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Two Retirement Planning Approaches: Safety vs. Probability

According to Merrill, four of the
most common risks to your retirement strategy are:1

  • A significant
    market drop shortly before or early in your retirement
  • Inflation
    reducing your spending power over time
  • Unexpected
    medical and/or long-term care expenses
  • Outliving your
    assets

If you are nearing retirement, it
might be time to review your current financial strategy and make adjustments,
if necessary. It’s important that you make any adjustments based on your
personal circumstances. If we can help you align your retirement assets with
your objectives and timeline, please give us a call.

Retirement income analyst,
professor and author Wade Pfau defines two schools of thought when it comes to
managing money in retirement. The first is the “probability-based approach,” in
which an individual is comfortable holding equities for growth opportunities
over the long haul. The second approach focuses on “safety first,” which also
utilizes insurance-based contracts, such as life insurance or annuities, that
spread risk across an insurance pool. This strategy basically gambles that some
people will die early while others live longer — but that risk is managed by the
insurer instead of the contract owner.2

However, retirees don’t have to
select just one approach; it may make sense to diversify between the two. With
a probability-based approach, consider investments that are designed to
generate retirement income, such as investment-grade bonds or
high-dividend-paying stocks. However, keep in mind that all investing involves
risk.

The “safety” approach is a good
strategy for helping to cover unexpected expenses, such as long-term care. Not
everyone ends up needing such care, but people who do can deplete their
retirement savings quickly if they choose to self-fund this expense. One way to
combine this coverage with your legacy planning goals is through a life
insurance policy that offers a long-term care benefits rider. This type of
strategy leverages a portion of your current assets to provide a substantially
higher death benefit for beneficiaries. However, you can draw from the contract’s
death benefit if you do need to pay for long-term care. That way you don’t pay
for coverage you don’t need, but it’s there to assist with the costs if you do.3
It’s important to keep in mind that life insurance policies and long-term care
riders are subject to medical underwriting and riders may require an additional
fee.

A good place to start your retirement planning is to check your
Social Security benefit estimate.

The Social Security Administration mails written statements to
people age 60 or older who are eligible for benefits. However, anyone at any
age can check out their statement by registering at the Social Security website
www.ssa.gov/myaccount/ — for a “my
Social Security” account. Once you have signed up for an account online, you’ll
stop receiving estimates by mail. However, you can check updated estimates online
at any time. Double-check that your earnings history is accurate because that’s
what determines the amount of benefits you’ll receive.4

Once you have a good idea of what to expect in Social
Security, you can start to consider other income streams. Work with an experienced
financial advisor to help you determine the appropriate retirement planning approach
for you.

Content prepared by Kara Stefan
Communications.

1 Merrill. 2019. “4 Big Retirement Risks — and How to
Prepare for Them.” https://www.ml.com/articles/big-retirement-risks-and-how-to-prepare-for-them.html. Accessed Dec. 15, 2019.

2 Knowledge@Wharton. Dec. 10, 2019. “What Will You Need
to Retire with Safety and Security?” https://knowledge.wharton.upenn.edu/article/what-will-you-need-to-retire-with-safety-and-security-lanning/. Accessed Dec. 15, 2019.

3 Merrill. Oct. 25, 2019. “Will You Be Prepared to
Cover the Costs of Long Term Care?” https://www.ml.com/bulletin/will-you-be-prepared-if-you-need-long-term-care.html. Accessed Dec. 15, 2019.

4 Bob Carlson. Forbes. Dec. 15, 2019. “How to Read
Social Security Benefit Estimates.” https://www.forbes.com/sites/bobcarlson/2019/12/15/how-to-read-social-security-benefit-estimates/. Accessed Dec. 15, 2019.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. Any references
to protection benefits and safety generally refer to fixed insurance products,
never securities or investment products. Insurance and annuity product
guarantees are backed by the financial strength and claims-paying ability of
the issuing insurance company.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links provided
in this text, please contact us to request a copy of the desired reference.

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Tax Tips and Updates for the 2019 Filing Season

As we enter a new year, it’s time
to start thinking about smart tax moves to help minimize what you’ll owe Uncle
Sam on April 15, 2020. Given the fact that the 2017 Tax Cuts and Jobs Act went
into effect only last year, taxpayers are still learning the ins, outs and potential
undiscovered advantages of the plan. For example, if you did not itemize
deductions on your previous federal return, your state tax refund will be
tax-free.1

Bear in mind that other
clarifications have come to light since the law was passed, such as deducting
interest on a home equity line of credit. However, if you actually used the money
from a home equity loan to repair or renovate your home, the interest on that
loan is still deductible.2

We recognize that tax planning is
an onerous task, made more difficult by changes in tax law. If you are
wondering how any changes in your investment portfolio may affect your taxes,
please give us a call. If we don’t have the exact tax expertise you need, we
can help point you in the direction of someone who does.

In addition to doubling the
standard deduction, the Tax Cuts and Jobs Act reduced individual income tax
rates to between 12% and 37%. However, these cuts are scheduled to expire in
2026. In recent months, the Trump administration has proposed dropping the
marginal rate even lower for the current 22% income tax bracket, down to 15%.
While this appears to be a strong carrot entering the 2020 campaign year,
there’s been no clarification as to how this tax cut would be paid for and,
given that it would add roughly another trillion dollars or so to the federal
debt throughout the next decade, is not likely to gain traction in Congress.3

If you traditionally deducted
substantial mortgage interest as well as state and local real estate and income
taxes, you may have seen a noticeable difference in last year’s return. The Tax
Cuts and Jobs Act capped these federal deductions at $10,000, which some real
estate analysts say is responsible for lower home valuations in some parts of
the country.4

It’s also important to stay
abreast of the tax-related ins and outs of inherited IRAs. If you are the deceased
account owner’s spousal beneficiary, you have several options — one being that you
can basically treat the account as your own. However, if you’re a non-spouse
beneficiary, your options are limited. Currently, you can either take
distributions based on your own life expectancy — the “stretch option” — which
allows the funds to continue growing tax-deferred in the account; or, you must
liquidate the account within five years of the original owner’s death. Note
that as of 2019, Congress is currently considering legislation that would
eliminate the stretch option and require full liquidation within 10 years of
the account owner’s death.5

Content prepared by Kara Stefan
Communications.

1 Rocky Mengle and Kevin McCormally. Kiplinger. Dec. 2,
2019. “20 Most-Overlooked Tax Breaks and Deductions.” https://www.kiplinger.com/slideshow/taxes/T054-S001-most-overlooked-tax-deductions-breaks-2019/index.html. Accessed Dec. 5, 2019.

2 Andrew H. Friedman. Merrill Lynch. March 19, 2019. “Tax
Law Update: New Information on What’s Deductible – and What’s Not.” https://www.ml.com/bulletin/tax-update-the-irs-answers-frequently-asked-questions.recent.html. Accessed Dec. 5, 2019.

3 Knowledge@Wharton. Nov. 19, 2019. “A Middle-class Tax
Cut: Weighing the Costs and Benefits.” https://knowledge.wharton.upenn.edu/article/blouin-middle-class-tax-cut/. Accessed Dec. 5, 2019.

4 Knowledge@Wharton. Oct. 22, 2019. “Why Tax Changes
Are Hurting the Housing Market.” https://knowledge.wharton.upenn.edu/article/tax-changes-hurting-housing-market/. Accessed Dec. 5, 2019.

5 James Royal. Bankrate. Nov. 19, 2019. “7 inherited
IRA rules all beneficiaries must know.” https://www.bankrate.com/retirement/inherited-ira-rules/. Accessed Dec. 5, 2019.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

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Non-Cyclical Stocks and Their Relationship to the Economy

Three pivotal economic events of
2019 were: (1) the prolonged trade dispute between the U.S. and China; (2) the
series of three interest rate cuts by the Federal Reserve; and (3) chatter
about a possible 2020 recession.

It remains to be seen whether a
recession is on the way, but if you’re concerned about market volatility,
schedule time to review your portfolio with one of our financial advisors to discuss
methods to potentially add more defense and security to your personalized
financial strategy,

As far as more general means of
adopting a more defensive portfolio posture, consider these guidelines:1

  • Seek out
    companies that are efficient, meaning they have a relatively high and
    consistent return on equity.
  • Focus on
    businesses you understand; the start of a new recession is no time to be
    speculative.
  • Check out a
    company’s historic average return on equity over at least a 10-year period.
  • Consider a
    company’s value. Certain stocks, categorized as “non-cyclical,” are largely
    unaffected by drops in the stock market because they hold value even in times
    of economic decline.

Companies that produce non-essential
products, also commonly known as consumer discretionary goods and services, are
a good example of cyclical stocks. Auto manufacturers are considered cyclical
because car sales tend to rise when consumers are gainfully employed and the
economy is growing.2

But no matter how far the economy
may decline, there’s never a complete standstill. People will always buy
necessities like toothpaste and toilet paper. The companies that make these
evergreen products are considered consumer staples and are an example of non-cyclical
stocks. Food and beverage, tobacco, household and personal product industries
all fall under this category.3 Another non-cyclical sector is
utilities. Utility companies are widely recognized for having a stable business
model and, as a result, tend to pay out higher dividends.4

Value stocks are back in vogue.
For years they have been eclipsed by growth stocks, but with market volatility possibly
on the horizon, it may be good for investors to consider securities the market
may have overlooked. Value stocks are those whose prices rather underestimate
the true health and potential of the company. They tend to be cheaper than their
competitors and may have a price-to-earnings ratio lower than the broader
market.5

After a decade of underperformance,
Bank of America market analysts say value stocks, as a category, have never
been this affordable. They point out that the last time their prices dropped
this low was back in 2003 and 2008. In both time periods, value stocks went on
to outperform momentum stocks by 22 and 69 percentage points, respectively,
over the following year.6

Content
prepared by Kara Stefan Communications.

4 Joseph Belmonte. Virginia Pilot. Nov. 11, 2019. “How
to play defense with your investment portfolio.” https://www.pilotonline.com/inside-business/vp-ib-expert-belmonte-1118-20191111-4tdifjm5xjge3c4yl5o7yamgfm-story.html. Accessed Nov. 29, 2019.

3 Ken Little. The Balance. Oct. 29, 2019. “Understanding
Cyclical and Non-Cyclical Stocks.” https://www.thebalance.com/understanding-cyclical-and-non-cyclical-stocks-3141363. Accessed Nov. 29, 2019.

1 Sweta Jaiswal. Yahoo! Finance. Nov. 16, 2019. “Here’s
Why Consumer Staples ETFs Are Rising This Year.” https://finance.yahoo.com/news/heres-why-consumer-staples-etfs-194407670.html. Accessed Nov. 29, 2019.

2 Timothy Smith. Investopedia. Nov. 7, 2019. “Lights
Out: 3 Expensive Utilities Stocks With Chart Tops.” https://www.investopedia.com/lights-out-3-expensive-utilities-stocks-with-chart-tops-4775538. Accessed Nov. 22, 2019.

5 Nick Giorgi. Merrill Lynch. July 1, 2019. “What is a
value stock?” https://www.merrilledge.com/ask/investing/what-is-a-value-stock. Accessed Nov. 29, 2019.

6 Yun Li. CNBC. Nov. 8, 2019. “Value stocks have ‘never
been this cheap,’ Bank of America says.” https://www.cnbc.com/2019/11/08/value-stocks-have-never-been-this-cheap-bank-of-america-says.html. Accessed Nov. 29, 2019.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

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The Future of Manufacturing

A concerted effort to draw
American manufacturing operations back to the U.S. over the past three years
has done little to move the needle. In fact, a recent report from the Department
of Commerce reveals that the manufacturing sector is at its lowest
representation of the national economy in 72 years — a mere 11% of gross
domestic product (GDP). That puts it below real estate (13.4%) and professional
and business services (12.8%).1

Furthermore, the factories that
operate here on home soil have another major problem: an aging workforce.
According to the National Association of Manufacturers, about one in five
factory workers are age 55 or older, which means that by 2035, there could be
as many as 2.4 million unfilled jobs in U.S. manufacturing.2

While the manufacturing sector has struggled in recent
years, today’s low interest rates offer the opportunity for expansion and
investment in domestic operations. In fact, merger and acquisition (M&A)
activity has soared in recent years. In the wake of uncertain trade agreements,
companies have been merging and buying out smaller competitors as a counter
strategy to building new factories.3

This new infusion of M&A activity, coupled with
innovation and new technology, positions the sector for growth in the future.
While the industry has produced mixed results, it’s important for manufacturing
investors to remain diversified to help manage risk while participating in the
future growth opportunities of this industry.

Remember that when industries
experience tough times, resilient companies often reinvent themselves and emerge
through innovation. The manufacturing industry is poised for such a transformation.
The next wave of factory innovation is being called the Fourth Industrial
Revolution, as companies seek to revive manufacturing productivity through
automation and robotics.4

However, rather than make human factory workers obsolete,
automation is expected to make the profession more highly skilled and engaged
in decision-making processes. New digital technology is expected to take over
jobs that involve repetitive tasks, leaving human jobs of the future to manage
cognitive, nonrepetitive tasks.5

Another innovation called augmented
reality (AR) enables the overlay of images and words on a physical piece of
equipment. This works much like virtual reality; you look at a machine through
an augmented reality device, which provides things like current output
statistics, temperature and repair instructions within view. This enables
quicker repairs and even training for new or inexperienced personnel — providing
instant and automatic expertise on the manufacturing floor.6

Content prepared by Kara Stefan
Communications.

1 Reade Pickert. Bloomberg. Oct. 29, 2019. “Manufacturing
Is Now Smallest Share of U.S. Economy in 72 Years.” https://www.bloomberg.com/news/articles/2019-10-29/manufacturing-is-now-smallest-share-of-u-s-economy-in-72-years. Accessed Nov. 22, 2019.

2 Stan Zaharewicz. Cleveland.com. Nov. 10, 2019. “Fuel
the future of U.S. manufacturing with an investment in talent.” https://www.cleveland.com/opinion/2019/11/fuel-the-future-of-us-manufacturing-with-an-investment-in-talent.html. Accessed Nov. 22, 2019.

3 Jim Vinoski. Forbes. Nov. 8, 2019. “U.S.
Manufacturing Appears To Be Cooling Off — But The Segment’s M&A Activity
Continues To Boom.” https://www.forbes.com/sites/jimvinoski/2019/11/08/us-manufacturing-appears-to-be-cooling-offbut-the-segments-ma-activity-continues-to-boom/#4c05bf777c6c. Accessed Nov. 22, 2019.

4 Paul Gosling. Financial Magazine. Oct. 8, 2018. “8
key features of the factory of the future.” https://www.fm-magazine.com/news/2018/oct/factory-of-the-future-201819820.html. Accessed Nov. 22, 2019.

5 Knowledge@Wharton. July 2, 2019. “Want a Job in the
Future? Be a Student for Life.” https://knowledge.wharton.upenn.edu/article/lifelong-learning-future-of-work/. Accessed Nov. 22, 2019.

6 Mark Howard. American Machinist. Nov. 21, 2019. “Can
Augmented Reality Improve Manufacturing?” https://www.americanmachinist.com/automation-and-robotics/can-augmented-reality-improve-manufacturing. Accessed Nov. 22, 2019.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

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Market Trends to Watch

The
investment world is like the weather: constantly changing. Financial vehicles
are tweaked and improved upon, particularly when there are changes to tax law
or compliance rules. The world of finance is fluid, and so are we. As our lives
evolve, it’s important to review and sometimes make adjustments to our
investment and insurance goals and strategies.

The
difficult part can be keeping up with all the changes. We believe one of the best
ways to do that is to work with a financial advisor and meet with him or her regularly.
At least once a year, it’s good to review your current situation, find out what
changes or new products are available, and determine if you should make any
alterations to your financial portfolio. Contact us if you are interested in
such a consultation.

Following
is a roundup of news and timely reminders from the investment industry.

Impact
Investing

What
may have started as an environmentalist movement to effect change by tapping
invested assets, the sustainable investment industry has grown into a
mainstream strategy. The share of assets invested in funds focused on
environmental, social and governance (ESG) issues increased 40% from 2000 to
2017.1

This
is no longer simply a “do-gooder” motivation. Studies have revealed that
companies focused on environmental efficiency — meaning they minimize the use
of natural resources and generate less production waste — tend to enjoy economic
advantages over less environmentally sensitive competitors. These advantages can
include lower costs; higher flexibility and efficiency in their supply chains;
increased productivity; reduced regulatory risk; and fewer costly fines,
recalls or mitigation requirements. As a result, recent studies found, the
stocks of these companies tended to be less volatile — particularly in
manufacturing and other resource-intensive industries.2

E-Commerce
Update

Online
sales are starting to have a more profound effect in some sectors of the investment
market. For example, in 2018, Amazon surpassed Walmart as the top apparel
retailer in the United States, claiming more than 9% of the market. But not all
traditional retailers have been hit as hard by e-commerce; for example, some
investment analysts say retailers like QVC and those in the
business‑to‑business e-commerce market — notably in the home improvement and
auto parts industries — remain competitive because they are more insulated
from Amazon or other online competitors. 3

And
there’s another angle to consider with e-commerce. While we normally associate
online retailers with low overhead, overall the industry requires three times
the warehouse space of primarily brick‑and‑mortar retailers. In turn, this has
created opportunities in the Real Estate Investment Trust (REIT) market that
focuses on commercial properties.4

Investment
trends

According
to Bank of America, some of the economic and societal changes to watch over the
next 10 years include:5

  1. More
    disruptions in the global flow of goods, ultimately leading to a rebalancing
    that will increase productivity and lead to a more sustainable global economy
  2. A
    focus on high-quality companies in sectors with low political risk, such as
    utilities, national defense, waste management, data processing and payments,
    and global beverages
  3. Markets
    responding to demographic shifts, such as the rise of the middle class in
    emerging market countries and millennials’ preference for tech compatibility
    and sustainability
  4. Continued
    growth of energy-efficient, renewable, sustainable and green initiatives

Content prepared by Kara Stefan
Communications.

Merrill Lynch. Sept. 10, 2019. “Can You Do
Well by Investing in What’s Good for the World?” https://www.ml.com/bulletin/can-you-do-well-by-investing-in-whats-good-for-the-world.recent.html. Accessed Nov. 13,
2019.

Merrill Lynch. June 2019. “Investing in a
Low Carbon Economy.” https://mlaem.fs.ml.com/content/dam/ML/bulletin/can-you-do-well-by-investing-in-whats-good-for-the-world/ml_investing-in-a-low-carbon-economy.pdf. Accessed Nov. 13,
2019.

T. Rowe Price. Oct. 4, 2019. “E-commerce
Disrupts Retail-Related Bonds.” https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/investments/fixed-income/e-commerce-disrupts-retail-related-bonds.html. Accessed Nov. 13,
2019.

4
Ibid.

5
 
Pippa Stevens. CNBC. Nov. 11, 2019.
“Here are Bank of America’s top 10 investing themes to watch over the next
decade.” https://www.cnbc.com/2019/11/11/bofa-says-these-are-the-10-biggest-investing-themes-for-the-next-decade.html. Accessed Nov. 13,
2019.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

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The Importance of Women Achieving Financial Confidence

Married or single, women are
finding that taking an active role in their financial futures is critical. About
80% of married women outlive their husbands, and nearly half of all widows say
they wish they’d been more involved in managing their finances when their
spouse was alive.1

Whether you have a career or rely
on someone else for income, are retired or still dreaming of retirement, don’t
take your financial future for granted. It takes work. We can help. Schedule
time with us to review your situation and create a financial strategy you can
feel confident about — whether you have a partner or not.

The reality is women, on average,
earn less than men over their lifetime and spend more time out of the workforce,
often caring for children or aging parents. They therefore tend to save less,
invest less and receive a lower Social Security benefit, putting women more at
risk of outliving their money in retirement.2 However, over the long
term, women who invest earn a higher rate of return than men, on average.3

Several studies have shown women’s
portfolios outperformed men’s by an average of 0.4% to 1.8% annually.4
Industry watchers have theorized several factors that could account for this
boost:5

  • Women generally
    are patient, choosing long-term, buy-and-hold strategies versus reactive moves.
  • Women often take
    a balanced investing approach, diversifying their assets across varied
    financial products and risk levels.
  • Women are
    information-seekers, researching their options beforehand and looking for guidance
    from financial professionals.
  • Women often have
    more time to invest, because they live longer than men, on average.

Make your longevity an advantage.
Start today to work toward the retirement you’ve envisioned. We’d love to help.

Content prepared by Kara Stefan
Communications.

1  Jean
Chatzky. The Balance. March 14, 2019. “How Women Can Plan for Outliving Their
Husbands.” https://www.thebalance.com/retirement-plan-for-women-outliving-husbands-4139845. Accessed Nov. 7, 2019.

2 Merrill Lynch. April 22, 2019. “Women’s Guide to
Social Security.” https://www.ml.com/bulletin/womens-guide-to-social-security.recent.html. Accessed Nov. 7, 2019.

3  Merrill
Lynch. Sept. 27, 2019. “What We All Can Learn from Women Investors.” https://www.ml.com/bulletin/learning-from-women-investors.recent.html. Accessed Nov. 7, 2019.

4 Ibid.

5 Ibid.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

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Tax Updates and Reminders

As we head toward the end of the year, consider maxing out
your contributions on tax-advantaged accounts to help manage your 2019 return.
While some accounts, such as an IRA or Health Savings Account (HSA), allow you
to continue making contributions up until April 15, 2020, most
payroll-deduction plans such as a 401(k) will stop at year end (for 2019
contributions). Employees can contact their plan administrator to learn how
they might make additional contributions above what is automatically deferred
from their paycheck.1

This may also be a good time to strategize your retirement
plan contributions for next year. If you’d like to discuss strategies for any
employer, retirement, college or health savings account contributions, please
let us know.

The 2019 contribution limit for 401(k) plans is $19,000, up $500
from last year. Taxpayers age 50 and older can contribute an additional catch-up
contribution of $6,000.2  

If you haven’t maxed out your Individual Retirement Accounts
(IRAs), you may contribute up to $6,000 in 2019. Be aware that’s the total
amount that can be contributed to all the IRAs you own, including Traditional
and Roth. People age 50 and older can add another $1,000 to their IRA accounts
in 2019.3

HSA contribution limits for 2019 have increased to $3,500
for individuals and $7,000 for a family, when accompanying a high-deductible
health plan. The catch-up contribution isn’t available until age 55 and older, for
an extra $1,000.4 An HSA can be used as an emergency savings account
for any reason, as long as you follow the rules. You can pay some of your qualifying
health care expenses out of pocket, but be sure to keep the receipts. Should
you need additional funds, you can pull amounts up to the paid receipts from
your HSA without incurring any tax liability.5

If you don’t need the money for immediate expenses, consider
using those reimbursed funds as contributions to your HSA for the next year,
which offers the advantage of being tax deductible once again. Even if your
regular contributions are made by payroll deductions through your employer, you
can make direct contributions from your personal checking account, and then
deduct that additional amount on your personal income tax return.6
Just don’t exceed the annual contribution limit.

Content prepared by Kara Stefan Communications.

1 Sandra Block. Kiplinger. Oct. 31, 2019. “10 Year-End
Moves to Lower Your 2019 Tax Bill.” https://www.kiplinger.com/slideshow/taxes/T055-S003-10-year-end-moves-to-lower-your-2019-tax-bill/index.html. Accessed Oct. 31, 2019.

Julia
Kagan. Investopedia. June 19, 2019. “401(k) Contribution Limits for 2019.” https://www.investopedia.com/retirement/401k-contribution-limits/. Accessed Oct. 31, 2019.

3  Eric
Reed. Smart Asset. July 17, 2019. “IRA Contribution Deadlines for 2018 and 2019.”
https://smartasset.com/retirement/ira-contribution-deadline. Accessed Oct. 31, 2019.

4 Kathryn Mayer. Employee Benefit News. 2019. “From HSA
contributions to 401(k) limits, 11 numbers to know for 2019.” https://www.benefitnews.com/list/from-hsa-to-401-k-contribution-limits-11-numbers-to-know-for-2019. Accessed Oct. 31, 2019.

5 HASstore. Louise Norris. “Compound It! How to use your
HAS as an emergency fund.” https://hsastore.com/learn/basics/hsa-emergency-fund. Accessed Nov. 20, 2019.

6 National Benefit Services. “HSA Frequently Asked
Questions.” https://www.nbsbenefits.com/hsa-frequently-asked-questions/. Accessed Oct. 31, 2019.

This content is designed to provide general
information on the subjects covered. It is not, however, intended to provide
specific legal or tax advice and cannot be used to avoid tax penalties or to
promote, market or recommend any tax plan or arrangement. You are encouraged to
consult your personal tax advisor or attorney.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

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News Around the Internet

Where there is internet, is there more prosperity? Generally speaking, yes.

It costs much more to lay fiber to outlying communities than it does in larger metropolitan areas, which may contribute to the growing geographical discrepancy between income, education and even health care. Some places, like Indiana, hope to bring rural areas up to speed by expanding broadband access. Indiana, for example, is planning a $1 billion infrastructure update.1

Internet access opens the door for opportunities in a variety of areas, including education. Enrollment for online higher education classes is increasing each year, according to the report “Grade Increase: Tracking Distance Education in the United States.” Most of this enrollment (67.8 percent) is by students attending public institutions, with about half of students also attending on-campus classes. While online educational enrollment is rising swiftly, the number of students studying on a campus dropped by more than 1 million between 2012 and 2016.2

Keeping in touch with friends and the world’s current events is also simplified by internet access. Use of social media websites and apps is widespread among all demographics. According to a Pew Research Center study, while the share of teens using Facebook fell 20 percentage points over three years, a larger share of lower-income teens continue to use Facebook. Sociologists interviewed noted that higher-income teens often seek the prestige of the next “hot” social media platform, whereas lower-income teens continue to rely on Facebook to connect with a diverse network of friends and family.3

Unfortunately, the internet also has become a tool for negativity, particularly when it comes to bullying and misinformation. While social media has done much to establish and strengthen connections among people, it also enables the propagation of cyberbullying, a growing threat for teens and preteens. In 2018, 26 percent of parents reported their child had been a victim of cyberbullying. However, this share has dropped from 34 percent in 2016.4 First Lady Melania Trump has made cyberbullying her primary focus, encouraging adults to provide children with information and tools to develop safe online habits.5

Perhaps one of the most detrimental uses of the internet in recent years has been the spread of misinformation, particularly “fake news” stories that look like legitimate articles but which report inaccurate or fabricated facts and statistics. The problem is exacerbated by social media users who read and believe the stories, then share them with friends and followers.

Worse yet, these fake articles are circulated by bots on Twitter and other websites. A “bot” is an automated account made to look like a human user that is programmed to spread false information. More than 13.6 million Twitter posts shared misinformation linked to bots between May 2016 and March 2017.6

Sadly, people tend to be more interested in dramatized falsehoods than the truth. One researcher found that while true news stories tend to spread to no more than about 1,600 people, shared false stories on the internet tend to reach tens of thousands of readers, even though they originated from far fewer sources.7

Content prepared by Kara Stefan Communications.

1 Lindsey Erdody. Indiana Business Journal. Sept. 14, 2018. “Broadband blitz to lift economy, study says.” https://www.ibj.com/articles/70471-broadband-blitz-to-lift-economy-study-says. Accessed Oct. 4, 2018.

2 Online Learning Consortium. Jan. 11, 2018. “New Study: Distance Education Up, Overall Enrollments Down.” https://onlinelearningconsortium.org/news_item/new-study-distance-education-overall-enrollments/. Accessed Nov. 30, 2018.

3 Hanna Kozlowska. Quartz.com. Aug. 15, 2018. “Do teens use Facebook? It depends on their family’s income.” https://qz.com/1355827/do-teens-use-facebook-it-depends-on-their-familys-income/. Accessed Nov. 30, 2018.

4 Sam Cook. Comparitech. Nov. 12, 2018. “Cyberbullying facts and statistics for 2016-2018.” https://www.comparitech.com/internet-providers/cyberbullying-statistics/. Accessed Nov. 30, 2018.

5 Jordyn Phelps. ABC News. Aug. 20, 2018. “First lady Melania Trump speaks out against cyberbullying.” https://abcnews.go.com/Politics/lady-melania-trump-speaks-cyberbullying/story?id=57284988. Accessed Nov. 30, 2018.

6 Maria Temming. Science News. Nov. 20, 2018. “How Twitter bots get people to spread fake news.” https://www.sciencenews.org/article/twitter-bots-fake-news-2016-election. Accessed Nov. 30, 2018.

7 Maria Temming. Science News. March 8, 2018. “On Twitter, the lure of fake news is stronger than the truth.” https://www.sciencenews.org/article/twitter-fake-news-truth. Accessed Nov. 30, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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The Power of a Healthy Mind

Can having your mind in the right place improve your health? It can’t hurt.

We’re living longer, but we aren’t always prepared for what lies ahead. It’s easy to become disillusioned as new aches and pains crop up or our body doesn’t work like it used to. But just as we exercise and eat right to keep our body in shape and maintain mobility and vigor, the same goes for our mind. There are ways we can prepare for a happy and high-quality retirement.1

For some, the key is to set a goal. Even if you don’t reach it, getting up every morning and looking forward to working on that objective is incentive to stay healthy and positive. For example, centenarian Orville Rogers still competes in track meets all over the country. His secret: “Some people think I run because I can, but that’s backward. I can because I do.”2

Of course, a longer life means planning for a longer retirement. Don’t let concerns about retirement income planning add stress to your life. If you’d like some assistance in assessing your retirement income strategy and how insurance products may fit into that strategy, we’re here to help.

While sleep, nutrition and exercise all contribute to good health as we age, scientific research has found that intimate, loving relationships are also key to a fulfilling life. Alan Mulally, former president and CEO of Ford Motor Co., lives by the edict his mother taught him as a child: “The purpose of life is to love and be loved.”3

We each may have a different purpose in life. On the island of Okinawa, Japan, a community of long-living residents calls this “ikigai.” The philosophy is based on the idea that a person’s passions in life are unique, not universal. There is no one “secret formula” for living a long and happy life. The residents believe that if you do what you love, you will live longer. Even as you grow older and your body changes, your ikigai drives happiness and quality of life.4

While it’s sometimes easy to dwell on the negative, it’s important to focus on the positives that come with aging – self-knowledge, contentment, wisdom about the ways of the world. By focusing on what we have gained, rather than what we have lost, it’s possible to develop a more positive view of ourselves at any age.5

Plus, a positive outlook may do more than just give us a higher quality of life. A recent study found that focusing on a purposeful goal – one that requires cognitive skills such as creative thinking, analysis, decision-making and problem-solving – may even be protective against declines in memory and comprehension.6

Content prepared by Kara Stefan Communications.                                                                                                                     

 

1 Mick Ukleja. Success.com. April 6, 2018. “5 Attitudes For Aging Gracefully.” https://www.success.com/5-attitudes-for-aging-gracefully/. Accessed Nov. 27, 2018.

2 Chris Chavez. MSN.com. Oct. 22, 2018. “100-year-old Track Star Orville Rogers Featured on Cover of Money.” https://www.msn.com/en-us/sports/more-sports/100-year-old-track-star-orville-rogers-featured-on-cover-of-money/ar-BBOJ819. Accessed Dec. 6, 2018.

3 Melanie Curtin. Inc. Sept. 18, 2018. “In Just 10 Words, This Former CEO of a Billion-Dollar Company Explains the Purpose of Life.” https://www.inc.com/melanie-curtin/in-just-10-words-this-former-ceo-of-a-billion-dollar-company-explains-purpose-of-life.html?cid=sf01001. Accessed Nov. 27, 2018.

4 David G. Allan. CNN. Nov. 12, 2018. “Do what you love and live longer, the Japanese ikigai philosophy says.” https://www.cnn.com/2018/11/12/health/ikigai-longevity-happiness-living-to-100-wisdom-project/index.html. Accessed Nov. 27, 2018.

5 Lawrence R. Samuel. Psychology Today. March 3, 2017. “The Joy of Aging.” https://www.psychologytoday.com/us/blog/boomers-30/201703/the-joy-aging. Accessed Nov. 27, 2018.

6 Susan McQuillan. Psychology Today. Feb. 7, 2018. “Research Shows Promise for Aging Brains.” https://www.psychologytoday.com/us/blog/cravings/201802/research-shows-promise-aging-brains. Accessed Nov. 27, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Protect Yourself from Scams, Hacks and Breaches

According to a telecommunications study of 50 billion telephone calls over an 18-month period, nearly four percent of calls in 2017 were fraudulent. In 2018, that number jumped to 29 percent of all calls. At that pace, the number of fraudulent calls is expected to rise to 44 percent of all calls in 2019.1

You may have noticed one of the latest techniques in spam telephone calls, termed “neighborhood spoofing.”2 This is when your Caller ID shows that the number is from within your area code. You may assume it’s a legitimate call from someone who is not in your contact list, such as your child’s teacher, a neighbor or a colleague. Instead, it turns out to be a telemarketer or scammer who could be located anywhere in the United States, or anywhere in the world.

A good rule of thumb is never give out any personal information over the phone. Don’t even verify your name or address. Tell the caller you will look up the number of the company or agency they’re calling from and give them a call back. Don’t rely on a number that they give you.

Now, more than ever, it’s important to protect yourself from scams. If anyone calls you regarding your insurance needs or policies, we urge you to contact us directly. Any changes to your insurance should be made within the context of your total financial picture, and we can help you with that. Please don’t hesitate to call us.

Just in time for health insurance enrollment season, some Blue Cross and Blue Shield state licensees are warning their customers about a nationwide robocall scam. Apparently, bad actors are making calls claiming to be Blue Cross and Blue Shield representatives marketing insurance products.3 Remember that when you purchase something over the phone, you need to be the one who initiates the call.

Online platforms also are vulnerable to scams. In September 2018, hackers broke into popular social media network Facebook and accessed the records of more than 50 million users. Information that was stolen included private messages, posts, likes, videos and photos. The hackers got in using the website’s “View as” feature, which had a bug allowing hackers to log in as the account holder. They could even use the same credentials to log in to those users’ Instagram and WhatsApp accounts.4

Remember chain letters that used to come in the mail? They claimed that if you sent a dollar to 10 people by mail that you’d get loads delivered back to you. Well, that technique has gotten a new facelift on social media platforms like Facebook. They begin by posting a request to buy a gift of $10 or more and to add your name to a list. Eventually, you’re supposed to receive 36 gifts. However, this is just another pyramid scheme that’s popular around the holidays. Not only are such posts illegal, by sharing your name on such lists that are forwarded to strangers, you may open yourself to the potential of identity theft.5

Then there’s the “grandparent scam,” in which criminals call and pose as a grandchild or other family member in distress, asking you to wire them money. They position it as an emergency, so you may be tempted to send the money immediately before realizing it’s a scam. The fraudster might even beg you not to tell anyone about it because he’s so ashamed. If you get such a call, experts advise not to send money. Ask the caller questions that a stranger couldn’t possibly answer, and if you’re concerned it might be a legitimate phone call, verify the situation in question by hanging up and calling or texting the family member in question directly or another family member.6

Another common scam that makes the rounds during winter is a phone call from someone posing as a representative of the electric, gas or water company, claiming you didn’t pay your utility bill. They threaten that if you don’t give them information to pay it over the phone, your service will be cut off by the end of the day. Here, too, experts say never to give personal or financial information over the phone; hang up and call the utility company directly if you are concerned.7

During the holiday season and into the New Year, please be extra wary of scammers looking to take advantage of your goodwill. You can report possible fraud to the Federal Trade Commission, at www.ftc.gov, or by calling 1-877-FTC-HELP.8

 

Content prepared by Kara Stefan Communications.                                                                                                          

 

1 AfterFiftyLiving.com. 2018. “9 Things You Can Do to Avoid Telemarketing Fraud.” https://www.afterfiftyliving.com/9-things-you-can-do-to-avoid-telemarketing-fraud/. Accessed Nov. 12, 2018.

2 Ibid.

3 Jeff Wyatt. ABC 33/40. Nov. 12, 2018. “Blue Cross and Blue Shield of Alabama warns of robocall scam.” https://abc3340.com/news/local/blue-cross-blue-shield-of-alabama-warns-of-robocall-scam. Accessed Nov. 12, 2018.

4 Lavanya Rathnam. TechGenix. Oct. 16, 2018. “Facebook Data Breach: Why It Happened and What It Means for the Future.” http://techgenix.com/facebook-data-breach/. Accessed Nov. 12, 2018.

5 Keith Darnay. Bismarck News. Nov. 12, 2018. “Scam alert: ‘Secret Sister’ pyramid scheme hits Facebook.” https://www.myndnow.com/news/bismarck-news/scam-alert-secret-sister-pyramid-scheme-hits-facebook/1590851690. Accessed Nov. 12, 2018.

6 Danni Dikes. WSAV3. Nov. 9, 2018. “Grandparent Scam: Criminals pose as relatives to steal your money.” https://www.wsav.com/news/local-news/grandparent-scam-criminals-pose-as-relatives-to-steal-your-money/1591369233. Accessed Nov. 12, 2018.

7 Michael Knight. KPQ News Radio. Nov. 12, 2018. “PUD Scam Alert.” http://www.kpq.com/pud-scam-alert/. Accessed Nov. 12, 2018.

8 Danni Dikes. WSAV3. Nov. 9, 2018. “Grandparent Scam: Criminals pose as relatives to steal your money.” https://www.wsav.com/news/local-news/grandparent-scam-criminals-pose-as-relatives-to-steal-your-money/1591369233. Accessed Nov. 12, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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