By Dave Stanely WKTV Contributor Integrity Financial Services LLC
(Pxhere.com)
Did you know that you have a valuable asset that is often overlooked and may not be included in conversations regarding your financial portfolio? It’s your life insurance policy. Many people are not aware that a life insurance policy is an asset that can be sold with some of the terms being set by the owner.
All too often, life insurance owners surrender their policy to the insurance company instead of getting a quote in the “secondary” market for what it’s actually worth. The market value of a life policy can be as much as eight times more than the surrender value. If you have a life policy that is unwanted, unneeded, or has become unaffordable, you can get a quote for the cash value in the open market. Typically, you will have several choices as to the disposition of your policy.
One option is to settle for an all-cash offer and surrender any and all ownership of the policy. Another option is to take a reduced death benefit with a partial cash payout and never pay another premium. This is the equivalent of owning a “paid-up policy” for a reduced death benefit which will still be paid to your beneficiary upon the death of the insured.
Older retirees can sometimes find themselves in need of a lump sum of cash later in life due to health circumstances (i.e., long-term care expenses), divorce, or even debt. These are some of the primary reasons why seniors opt to sell their policy and use the money for these needs. It’s your cash and can be used for any purpose. Other examples include investing the cash to generate monthly income, paying for college expenses of grandchildren, or perhaps funding a long-desired family vacation.
One other point to make about selling a life insurance policy in this manner is that this type of sale is not a “viatical settlement.” You may have heard this phrase before but not fully understood its meaning. A viatical settlement is where a person with a terminal illness sells their life insurance policy for less than its mature value to benefit from the proceeds (cash) while the insured is still alive. You do not need to be terminally ill to sell your life insurance policy in the open market. However, it is true that if you have impaired health or you are in your mid to late 80s or 90s, your policy can be worth more due to these factors. However, it is not necessary to be ill to take advantage of selling one or more of your life insurance policies. Do yourself a huge favor, get a quote from a qualified insurance agent, and know your options and the value of your policy before you surrender it to the life insurance company.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
Energy costs may offset lower costs in other areas. (pxhere.com)
The West Michigan economy appears to have flattened, but has not yet contracted into a recession, according to the latest monthly survey data released by Grand Valley State University’s Seidman College of Business.
The September survey of purchasing managers conducted by Brian Long, director of supply chain research at GVSU, found steady demand among automotive suppliers offsetting more negative news about orders coming from sectors like the office furniture industry.
“Of our cyclical industries in West Michigan, our automotive parts producers are continuing to stay fairly busy, but not so much so with our office furniture companies and anything related to capital equipment where the markets are starting to soften — not collapse — just soften,” Long said.
Lower commodity prices for goods like metals and plastic resins will take months to find their way into consumer prices, while energy costs could offset lower costs in some areas, he said.
For the survey, released Oct. 10, the sales/new orders index was flat in September after going into negative territory in July and August.
Production levels were also flat, with a majority of survey respondents reporting output being the same as it was in August.
Long said he’s about 80 percent certain the region is sliding into a “shallow recession,” based on the national trends and feedback he hears from inside the region’s industrial employers.
“The confidence situation has clearly worsened the short-term business outlook index for September,” he said. “However, the long-term business outlook, which queries perceptions for the next three to five years, still remains positive, just not nearly as strong as it was six months ago.”
Get serious about your retirement: If your employer matches your 401(k) contributions, you need to take advantage and max out your contribution. Your employer’s share is “house money,” which means using their contribution as part of your 401(k) plan as an employee benefit. Many 401(k) plans allow for conversion to a guaranteed retirement income which can be used as a lifetime benefit. Ask your benefits manager to see if it is included in your plan. It would help if you also planned at what age you would like to retire. If you have had a loss in investment returns in your 401(k), ask yourself how you can gain that back. Your asset allocation in your 401(k) can be changed as you get closer to retirement age. Most plans allow you to move the money as a rollover to a self-directed IRA, which provides the option of using an annuity with an “Income Rider” attached to provide desired guarantees. If you have an IRA and are not contributing annually, start this year; contributions made before April can be deducted from the previous year’s income.
If you don’t have a will, see an attorney and make one. If you have a current will make sure it is up to date.
Name an executor for your estate. Use caution in the selection, and make sure you have asked the executor for permission to use them. Based on the valuation of your estate and your state of residence, the use of a trust can assist the executor in their responsibilities. Ask your attorney for ideas and help. Never buy a trust from anyone other than an attorney licensed to practice law. Often life insurance is used to provide funds for any taxes or debts that may be due at your death, have a professional insurance review the policies, and make sure the ownership and beneficiary decisions are up to date.
Create an emergency fund for situations that come up, such as a hole in your roof or an unplanned car repair. Only 28% of people have an emergency fund, according to a 2022 Bankrate.com survey.
Take a close look at your investments and review them for changes. Remember, as we get older, we have less time to make up losses in our investments.
Start paying down debt. Debt can be a drag on your retirement; once the debt is retired, stress becomes less, and your options for life increase.
Budgeting and following a monthly plan can help. There are numerous studies about budgeting; one thing is for sure, people who follow a budget have less stress. Make a budget and stick to it.
Life should be enjoyed. Use these simple 7 financial tips as the first step to regaining financial freedom and reducing stress.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
Strong hiring trends, lower commodity prices and high demand for automobiles continue to buoy the Michigan economy even as other indicators signal an economic slowdown.
That’s the conclusion of the August purchasing managers survey for the Institute for Supply Management released Sept. 6 by Grand Valley State University’s Seidman College of Business. Brian Long, director of supply management research at GVSU, said this month’s survey serves as yet another mixed bag with respondents from local manufacturers taking business on a day-to-day basis.
“Locally, we certainly have some indications that our economy is beginning to slow, but we do not yet have evidence that we are now or are about to enter a recession,” said Long, who has been conducting the survey of West Michigan businesses for more than 28 years. “However, if our index of new orders continues to slide, we’re going to have to reassess our position.”
Brian Long is a local business forecaster. Credit: GVSU
Some key findings from this months survey include:
The new orders/sales index in August slipped to -5 from -3 in August, indicating a further erosion in sales among those surveyed
The survey’s production index saw a positive swing from +7 to +17, as did the long-term business outlook index, which rose to +28 from +12.
The short-term business outlook index also swung back into positive territory during August, going from -2 in July to +2.
Long said commodity prices for key industrial supplies like copper, some forms of steel, lead, zinc and oil continued dramatic declines, but those decreases typically do not translate into near-term changes in the retail market, where prices remain elevated.
“Industrial deflation does not easily spill over to the consumer market,” Long said. “So the Federal Reserve is still going to have to raise interest rates considerably to control consumer inflation.”
“Dollars saved 20 years ago have lost nearly HALF of their purchasing power. Such inflation poses a serious threat to seniors entering retirement, as well as those already in retirement.”
Since 2000, the US dollar has lost an incredible 44.2% of its purchasing power. Reports from the government’s Bureau of Labor Statistics (BLS), the official tracker of inflation statistics, indicate inflation may be worse than we think. Even as interest rates remain at their lowest ever, Federal Reserve policies may be pushing inflation higher.
The good news is that taking advantage of viable alternatives to traditional planning and creating a safer, more robust “hybrid” portfolio can help you avoid making those mistakes.
(pxhere.com)
What does this mean for retirees and pre-retirees?
If you have an advisor or team of advisors, they most likely have mentioned the idea of “diversification” at least once. Since 2020, however, the concept of diversification has morphed from a “nice idea” into an absolute necessity. Multiple asset classes, particularly cash-flowing assets, seem to be the only cure for thriving in an increasingly volatile investing landscape. Diversification or developing so-called “hybrid” retirement strategies is essential to avoid a retiree’s most dreaded scenario: outliving their savings.
Proper diversification and risk reduction are part of well-designed, customized financial plans. Contrary to what some advisors preach, there are no shortcuts, no “one size fits all” templates to shorten the process. Portfolio allocation is unique to every individual. Some financial professionals believe the only way to ensure a diversified plan is to invest in every kind of asset.
How does one achieve diversification?
Many people don’t want to spread their cash out in multiple assets because they find it too difficult to monitor and maintain. If that is the case, retirees and those nearing retirement should consider several potential sources of income streams. Each of these assets offers different benefits and risks, and growth potential.
Social Security
Although it is a dependable income source, retirees should not regard Social Security as their sole source of retirement money. In 2020, Social Security paid out an average of $1,503, an amount that is insufficient to meet most retirees’ needs.
Fixed instruments
Debt instruments that pay fixed amounts of interest, such as bonds, are commonly used to build diverse retirement blueprints. Interest from these kinds of assets is usually paid on a semi-annual basis. The principal invested goes back to the investor upon maturity.
Stock market
While the market offers high growth potential, recent volatility makes it clear that such growth often comes with higher risks.
It’s critical when considering this option that you clarify how much risk you are willing to take and whether you have time to recover from any losses you might incur. The COVID-19 pandemic has made Wall Street’s outcomes even more unpredictable, meaning it could take years for seniors who invest too heavily in the market to recover from a downturn. Retirees could find they must withdraw more significant amounts of their cash when stock prices are down, leading to faster depletion of retirement savings.
Be sure you consult with a knowledgeable financial planner to determine whether you have the right amount of money invested in stocks.
“Safe money” vehicles
The cornerstone of a sound retirement is safe money products such as permanent life insurance and annuities. Instead of adding these proven products as afterthoughts, building your portfolio around them makes sense. Owning risk-averse, tax-advantaged products, many of which provide guaranteed income streams, will help you in several ways.
You will be able to plan better, knowing that you have a predictable source of income. Also, unlike stocks and other assets, your principal is protected. And you have the opportunity to use these products to create a legacy for your loved ones. Safe money products like annuities and life insurance also have unique tax advantages that other cash management tools lack.
Depending on your appetite for growth and risk tolerance, there are other possibilities to diversify your retirement portfolio. Before committing to any of these more “exotic” investments, you need to spend time doing your research and due diligence. Then speak to a trusted advisor who will tell you the TRUTH about money and not just try to sell you something.
Financial mistakes can be detrimental to your happiness when you no longer work. The good news is that taking advantage of viable alternatives to traditional planning and creating a safer, more robust “hybrid” portfolio can help you avoid making those mistakes.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
Retirement can mean many different things to many people. For some, it will be a time to travel and spend time with family. For others, it will be a time to start a new business or begin a charitable endeavor. Regardless of what approach you intend to take, here are nine things about retirement that might surprise you.
1. No Age Restriction on When You Can Retire
In the past, most people retired around age 65. However, retiring later in life has become more prevalent in recent years. In fact, there’s no age restriction on when you can retire. As long as you have the financial means to do so, you can retire at any age.
Don’t roll the dice when it comes to retirement, make a plan and review it. (pxhere.com)
2. Retirement Income Can Be Taxable
Depending on your retirement account type, you might have to pay taxes on your retirement income. If you have a traditional IRA, you may owe taxes on the money you withdraw in retirement based on your overall income. If you have a Roth IRA, you won’t owe any taxes on the money you withdraw.
3. You Might Need to Adjust Your Withdrawal Rate
The 65-and-older population is the fastest-growing age group in the United States and has grown by 34.2% over the past decade. The percentage of money you can safely withdraw from your retirement account each year depends on several factors, including the size of your nest egg and how long you expect to live. However, as a general rule of thumb, you should withdraw no more than 4% of your nest egg each year.
4. Consider Delaying Your Social Security
You’ll receive a reduced benefit if you start collecting Social Security benefits at age 62. For example, suppose your full retirement age is 67, and you start collecting benefits at 62. In that case, you’ll receive only 70% of your monthly benefit. If you wait until age 70 to start collecting, you’ll receive 132% of your monthly benefit. The average Social Security retirement benefit is $1,536 per month or about $19,000 per year. The maximum possible Social Security benefit for someone retiring at full retirement age in 2020 is $3,345 per month or $39,000 annually.
5. Don’t Forget The Cost Of Nursing Homes.
Most health insurance plans don’t cover the cost of long-term care, such as the cost of a nursing home. Consider purchasing a long-term care insurance policy or set aside funds to cover any future care costs. The average cost of nursing home care in America is expected to be more than $8,000 a month by 2023. However, actual costs will vary from state to state.
6. You Might Have to Downsize Your Home
If you plan on downsizing your home in retirement, you might be surprised to learn that the cost of living in some areas is quite high. For example, the cost of living in Manhattan is more than double the national average. As a result, you might have to downsize your home to a smaller apartment or condo.
7. Consider Working in Retirement
If you don’t have enough saved for retirement, you might need to work during retirement. In fact, about one in four Americans over the age of 65 are still working. Working during retirement can help supplement your income and allow you to stay active.
8. You Might Need to Save More Than You Think
The amount of money you need to save for retirement depends on a number of factors, including your lifestyle and how long you expect to live. However, as a general rule of thumb, you should aim to have at least 10 times your annual income saved by retirement. For example, earning $50,000 a year, you should aim to save at least $500,000 by retirement.
Bonus Fact About Retirement: Don’t Forget About Inflation
Inflation will have a significant impact on your retirement savings. For example, if inflation is 3%, the cost of living will be 33% higher after 10 years. As a result, you’ll need to save more money for retirement than you think.
The future points to one conclusion: The 65-and-older age group is expected to become larger and more influential. Have you made arrangements for health care expenses? Are you comfortable with your decisions? Have you considered market volatility? Inflation?
Research shows that the average American has $95,776 saved for retirement, and one in three Americans have no retirement savings. Suppose you don’t have enough saved for retirement. In that case, you should consider working during retirement, downsizing your home, or delaying your Social Security benefits. You should also be aware of the potential costs of nursing care and long-term care. Finally, remember that you might need to adjust your withdrawal rate as you get older. With careful planning, you can ensure a comfortable retirement.
A retirement strategy is not a “set it and forget it” proposition. You should review your strategy annually to ensure you are on track to reach your goals. How have you prepared for retirement? Are you on track to reach your goals? Have you even defined your goals? Take a few minutes and conduct personal evaluation.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
With prices continuing to skyrocket, Michigan residents and business owners search for the reason behind the perpetual inflation, and when it might end.
Global issue as well
Many economists and local business leaders say increasing costs for businesses are the driving force behind rising prices. And that continuing inflation is a concern not only statewide, but nationally and globally as well.
As the world emerges from the emergency status of the COVID-19 pandemic, business owners and consumers are fighting against ongoing residual effects, namely inflation. Due to supply issues during the pandemic and current labor shortages, prices for everyday goods have skyrocketed, with consumer prices up 9.1 percent over year end June 2022. U.S. Bureau of Labor Statistics
Exercise patience
Despite the economic concern, Keith Morgan, president and CEO of the Wyoming-Kentwood Chamber of Commerce, advises community members to, “Temper your decisions…exercise patience. It’s not as bad as they make it seem…and it’s not as good as some people think it may be.”
Keith Morgan, president and CEO of the Wyoming-Kentwood Chamber of Commerce. (Courtesy)
In regard to business owners, “The biggest impact right now that businesses need to be aware of, the key is, preparation,” said Morgan to WKTV. Most small businesses are not prepared for crises such as a pandemic. “A business is going to typically have a 6-month runway (also known as a reserve) if they are in a good position…some may have 12 months. Very few are going to have 24 months.”
With the pandemic lasting longer than businesses anticipated, several owners found themselves floundering.
“What a lot of people are experiencing,” continued Morgan, “is that they are having to pivot. They are forced to reevaluate their paradigm. The businesses that have done well are the ones that are finding ways to provide different services or provide different products…and finding avenues to be more efficient.”
Government help available
Morgan also revealed that government help is available for businesses, but that many organizations are hesitant to take advantage of different funds that are available, such as ARPA (American Rescue Plan Act) funds, due to not having information about those advantages.
Local Chamber of Commerce networks offer professional advisors and relationships business owners can take advantage of, and that can help them understand that information so they can make better decisions.
Some aspects of the inflation crisis, however, cannot be avoided.
Labor shortages
Labor shortages have had a large bearing on inflation. With fewer workers available for businesses to draw on, they are finding the need to offer incentives, such as higher pay rates and benefits. Something that will make a “significant difference” in employer expenses, Morgan said.
Tim Mroz, senior vice president of Community Development for The Right Place. (Courtesy)
Tim Mroz, senior vice president of Community Development for The Right Place, agrees that one of the prevailing struggles is “the ability for employers to stay competitive with wages, and employees to keep up with the cost of living.”
Offering such incentives, however, increases cost to the employer. “Companies just can’t eat that total cost,” Morgan said. “So that cost has to be passed on to the consumer who is buying your service or product.”
The company that offers that service or product now must raise that rate to be able to account for the additional cost to their business. Add in meeting profit margins and expectations from investors, and that cost increases exponentially.
Supply chain issues
Supply chain issues are also a large factor of inflation.
“The good news is that we are seeing progress,” Mroz continued. “I think we’ve gotten beyond the emergency situation we were in a year ago during COVID. The supply chain issues we’re seeing today are a little more targeted at certain materials.”
Those manufacturers who are still experiencing supply issues, however, are now finding the problem compounded by rising prices when they can acquire those materials.
“Steel prices are still a challenge, both for construction steel and coiled steel.” At local steel manufacturers, Mroz said, “There is very little inventory. What they do have they are moving as fast as possible.
“Since 2020 to current quarter, construction prices have just about doubled. If it’s not under control soon, we’re going to start seeing pullbacks in the construction and development industry. That’s concerning because we need housing.”
Jason Parsons, senior construction project manager for Habitat for Humanity of Kent County, told WKTV that “All of the materials I have delivered to site, they are all adding a fuel surcharge onto the bill, which didn’t used to be there. We are getting regular cost increases on windows, siding, roofing.”
Parsons says it is not any one thing causing the increase.
“I think it’s the supply chain problems, it’s the delivery chain and trucking costs, manufacturers are having a difficult time keeping enough labor. They aren’t producing as much as they were, so they are charging more for what they are producing.”
Compounding the problems brought on by a lack in available materials is a shortage of truck drivers. That shortage has cost site workers delays as they wait for materials to be delivered.
“It’s a synergistic type of system that one thing doesn’t just affect one other piece,” Morgan explained. “One thing can affect 17 other pieces down the road, and they all work together.”
A social aspect also comes into play due to a growing mentality that there is no better time to raise rates because people are expecting it. Morgan mentioned the current gas market, observing that prices are unlikely to decrease back to yesterday’s normal, even if cost improves for the buyer because “(consumers) are used to paying it, and willing to pay it, and are paying it,” thus increasing the buyer’s profit margin.
These thoughts are supported by a current podcast, Trend Talks with ITR Economics, specifically episodes from “The Consumer, Interest Rates, and Gas Prices” with Alan Beaulieu, March 18, 2022, and “Pricing at the Peak” with Connor Lokar, January 14, 2022.
Over the 12 months ended June 2022, the Consumer Price Index for All Urban Consumers increased 9.1 percent. The 9.1-percent increase in the all items index was the largest 12-month increase since the 12-month period ending November 1981. U.S. Bureau of Labor Statistics
Will consumers see a decrease in prices?
Morgan says yes, but it will take time.
“Inflation will decrease due to what the market can bear,” he explained. “Prices are based off of what people will buy.”
Parsons agreed.
“It’s all supply and demand. If supply increases and demand goes down, the prices will come down. They have to.”
Federal Reserve taking action
The Federal Reserve has already taken action by purposely increasing their rates.
“The Federal Reserve has the most impact on the value of a dollar,” Morgan said. “They can change the numbers, which will tighten up the financial market and the base has to follow suit. If they (Federal Reserve) tighten up the economy, and people aren’t able to go out and get as many loans, they can’t do as many things, then that will typically drive the prices back down because you have a surplus in the market.”
No easy fix
Even so, Morgan believes it will be a minimum of a year to bring the economy back down from inflation, with economists saying it could be as long as 18 to 24 months. But Morgan cautions that a lot can happen in 24 months, and to “temper your plans and expectations. There is really no easy fix.”
Both Morgan and Mroz agree that Michigan is not alone in its struggles.
A global problem
“This isn’t a Michigan-specific issue,” Mroz said. “It’s a national issue, I would argue that it’s even an international issue. Everybody is dealing with this right now, with global finance as connected as it is.”
Close to retirement?
When asked how the average consumer can prepare or help themselves right now, Morgan said each individual and family situation is different and dependent upon their needs but did suggest that those close to retirement pull their money from the market now and put that money in a savings account with very low risk.
“Economists are saying that, unless you have a 2-year runway where you can stay in the market without making any change, you need to get your money in a place where you’re not going to earn much interest, but at least you’re not going to lose much either, because the markets have trended downward,” Morgan said.
Despite the difficulties many individuals and business owners face, Morgan offers hope.
“We are not in an economy where we don’t have money,” Morgan explained. “We are experiencing inflation and it’s a concern, but it’s not such a concern to the extent that we are going to change our buying habits or change our lifestyle.”
If you’re a woman in or near retirement, let me ask you this: “How do you plan to take what you’ve so diligently saved and turn it into a lifetime stream of dependable, predictable, tax-advantaged income?”
Five reasons women should consider using annuities to create more prosperous, less stressful retirements. (pxhere.com)
If you’re like many of us, you probably don’t have a ready answer to this question. That’s because you’ve been busy doing “all the right things.” You’ve been working, saving, maximizing your 401 K, paying off debts, being a caregiver, running a household, etc. It’s likely you haven’t really had time to think about what to do when the time comes to stop working and live on what you’ve accumulated.
I want to suggest: Take some time to consider annuities carefully. After spending time studying this often overlooked, but powerful financial vehicle, I’ve come to believe that nearly every woman planning on retiring could benefit from the features found in annuity products.
Here are a few reasons you should consider an annuity when it comes time to empty your “accumulation” bucket.
An annuity creates guaranteed income for life. When you deposit a lump sum into an annuity, you enter into a contract with an insurance company in which the company guarantees you income for the rest of your life. This will eliminate a chief concern of many women entering the retirement phase of their lives, namely, running out of money too soon.
Flexibility and customization. Annuities have come a long way in the past few years, offering a full spectrum of long-term care and inflation protection features. No longer are you constrained to a “one size fits all” annuity. These new kinds of annuities now provide for a new level of customization, safety, and functionality.
Annuities provide predictability. Many people, especially those in their pre-retirement and retirement life stages, want to know exactly how much income they will be available when they retire. If predictability is one of your top priorities, then an annuity can provide that.
Zero maintenance. When you agree to the terms of the annuity contract, you’ll be assured of a steady income for life even if you live for another 50 years after retiring. An annuity is one of the few available financial products you can actually “set and forget.” there is nothing to keep tweaking or moving around; no more crossing your fingers every time the market hiccups.
Tax benefits by using an annuity for a portion of your nest egg allow that portion to grow tax-deferred, just like the money in traditional retirement accounts. That means if you don’t take out all the money for a while, you could see a significant tax reduction in retirement.
There are many other reasons that an annuity, while it may not be for everyone, is still worthy of your attention as you enter retirement. Partnering with an annuity specialist will allow you to examine these safe money alternatives more thoroughly to see if they will work in your particular situation.
If you’d like to know more about how women can use annuities to create safer, saner, more prosperous post-work lives, email or call me, and I will be happy to send you educational information to help you make the right decisions about your retirement blueprint.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
The IRS restricts specific investment options for an IRA.
These restrictions do not allow investment in collectibles, antiques, and other assets. Here is a list: If an IRA invests in collectibles, the amount invested is considered distributed in the year invested. The account owner may have to pay a 10% additional tax on early distributions.
Learn what a prohibited investment in an IRA is important in retirement planning. (pxhere.com)
Here are some examples of prohibited assets held in an IRA: • Artwork • Rugs and other home furnishings • Antiques • Precious metals, some exceptions for gold bullion • Gems, diamonds, other precious stones • Stamps and coins as collections • Alcoholic beverages • Certain other tangible personal property based on the exact nature of the asset • A partnership or company that owns sells or buys these items could be a named asset within an IRA. • Insurance products are also not allowed except for annuities.
Assets that are allowed to be held in an IRA include: • Stocks • Bonds • Mutual funds • Real Estate Investment Trusts • Brokerage accounts • Banks products such as CDs and savings account • Insurance company annuities
If your IRA is engaged in any prohibitive practice, you may be exposed to being taxed as a distribution and also be liable for a 10% penalty.
Remember that an IRA is just a tax-deferred receptacle for invested assets. Almost any category of investment can be placed there, and different IRA custodians make their money by selling and managing these assets. If you open one at a bank, you’ll be able to invest in CDs or savings accounts. If you open it at an insurance company annuity could be a viable option. If you select to open an IRA at a brokerage and mutual fund company, you’ll be able to invest in mutual funds, stocks, bonds as well as other options.
Always make sure your IRA matches up with your goals, and if you do not fully understand the investment options available to you, get a second opinion. Owning an IRA can be a massive advantage to you in later years, make certain your IRA is designed for your specific period and goals.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
First and foremost, I want to let you know that I would never try to sell you on anything. I have learned in my 40 years of experience that if I try to talk you into something, anybody can come right along and talk you out of it so, that is not my objective. However, with math, science, and reason, I would like to reaffirm some very important facts and figures about your retirement planning:
Math and science are key in helping with retirement planning. (pxhere.com)
1. We all know the market is cyclical, it goes up, and it goes down. We have had the longest upmarket, “Bull Market,” in the history of the stock market; over the last nine years. Thus, Reason alone, tells us that we are due for a market correction, “Bear Market.” Math and science prove that we are due for a soon coming market correction. Just to name a few of the catalysts of a possible Bear Market, but not limited to, are these indicators:
• The most significant “Buyback” in the history of the market took place in the last quarter of 2018. A “buyback” is essentially corporations run out of ideas to increase stock market shares and dividends of their company. They are buying back their stock held in foreign countries and inflating their profits. As of October of 2018, there were over $800 billion in stock buybacks, a stock market record. Corporations used funds from $2.6 trillion dollars sitting overseas.
• The tariffs imposed on foreign countries in June 2018.
• The housing market, as interest rates increase, so will adjustable rate mortgages increase. A Zerohedge chart reflects that home-builder stocks are already dropping as lumber prices forecast a drop in the housing market.
• Interest rates tend to go up when the federal reserve unwinds its balance sheet and adds to the supply of Treasuries and mortgage-backed securities on the market. When interest rates go higher, stock valuations need to go down with a lower P/E ratio. (Profit /Expense ratio)
• Federal Reserve policy. A JP Morgan study reflects that the Federal Reserve is decreasing its balance sheet of treasuries and mortgage-backed securities by $50 billion a month, which is known as Quantitative Tightening, which is projected to continue to at least the end of 2020.
• Valuations. The United States Stock Market is the most expensive in the world at this moment. The Buffett indicator is flashing red with a total market capitalization vs. GDP (Gross Domestic Product) of 150%. Studies reflect that any ratio above 115% is an indicator that the market is significantly overvalued.
2. Historically the S&P time-line for recuperating from market corrections is between 13 to 22 years. Studies reflect that 64% of the time, the S&P is either losing ground or making up losses. Let me ask the question, “Going into retirement, do you want the 64% chance of a market correction and taking 13 to 22 years to recuperate the retirement savings you’ve accumulated over your lifetime?”
Mortality tables reflect that one retiring at age 65 will live 20 to 25 years.
3. Mathematically, it’s a proven fact that if a retiree experiences double-dipping (losing value in their account and drawing income from their account simultaneously) at the beginning of their retirement, they will outlive their retirement funds before they outlive their retirement life. This is known as the “Sequence of Returns.” Also, add the devastating fact of fees, the account now has triple dipping!
4. Psychological studies prove that retirees with a guaranteed, known, and predictable source of income live a much happier, stress-free, and worry-free retirement life.
5. The Fixed Indexed Annuity (FIA) relieves merely the risks of outliving one’s money and the burden of trying to manage and chase market returns and trying to avoid market losses of managing a retiree’s portfolio. It gives a guaranteed, predictable income for life as well as a projected income, based upon only upside market growth. It automatically tracks this upside market growth.
I trust that the above information on math, science, facts, and figures will assist in journeying into a peaceful, stress-free, worry-free retirement.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
Transitioning from being a saver to a spender means you will be required to not only keep close eye on your investments, spending and taxes, but for also creating your own “paycheck.” (pxhere.com)
“Transitioning from saver to spender can be a disconcerting shift for many seniors. A more systematic approach to spend-down can help.”
Transitioning from being a saver in the accumulation phase to a spender in the spend-down stage of your financial life means you will be required to not only keep a close eye on your investments, spending, and taxes but for also creating your own “paycheck.”
This paycheck might result from living off the interest or dividends from investments for some retirees. Others may prefer more predictable income sources, including annuities and Social Security. These “safe money” assets can help you achieve more peace of mind and perhaps cover your basic living expenses.
Shore up your emergency savings
It’s crucial to take a systematic approach to the problem of how best to spend your money in retirement. You should ensure you have enough money to cover unexpected expense to last at least a year. Suppose you’re worried about having to sell off investments in a bear market to cover emergencies. You might want to discuss rebalancing your portfolio with your advisor, perhaps using more liquid assets.
Include predictable income streams, using annuities and life insurance
Most planners understand, at least on a fundamental level, the power of annuities to help their clients avoid running out of money when they retire. After all, almost every financial services company offers annuity products, and they have done so for many years. Modern retirement research has produced volumes of data-based reports confirming the value of an annuity in a retirement portfolio. Life insurance and annuities may suit retirees who desire the protection of their principal, a predictable stream of lifetime income, long-term care options, or want to leave a legacy to a family member.
Despite the positive data surrounding annuities, many advisors are reluctant to offer them to their clients. This reluctance is often because they believe there will be pushback from clients who have heard negative things about the product through the media or online.
Many popular financial entertainers such as Dave Ramsey have been openly antagonistic about annuities and continue to spread myths and misconceptions to their viewers.
However, continuing changes in retirement plan structure and funding of employer plans have caused more people to dig deeper into safe money and income products to create their pension plans.
Since 1974, the traditional defined benefit (DB) plan, which provided retirees with benefits based on final salary and years of service, has disappeared from the private sector. Replacing it is the direct contribution plan in which employees and their employer regularly contribute to accounts in the employee’s name. Direct contribution plans benefit companies by lowering their expenses. But they place the burden of retirement success squarely on the shoulders of the individual. If you participate in a workplace plan, both longevity risk and performance risk have been shifted to you. Standard direct contribution plans do not guarantee your account will provide lifetime income and running out before you die is always a distinct possibility.
That’s why most retiree portfolios will benefit from strategically designed insurance and annuity products. Strategically designed life insurance is another way to create more predictable, tax-advantaged revenue streams. Properly structured, life insurance offers investments like stocks, bonds, CDs, etc. Annuities relieve the consumer of the need to set aside additional money to offset potential risk and fees for managing the account.
If fear of managing your retirement accounts paralyzes you and causes you stress, simply pass it to a risk bearer, an insurance company. Let the annuity provide you with a safe and secure income.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
by Redfin, a full-service real estate brokerage, found that 68.8% of home offers written by Redfin agents nationally faced competition in February. (pxhere.com)
LANSING – “Pretty much every offer I put was a shot in the dark, where you’d just cross your fingers and pray and hope that it gets accepted,” said Corbin Holwerda of Grand Rapids.
Holwerda is a first-time homebuyer who has been looking for a house in Grand Rapids since mid-January.
“I’ve put in seven or eight offers, and it’s really tough because half of those I’m losing to all-cash offers,” he said. “I’m still a young adult. I don’t have $250,000 in the bank that I can just front and put up for a house.”
A recent study by Redfin, a full-service real estate brokerage, found that 68.8% of home offers written by Redfin agents nationally faced competition in February. That’s the highest share reported by its agents since at least April 2020.
“Even if we are able to go above asking (price), there are still people waiving inspections and going $50,000, $60,000 or $70,000 above asking in some cases,” Holwerda said.
According to a new Congressional Research Service report, the main factor causing record-high home prices is that more people are looking to buy houses than there are houses for sale.
Cash offers can help the sale of a home move more quickly. (pxhere.com)
It’s a question of supply and demand, the report said.
“We have people selling homes with 40 offers on one home,” said Shirley Smith, the executive officer of the Hillsdale County Board of Realtors.
“There is a huge amount of competition right now, and the reason for that is because inventory is low. House prices have been going up the last few years and inventory has not increased appreciably,” Smith said.
“I think we’re also seeing more cash offers because those are the offers that get accepted more quickly,” she said.
Sometimes offers are contingent on the sale of the buyer’s current home, a bank loan or inspections to be done, and that can take more time, she said.
But cash offers move the process along more quickly.
“Generally, when we have high housing prices like this, it doesn’t go on forever. I think I, and most Realtors, expect that in the not-so-distant future there will be a change in the trend,” she said.
According to Smith, projections from the National Association of Realtors say housing prices may increase 5% in the coming year, which is much lower than several years past.
“That might be a tapering off in the market,” she said.
According to the Case-Shiller Detroit Home Price Index, home prices in Detroit have gone up about 8.6% per year since January 2012. But from January 2021 to January 2022, prices rose 13.9%.
That can be compared with neighboring states’ large cities, like Cleveland, rising 13.3% and Chicago, rising 12.5%. Nationally, home prices rose 19.1% from January 2021 to January 2022, according to Case-Shiller’s national data.
“The interesting thing here (regarding the increases) is that in traditional years, only 3 to 5% of the housing on the market is actually new houses,” said Wayne State University economics professor Allen Goodman.
“As a result, most housing supply occurs kind of above the middle of the market. We don’t allow people to build new, low-quality houses,” said Goodman, who specializes in housing and health economics.
He said some new houses are resold multiple times and “as a result, the housing gets toward the upper end of the market, and what’s left there is sometimes said to filter down to other buyers.”
“A lot of this goes back to COVID, in part,” said Goodman. “To keep the economy growing, the federal government and Federal Reserve banks have had what were historically low interest rates. What it meant was that people who wanted to buy houses were faced with mortgage rates of like 3%.”
A combination of low interest rates and a smaller-than-traditional supply lead to increases in the price of housing. (pxhere.com)
“A combination of low interest rates and a smaller-than-traditional supply lead to increases in the price of housing,” Goodman said.
Monitoring estimates of the value of his own Huntington Woods home over the years, Goodman said it lost half its value from 2007 to 2009.
The value can vastly change by month. In one recent month, his home’s value was estimated to have increased around $30,000, but in a previous month it was estimated to have dropped $20,000.
“But really over the past year, it’s pretty much been the same, at least according to Zillow,” he said, referring to the online real estate-market national company.
Capital News Service is provided by the Spartan News Room located at Michigan State University. CNS reporters cover state government for member newspapers and digital media outlets across the state of Michigan.
Many people are shocked at how much of their tax-deferred balances will be erased by current taxes when funds are withdrawn. (Supplied)
Because of the accumulation benefits of tax deferral, many individuals have successfully created substantial IRA or 401(K) accounts or other qualified plans.
Many people are shocked at how much of their tax-deferred balances will be erased by current taxes when funds are withdrawn. It is not uncommon for these accounts to have amassed seven figures of total dollars. It is also usually the case that little attention has been focused on what will happen to one’s hard-earned dollars when taking money out of the Plan.
Reductions Due To Taxes Can Be Dramatic
The tax-caused decrease in total assets going to family members can be dramatic. For example, we recently reviewed a client situation where the plan holder had a $6 million balance. The client wished to begin distributions at age 70 ½. Further, the client did not require any distributions to maintain their lifestyle and wanted all the funds to go to children. The client was disappointed to learn that, under the client’s current structure when distributed over 10 years, the $6 million would be slashed because of taxes by $2.6 million and only yield $3.4 million net proceeds to the beneficiaries.
The $2.6 million of asset erosion occurs because all funds coming out of a qualified plan are fully taxable as ordinary income. And, contrary to common belief, assets in an IRA do not benefit from a step-up basis when passed on. Thus, while this case was a reduction of some 43%, other plans can be crushed by as much as 75% because of income and estate taxes.
The existing Plan had other vulnerabilities, as well. One was the assets were all held inequities subject to significant drops in value. Over a lengthy period, the probability that such a reduction will occur is substantial.
How To Increase Net To Beneficiaries Without Risk
Fortunately, a solution that could produce guaranteed results was possible in this particular situation. We set up a plan where taxable distributions from the IRA will be used to purchase the appropriate type of life insurance with the family named as beneficiaries. The client and the client’s family can be much better off with this solution because:
Assets are shifted from taxable to non-taxed.
Total net after-tax assets to the family are significantly increased.
The increase in assets is immediate.
There is no need to enter speculative investments to achieve the gain.
The value of the account is not subject to market losses.
The results are guaranteed by some of the most substantial financial companies in the world.
The entire Plan can be implemented on a set-it and forget-it basis.
Implementing IRA Rescue For Your Qualified Plan
Each rescue of an IRA or 401K or other qualified plan is custom-made for your circumstances. For individuals with separate plans and assets, net benefits can increase from some 25% of asset value to many times the asset value. For married couples inheriting each other’s IRAs, the after-tax yield can be much higher than otherwise. IRA Rescue can be achieved by converting a client’s weakest assets – those with the most significant tax liabilities – to non-taxed assets.
And while a plan’s asset value is significantly increased immediately, the tax liability on distributions from the Plan is spread over time, much to the client’s advantage.
All plans can and should be coordinated with your accounting and legal, trust, and estate advisors, and we do that as a matter of course.
A complete solution is available with plan distributions able to be executed on schedule, trustees guaranteeing that policy premiums are paid as required, trustees delivering gifts to beneficiaries, and taxes able to be paid at the funding source. These solutions can truly be established to set and forget while delivering much more financial benefit to those for whom a client wished to provide financial security.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
By David Stanley Integrity Financial Services, LLC
Hurricanes to the weather can impact the U.S. economy. (pxhere.com)
Hurricane Ida, COVID- 19 and a February winter weather disaster in the United States and Mexico; many other catastrophes and worries abound. What issues currently confront the U.S. economy? The answer is multi-level but can be summed up as:
1) The collapse of an economy (potential)
2) Inflation
Are your important retirement dollars safe? If you have a fixed/indexed annuity, your money is still protected. Think of the simplicity the annuity brings to life. No fees, no loads, no market risk. It is not stocks, bonds, or mutual funds, which rely on fluctuating investment trends. It’s dependable fixed/indexed annuities that will fund Baby Boomer retirement.
Safety is not an issue with fixed annuities. The insurance company doesn’t borrow money to make risky or speculative investments. What keeps annuities safe? Think of it this way. Are you worried about your homeowners, auto insurance, life insurance company going under? No. Remember, annuities are not speculative investments, but deposit accounts backed up by cash on hand.
The insurance industry was “the last man standing” during the Great Depression when banks and investment firms failed. Then as now, this sector remains the last bastion of financial freedom. The fixed annuity company already has its portfolio to back these contractual guarantees.
Annuities provide a level of economic security that cannot be duplicated by other investments like stocks, bonds, CDs, etc. Annuities relieve the consumer of the need to set aside additional money to offset potential risk and fees for managing the account.
If fear of managing your retirement accounts paralyzes you and causes you stress, simply pass it to a risk bearer, an insurance company. Let the annuity provide you with a safe and secure income.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
“Risk can be a hard concept to calculate, remember, it is not a calculated risk if you haven’t calculated it.” – Dave Stanley
Photo from Pxhere.com
In the 2009-2010 NFC Championship Game, the Minnesota Vikings and the New Orleans Saints were tied 28-28 late in the fourth quarter, with the Vikings close to field goal range. Vikings quarterback Brett Favre took the snap, rolled to his right, and saw about 30 yards of open field in front of him. Even though he had injured his leg in the third quarter, all Favre had to do was lurch forward for 10 yards, fall down, and have a first-and-10 inside field goal range.
Instead, Favre reverted to what has made him a legendary hero (and sometimes a goat) many times in his Hall of Fame career. He planted his foot and threw cross-field where Tracy Porter intercepted him at the 22-yard line. At that moment, Minnesota’s fine season, Favre’s great comeback, and Vikings fans’ hope for a Super Bowl were thrown away. The Saints ran out the clock and kicked a field goal on the first possession of overtime.
What happened? In a pressure situation, with everything on the line, instead of making the high percentage play, a superstar did what felt familiar and comfortable – not what was safe.
You see the analogy coming. Quarterbacking a football team and managing your retirement portfolio are wildly different activities. It is doubtful that we will ever achieve a “Brett Favre” status within your success. Yet, a failure on our part to “read the field” could be more devastating to a family than the shock and disappointment felt by the players, coaches, and fans after that heart-breaking loss.
It is common for us as individuals to be the “quarterback.” If that’s the picture we are projecting, who is the head coach and team owner? Making all of the decisions in your planning can be very difficult, but help is often needed.
We have moments when we cannot handle any more risk (take the first down!). We know we do not want to lose another dime (just get me into a good field position!). It does not make any difference if you are convinced you can choose the stocks, funds, IPO’s, REITs, or whatever will right their portfolio and make you look like a hero. Most of us may not be ready to take that step with you.
During that game, there were millions of people watching. Some of those people were former NFL players. Some were Hall of Famers. Some were even Hall of Fame quarterbacks. But, when Favre planted his foot, there was no one on the planet more comfortable than he was. A lifetime of training, conditioning, practice, big games – even Super Bowls, had prepared him for that throw. It was the most comfortable thing in the world until Tracy Porter.
We may have the knowledge and experience but being all things in all situations just isn’t possible any longer. We all need a “Coach” to make sure we call the correct play. The disappointment over a lost opportunity while “going for field position” will be nothing compared to the fury if you try to “force a throw” they did not want you to make in the first place.
In plain English, we should never be comfortable with risk unless we know and understand all your options.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
“Planning to retire? Be sure you have your exit plan in place and remember, when you retire, you never have a day off.” Dave Stanley
Retirement is not likely to look anything like your parents’ retirement. The economic impact of government actions related to the pandemic, inflation caused by loose monetary policy, and stock market volatility have created craters in even the best-laid retirement plans. Many Americans are considering taking the money and running, opting for early retirement.
Joel along-haul trucker, says he was initially going to wait another five years before retiring. “Dealing with a lack of parts for my trucks because of supply-chain problems, frustrating and time-consuming regulatory changes, and inflation have made my life challenging. I’m retiring now instead of later,” he explained.
Retiring early is a decision many Americans have already made, mainly because their workplaces reduced or eliminated staff. Some workers were offered attractive incentives for taking early retirement by companies feeling the pinch of COVID lockdowns.
Regardless of whether your retirement plans look solid, it’s still a great time to review your portfolio’s balance and think about for how long you want to continue working. Fortunately, the basics of creating a secure retirement remain the same, except for perhaps a few additional COVID-related caveats. Here are a few things to consider:
Don’t count on working forever. Until COVID- working until you dropped seemed like a viable plan. However, results from a 2021 study by the Employee Benefits Research Institute (EBRI) confirm previous findings that indicate nearly 50% of all retirees left the workforce before the original target retirement date. This reality means that people in their 50’s and 60’s should have emergency plans solidly in place.
Reduce or eliminate as much debt as you can. It’s common sense to make debt reduction a priority. You don’t want to take a credit card balance, car payment, or student loan with you when you retire, especially when retiring in an unpredictable economy.
Have a health insurance strategy in place. If you find yourself retired before you are eligible for Medicare, you may have to find an affordable policy for those “gap years.” Even if you do get Medicare, you’ll need to plan for things like co-pays and uncovered expenses. One thing to consider is a health savings account, or HSA, which can help you grow a pot of emergency cash you can use when you retire. Ask your financial advisor to explain the many benefits of HSA plans and help you determine if starting one will work for you.
Finally, no matter what you decide about retiring, meet with a qualified retirement income planner. Ultimately, deciding when to retire may or may not be up to you. However, if you are thinking about leaving the workforce, you should sit down with your advisor and discuss every potential pitfall and how to avoid them.
Your advisor will suggest more strategies and recommend the right products to help you avoid running out of money when you stop working.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
“If you are within a couple of years of retirement, you will want to know the answer to this critical question.”- Dave Stanley
Photo from pxhere.com
Here in New Mexico, it isn’t unusual for someone ordering Mexican food to be asked, “Red or green?” In fact, “Red or green?” was adopted as the official state question in 1999. (Did you even know such a state question existed?) Chile is the fiery soul of New Mexican food, and everyone here has their opinion about which chile sauce goes best with which dish.
I like to ask my clients and prospects the same question regarding their retirement savings. “Do you prefer green money or red money?” Red money, I define as that portion of savings a person is willing to expose to market risk. With red money, you accept the possibility of losses, even significant ones. The desire to chase after market gains is perfectly understandable given our current low-interest environment that punishes savers. Nevertheless, risking your life savings in hopes of getting (often mythical) higher returns may not be the ideal decision for those who are within a few years of retiring. That’s because when you choose red money, your wealth is exposed to both upside and downside risk.
On the other hand, green money is the portion of your savings you want to safeguard. Green money is cash used to create income streams that provide you with more safety and peace of mind. Green money is for those who are unwilling to accept even small losses. Instead, green money people add products offering lower rates of return in exchange for low to no market risk. Real green money has no downside risk and only upside potential.
Choosing red or green is not black and white. Despite what you may have heard from your advisor or some TV money guru, neither red money nor green money is inherently bad or good. After all, you are an individual with your own level of risk tolerance and unique money goals. What you need your savings to do when you retire may be very different than what your friend, neighbor, or co-worker needs.
Knowing this, you shouldn’t be asking, “What’s better, red or green money?” but rather, “What percentages of each type should I have in my portfolio to achieve my goals?” “What portion of my cash am I comfortable with exposing to risk?” “What do I ultimately want this money to do for me?” If you’re wanting to move forward slowly and consistently, instead of getting caught in a cycle of two steps forward, three steps back, you’ll need to examine products that can help you accomplish that.
For example, certain types of life insurance and annuities offer you the possibility of creating predictable retirement income with little to no risk exposure. Exploring your safe money options is not only prudent but necessary as we continue to experience market upheavals and a precarious and unpredictable economy.
Summing it up: A successful retirement requires that you know with what percentage of risk you are most comfortable with, how much you can afford to lose during a market downturn, and what you want your wealth to accomplish. How much red or green money you put into your portfolio is a critical decision that every retiree needs to make. A seasoned retirement income planner can assist you in making that decision and ensuring that every one of your dollars does the work of three or four.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
ALLENDALE, Mich. — Charities and nonprofit organizations will need to develop stronger ties with their supporters because of the COVID-19 pandemic, according to a Grand Valley professor.
photo from pxhere.com
The pandemic challenged charities and nonprofit organizations in an unprecedented fashion, forcing them to strategize virtual ways in connecting with donors online, said Salvatore Alaimo, associate professor of nonprofit management, within the School of Public, Nonprofit, and Health Administration.
However, Alaimo said charitable organizations rely on the social capital of networking, relationships, trust and reciprocity that they build and maintain with supporters.
“This social capital feeds into whether people donate, whether they decide to volunteer their precious, expendable time or whether they want to serve on the board of your organization,” said Alaimo.
The holiday season usually means an increase in donations to charities and nonprofits, and after nearly two years of pandemic restrictions limiting in-person gatherings and events, this season is even more important.
Giving USA’s 2021 annual report stated Americans responded by donating more than $471 billion to charities and nonprofits in 2020, a 5.1 percent increase over 2019. Foundation giving also increased to more than $16 billion in 2020, a 19 percent increase over 2019.
According to the Urban Institute, about 1.5 million charitable organizations function in the United States. While charitable giving has increased, Alaimo believes they will face long-term ramifications due to the challenging times.
“For nonprofits, it’s going to be an adjustment of priorities,” said Alaimo. “Staff leadership and boards of directors will have to go back to basics. Who’s the audience they are trying to reach, who are the stakeholders, and how do they maintain relationships if we’re being kept separate from each other.”
More than 80 percent of nonprofits have budgets less than $500,000, so they faced challenges even before the pandemic, said Alaimo.
In-person events are integral to forming connections between supporters and the nonprofit, said Alaimo. But, with the pandemic limiting in-person functions, charities resorted to a myriad of virtual events.
Auctions, fun runs and even golf outings moved online, making those all-important connections difficult to maintain. For all the good technology did to ease the logistics of fundraising, it still created separations between organizations and supporters, said Alaimo.
“As I remind my students, just because we are electronically networked does not mean we are good at networking,” said Alaimo. “Now that COVID has come along, the isolation factor of technology is amplified. My concern is all of that is going to put a dent into social capital, and that’s not going to bode well for nonprofits.”
When it comes to selecting nonprofits that are reputable and allocate money efficiently, Alaimo said there are several websites and databases to help such as GuideStar, Charity Navigator or the Better Business Bureau.
For Abby Lininger, remaining true to herself has been the key in being successful. (Supplied)
By Sheila McGrath WKTV Contributing Writer
When you’re a woman working in a male-dominated field, it helps to have a strong sense of self.
After practicing as a financial advisor for more than a decade, Abby Lininger has definitely acquired one. But it wasn’t something that happened overnight.
“It wasn’t a short journey,” she said.
Lininger, 34, runs the Drake Financial Group office at 2034 84th St. SW in Byron Center. She helps young people open their first investment accounts, manages accounts for retirees, and meets with clients of all ages who seek her help getting their financial lives in order.
Although she believes things are changing for the better, the world of finance is still a man’s world, Lininger says. Even in 2022, men are often the financial decision-makers in a family. And when it comes to seeking help from a financial advisor, they’re likely to look to another man for advice.
According to the Certified Financial Planner Board of Standards Inc., women make up about 23 percent of financial advisors in the U.S.
Abby Lininger with her family. (Supplied)
But there are still a lot of clients out there for someone who doesn’t quite fit the traditional mold, she said. She loves the opportunity to serve a different clientele, whether it’s single, professional women, or young couples who got the brush-off from another advisor because they didn’t have a big enough bank account.
“I don’t look like most advisors you might have met before, but I’m OK with that. I don’t need everybody to be my client. I am looking for people who don’t want that stereotypical financial advisor,” she said.
Lininger graduated from Hope College in 2009 after studying international relations and Spanish. Although her father was a financial advisor, she didn’t see herself going into the same field.
But with the Great Recession making it hard for new graduates to find jobs in 2009, she decided to go to work for her father’s business after all. Her father, Mark Drake, started Drake Financial Group in Portage, where Lininger grew up.
As a new college grad who was also a woman in a male-dominated field, she struggled to gain credibility at first, she said. It’s a field where there’s a lot for anyone to learn – male or female. But she was also very aware of not looking the part of a typical financial advisor. She didn’t wear suits. She didn’t have straight hair. She jokes that she didn’t even sound like a financial advisor. People on the phone would ask her “How old are you?”
She made it through the early years by consulting with others in her office who had more experience, and always continuing to learn. And in time she learned to leverage her laid-back style into a strength. When she’s dealing with clients, she likes to be casual and relatable, using plain language to describe complex topics.
“I think the biggest thing was the realization that I don’t have to be someone else to be successful,” she said.
Lininger graduated from Hope College in 2009 and then joined her father’s business, Drake Financial Group. (Supplied)
She said that she does think things are changing. More women are taking charge of their own financial lives, and she thinks that she definitely has more female peers than her father did when he was starting his career.
Lininger opened the satellite office of Drake Financial Group in Byron Center in 2014 after she and her husband, Brad, moved to the area from Portage. Opening her own office has helped her pave her own path and establish her own credibility, apart from her father’s, she said.
“I’m here creating my own reputation, and I think that is a beautiful thing,” she said.
“It’s fantastic if you inherit an annuity, but you need to understand the tax implications and how to make them more favorable.” – Dave Stanley
You cannot escape taxes if you inherit an annuity. Fortunately, though, understanding how inherited annuities are taxed can help you avoid paying more in tax than necessary. Your beneficiary status and how the payouts are structured determine tax liability for inherited annuities. You can do a few things to ease that tax burden and perhaps defer payment.
For instance, if you are a surviving spouse inheriting an annuity, you have a few options. You can choose to pay taxes on all the money right now or exercise what is called the “spousal continuation provision.” The spousal continuation provision is a tax strategy you use to avoid paying taxes now. You could also spread your tax payments over time by opting for non-qualified stretch payments based on your life expectancy. All of these options have their pros and cons, and you should always involve your financial or tax advisor in the decision process.
If you are a non-spousal beneficiary who inherits an annuity, the rules work a bit differently. Still, there are ways to help minimize your tax bill. For example, you could use what’s called a bonus annuity to help mitigate your tax burden or choose periodic payments. These types of annuities provide bonus money to incentivize you to purchase them.
You can also use other techniques if you have access to a tax planner. Your planner may recommend what’s known as a “1035 exchange,” in which you exchange an inherited annuity for a different annuity that is similar but could provide better benefits. The main reason you would even consider doing a 1035 is if a newer annuity offers you better benefits or more favorable terms. The main thing to remember with a 1035 exchange is that you can’t swap a qualified annuity for a non-qualified annuity to avoid paying taxes.
If you inherited the deceased annuitant’s IRA andthe annuity, you might be able to roll the inherited annuity into a personal IRA in your name. The roll-over option is only available to those who inherit both the IRA and annuity. If you could do a roll-over, you would have to follow the inherited IRA tax rules.
Qualified versus non-qualified annuities.
If you want to understand how an inherited annuity is taxed, two terms that are critical to grasp are “qualified” annuities and “non-qualified” annuities. An annuity is qualified if you purchase it with pre-tax dollars via a tax-advantaged account such as an IRA or 401k.
The IRS treats distributions paid to an annuitant from qualified annuities as taxable income in the year they are received. Qualified annuities are also required to follow required minimum distribution rules. Any withdrawals before age 59 ½ may be subject to the 10% early withdrawal penalty.
Non-qualified annuities arefunded with after-tax dollars in a fashion similar to a Roth IRA. There’s a caveat, though. Although contributions to a non-qualified annuity are not taxable, growth and earnings on the initial investment are tax-deferred. Tax-deferred means you will pay ordinary income tax on the earnings portions of your distributions. However, there are no RMD issues, and you won’t have that 10% early withdrawal penalty.
Summing it up: An inherited annuity can be a welcome windfall or a potential liability. If you inherit an annuity, be sure you find an expert who can help you navigate the rules and suggest ways to avoid paying more in taxes than you must. The key is in understanding how the IRS treats specific kinds of beneficiaries and annuities.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
It is this consistency that will ultimately allow you to create more wealth both in and out of the stock market. (pxhere.com)
“The best way to measure your investing success is not by gains and losses but by whether you’ve improving your overall financial plan that is likely to get you where you want to go.” — Dave Stanley
On the most fundamental level, there are two different approaches to investing in the stock market: active and passive.
An active investor, relying on his or her personal skill, attempts to beat the market by investing in companies believed to have the most reliable long-term growth prospects. Such an investor may try and beat the market by jumping in and out at precisely the right times to maximize gains and avoid losses.
Passive investors, on the other hand, are looking to match market returns by spreading money around between different types of investments. How their money is allocated will affect their returns, but passive investors are interested in simply taking market returns and not trying to get an edge on everyone else in the market.
There is an obvious difference between the two strategies and, for most individuals, beating the market as an active investor is nearly impossible. Typical active investors, in fact, regularly underperform the market by 4-5%. Even professional investors have difficulty beating the market consistently. Most people wind up losing to the market.
That’s why, when discussing what course of action is best for an individual, financial guru Ben Graham stated that an individual “should act consistently as an investor and not as a speculator.”
Index Investing and the Single Investor
A stock index is a measurement of a segment of the stock market. These indexes are compiled from the prices of selected stocks, usually using a weighted average. Contrary to what you may think, an index (such as the S&P 500) is not the “pulse” of a market, but rather a tool used by investors and financial advisors to compare the returns on specific investments and to describe the moods of investors.
Indexes use a base value that represents the weighted average stock price of all the stocks comprising that particular index. The actual index number has much less importance than its percent change over time. It is this up or down movement that can give you an idea of how that particular index is performing.
Each index is calculated on an ongoing basis every day the market is open, and each reflects market conditions and the state of the economy differently. It is important to note, however, that the most referred-to stock indexes, like the NASDAQ and S&P 500 reflect only a portion of the actual market and not the whole market. So, while indexes give you a useful snapshot of market movements and the attitudes of investors and provide you with a better historical perspective, they are not as useful as forecasting tools. Indexes tend to be most helpful as a research tool when viewed over a long historical period to determine trends and changes in investing patterns. Using an index will provide an investor with a yardstick for comparison.
Far from being the refuge of the timid and inexperienced willing to earn less on their investments, index investing has proven itself to be an incredibly effective strategy that often outperforms similar active investing strategies. 80-90% of the time, taking market returns produced by index investing produces better results than similar active strategy.
Index investing allows even those who are not “bull market geniuses” or who do not possess degrees in finance to make smarter decisions when it comes to growing wealth. It is perhaps the very best way to participate in market gains without having to incur excessive exposure to risk and the many expenses of more active growth strategies. Index investing lets you simplify and streamline the investment process and become more consistent.
It is this consistency that will ultimately allow you to create more wealth both in and out of the stock market.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
Brian Long is a local business forecaster. Credit: GVSU
Modest, steady economic growth continues in West Michigan, yet supply and personnel shortages are hindering normal business operations, according to Brian G. Long, director of Supply Management Research in the Seidman College of Business at Grand Valley State University.
Long’s report for January showed positive numbers for employment, new orders and production, although Long called pending interest rate hikes and a looming situation in the Ukraine “the elephants in the room.”
“If a serious war breaks out and Russia invades Ukraine, all bets are off,” Long said. “Domestically, the greatest economic threat remains inflation. The next two or three reports may rise to a rate of 8 percent or so, and then begin a gradual decline for the rest of the year.”
Other highlights from Long’s report: • Sales/new orders rose slightly in January to +18, signifying that new orders of raw materials or services will be made soon • The index of employment was down in January to +13, from +17 in December; the most significant personnel shortages are in hospitality and service industries • Production index was down slightly in January to +15, from +16 in December
The Institute for Supply Management survey is a monthly survey of business conditions that includes 45 purchasing managers in the greater Grand Rapids area and 25 in Kalamazoo. The respondents are from the region’s major industrial manufacturers, distributors and industrial service organizations. It is patterned after a nationwide survey conducted by the Institute for Supply Management. Each month, the respondents are asked to rate eight factors as “same,” “up” or “down.”
For an audio of Long’s complete report, click here.
Sometimes a never-ending lifetime flow of income is a better option than a pile of money. (pxhere.com)
“A recent study by Oxfam explained the distribution of wealth which to many people is alarming. The report states that 85 individuals in the world have more combined wealth than the poorest 3.5 billion.” — Dave Stanley
It further states about our country: “In the US, where the gap between rich and poor has grown at a faster rate than any other country, the top 1% captured 95% of growth since 2019. During that time, 70% of Americans became poorer.”
The “rich get richer” as the old saying goes and the gap between rich and the number of poor widens every day. Of course, the obvious way to balance out the deficit would be to add all the money together and give each an equal share. If my memory of history is accurate, this has been tried in the past — it was called Communism.
I wish everyone on planet earth could have all their needs met and live a long and happy life. That being said, the rich will always have an advantage over the poor. Instead of discussing the variance between the rich and the poor, how about those of us in the middle, the other four billion here on planet earth? Those of us who work at a job, save money, and educate our children are the ones who are the middle class, so how do we get ahead?
In September 2020 a UC Berkeley study found that the wealthiest 1% of Americans saw their income grow by 31.4% between 2018 and 2020. Also, it was discovered that income inequality in the United States was the highest since before the Great Depression.
How did this all happen? How does such inequity occur? One actual reason why most in the middle class cannot move to a loftier position is our tax system. Workers are taxed at a different rate than investors — the difference between earned income and dividend and capital gains taxation is significant. If you work, your tax rate is higher than if you earn from your investments.
How do we accumulate more money? How do we become millionaires? My answer is simple: we don’t need to. Ask yourself, what good is a pile of money? Does it represent success? Does it acknowledge your efforts? Yes, it does, but it is not important.
What is important is cash flow, having enough money to live as well as you desire. Now I know there are those who desire to accumulate a large amount of money. To me, having an income that I cannot outlive is far more critical.
That being said, we in the middle class already have that option open to us, income we cannot ever outlive. It is called investing in an annuity.Sometimes a never-ending lifetime flow of income is a better option than a pile of money.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
DIAs offer several distinct advantages over kinds of safe money products. (pxhere.com)
“Does a deferred income annuity have a place in your retirement plan? It might fit in your portfolio like a glove.” — Dave Stanley
If you’re looking for payments that begin on a future date and continue for the rest of your life, your spouse’s life, or for a specific period, you might consider a deferred income annuity (DIA).
DIAs offer several distinct advantages over other kinds of safe money products. You won’t need to keep your eyes on the stock market, track interest rates, or calculate dividends. If you desire lifetime guaranteed income that you can’t outlive, a deferred income annuity will accomplish that. Having a DIA can give you more peace of mind knowing you will have a predictable income stream available when you no longer work.
For some, DIAs are an excellent selection for their retirement portfolios because they help defer taxes until later when you could be taxed at a lower rate. Other types of annuities are front-loaded, meaning you pay taxes upfront, perhaps at a higher rate.
DIAs are guaranteed by the issuing insurance company’s assets and are not subject to the ups and downs of the stock market. Also, since deferred income annuities don’t have account management and additional fees, ALL of your premium payments go to your monthly income.
When you choose a DIA, you decide how frequently to receive payments. Typically, deferred income annuity buyers can set payments for every month, yearly or quarterly.
Although DIAs are a less complicated safe money product, they are still highly customizable. Improvements in the DIA product mean that you have options to make your DIA do more for your retirement.
One question about annuities is what happens to your funds when the annuitant dies? Does the insurance company stop making payments? Do loved ones lose all the money put into the annuity? Customization allows payments to continue to designated beneficiaries, so it will enable guaranteed income to continue. There are many other ways to customize your annuity, including extending coverage for a guaranteed period, adding a second person to the annuity, and others. An annuity specialist can help customize one just for you and your circumstances.
Tax issues:
How your annuity proceeds are taxed depends on how you fund it. For example, you can purchase a deferred income annuity with proceeds from selling stocks or bonds, a business, or a home. You might also use cash from a maturing CD or money you’ve saved in a deferred annuity account. When you fund a DIA with lump-sum distributions from a defined benefit or defined contribution plans, SEPs, IRAs, 1035 exchanges, or Section 403b plan, the annuity is now a “Qualified Deferred Income Annuity.” You could also use a lump sum from a tax-qualified account, such as a 401k or traditional IRA. Remember to talk with your tax expert since your plan has been growing tax-deferred, and your payments will be taxable income.
Non-qualified deferred income annuities have not been tax-sheltered. They are funded with monies on which you have already paid taxes. Examples of non-qualified annuity money can come from selling a house, mutual fund, business, or other investment. They might also make sense if you receive large inheritance or proceeds from an insurance settlement.
When you start receiving annuity payouts from a non-qualified annuity, a portion of each payment is considered a return of principal and excluded from taxation. The amount excluded is calculated according to an “exclusion ratio.” You can usually find the details of the exclusion ratio on any quotes you get. Be sure to have your annuity professional explain this to you carefully before deciding on any product or company.
The bottom line: Deferred income annuities are an option for people looking to create a pension-like source of reliable income. Like a variable annuity, you won’t access your money for a specific number of years, allowing it to grow. Like an immediate annuity, DIAs have fixed payouts for life. Customization options will enable you to solve other issues, including ensuring income for a spouse or beneficiary.
If you are looking into deferred income annuities, speak with your qualified local expert experienced with the many types of annuities available. They will evaluate your needs and goals to determine if a DIA will solve the most critical issues.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
The leaders of three West Michigan nonprofits have joined forced to create a new collaborative initiative that will serve boys and young men of color under a single mission: becoming something they don’t always get the chance to see.
Cole Williams, o the Delta Project
“We Matter Now reflects the importance of seeing positive Black male leadership that will enable boys and young men of color to create positive change in our community” said Cole Williams, of the Delta Project, who is joined by Dondreá Brown of Young Money Finances and Henry Sapp of Better Wiser Stronger. “Boys and young men of color don’t believe they have an opportunity to change their lives because they don’t see enough successful men of color as role models.
“By sharing our lived experienced, We Matter Now strives to provide examples of what boys and young men of color can become.”
With multiyear financial support from Heart of West Michigan United Way, Brown, Sapp, and Williams have joined forces to serve as resource brokers for We Matter Now. The initiative curates its programming from a strengths-based approach, working to empower “at-potential” boys and young men of color and to equip them with the necessary tools to close the gap on education, wellness and financial achievement.
This year, We Matter Now will offer a conference, summer programming, a celebration and ongoing initiatives for approximately 60 at-potential boys and young men of color in grades 9-11. The inaugural We Matter Now conference will be held Friday, April 22 at Grand Valley State University’s Eberhard Center in downtown Grand Rapids, gathering 60 Black and Brown youth for a day of education, recognition, celebration and connection.
Those interested in joining the first We Matter Now cohort and attending the conference, which is free of charge to participants, can sign up online.
Dondrea Brown, of Young Money Finances
“Recognizing the power of words, We Matter Now seeks to serve ‘at-potential’ boys and young men of color, flipping the narrative that too often begins with ‘at-risk’ youth,” Brown said. “Our initiative strives to create a safe space, working to provide Black and Brown high school students with the tools, skills, resources and relationships needed to face challenges within their community.
“Henry, Cole and I appreciate the support from United Way, which has encouraged us to develop programming that will resonate with youth we are already working with in our community. Together, we are creating a road map that will help young men in West Michigan build deeper, stronger relationships and grow into leaders.”
As one of its first steps toward mobilizing the community for change, Heart of West Michigan United Way developed the Transformation Strategy in 2021 to close the economic and achievement gap for people of color in Kent County. Through this strategy, the organization created the Opportunity Initiative to provide local Black, Indigenous and People of Color, or BIPOC-led/founded grassroots organizations –including Young Money Finances, Delta Project and Better Wiser Stronger – financial and educational support through a one-time grant. United Way’s goal was to help build the capacities of small nonprofits and collaboratives that were already successfully addressing systemic change.
“United Way is funding the We Matter Now initiative because we saw how intimately these three organizations work to empower young Black and Brown men who struggle to achieve due to structural racism and other forms of oppression,” said Shannon Blackmon-Gardner, vice president of community impact at Heart of West Michigan United Way. “We are so excited to support their work and see the change, growth and impact that this collaborative will have on our young men of color.”
The theme of the first conference, Our Vision, Our Voice, Our Choice, underscores the initiative’s desire to have boys and young men of color be partners in what programming will look like. Sessions will focus on financial education, healthy behaviors and conflict resolution training, equipping attendees with the support to be impactful members of the community.
Henry Sapp, of Better Wiser Strong
“We Matter Now will serve as a resource broker, collaborating with curated organizations to connect attendees to the high-impact services, information and support they need,” Sapp said. “Research shows it’s critical for young people to have adults who believe in and support them in order to develop a positive sense of their future.
“Youth who can see a future for themselves are more likely to exhibit positive behaviors, such as good decision-making and goal planning, while avoiding problem behaviors and poor choices.”
Through its three partner organizations, We Matter Now will offer summer programming to those who attend the conference as a way to extend the conversation and share resources. This programming will include:
Better Wiser Stronger will offer its Blueprint Journal workshop, which is part of its boys-to-men curriculum and designed to provide a blueprint for success.
The Delta Project will offer its Delta Conversation, which uses storytelling and video editing to tell personal stories in a meaningful and digestible way.
Young Money Finances will offer three sessions – Young Money Managers, Young Investors and Young Entrepreneurs – enabling teens to sharpen their skills around managing money, investing and starting a business.
We Matter Now will also hold a celebrationin August before the start of the new school year to celebrate the connections forged during spring and summer, connect families of attendees with one another and promote a successful return to the classroom.
Limit the amount of personal information you share online, including birthdays, addresses, account numbers and passwords, and your Social Security number. (pxhere.com)
“Don’t be quick to click, make sure it’s legitimate.” — Dave Stanley
The world has gone digital, so have your assets and much of your personal information. Cybercriminals are aware of this shift but are also mindful of how ill-prepared many people are when protecting themselves in the online world. While cybersecurity might seem complex, a little bit of common sense will go a long way in minimizing the threats that could expose you.
Beware before you share.
Limit the amount of personal information you share online, including birthdays, addresses, account numbers and passwords, and your Social Security number. If a government agency contacts you asking for your government-issued ID, verify the request by contacting the agency. Scammers like to pose as the IRS and other agencies in hopes of convincing their targets to share valuable personal data. If you encounter one of these scams, you should terminate contact immediately and report it to the proper authorities.
Shop smart, shop safely.
These days, nearly all of America shops online. Sadly, many unscrupulous websites out there fail to handle your data with the level of care it deserves. This leaves your data vulnerable to hackers that use these sites to steal credit card information in hopes of making a quick buck. It’s essential to shop at reputable online stores only. Look for badges of trust and read independent reviews so you can gain a sense of a website’s credibility.
Security Software
Anti-virus software and firewalls provide an added layer of defense and should remain on at all times. Sensitive information stored on a device should be encrypted and backed up if it is compromised by malware. When choosing passwords, make sure that they are complex and unique to every account. It would help if you also made sure all devices sharing a network with yours use anti-virus software.
Stay safe while using public Wi-Fi.
Public Wi-Fi is available in most stores and restaurants, but connecting to these networks could be risky. If you must connect to public Wi-Fi, use a virtual private network, and avoid viewing sensitive information or making bank transactions.
Know the signs of a scam
It is important to stay in the know about trending scams. There are, however, red flags that are common to a wide range of scams.
An attempt to gain trust by impersonating a government agency or familiar contact
Contact from out of the blue claiming a problem or prize
Scammers use emotional appeal in an attempt to create urgency; they may pressure you with jail time or other penalties
Unusual requests regarding the method of payment, you might be asked to use a money transfer company or purchase pre-loaded gift cards so you can provide them with the number on the back
Be wary of familiar contacts requesting personal information. A popular scamming tactic is to gain access to the account of someone you may know or trust. The scammer will then message you to get personal information or money from you.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
The average consumer may not be aware of some more attractive CD terms as they are typically reserved for large investors and therefore offered to the bank’s wealthiest clients. Some types of CDs are not provided directly by an issuing bank but are made available through financial professionals licensed to sell the specific CD instrument in question. That is why investigating the certificate of deposit alternatives with a financial professional is one of the essential fact-finding missions in which a conservative investor can engage.
Traditional CDs: Traditional certificates of deposit are sold directly by banks to the general public. The purchaser agrees to hold their funds for a specified period with the bank to attain a fixed return on their investment when the period ends, usually referred to as the certificate’s “Maturity Date.” If the depositor wants to withdraw funds before the maturity date, penalties are generally applied, and this is pretty much the only way you can lose principal with a traditional CD investment.
Brokered CDs: Brokered certificates of deposit are sold through securities broker-dealers and deposit brokers rather than directly through the issuing bank. Brokers purchase the CD from the issuing bank on the investor’s behalf.
Market Linked, or Structured CDs: Market-linked certificates of deposit, also referred to as structured certificates of deposit, are a brokered type of CD offering the safety of FDIC insurance with more attractive interest rates than traditional CDs. They usually pay both a guaranteed interest rate and a variable interest rate, which is tied to a market vehicle such as stocks, bonds, commodities, or indices. Conservative investors find these desirable investments as the FDIC insurance minimizes risk to principal, and the higher interest potential dramatically reduces risk to losses due to inflation.
Deposit Brokers have been selling Market Linked CDs (MLCDs) in the United States since Chase Bank introduced them in 1987, but they were designed for wealthier investors and were out of reach to average investors. While today’s MLCDs are available for a minimum deposit of $1,000, many brokers may require a higher account size.
Bump-Up CDs: Bump-up certificates of deposit offer a lower initial interest rate than traditional CDs to investors but provide them with a one time option to “bump up” their rate if interest rates rise during the CD term.
Step-Rate CDs: Step-rate certificates of deposit are designed to “step” up or down to a predetermined rate at a certain point in the term of the CD based on specific circumstances.
Callable CDs: Callable certificates of deposit are offered at higher than traditional rates to investors with the bank retaining the option to “call” the CD after a specified period.
And beware: your interest may be taxed annually as it is earned even though you will not receive it until your maturity date.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
If you’re a woman, who is divorced, in the process of divorcing, or is contemplating a divorce in the near future, understanding a few key things about the financial implications of a marital dissolution will go a long way toward helping you regain the confidence you need to take control of your wealth.
After a divorce, some women, especially those whose spouses were in charge of the household finances; find themselves in the confusing and uncomfortable position of having to learn personal finance from scratch. They now have no choice except to take responsibility for earning, saving, paying bills, and investing for retirement.
It’s unfortunate that many divorced women find themselves faced with some unpleasant and unanticipated realities in their post-marriage lives. For example, women often greatly underestimate the costs involved in the divorce process itself. The website Divorcestatistics.info puts the average cost of a divorce in America at around $15,000.
Beyond the legal costs, things such as lack of financial literacy, standard office expenses, the need to hire valuation and other financial experts, and even the emotional states of the divorcing couple can contribute to the high price tag a divorce usually carries.
Divorcing women face other nasty surprises
• Health insurance costs are often more than they envisioned. Usually, divorced women will have to pay their health insurance premiums, which can be staggering. Nationally, health insurance premiums have been increasing by an average of 5% every year, for the last six years. In some states, coverage for a single woman can be more than $1,000 per month! • They need to find a job as soon as they can. Economic necessity can mean that some divorced women will see they need to start working quickly. Those who were stay-at-home wives and mothers may not have had time to acquire new skill sets or update their existing skills, making it difficult to get hired or get better wages. • They could find themselves homeless. In a typical divorce, the family home can be the most valuable financial asset as well as a big bone of contention. If divorcing women do want to stay in the home because they have young children or due to an emotional attachment, they may have to fight to keep it. Fighting with an ex-spouse over the home is an expensive and time-consuming process that could quickly deplete any savings and create even more stress. • Alimony and/or child support is not what they thought it would be. For whatever reason, some divorced women overestimate how much money they feel their ex-spouse should pay in spousal or child support. The amounts arrived at during the divorce process may be much, much less than anticipated.
These and other unwelcome surprises in the aftermath of a divorce don’t have to spell disaster, though. With a little pro-active “divorce planning,” you can lessen the sting of the process and begin to regain control over your financial future.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
Retirementplanning is crucial enough as it is for a married family. Still, it becomes even more critical for singles or unmarried couples considering that they are not accorded the same tax breaks and advantages which a couple gets upon marriage. Statistical studies report that single women are the fastest-growing group of home buyers, while the number of married families buying a house has dropped by 10% in the last ten years.
With increasing divorce rates and increased tolerance of non-traditional definitions of the concept of a family, the taxation laws have not been able to keep up with the growing purchasing power and numbers of people who fall into the definition of singles or unmarried couples, including divorcees, same-sex couples and singles living in an extended family with other members. What proactive financial planning steps can people who fall under these characterizations take to ensure a secure future?
If you live with a partner, the best thing you can do is be transparent about your finances and discuss all expenses and bills payable, to work out a satisfactory arrangement. This could mean a pooled fund for monthly payments and joint assets, while payments towards significant individual assets are paid for the owner(s).
Remember that there will be no legal recourse in case of a split and the asset not being in your name. If you have joint ownership of assets, contact a lawyer to put in writing arrangements for the distribution of assets in case of a split. A commonly availed arrangement for partners buying a home is under a JTWROS or joint tenants with the right of survivorship. A living trust can be set up to avoid the gift tax, which would be payable for transferring property to the surviving partner.
Funds in 401(k) plans, IRAs, and other retirement plan vehicles will not automatically be transferred to the survivor, as in the case of a spouse. Take special care to nominate your partner as the beneficiary and change as and when necessary if you are single. Write powers of attorney for each other, which would only come into effect in the sudden demise of one partner, or extreme disability. Note that unmarried couples do not have a right to each others’ social security benefits. IRA rollovers from one partner to the other are also taxable, unlike those for a married couple.
Also, laws governing rights over assets and responsibilities for joint debts may vary depending on the state of residence and the contracts signed with financial organizations.
All this means is that for single and unmarried live-in couples, retirement planning needs to be taken a bit further than that done by a married couple to offset the lack of clarity in governing laws and tax benefits. Everything has to be put down in writing in clear terms. It is generally advisable to consult a financial planner and set your finances to go in the right direction before jumping into a long-term live-in arrangement.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management
One of the fundamental financial concepts, the time value of money (TVM), says that the current value of a sum of money is worth more than the future value of that same amount. The principle of TVM comes from implicit costs, known as “opportunity costs.” It would be best if you evaluated when deciding whether it’s better to receive money now or take payments in the future. One way to think about opportunity costs is that they represent the value of what you stand to lose or possibly miss out on when you choose one possibility over another.
For example, a favorite uncle left you $100,000 in his will with the option to either take the whole sum now or get the money in equal payments over three years and receive an additional $500.00 for doing so.
For most of us, the instinctive choice is to take all the money right now and not wait three years to put it to use. By taking that money immediately, you can put it into an account that offers you continuous compounding interest that is likely to equal or exceed the $500.00 bonus you get for waiting. You could invest in an appreciating asset such as real estate or a cash-flowing business when you get the money right away. You might purchase stock with the potential to gain value or lock-in value with an annuity or life insurance policy. Because it provides immediate purchasing power, most people consider a present-day sum of money more valuable than a future sum.
Understanding the theory of the time value of money can help you avoid making costly mistakes with your money. You may one day face the decision to take a lump sum of money immediately or wait until later. Fortunately, there is an easy formula for the time value of money that takes the guesswork out of the decision. In this formula, the following variables are accounted for:
FV= Future value of money
PV= Present value of money
i=interest rate
n= number of compounding periods per year
t= number of years
Using the TVM formula, we can determine whether it would be wiser to accept the $100,000 from your uncle as a lump sum or in equal annual payments over three years along with the additional $500.
We have established that by not taking the lump sum, you stand to gain an additional $500. The question is, how much money could you earn over the three years if you were to receive the $100,000 and invest it today? Let’s say you take your $100,000 and invest it in a fund with an average annual rate of return of 6%. You want to know how much your investment will grow by the 3rd year. To figure this out, input the variables, and you will be left with the future value of your investment for a particular year.
119,101.60=100,000 x (1+.06)3
As you can see, after the 3rd year, your initial investment will have earned you an additional $19,101.60. Now that you know, taking the lump sum seems like a no-brainer.
If you are taking an active approach towards investing for retirement or other financial goals, do not be fooled by the allure of “free” money in return for splitting the sum into smaller payments. Carefully evaluate the pros and cons of each option while keeping in mind your own financial goals. Use the TVM formula, compare the potential gains and remember this; a dollar today is worth more than a dollar in the future.
Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or Register for Dave’s FREE Newsletter at 888-998-3463 or click this link: Dave Stanley Newsletter – Annuity.comDave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.
