same time, you don’t want to invest in hopes interest rates will go up only to see the rates sink even lower.

Different Ways to Ladder

A financial professional, such as Summerlin Benefits Consulting, can help you determine the best laddering strategy for your situation and may suggest one of the following methods.

Spreading Out Your Principal

Maybe you have a total of $500,000 to invest in annuities. You can use $100,000 each year toward an annuity purchase. This also allows you to invest just a part of your retirement savings to give annuities a try before tying up a large percentage of your savings.

Annuities With Different Surrender Periods

Another way to ladder annuities is to buy several fixed-rate annuities with different surrender periods. The surrender period is the amount of time you must wait to withdraw funds from your annuity without facing a penalty. If you do need to withdraw more than what is allowed in the contract, you will have to pay a surrender charge.

At the end of the surrender periods, you can withdraw your money without penalty as long as you’re at least 59.5 years old. Alternatively, you can move the funds to an annuity with better terms through a 1035 exchange. These exchanges are a way to trade in one annuity for another without tax consequences. The 1035 refers to the provision in the tax code that covers them.

If the annuity contract is as good as the offerings at the end of the surrender period, you can keep the annuity contract as is. Having several annuities with different surrender periods allows you to review the terms of each contract at the end of its surrender period and decide whether you could get better returns in another annuity.

Take Advantage of Different Features

You can also ladder various types of annuities. For example, you can invest some of your money into the purchase of fixed annuities while investing other funds into indexed or variable annuities. This allows you to have a balance of the advantages and disadvantages of each type. Each type of annuity has unique benefits and drawbacks — such as the reliability of predetermined interest rates on fixed annuities versus the less stable rates of variable annuities.

Increase Your Payments by Staggering Payout Dates

Finally, in addition to laddering the actual purchase of annuities, you can ladder when they will start paying you income, beginning at the age of 59 ½. The older you are when you start receiving the payments, the higher the payments will be. This is because life expectancy is one of the factors that determine annuity payout amounts. The longer your life expectancy, the lower your payments will be.

Hence, you’ll receive larger payments from a deferred annuity that doesn’t start paying out until you turn 75 years old than you would from an immediate annuity that starts paying you at age 60.

Where do I Begin?

You may be thinking to yourself, “Laddering sounds fine and dandy, but how am I going to figure out which strategy is best for me?” At Summerlin Benefits Consulting, it is our job to help you navigate through this process; we try to take out the guesswork for you. While each client’s specific financial situation may be different, our goals remain the same: protecting your principal, helping you obtain a reasonable rate of return, and keeping it simple. Call us today and let’s start protecting your money!

Interest rates have gone up again. Many are wondering how to protect their future.

Mon, 26 Sep 2022 16:57:36 GMT

For the third time in a row, the Federal Reserve said on Wednesday, September 21st it would raise the benchmark federal-funds rate – this time, by a 0.75 percentage point so that it hovers between 3% to 3.25% . Officials suggested this would not be the last time this year, and to expect the rate to jump to around 4.4% by the end of 2022.

The news may seem especially unsettling for retirees, as many are living on fixed incomes. Increasing the federal-funds rate is the Federal Reserve’s attempt to combat inflation, but many Americans are trying to do that themselves – while also handling the stresses of market volatility. In recent years the economic environment has felt unnerving at times for retirees, as well as retirement savers: market volatility has pushed 401(k) and IRA balances down, which has depleted many retirees’ “nest eggs”. Additionally, rising inflation has made everyday expenses such as groceries and gas much costlier.

The Federal Reserve said higher interest rates will also affect Americans in other ways, including a slowing economy and a rise in the unemployment rate.

Watch Your Spending

“The first thing to watch out for is spending”, said Kelly LaVigne, Vice President of Advanced Markets and solutions at Allianz Life. “Companies have tried to catch up by producing a lot of inventory and a slowing economy might make them competitive to sell their products with tempting prices,” he said – “those sales may be alluring, but retirees and retirement savers alike should be protective and curb any bad spending habits.”

When there is a downward trend in U.S. stock indexes, especially after the Federal Reserve’s latest announcement of increases, retirees should be saving all they can, but it’s hard because retirees savings is also at risk.

Americans may also want to take this time, if they can, to try to tackle any credit card debt as the rate hike will affect higher-interest debts.  Spending only cash when making essential purchases is a way to prevent credit card debt from getting even further out of hand during turbulent times.

Diversify Your Portfolio

Stock market volatility can be hard to stomach, especially for someone whose nest egg is tied up in at-risk investments, but retirees and near-retirees are often told to stay the course. We don’t want to have a knee jerk reaction, but in reality, we need to protect ourselves and our future. That includes developing and restructuring a retirement plan when it makes sense to do so. This usually includes balancing risk tolerance as we age and our time horizon lessens.

The “Rule of 100” is one good way to determine a healthy amount of risk in your portfolio: Subtract your age from 100 to determine the percentage of your portfolio that can be left in riskier areas, such as stocks and equities. For example, if you are 60 years old, it is a good rule of thumb to not have more than 40% of your investments at risk. The other 60% should be placed in a safe environment.

Take a Look at Your Retirement Income Streams

Now is the time for anyone in or near retirement to consider multiple streams of income if they haven’t already. For some Americans, that may simply be a retirement portfolio and Social Security benefits. For others, it could be a pension, or an annuity, alongside personal retirement savings.

Fixed index annuities (FIAs) are an ideal option, as they can provide a guaranteed income for life. An FIA is what we at Summerlin Benefits Consulting like to call a “safe money vehicle”, as it allows you to grow an asset (some portion of your overall retirement strategies) for the purpose of turning on income in the future, without risking it to grow it. It allows you to create your own future fund, with a defined monthly income benefit which can supplement social security and other retirement income sources.

While many retirees have re-entered the labor market as a way to bring in extra cash and preserve their investments, income planning can sometimes help prevent this “un-retirement” from occurring.

Seek Help from a Financial Professional

Retirees should take stock of how they’re feeling right now with the latest rate hike and keep it in mind if the Federal Reserve increases the rate again later this year. Look at where you are right now, remember what this feels like, and try to plan ahead. If you are not sure where to start, a financial professional can help you evaluate your goals to make sure you are on the right path. Retirees and other more mature investors, however, may want to utilize a professional who specializes in “Safe Money” strategies, so that they can ensure the advice they get relates to their current circumstances and needs.

At Summerlin Benefits Consulting we are Safe Money Experts. We believe that helping clients protect the money they already have will go a long way to helping them protect their futures as well. If you’d like help reviewing your options for retirement income protection and/or to discuss how to best plan your financial future, please feel free to call today for a no-obligation meeting.

Don’t let a volatile market burst your retirement bubble. Here are 5 useful tips!

Mon, 19 Sep 2022 16:52:09 GMT

Retiring is usually accompanied by celebration, but recent market volatility is adding a measure of doubt for those nearing or at the start of their retirement. That volatility, coupled with factors such as rising interest rates and high inflation, has many investors worried about their retirement funds and what they can do to weather the storm.

Over the past year, an estimated  1.5 million retirees  have re-entered the U.S. labor market due to such factors as more flexible work arrangements, rising costs and the inability to keep up while on a fixed income. Additionally, according to the BMO Real Financial Progress Index, 25% of Americans feel they have to delay their retirement plans, primarily due to disrupted savings resulting from increased prices and market instability.

During this period of extreme uncertainty, near-retirees may be second-guessing if now’s the right time to stop working. But a down market shouldn’t cause interference with or delay retirement. By following the tips outlined below, impending retirees can stay on track with their plans, retire with more confidence and reduce the effect of a down market on their retirement portfolio.

1. Re-evaluate your risk tolerance

Early in one’s career, there are opportunities to take relatively more risk—for instance, investing more heavily in stocks with higher growth potential and risk, or investing in high-yield bonds. In a well-diversified portfolio, risk should primarily be measured by volatility rather than its most intuitive definition—permanent loss.

If a diversified portfolio is tailored to individual needs and objectives, its riskier portions should be diversified to minimize the risk of total loss and the negative impacts of volatility. Generally, as individuals get closer to retirement, their portfolio’s makeup may change to ensure they’re able to recover if the market goes south.

At Summerlin Benefits Consulting, we like to use the “Rule of 100”: Subtract your age from 100 to determine the percentage of your portfolio that should be placed in risk-prone areas such as stocks or bonds. For example, if you are 65 years old, it is a good rule of thumb to keep only 35% of your portfolio at risk and place the other 65% in safer areas.

“Easier said than done,” you might be thinking. But, stay with me! There are investment vehicles, such as Fixed Index Annuities (FIA) that are designed to offer a reasonable rate of return during market upswings and protect your money during market downturns.

These “safe money strategies,” as we fondly call them at Summerlin Benefits Consulting, create a healthy balance between protecting what you’ve already accumulated while allowing room for future growth. Given the market’s current condition, it’s important to talk with a financial professional to determine how to adjust your portfolio to lower risk, or to simply ask questions if you’re unsure where to start.

2. Don’t put all your eggs in one basket

Unfortunately, no one can predict what’s going to happen in the market, certainly in the short run, regardless of your level of expertise. Volatile times provide individuals the opportunity to revisit and re-evaluate their portfolios.

Spreading your money out across several different types of assets can lessen the impact of a market downturn, since different assets usually respond differently to market shifts. When doing so, it’s important to ensure your portfolio includes diversified holdings across asset classes and styles of investing, investments that generate income and hedging strategies to provide downside protection. In other words, it’s ok to keep some of your holdings in brokerage accounts, while placing the rest in an FIA for example. That way, you achieve “True Diversification”.

3. Review your cash reserves

Uneasiness in markets can cause individuals to be uneasy about their overall finances. As such, individuals should assess how much cash they feel comfortable having on hand to meet basic needs and unexpected expenses in order to feel more confident when markets are uncooperative. Creating a budget system that tracks monthly expenses can help.

It is also beneficial to have investments that offer liquidity should you need extra cash in a hurry. With an FIA, for example, they typically allow for a free 10% withdrawal each year, which gives added security by having access to your funds. Your financial professional can help you calculate your liquidity in order to help ensure you are maintaining an adequate emergency fund throughout retirement.

4. Try not to be influenced by your emotions

Market volatility creates a stressful environment for anyone with money in the stock market. For those on the verge of retirement, emotions lead many to sell when the market turns down in an attempt to avoid losses and then buy again after the market recovers and they feel optimistic. But getting the timing of those two decisions right to avoid missing a net gain along the way can be difficult.

If you look at market trends for the last several years, you will see overall gains until just recently. Even though it’s best not to jump the gun and sell everything the moment the market turns sour, it may still be a good idea to move some of your market holdings into safer, less risky areas before losing any more money.

If you are nearing or in the middle of your retirement, it could be detrimental to lose any portion of your nest egg, as you won’t have time to make it back up. And, quite frankly, it makes good logical sense to have some of your money safe from declines regardless of the current market climate.

5. Plan, plan, plan—but be flexible to adjust when appropriate

From the start of one’s retirement journey until the end, having long-term goals and a solid plan can help ease stress to a degree and keep you on course. If you’re unsure what to do next, or if you don’t yet have a solid plan, consider talking with a financial professional. Closer to retirement, there may be appropriate changes you’ll need to make to your portfolio to reduce risk, but don’t worry, the financial professional can help walk you through this to determine the best course of action for your individual situation.

The road to your retirement may not be as smooth as you once anticipated. It’s important to remember that there are many ways to protect your nest egg. Summerlin Benefits Consulting believes in making things simple for our clients so as to ease some of the stress of retirement planning. With safe options, providing features like guaranteed lifetime income and long term care benefits, we help you find the path that is right for you so that you can focus on putting the celebration back into your retirement decisions.

How to be Prepared for Retirement With Less Than $500,000 in Savings

Mon, 12 Sep 2022 16:50:47 GMT

Let’s discuss retirement planning for the “average Joe”.

As an example, today we’ll use a 61-year-old teacher who plans to work 4 more years before retiring. With her teacher’s pension and her husband she can expect between $5,200-$6,000 per month in lifetime pension benefits. Let’s assume her husband is about the same age and between the two of them they have $300,000 in IRAs, Roth IRAs and her 403B as well as a small investment account and about $60,000 in cash. Combined they will also have around $3,000 per month in social security income (SSI).

Does this seem like enough? How prepared is this couple for retirement?

So, let’s also say they will have their house paid off in 3 years ad it’s worth about $275,000. Cars are paid off and they currently have very little debt. But other things to consider are perhaps the husband may not be able to work in his current job much longer due to health issues. He might actually need to retire before 65. The couple estimates that they will need about $45,000-$50,000 per year for retirement. They may also have to take care of one parent who is in their 90s.

These are all things that today’s “average Joe” might be facing as they enter retirement, right?

It’s easy to understand the concern they would feel about their security as they get closer to retirement, but at least this couple has a secret tool so many Americans wish they had: a pension outside of social security.

In this case, they have income sources and having that pension on top of social security is powerful. Quite frankly, the average wealth adviser would tell this couple they seem to be on track. But the next two to four years will be pivotal for them.

There are four contributing factors that greatly affect one’s retirement security- longevity, because the longer you live, the longer you need your money to last: the return rate on your investments, hard losses during market declines, and your spending. It’s pretty important, as you approach retirement that you take charge of your situation and take steps to help you live comfortably for the rest of your life. In short, take steps to make your money last.

So, how does someone do that? First, make sure you have gone over your spending and your estimated expenses again and again before you quit. List out every cost you think you’ll have in retirement, and pore over your current spending, such as analyzing your last few credit card statements.

You’ve mentioned how much you think you will need annually in retirement, but does that include taxes? Or healthcare, which only gets more expensive the older you get? In this example, if it is truly $45,000-$50,000 a year you’ll need, that’s great, but they must be sure of that before entering retirement, so they aren’t spending so much time worrying about paying bills.

It would also be smart to set aside some cash savings for emergencies, because unexpected things happen whether you’re retired or not. If you are only a few years from retirement like this couple, you should also consider increasing your contributions to your retirement accounts if you can.

Inflation is a big point to consider these days, and everyone should account for it in the decades to come. Social Security has a cost-of-living adjustment, although not everyone agrees it is as well-aligned with inflation of the goods and services older Americans spend their money on, but it still counts for something. If you have a pension, you should also check if it is inflation-adjusted, and if not, factor that into your future spending needs when estimating your expenses for retirement every year.

A financial professional can help you with this. Not everyone wants to work on a monthly or annual basis with a financial professional, but firms like Summerlin Benefits Consulting can go over these concerns with you and try to help you plan for the future. One thing Summerlin Benefits Consulting specializes in is fixed index annuities, which can be a great tool to establish supplemental income, prevent loss, and make your money last for life. These accounts can even help prepare you for future expenses like long term care.

Now, there is no right answer for when to claim Social Security, but it is important to consider all of the options. Waiting until you are older to collect can be a fantastic goal, but if it has to be taken a bit sooner, that would be OK too.

Longevity plays a huge factor in Social Security claiming strategies- people who don’t live much longer past 70 don’t get to enjoy the benefits they paid into all this time. Others use benefits from Social Security and fixed index annuities as a way to avoid tapping into their retirement savings, so that the money can continue to grow in an investment portfolio. Plenty of couples talk through strategies so that they’re maximizing their benefits for their personal situations.

Another good step is to try to estimate what you think your tax situation will be like in retirement versus now so you’re making the best decisions for yourself. Understanding what taxable income you’ll have from your retirement income sources will help with long term planning. For example, you don’t put money in a Roth if you expect to take it out in a relatively short period of time because it just doesn’t provide the same tax benefits to you. It’s often better to save your tax-free income for later down the road if you can.

Additionally, Indexed Universal Life Insurance is a great way to leave behind inheritance for loved ones and can also provide another tax-free income source that you can draw against in the form of a loan from its cash value.

At Summerlin Benefits Consulting, we specialize in safe money strategies that not only help retirees protect their money, but also make their money last for life.

5 Blunders to Avoid When Investing for Retirement

Fri, 02 Sep 2022 16:49:11 GMT

Blunder #1: Placing “Big Bets”

Few people would go to Las Vegas, put a big portion of their life savings on the table and make only one roll of the dice. While the reward for winning that bet might be huge, the probability of winning simply isn’t worth the risk of losing and the pain that would bring. Yet time and again, take the gamble, albeit not in such dramatic fashion.

The most common “big bet” often isn’t viewed as a bet at all. That bet is holding a large portion of your retirement savings in stock. Sure, you might like to play the market and think its prospects are good. But that may mean making investment decisions based on emotion, and that is likely not best.

Betting with your retirement savings can be tempting, especially if you feel the need to catch up on your retirement savings or if the person giving you the tip is someone you respect. But that is again mixing emotion and financial decisions, a potential recipe for regret.

Blunder #2: Not Knowing When to be Conservative

The phrase “conservative investing” implies a prudent and cautious approach with low risk and less volatility. It conjures up images of predictable income streams, the protection of principal and peace of mind. Many conservative investments can provide that and, in fact, might be the right decision for some investors or for a portion of their portfolio.

But “conservative investing” may not always be as safe and prudent as it sounds. For example, many investors associate bonds with safety. In the short term, bonds have been less volatile than stocks. But, you might be surprised to learn that over a long time horizon- 30 years or more- bonds actually have a higher volatility. This is because bonds have many risks.

One such risk is that their value can fall dramatically if interest rates go up. This is because bond prices and interest rates have an inverse relationship. For example, if you need access to your bond investments to pay for a wedding, help an adult child make a down payment on a home, deal with unanticipated home or medical expenses or if you simply want access to cash now, you could be faced with selling a bond below the price you paid for it.

With interest rates recently near historic lows, you should ask yourself: Do you believe interest rates are more likely to go up or down in the next few years? If you believe “up”, then you’ve just proven to yourself that bonds are not as low-risk as they appear to be.

A better alternative would be a fixed index annuity (FIA). We at Summerlin Benefits like to call FIAs “Safe Money Strategies,” because they protect your money during steep market declines and allow for growth during market increases. You get to have your cake and eat it too! Retirees also find value in the fact that FIA provide just enough access to their cash to ensure liquidity needs are met when they need it most. In other words, they have the freedom to help pay for that wedding or down payment!

Blunder #3: Falling for a Ponzi Scheme

Remember the Bernie Madoff scandal? Madoff masterminded one of the largest financial frauds in history, cheating the wealthy, charities, and everyone else he could. One of the reasons he got away with it for so long was that his firm was both the money manager AND the custodian of funds. His firm controlled the supposed “investments” he was making. There’s nothing wrong with that. It’s called a managed account and it’s what most wealth managers do as well.

However, many money-management firms don’t take the actual custody of the funds, but instead use highly respected third-party firms like large banks. That means the custodian maintains custody of your investments and is independent from your advisor. This helps protect you from fraud. So, while not all money-management firms that take custody of your funds are crooked, virtually all Ponzi schemes rely on controlling custody of your funds.

Do yourself a big favor right now: if your investments are managed by anyone other than yourself, make sure you know who your custodian is and that they are an independent, distinct, and separate entity from your money manager, whose control is limited to helping you make decisions. (That is often the case with brokers who use their firm as the custodian. Just be sure there’s separation.) Having a custodian won’t prevent your money manager from making blunders or mistakes, but it will restrict the money manager’s ability to make transfers and loot your account.

Blunder #4: Paying Excessive Fees

Many retirees end up paying excessive fees, often times without even being aware of it. This makes it less likely that they can achieve their own long-term goals. Fees can cost you hundreds of thousands of dollars over your lifetime. In addition to the obvious, out-of-pocket costs, the money unnecessarily spent on fees also loses the power of compounding returns, which can add up to significant amounts over a lifetime of investing.

Even seemingly small differences in fees can make a huge difference in the amount of money you end up with. For example, let’s assume you invest $1,000,000 in two mutual funds over twenty years without taking any distributions. Additionally, let’s assume they have an average annual return of 10%, but one has annual fees and expenses of 1.5% and the other, 2.4% (both are assessed at the end of each year.) All things being equal except fees, the one with the lower fees will put over $800,000 more in your pocket over time.

Blunder #5 Ignoring the Insidious Effects of Inflation

Right now, the United States is in an inflation spike. But, why does this matter to you as an individual? First, your personal inflation rate might be much higher. Let’s say you have a spouse who requires long-term care and you have three grandchildren who will be starting college over the next few years. You have promised to pay their tuition and fees. Because the cost of these services has risen much faster than other goods and services in the economy today, these expenses could have a large impact on your retirement nest egg. Second, even a small increase in inflation barely perceptible in our weekly or monthly spending can make a huge difference in spending power over time, even if not necessarily visible today.

So, whether inflation becomes an even more dramatic problem or is simply an ongoing, steady erosion of your purchasing power, you should prepare. A conservative, fixed-income investment strategy may result in slow and steady growth rates, but that’s not necessarily a bad thing; these investments will prevent you from experiencing the losses that put you far behind inflation.

Summerlin Benefits Consulting, Inc. helps people identify and combat these 5 potential blunders every day. We focus on safety in retirement planning and help our clients find the best strategies to match the financial goals that are most important to them.

Whether to Claim SSI or Withdraw from 401K

Mon, 29 Aug 2022 16:48:04 GMT

Consider what you might be giving up.

Recession fears continue to spike as major indexes are approaching bear market territory, after months of market volatility that have put a strain on retirees’ and pre retirees’ retirement portfolios.

Those at an age to claim Social Security may be thinking about claiming sooner than previously planned to give them a source of income and to give their portfolio a chance to recover some losses.

There is no right answer to when to claim Social Security. An individual receives 100% of the benefits they’re owed at full retirement age, which also depends on when they were born.

Retirees can begin claiming as early as age 62, but any time before full retirement age results in a reduced benefit. Individuals can also receive more than what they’re owed for every month they delay up to age 70. Benefits are based on a formula that factors in age and earnings history.

There’s also no right time to start withdrawing from a retirement account, or exact amount a person should take from these accounts every month. The 4% rule, which suggests individuals take 4% of their portfolio balance every year to stretch their money over their retirement, has been widely contested in recent years. Some experts state the withdrawal rate should be closer to 3% in an effort to make retirees’ money last their lifetimes. 

Market volatility and rising inflation has been a big concern for Americans of all ages, but for retirees it can be especially stressful as they tend to live on fixed budgets after leaving the workforce. Taking too much from an investment portfolio can trigger the sequence of returns risk, which is when a portfolio has fewer assets in it to grow when the markets rebound. Beginning Social Security too early, on the other hand, results in a permanently reduced benefit for the rest of one’s lifetime. 

Retirees might want to opt for taking from their 401(k) plans instead of Social Security, said Larry Kotklikoff, an economist and founder of Economic Security Planning, which has a Social Security analyzing software called MaxiFi Planner. During a  Barron’s Live event , Kotlikoff said taking Social Security early to keep your investment portfolio intact, when adjusting for risk, can generate a negative return. Social Security is also inflation-protected, since there is a cost-of-living adjustment, which is a bonus for retirees whether they’ve begun claiming or not. 

There’s certainly interest in taking from a 401(k) in an effort to postpone Social Security benefits. In a study about a 401(k) bridge option, which is when investors use assets from their retirement accounts equivalent to Social Security benefits so that they can delay claiming, more than a third of people who were given information about this option chose to try it. This survey, conducted by NORC from the University of Chicago and the Center for Retirement Research at Boston College, was likely the first time these respondents have heard of a “bridge,” and if there were more exposure to this option in retirement accounts, more Americans may choose it in their own retirement journeys, says Alicia Munnell, director of the Center for Retirement Research at Boston College.

Of course, waiting to take Social Security isn’t always the best option either. One of the many factors retirees should consider when deciding when to claim includes medical history and status as well as longevity – someone who only expects to live to their mid-70s wouldn’t enjoy the benefits they worked hard for if they only started claiming at 70. In other instances, people may use Social Security as one component of their retirement income strategy, pairing it with annuities or a pension, and would rather their retirement savings vehicles, like a 401(k) or an IRA, continue to grow for the decades to come.

Another great option to consider is a fixed index annuity. In a fixed index annuity, a portion of your money can be set to grow with the index of the market, but never risk loss! Fixed index annuities help both savings and benefits last longer. Ensuring an experience of lifelong savings and income which will retain its buying power both now and in the future.

At Summerlin Benefits Consulting we want to make sure your money is safe in this turbulent time. Our team of advisors will work with you to figure out the best vehicle for protecting your retirement nest egg, so that you can feel confident no matter what happens in this bear market.

Why cash is an important part of your retirement plan

Fri, 19 Aug 2022 16:46:47 GMT

Retirement savers are often told they’ll see a greater return in their retirement assets if they invest it – and that may be true – but it’s important to prioritize some cash in a retirement plan as well.

For those close to retirement, consider keeping a portion of your retirement plan in cash – whether that be in the portfolio itself, in the bank, or in another safe retirement account like a fixed index annuity.

Bank and money market accounts do not typically generate the same type of returns as investments, though when the stock market is in decline, some investors may argue that safe money with low returns is better than losing money. Investing in equities can be an important piece of the puzzle while you are younger and planning for future retirement income, as stocks and equity funds create large returns sometimes over time.

But there are instances – like right now – when more mature investors, especially those that are already retired, could really benefit from having some of their money placed safely AWAY from the volatility of equities, stocks, mutual funds, etc. In fact, some more mature investors find that Fixed Index Annuities, especially those with lifetime income benefits, can serve as a very good middle ground since they tend to grow at a more reasonable rate of return than a bank account or money market account, during years when the stock market is doing well but they do not lose value during market declines.

As the saying goes, “cash is king.” That’s not always true when it comes to preparing for retirement, but having some cash on hand does allow retirees the opportunity to avoid tapping into their portfolio during market volatility. Retirement savers often find value in the fact that accounts like Fixed Index Annuities can sometimes provide just enough access to their cash (typically allowing a 10% free withdraw yearly) to ensure liquidity needs are met when they need it most. Retirees may also be stressed to see their investment balances dropping week after week as major indices and sectors across the US stock market suffer from the current volatility and an FIA can alleviate that stress as well, since it will not lose value, even in times of investment strife.

Since taking money out of an investment portfolio and converting it to cash when it’s on the decline can provoke the “sequence of returns risk,” an FIA can provide a better way to liquidate for safety while still maintaining some market growth. This means, when investors are suffering from deficits in their portfolio, they can still maintain a reasonable rate of return over time on some of their money using an FIA. Of course, people who do need cash in retirement should withdraw from their portfolios- albeit conservatively. Having cash on hand in the bank, or receiving a cash payout or income benefit from your Fixed Index Annuity, can help avoid excessive withdrawals from other investments.

If the thought of riding out a down market sounds daunting, safe money strategies, like a fixed index annuity can really help. They can provide cash access and can also be an ideal tool to supplement other income sources like social security income and pensions.

There’s no one set amount of money that should be kept in cash – the answer depends on individuals’ personal circumstances and comfort level. One rule of thumb is to keep about a year’s worth of living expenses in cash, which could be drawn against when portfolios are riding a rollercoaster investment market. During these times, for many people, cash can be kept safe, achieve growth, and last a lifetime with the help of a fixed index annuity through Summerlin Benefits Consulting.

Summerlin Benefits Consulting has helped many people determine what type of strategy makes sense for them and their families and we can help you too!

Can you guess how much the average working boomer has saved for retirement?

Fri, 12 Aug 2022 16:46:01 GMT

It is no secret that there is a retirement crisis facing Americans.

In a recen t  survey conducted on behalf of home financing and real estate website “Anytime Estimate,” Ameri cans were surveyed on how much, or little, they have saved for retirement, and the results were not pretty.

Less than half of those surveyed have saved $100,000. The median income in retirement is $40,000, so this savings is not even close to being enough. One out of every six have saved absolutely nothing. One out of three are currently making no contributions at all. One might discount these statistics by saying, “it must be young people who are contributing to these numbers," but that is not the case. And if it were, at least young people have decades to make up the ground. Boomers do not.

Respondents who are still working, with a median age of 60, have average savings of around $112,000. One quarter of those surveyed, and 30% of millennials, said they were planning to rely on “cryptocurrencies” to finance some of their golden years.

Good luck with that! This may be hard to do if the crypto bubble continues to deflate at its current rate.

Probably the saddest part of the survey was that around 80% of people expect their standard of living to decline in retirement, while 10% feared they wouldn’t be able to retire at all. What is sad is that these people are obviously well aware of the problems they face but may not know the right steps to take.

Financial professionals, like those at Summerlin Benefits Consulting, help people determine how they can combat this retirement crisis, regardless of their age. It is never too early or late to get help.

For those who are young, the obvious answers are to save more, save earlier, and invest better- which usually means investing in long-term assets like stocks and keeping your costs low. But we all know how volatile the stock market can be, so even time is not always a guarantee of a healthy retirement.

Those who are older don’t have the luxury of time at all, and in most cases, they will need to rely on Social Security providing the bulk of their retirement income.

The Social Security dollars forcibly extracted from your paycheck have been poured so far this year into bonds paying interest between 1.625% and 3%. This, at a time when consumer price inflation is running at nearly 9%.

Las year FICA dollars were blown on bonds paying just 1.4% interest, and in 2020 less than 1%. So, large chunks of that money have already gone out the window.

No wonder Social Security is in a deepening financial crisis. The fund is invested early in low-paying U.S. Treasury bonds. Since the early 2000s, the fund has earned an average return of 3.8% per year, enough to increase an investment by only 80%. This is minimal compared to the return that other countries are seeing from their social security or “future” funds.

If you’re thinking that sounds like an unwise investment policy, you’d be right. But it seems like Washington won’t be making moves to change the policy any time soon.

Social Security is a “defined benefit” rather than a “defined contribution” retirement plan, so your benefits aren’t directly tied to the investment returns from the underlying assets. Instead, your benefits are set by law- but are supposed to be financed by underlying assets. The poor investment returns mean those assets are running out. This is why many people are talking about cutting Social Security benefits.

Heaven forbid they should improve the returns.

This is why many Baby Boomers have utilized products like Fixed Index Annuities (FIAs), which provide guaranteed income for life. An FIA is a safe money vehicle, where you can grow an asset (some portion of your overall retirement strategies) for the purpose of turning on income in the future. It allows you to create your own future fund, with a defined monthly income benefit that will work kind of like a pension, which can supplement social security and other retirement income sources. Boomers who haven’t set aside a huge amount of liquid savings can at least use some of what they have saved for this purpose, and it is a really good way to fill that void.

At Summerlin Benefits Consulting we are Safe Money Experts. We believe that helping clients protect the money they do have will go a long way to helping them protect their futures as well. If you’d like help reviewing your options for retirement income protection and/or to discuss how to best plan your financial future, please feel free to call today for a no-obligation meeting.

Bond Alternatives May Be a Good Idea Right About Now

Fri, 05 Aug 2022 16:44:57 GMT

Most people think bonds are safe, but in today’s volatile climate, they are not. Interest rates are poised to rise even further, which is bad news for bonds. Investors seeking a measure of safety along with the possibility of a return have a few choice alternatives to consider instead.

In the not-too-distant past, bonds were portrayed as a secure part of a portfolio – a safer investment than stocks. Investors looked to government bonds as the bedrock of a stable retirement income. But bond yields are extremely low these days, prompting some investors to seek alternatives. This has sparked renewed interest in various investments that can generate passive income and stability.

Most people don’t remember what a bad bond market looks like because we haven’t seen one for 30-plus years! We’ve had steadily declining interest rates since the mid-1980s. Bond prices move in the opposite direction of interest rates. If interest rates rise, bond prices fall, and vice versa. The Federal Reserve has raised interest rates in 2022 and is slowing its purchase of bonds, so the climate is likely to be less favorable for long-term bonds going forward. And with bonds paying historically low interest rates, long-term bonds falling in price could mean a low-yield investment for years.

The problem with bond mutual funds

Bonds issue at par value of $1,000, and you are in effect loaning a corporation or some form of government your $1,000. There is a length of time you have to leave it there, until it reaches what is known as its maturity date, which can range from one year to 40-plus years. There will be a set interest rate for that length of time. So, as interest rates rise and bond prices fall, you can hold until maturity and get your $1,000 back.

A huge issue is that most people don't hold their bonds directly anymore; rather, their bonds are in mutual funds. And within mutual funds, there are two problems: There is no set interest rate, and there is no maturity date. So when interest rates rise and your bond prices fall, there is no date in time when you will get your $1,000 back.

Three other investments to consider instead

To avoid getting trapped while the outlook on bonds is not all that bright, here are some alternatives that can provide more security and a decent rate of return:

Fixed annuities and fixed index annuities

Fixed annuities , sold by insurance companies, offer long-term tax-deferred savings and monthly income for life. They involve an upfront payment by the owner, will grow annually at a fixed rate, and can provide either a lump sum pay out to the policy owner at the end of the policy term or a series of guaranteed income distributions from the insurance company. The insurer guarantees the owner the fixed interest rate on their contributions for a specific period of time. The value of the owner’s principal will grow based on interest applied each year.

You can also choose a fixed index annuity, where your principal is protected and the return is tied to a market index, like the S&P 500. If the market is down, the worst you can do is zero (zero is your hero!), and it will have a participation rate on the upside. So as an example, if we have a 80% participation rate and the S&P 500 is up 10%, then 8% would be credited to your account on your anniversary date and that new value is locked in and won’t drop below that value because of a market decline. In other words, your principal and your gains are protected each and every year.

We at Summerlin Benefits Consulting help our clients use fixed and fixed index annuities as “safe money strategies” because of the manner in which they can help reduce risk by protecting consumers’ savings and growth against down markets, while still achieving a reasonable rate of return over time.

Annuities can also generate more income than bonds of similar maturity purchased at the same time. And because annuities aren’t priced daily in an open market as bonds are, they can be better than bonds at holding their value while generating a more predictable cash flow.

Buffered or defined-outcome ETFs

Buffered or defined-outcome exchange traded funds (ETFs) offer investors protection from severe dips in the stock market. They are seen as solid alternatives to bonds because they allow more access to various investment products. In many portfolios, bonds traditionally served as a ballast, helping offset the risk of equities. But with interest rates so low, buffered/defined outcome ETFs are replacing bonds in some portfolios.

These ETFs set an exact percentage in losses – 9%, 10%, 15%, 20% or 30% – that shareholders are protected from over a 12-month period. In exchange for limiting an investor’s downside, some of the gains are capped at 10%, 15% or 20%.

Most buffered/defined outcome ETFs are linked to the S&P 500 Index and use flexible exchange options (FLEX), which allow both the contract writer and the purchaser to negotiate different terms.

Real estate investment trusts

This is the best-known bond alternative, created in the 1960s to provide investors with a way to invest in funds that own, manage and/or finance income-generating real estate. The REIT investment space is enormous; investors can target specific real estate segments and diversify across different segments. They get 90% of the profits.

REITs are tax-advantaged as dividends and trade like stocks. And unlike bonds, which pay a fixed amount of interest and have a set maturity date, REITs are productive assets that can increase in value indefinitely. Many REITs have dividend yields between 5% and 10%. Be careful though – many REITs are not liquid if you need access to your money in the short term. If you are looking for a strategy that allows you to have access to your money, fixed index annuities may be the better route to go.

Alternatives to bonds do offer higher yield potential. But remember – that comes with risk. It’s wise to work with a financial professional to go over your options as you assess your portfolio, differentiate between safe and risky assets, and help you structure your portfolio in a way that makes the most sense for you. We at Summerlin Benefits do this day in and day out with our clients. Call us today and we'd be happy to go over your options with you!

Declining Retirement Confidence: What Can You Do to Gain Back Some Confidence?

Tue, 26 Jul 2022 16:43:54 GMT

According to a recent publication by SHRM, there were several recent employee surveys conducted which show that retirement confidence is down, with fewer workplace savers seeing themselves on track to retire when they had originally planned.

In fact, workers' outlooks on retiring have seen a reversal from the last few years where confidence remained steady and even increased.

Most workplace savers now say they're unsure about the economic outlook, given  an inflation rate that rose 9.1 percent year over year in June . Adding to their uncertainty was a steep decline in stock market values this year, with the  benchmark S&P 500 index plummeting nearly 20 percent  from January through May before improving a bit to notch right at 18 percent in 2022 as of the end of July.

Declining Retirement Confidence

Overall, 63 percent of savers feel they are on track for retirement, down from 68 percent a year ago, according to BlackRock's seventh annual Read on Retirement survey, conducted between March 25-April 30, 2022.

Inflation is the main driver for the decline in confidence among more than 1,308 respondents who participate in their employer's 401(k) or 403(b) plans, with 87 percent of workplace savers reporting that they're concerned about inflation affecting their retirement.

It was also found in this survey, that older workers may have a more realistic view of retirement expectations. Nearly half of Baby Boomers said they'll need to save between $1 million and $3 million for a comfortable retirement, at least four times the amount that those from Generation Z anticipate needing.

Delayed Retirements

Meanwhile, almost half of those who planned to retire in 2022 are reconsidering or have put that plan on hold , according to a June survey of 1,000 U.S. consumers by software-maker Quicken Inc. And, workers ages 58 to 74 who were not planning on retiring in 2022 are now considering delaying retirement even further.

Among those who are considering delaying retirement, or "unretiring" and returning to the labor force, the changing economic climate is top of mind. Respondents cited the following factors as reasons they will need to continue working:

1. Inflation pushing up costs (cited by 65 percent).
2. The decline in the stock market (45 percent).
3. Increased interest rates (30 percent).

Even before this year's economic challenges, however, retirement ages had been rising. In 2021,  the average retirement age for men in the U.S. was 64.7 , roughly three years later than in the mid-1980s and early 1990s, according to a July report by the Center for Retirement Research at Boston College. The retirement age for women in 2021 rose to 62.1, up dramatically from 55 in the 1960s.

Major drivers for delaying retirement in recent decades, the researchers noted, include the shift from guaranteed defined benefit pensions to defined contribution 401(k)s and the decline of retiree health insurance, as well as extended life spans and the desire to remain active and engaged.

Protecting Your Retirement Savings

At Summerlin Benefits Consulting we know that today’s more mature employees want help with saving for retirement and it’s important that employers provide resources and tools to help these employees make informed decisions about their long-term savings.

For example, employees in their mid to late 50’s should be allowed to do an In Service Transfer from their 401k to a safe external environment, like a Fixed Index Annuity. This will allow the employee to protect the savings they have built over the years, so that they won’t experience the impact of major losses right before reaching retirement age, which could cause them to have to work longer than anticipated.

More mature investors, even when still employed, should shift their retirement savings focus to Safety 1st. Protecting the money you already have and getting a reasonable rate of return over time without any more losses will help you be better prepared by the time you do retire.

Want To Live to 100? Longevity is a Hot Topic for Today’s Retiree!

Fri, 22 Jul 2022 16:41:39 GMT

You have two choices when pondering how- and whether- you will live a long, healthy life.

You can either apply the latest findings of longevity research to boost your odds, or you can eat what you want, forgo health and wellness habits, and figure it’s mostly genetics anyway. Most of us choose the middle ground. We don’t throw caution to the wind, but we don’t limit our caloric intake and turn into diet-obsessed ascetics either.

If your goal is making it to 100, more power to you. It’s a crapshoot! Only about .004% of the current global population has done it.

These lucky few are not easy to categorize. Some regularly enjoy alcohol, fat or sugar (in moderation). Researchers theorize that daily routines- even seemingly unhealthy ones like eating a dish of ice cream every night- might provide a beneficial stability.

A positive attitude helps them wave off irritants and overcome setbacks. They don’t worry about what they can’t control. And they derive joy from everyday experiences like watering plants or watching clouds cross the sky.

“People who live longer tend to be optimistic and manage their stress well,” said Tom Perls, M.D., a distinguished professor of medicine at Boston University School of Medicine. “And optimistic people tend not to be neurotic, where they internalize their stress rather than let go of it.”

Founder and director of the New England Centenarian Study, Perls marvels at the resilience of individuals who reach an advanced age. He notes that a surprising number of people who approach age 100 live productively despite serious health ailments.

“About half of them have a history of aging-related disease like heart disease,” Perls said. “Maybe they had a stroke at 85 or have a history of cancer or diabetes. What's remarkable is how they’re still living independently in their mid 90s. Normally, such diseases would carry a higher mortality risk. But, these individuals have a level of resilience that mitigates these diseases.”

Like most longevity experts, he also credits good genes. “Genetics is playing an incredibly strong role at the very oldest ages,” he said.

Perls offers a free online resource, the Living to 100 Life Expectancy Calculator, to help you assess your odds. The calculator can be found at Livingto100.com. After creating an account, you can answer a few questions, and the results include a life expectancy calculation along with personal feedback and recommendations. An exercise like this can also help you establish necessary financial plans for a long, healthy life!

For decades, we’ve known that good nutrition, regular exercise, and maintaining a healthy body weight can extend our lifespan. And it’s no secret that socially engaged folks with an active mind (keep doing those crossword puzzles) and a rosy outlook on life can boost their longevity.

But we don’t always stop to think that longevity requires a good, solid financial plan as well, and lifetime income can sometimes be a key component to plan for.

There are new and exciting fields of study helping us live longer, like one that involves biomarkers of aging. Using various tests and measurements, researchers seek to contrast one’s biological age from their chronological age.

“Different people appear to age at different rates,” said Dr. Matt Kaeberlein, professor of laboratory medicine and pathology at the University of Washington in Seattle. “But we don’t understand why. So we’re developing biomarkers that are predictive at an individual level. These tools can measure the efficacy of different interventions that might be worth watching” to increase lifespan.

If someone’s biological age is 70 even though their chronological age is 60, for example, medical experts might suggest ways to slow their biological clock. Such interventions can include more exercise, better nutrition or even drugs that target an individual’s predisposition to disease.

Again, actions to sustain longevity are great, but require a financial plan as well. Being informed of things you can do, like how you exercise, what you eat or drink, or what your optimum weight should be is key, but the biological aging process will impact optimal lifestyle changes also.

So do what it takes to be physically and financially healthy for many years to come.

At Summerlin Benefits Consulting, we specialize in financial well-being, no matter how long you live. Helping our clients focus on enjoying their lives without financial stress is a way that we can help people every day.

Millennials have been conditioned to think that stocks only go up

Fri, 08 Jul 2022 16:40:48 GMT

Here’s a puzzler for you.

What are the odds that you’ll be better off over the next 10 years if you hold your retirement portfolio in boring Treasury bills, money-market funds or certificates of deposit rather than if you hold it in a diversified, low-cost U.S. stock index fund?

If you think “no chance,” or “that’s crazy,” sorry, but you have to stay after school.

If you think “1 chance in 50” or “1 chance in 20,” ditto.

Based on the historical record the correct figure is about 1 in 6. At least, that’s how often deposits have beaten stocks over any given 10-year period since the 1920s. Deposits won more than 15% of the time. (With no volatility, either). And if you just look at 5-year periods the odds deposits rise still further. They were a better investment than stocks in more than 23% of 5-year periods. Nearly 1 time in 4.

Yikes.

Oh, and this is looking at the S&P 500 index. Even low-cost index funds will underperform the actual index because of costs, and nearly every large U.S. stock fund with an actual manager will do even worse than that.

The goal here is not to panic anyone, nor to get people to sell their stock funds, nor to predict doom and gloom for the U.S. market. This is simply the historical record and one that should be taken seriously, since history does tend to repeat itself over time.

According to the ancient Greek philosopher Heraclitus, “no one can walk through the same river twice, because the second time it’s not the same river and you’re not the same person.” Boy, has this ever been more true than when applying it to financial history and today’s US stock market trends?

Sometimes, especially for more mature investors, it may feel a little bit like de ja vu. For younger investors, we just don’t know how far the next 5 or 10 years will resemble the past, but we do know that equities, stocks, and other securities can lose value- powerfully and swiftly. So, it makes sense to practice some safety in your portfolio no matter what your age.

Let’s call this a dose of realism to younger investors saving for their retirement who haven’t yet experienced a major market decline in their adult lives. Many of today’s investors have been subconsciously conditioned by decades of Federal Reserve manipulation to think that when it comes to stocks the only way is up. And that is just not true.

These thoughts were provoked by a staggering new survey from money management firm Natixis. Dave Goodsell, executive director of the Natixis Center for Investor Insight, says the median U.S. millennial investor EXPECTS their investments to earn 20% a year, on average, over the long term.[1]

No, really. And those aren’t even “nominal” returns. Those are actual returns that the millennial generation really expects to receive on top of inflation.

And across all age cohorts, he adds, the median U.S. investor expects average returns of 15% a year. Again, on top of inflation.

The actual historical average? Over the past century or so, large U.S. stocks have beaten inflation by less than 7% a year a year—over the long term. To put that in context, it means that over a 20-year period, today’s young investors are overestimating their total returns—thanks to compounding—by a factor of 10.

Goodsell stated in a recent interview that barely one-third of investors in their survey expect real returns averaging less than 10% a year over the long term. Among millennials it’s barely one in 5.

No wonder, when millennials were asked to define financial “risk” in the survey, hardly any considered “losing wealth” (12%) or “not meeting financial goals” (13%). It is true that more than twice as many identified “volatility” as risk, but that contradicts their performance expectations for stocks and other similar investments, and this requires a reality check because if volatility doesn’t actually lead to a loss of wealth, or a failure to meet financial goals, do they truly see it as a “real” risk?

OK, so it’s just a survey. But even if these figures are directionally correct, vast numbers of retirement savers in their late 20s and their 30s are living in somewhat of a La-La land. In fact, the survey was conducted across more than 8,000 individuals in 24 countries.

So, what can millennials do differently with a more direct approach to tackling “real” risk?

Well, one strategy that millennials may not be considering but could benefit from, is a fixed index annuity. These fall into the category that we at Summerlin Benefits Consulting fondly call, “safe money strategies”. Fixed index annuities (FIAs for short) can help reduce risk by protecting the consumer’s savings and growth against down markets while still growing their money at a reasonable rate of return during up markets. Many people may believe the myth that fixed index annuities are only for seniors, however they can be beneficial to younger investors too!

Even though some millennials may want to pursue a more aggressive or riskier method of investing, some level of safety makes sense at all ages. And another benefit to a fixed index annuity is that it provides a set-it and forget-it approach. This can be an enticing factor, especially for millennials or more risk-adverse investors.

The good news, according to Natixis, is that growing numbers of young people are seeking out actual human advice and expertise in this area. About 70% of the millennials in the survey have tapped a human as their financial professional and only 6% relied solely on a “robo adviser.” In fact, only half of millennials surveyed are willing to place their trust in “algorithms,” which may be the best news of all!

Financial Professionals who specialize in safe money strategies for the younger generation will provide a great service for millennials who are seeking to truly diversify their portfolio and take a more realistic approach to plan for their future.

Summerlin Benefits Consulting serves all age groups. We focus on safety in retirement planning and help our clients find the best strategy for them in their current stage of life.

3 Ways You Can Profit from Stock Market Turmoil

Mon, 27 Jun 2022 16:39:54 GMT

Every crisis is an opportunity. The massive turmoil on financial markets so far this year is no exception. Here are three things that every middle-class American can do with their 401(k), IRA or other retirement plans, right now, to take advantage of what’s going on.

1. Move Some of Your Money Into a Fixed Index Annuity

Retirement accounts, such as 401k’s, IRA’s, 403B’s, and Thrift Savings Plans (TSP) are all taking a hit this year due to market volatility. As of mid-June 2022, major stock indexes like the S&P 500 have fallen over 20%, while funds like international developed markets and U.S. small-caps are down 19%.

When this does happen, and individuals start looking for safer strategies in their portfolio, there is a trend of consumers moving money into bonds. We have, of course, seen this occurring steadily during Q1 and Q2 2022. Unfortunately, due to changes in the Federal Reserve that are also occurring this year to offset inflation, the US Bond aggregate has fallen 13% in price and very long-term Treasury bonds are down as much as 33%. This means, bonds are not a safer approach and can actually open you up to a more immediate risk in some cases.

There is one “safe” approach for consumers who want to continue to grow their money when the US stock market is doing well but who do not want to keep losing during a Bear Market, like we are experiencing today. That approach is called a Fixed Index Annuity.

Not only can you roll over your employer sponsored retirement account and/or your individual retirement account into a Fixed Index Annuity, but you can often receive a signing bonus up front when you do so. Here’s what that would look like:
A qualified transfer of funds would take place with no taxation of any kind.
Your bonus is deposited day one to help offset losses experienced year to date in your previous account.
Your principal and the bonus will be immediately protected from market declines- as in, you will not lose any more money from that day forward.
Your principal and the bonus will earn compounded interest year over year so that it continues to grow at a reasonable rate of return over time.

Because Fixed Index Annuities grow based upon a specific market index, like the S&P 500 for example, when that index is doing well you will earn interest per its performance that year. And, in years where that particular index is not doing well, your values are protected by the insurance company- you will not lose money. These accounts are specifically designed to help consumers protect the savings they have during down markets while still achieving growth over time.

2. Rebalance Your “At Risk” Investments

Moving some of your portfolio into a safe money strategy like a Fixed Index Annuity would be step one to achieving True Diversification in your portfolio, but the next question would be- what to do with the funds that you choose to continue to keep in an at-risk financial environment.

There’s some good news hidden in a broad-based selloff: pretty much everything has gone down. So, if you came into the 2022 calendar year owning, say, too much in large company U.S. stocks, and too little in smaller company stocks, foreign stocks, real-estate investment trusts, etc. this could be a good opportunity for a do-over. Rebalancing assets now could be conducted free of charge or at least reasonably cheap, since pretty much everything (except commodities and energy stocks) is down.

It’s not perfect of course, because things have fallen different amounts and will likely continue to lose value for a while longer. But, in today’s economy, transitioning to a more conservative approach and taking advantage of lower costs along the way can often make good sense.

3. Create Legacy Funds for Your Children or Grandchildren

One simple way to take advantage of this market meltdown is to use the timing to set up that legacy fund that you’ve been wanting to establish for your children or grandchildren.

Opening a new savings or investment account for minor children in 2022 and depositing as little as $5,000 or even $1,000 on their behalf into some low-cost index funds could be a good way to leave a little bit of money behind for your loved ones that is pretty well positioned for positive growth from here on out. The long-term returns from the stock market averaged about a 5.5% compounding interest over the last 20 years, as have accounts like Fixed Index Annuities which tend to average somewhere between 3-6% compounded interest over time. Based on those numbers, a $5,000 gift today could be worth as much as $14,588 in 20 years’ time.

Again, every crisis is an opportunity to reevaluate your strategies and take action towards positive change.

At Summerlin Benefits Consulting , we help clients follow a simple 3-tiered approach in deciding their course of action during times like this. Always ask yourself if the strategy you are taking is:

(1) Good for Me Now. (2) Good For Me Later. (3) Good For My Family When I’m Gone.

Yes. In 2022 with our turbulent market, it is a very good year to restructure in order to try to take advantage of the circumstances. But more importantly, restructure now to protect the assets you have and help you achieve all three of these objectives going forward.

When should I take my Social Security Benefits? Well, the answer is different for everyone.

Wed, 22 Jun 2022 16:38:10 GMT

After contributing to Social Security for all of your working life, you might think that you should claim your benefit at 62 to get as much money out of the system as possible. While it’s true that you’re eligible to claim your benefit at 62, doing so could actually mean that you’re leaving money on the table.

Each year that you wait (up until age 70), your monthly benefit increases. So the longer you wait to take Social Security, the bigger your monthly check will be. And because you will lock in that higher benefit for the rest of your life sometimes the payout can be more in your favor over time.

So, how do you decide when to take Social Security? Many of us want to wait for the higher benefit amounts but we need a paycheck sooner and so the decision can sometimes be difficult to make.

Here are a few examples of when it might make good sense to wait.

IF YOU’RE STILL EARNING AN INCOME

Though you can start claiming social security benefits as early as age 62, individuals born in 1960 or later do not reach full retirement age (FRA) until age 67, and taking benefits before that age will reduce your benefits as much as 30%. You can use this Social Security Administration chart to find your personal FRA and benefit reductions for you and your spouse.

Regardless, if you haven’t reached your FRA and are still working, Social Security will dock your benefit if you earn more than $18,960 per year. This can be a big chunk out of your benefit so if you’re working, it may make sense to wait at least until your FRA to claim benefits.

IF YOU DON’T NEED THE MONEY IMMEDIATELY

If you’ve saved for retirement, you may be able to live off of those savings while you continue to let your Social Security benefit grow. Once you reach your FRA, your benefit will grow by 8 percent each year up until age 70, which can make a big difference in the amount of money you receive each month, for the rest of your life. One way to accomplish this is with a Fixed Index Annuity that provides lifetime income payments. Receiving income payments from your annuity when you retire might enable you to wait and take social security a little later.

Let’s say your FRA is age 66 and your monthly benefit is $1,000. If you claim Social Security at 62, you would receive $750 per month. But if you waited until you turned 70, your benefit would increase to $1,320. That means the difference of $6,840 per year for life. That increased Social Security benefit on top of your Fixed Index Annuity income payments might very well, set you up with more substantial income for life than you had even anticipated.

IF YOU’RE HEALTHY

Another reason to consider letting your Social Security benefit grow is if you think you might live a long time. When planning on living long, even if you are healthy you have to plan for the fact that healthcare expenses are subject to inflation just like other costs of living requirements. A higher Social Security benefit combined with an option like a lifetime income annuity can often be the perfect combination to help you offset inflation in your retirement planning.

On the flip side, if you have a serious medical condition or have been told that you’re at high risk for developing one, it may make more sense to take your social security benefits as soon as you’re eligible. But with that in mind, you may also want to think about longevity in your spouse and his/her income needs throughout their lifetime, because claiming your benefit early could reduce your spouse’s widow(er) benefit.

We often run into husbands who are trying to help take care of their wife after they have passed away. Frankly, this can be a concern for either spouse, but statistically women do tend to live longer than men. There's more info on this later in this article but ultimately yes, it would be good planning for the husband and/or wife to have a strategy in place that will help a surviving spouse ensure that he or she will not outlive your combined retirement savings.

A financial professional who specializes in retirement income strategies can help you determine what makes the most sense for your financial situation.

IF YOU HAVE A FAMILY HISTORY OF LONGEVITY

Knowing how old your biological parents and grandparents lived to be is another factor to consider. There are of course many environmental, lifestyle, and medical factors that could come into play; for example: Did you know that women just generally tend to live longer than men? Women who reach the typical retirement age of 65, are statistically prone to living for another 20 years or more while 65-year-old men’s average life expectancy is to live another 17 years. That means that without even considering family history, women need to prepare for higher income benefit payouts over their lifetime.

Because family history and other factors like the example above can give you a sense of your potential life expectancy, you can use that information to help you decide whether to start claiming your social security benefits sooner rather than later.

Another factor to consider is that a long life also means that the retiree is likely to face the expense of long-term care services. Whether it be in the form of home care, assisted living, or a nursing home, longevity requires more income later in life for many and this has become an essential part of planning for your future.

Based on a recent cost of care study conducted by John Hancock, for 2022 In-Home Care for just 6 hours each day averages $4,464 per month, Assisted Living averages $4,805 per month, and Nursing Home averages $7,874 per month. This can vary based on where you live and the care providers in your area but these general guidelines definitely illustrate how important it is to make a financial plan for your future.

Allowing your Social Security Benefits to grow as long as possible and pairing those benefits with another lifetime income arrangement like a fixed index annuity, may help you be better prepared to cover costs like this no matter how long you live.

At Summerlin Benefits Consulting, we help clients figure out things like how much income they will need, when to take social security benefits, how to complement those benefits with other lifetime income strategies, and much more.

How to Help Recession-Proof Your Retirement Savings

Wed, 18 May 2022 16:35:40 GMT

After the rollercoaster we've experienced these past couple of years, and the down market we’re experiencing thus far in 2022, it’s natural to wonder if you’re doing as much as you can to protect your retirement nest egg from stock market volatility.

Even when the market falls during economic turbulence, you have more power than you realize. You just need to "Take Action" which frankly, is the opposite of "Stay the Course". Let's face it. Most people reach a point in their lives when the course no longer makes sense. So how do we effectively make changes in our financial plan? These five steps can help to keep you on track during uncertain economic times.

1. TRANSITION SOME SAVINGS OUT OF THE MARKET

Investing in the stock market always comes with a measure of risk. In exchange, over time you’re typically rewarded with higher returns than those you’d get from savings accounts, CDs, and other comparable accounts. But sometimes the market dips and your portfolio takes a hit.

The question many people have is, "should I get out when the market begins to decline?" Not always and not everyone, but for a more mature investor- Yes. Absolutely. It is a very good move for you to make at least some of your money safe before and especially during a market decline.

If you are over-invested and carrying too much risk for your age, this could mean that you might not have enough time to recover from a major market decline before you need to use your savings. For example, what would happen if a recession depleted a big chunk of your savings and then it took almost 10 years to recover as it did during The Great Recession of 2008?

The Great Recession stands as a cautionary tale about risk, investing in only what you know, and the dangers of “staying the course”. While the specific causes are still debated today, the culprits behind that economic collapse were a combination of several occurrences like:

the subprime mortgage market
a swift increase in interest rates by the Federal Reserve
a credit crunch and the significant drop in bank lending
risky Wall Street behavior
toxic securities, packaged and repackaged, causing the value of the investments to nosedive

Unfortunately, in 2022 we are experiencing several of these occurrences again this year and without properly protecting your assets now, many of today’s retirees could find themselves in trouble. A solid financial plan during market decline includes true diversification; as in, having some of your savings in a place where you absolutely can not lose it no matter how far the market falls.

2. MAKE SURE YOU’RE REBALANCING

Throughout your life, you’ll want a mix of riskier assets for growth and safer assets for stability. The closer you get to retirement, the less risky you usually want to be. And, completely eliminating risk from at least some of your portfolio, is critical to today's retirees.

A good rule of thumb to follow, which is used throughout the financial industry is called The Rule of 100. Take 100 and subtract your age. Whatever is leftover, is the amount of your portfolio that you could reasonably have at risk based on where you are at in your lifetime. (Ex. For a 60-year-old, you wouldn’t want to have more than 40% of your assets tied up in stocks, bonds, mutual funds, and other securities products which could lose value during market volatility.)

In addition to setting your mix of risky and safe assets and changing it as you get closer to retirement, you should also rebalance your At-Risk investments regularly. A long run of stock market returns can actually leave you taking more risk than you should if it isn't managed regularly.

3. GUARANTEE SOME PART OF YOUR RETIREMENT INCOME

Utilizing guaranteed income sources, which are not impacted by market volatility, like a lifetime income annuity can be a smart way to ride out a recession without serious losses. With this strategy, you will have a paycheck that you can count on each and every month, for the rest of your life, that won’t be impacted by the market.

Pensions and Social Security are also examples of stable sources of retirement income. If you’re on the verge of retirement, consider keeping enough cash in a risk-free location — like a savings account — to cover a couple of years’ worth of expenses. Cash value in permanent life insurance, like an Indexed Universal Life policy, this can be another tool for you to use to fund a cash reserve. In a low-performing market, you’ll be able to tap that cash supply instead of selling investments at a loss. As an extra plus in this environment, it will also grow tax-free.

4. DIVERSIFY, DIVERSIFY, DIVERSIFY

Without “True Diversification” the market risk to your portfolio is going to be way too high; especially for a retiree.

The goal of diversification within your investments is to keep your portfolio healthy, regardless of what the market is doing. True Diversification however, involves placing a portion of your money in a place where you absolutely cannot lose it during times of poor performance but where it will still grow at a reasonable rate of return during times that the market is doing well.

A good tool for achieving True Diversification would be a Fixed Index Annuity. These accounts grow based on certain indexes within the stock market, so you can experience the upswing of a positive market. But, they also lock in to protect your money during times of market decline so that you won’t lose money along the way. It’s a safe vehicle for your savings to accumulate at a reasonable rate of return over time with no risk.

It is important to work with a Fixed Index Annuity specialist and not an investment advisor when trying to add this product to your portfolio. This will help to ensure you are receiving the right information and that your annuity is structured correctly to meet your needs.

5. WORK WITH AN EXPERT, OR TWO!

Facing an uncertain market — especially as you close in on retirement — comes with high stakes.

A great financial advisor who specializes in securities and investments, will understand your financial goals and can guide you to investment options that help you build your savings over time. But, if making more of your portfolio safe makes sense to you for the phase of life you are in, a securities and investment advisor won’t be as effective for you, since they specialize in balancing risk as you grow your nest egg.

Especially if you are a more mature investor, you may need to seek the advice of a different kind of expert- a Safe Money Expert. This would be someone who specializes in helping more mature clients transition from At-Risk strategies to strategies that will not only protect the savings you’ve already established but will help you utilize them to meet your future income needs as well.

After all, a strong financial plan must include True Diversification if you are to properly prepare for the ups and downs of the market. That is how you safely weather a recession so that you can focus on what’s important; enjoying your retirement.

At Summerlin Benefits Consulting, we are Safe Money Experts. We specialize in Fixed Index Annuities and other strategies to help more mature investors protect their assets during a time in your life when it makes the most sense to do so. Call Today. Now is definitely the time to Take Action.

Women and Retirement: What’s The Tea?

Tue, 17 May 2022 16:32:41 GMT

Women often experience some very specific retirement risks that could jeopardize their lifetime income. It’s time to spill the tea, on what today’s woman is facing in retirement and how best to plan for it.

When it comes to retirement, the strategy of saving early and saving often is good general advice for everyone. But that doesn’t mean the ins and outs of retirement will look the same for all. Personal circumstances and financial influencers can define your specific needs for the future. Women in particular face some challenges that can leave them at a disadvantage to men in retirement. For example, women’s average retirement income is about 80 percent of what men receive, according to the National Institute on Retirement Security. The good news is that knowing of challenges like this in advance will allow you to create a retirement income plan that caters to your future.

Here are the top five factors that women need to consider when planning for retirement.

1. Women Live Longer

Women who reach the typical retirement age of 65, are statistically prone to living for another 20 years or more while 65-year-old men’s average life expectancy is to live another 17 years. That means women need to save more over their lifetime to ensure they don’t outlive their retirement savings.

The current average spending among households of age 65 or older is about $47,000 per year, according to the Bureau of Labor Statistics . Of course, how much you spend each year in retirement will depend on your personal lifestyle. Regardless, when planning for retirement female retirees in general may need to live off your savings longer than men will. It’s important for you to have a strategy for making your income go further in life. Thinking about ways to maximize your retirement income — including a plan for when to start taking Social Security is key.

For people born in 1960 or later the full retirement age is now age 67 instead of age 65 and if you can wait until age 67 to begin taking Social Security payments, that is one way to help increase your retirement paychecks. You’re eligible to claim your benefits as early as 62, but claiming Social Security prior to age 67 will reduce your benefits by as much as 30 percent. Many struggle with this decision however, because sometimes those paychecks are just simply “needed” sooner rather than later.

With Social Security being only one piece of the puzzle, knowing exactly how much you’ll need to save, what retirement income options are available to you, and how to draw from multiple income sources in a tax-efficient way are all important parts of your retirement plan.

2. Women Are More Likely To Have Gaps In Their Retirement-Saving Years

Contributing to the wage gap is the fact that women are still largely in charge of caregiving, and thus more likely to experience interruptions in their careers to raise children or care for other family members. In fact, one in three moms in a 2021 McKinsey & Company study considered scaling back at work or quitting their jobs entirely during the pandemic, largely due to childcare responsibilities.

The problem is that time out of the workforce also means putting a pin in your retirement contributions — something that can cause female retirees to run out of money well before their end of life. For women who are married, a spousal IRA may allow you and your spouse to keep up on retirement contributions while you take time off. But for single women or women who were homemakers, a better option might be a lifetime income annuity. This will enable you to take an asset you have already saved over the years, protect it, and purpose it into the role of providing you with monthly retirement paychecks for as long as you live.

3. Women Have Higher Healthcare Costs

Healthcare expenses are subject to inflation just like other cost of living requirements. And unfortunately, cost of care does tend to be higher for people in retirement, regardless of gender. But because of their longer lifespans, women can expect to pay $200,000 more than men in health insurance premiums alone, according to an estimate by Health View Services.

Additionally, retirees often face the expense of long term care needs. Based on a recent cost of care survey conducted by John Hancock, for 2022 In Home Care for just 6 hours each day averages $4,464 per month, Assisted Living averages $4,805 per month, and Nursing Home averages $7,874 per month. Now this can vary based on where you live and specific providers in your area but these general guidelines definitely illustrate how important it is for women, who are living longer, to make a plan for a lifetime income arrangement that will help cover costs like this no matter how long you live.

4. A ‘Gray Divorce’ Impacts Women More

The divorce rate among Americans who are 50 and over has roughly doubled since the 1990s, according to Pew Research Center . And research has shown that getting divorced later in life is financially harder on women than men. A 2020 Bowling Green State University study estimates that women see a 45 percent decrease in their standard of living following a gray divorce, versus 21 percent for men.

The lower lifetime earnings of women compared with men and taking time out of the workforce to provide childcare are some of the reasons behind the gap. And unfortunately, wives who have largely left financial decision-making to their husbands can be especially vulnerable. If you’re going through a divorce it would be a good idea to recalibrate your retirement plans with a professional and figure out what retirement income options you have.

This is an area where a fixed index and/or lifetime income annuity can sometimes help but another e xample would be to take advantage of the Social Security Administration's ex-spouse benefits if eligible. Did you know that if you were married for at least 10 years and your ex-spouse is eligible to begin collecting Social Security, you might be able to collect benefits on their record? You could be entitled to an amount that’s equal to half of their benefit if you meet other criteria and haven’t remarried.

4. DIVERSIFY, DIVERSIFY, DIVERSIFY

Because women are likely to outlive their husbands, proper estate planning is key to ensuring their finances will be protected following the death of a spouse.

A full estate plan includes not only creating a will or trust, but also includes naming powers of attorney and updating beneficiaries on life insurance policies , retirement accounts and other financial accounts. Keeping this information up to date is key because beneficiaries named in a policy override those named in a will. For instance, if a husband names an ex-spouse as a beneficiary on a life insurance policy but names his current wife in a will, the proceeds will go to the ex-spouse.

It’s important to work with estate planning, tax and financial professionals when setting up an estate plan so they can help you and your spouse figure out how to best protect your assets and pass them on with tax efficiency in mind.

Summerlin Benefits Consulting Inc. helps all of our clients avoid retirement risks that could affect their future income plans. In today's world however, as our female clients experience unique financial influences on your future, we want you to know that we are here for you.