Showing posts with label Financial Advisor St. Louis MO. Show all posts
Showing posts with label Financial Advisor St. Louis MO. Show all posts

Wednesday, March 22, 2017

The Federal Reserve Raises Benchmark Interest Rate

Monetary policy is normalizing due to economic improvement.

Provided by Benjamin Bogetto


On March 15, the Federal Reserve raised the benchmark interest rate by a quarter-point to a range of 0.75-1.00%. The increase was widely expected, and it represented a vote of confidence in the economy.1
 
This was the central bank’s second rate hike in three months, and Wall Street took it in stride, with the S&P 500 rising nearly 15 points on the day. One reason for that may have been the Fed’s latest dot-plot forecast, which remained as it was when the last interest rate adjustment was made in December. The Fed still projects a total of three hikes for 2017.1,2 
   
When the economy picks up its pace, the Fed responds. In the past several months, job growth and economic output have been steady, and inflation pressure has built to where consumer prices are rising close to 2% a year. The central bank thinks economic growth is now significant enough to warrant a series of small rate hikes.3
       
As interest rates slowly rise, retirees & savers could benefit. While higher rates do imply costlier borrowing, there are also some positives that come with tightening. Rising rates are good for interest-bearing bank accounts and fixed-rate investment yields. Higher interest rates encourage banks to lend more, improving the availability of credit.
   
Rate increases often promote dollar strength, meaning the dollar could buy more abroad – a perk for travelers. Even with slim inventory in the housing market, home sales could now get a boost – prospective home buyers may not want to wait much longer to arrange a mortgage. If interest rate adjustments occur two or three times a year (as they once commonly did), then investors may interpret Fed monetary policy statements less obsessively and focus on market fundamentals to greater degree.4

As Fed chair Janet Yellen commented to reporters after the Federal Open Market Committee’s decision Wednesday, “The simple message is, the economy is doing well.” Sustained economic improvement commonly leads the central bank to increase interest rates.1     

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

 Citations.
1 - marketwatch.com/story/fed-raises-interest-rates-by-a-quarter-point-sees-two-move-moves-this-year-2017-03-15 [3/15/17]
2 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=3%2F15%2F17&x=0&y=0 [3/16/17]
3 - nytimes.com/interactive/2017/03/15/business/federal-reserve-interest-rates.html [3/15/17]
4 - bankrate.com/finance/federal-reserve/benefits-higher-interest-rates-from-federal-reserve-1.aspx [3/15/17]

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Tuesday, February 28, 2017

Little Things That May Help Your Retirement Saving


Over time, these seemingly small factors could make a major difference.

Provided by Benjamin Bogetto

 

Saving for retirement takes decades and demands the investment of significant amounts of your income. As this major effort unfolds, you should recognize that some subtle factors and seemingly minor decisions could end up making a sizable and positive impact on your financial future.  
   
Your investment yield may be less important than the amount you save. Beating the S&P 500 feels great, but outperforming the market is not your foremost goal. Your real retirement saving objective is to accumulate sufficient assets – enough to provide adequate income in the “second act” of your life.
 
How much control do you have over your investment returns? The short answer is very little; market cycles, macroeconomic factors, and the behavior of institutional investors influence them profoundly. On the other hand, you have direct control over your savings rate. The more you pour into your retirement accounts, the more dollars you are giving a chance to compound.

As a hypothetical example, say two people have balances of $100,000 in their respective retirement accounts. Ariel earns a 10% annual return and puts $10,000 into the account at the start of every year for 20 years. David gets a 12% annual return from his account, but he never adds to its $100,000 principal during those 20 years. After 10 years, Ariel’s account balance is $434,638, while David’s is $310,585. After 20 years, Ariel has $1,302,775, while David has $964,629. Result: David falls behind, even while achieving a 2% greater return.1
 
Investment account fees can take a toll. Account fees are little things, but their impact over the years can be enormous on a retirement saver. This is why you may want to place your invested assets into accounts with minimal fees, annual fees of well under 1%.

Everyone talks about the several hundred dollars a year you can save (and invest) by swapping out your daily, flavored latte for a regular cup of joe, but you might as well keep ordering lattes. The money lost to lattes pales next to the money you could potentially lose to account fees. Demos, a public policy think tank, estimates that high expense ratios and administration fees on investments in a typical workplace retirement plan may cost a middle-class, dual-income household as much as $155,000 in retirement assets over a lifetime.2
     
What you avoid doing may help your effort as well. Resist the impulse to deviate from your long-term retirement planning and investing strategy without careful examination. Be wary of the emotional reactions to headlines or market disruptions, those little voices urging you to get out of the market or tilt your portfolio one way or another. Refrain from siphoning down the money in your retirement accounts and using those dollars for another purpose. Stick to your plan, ride through the turbulence, and avoid making a quick, impetuous decision that might do your retirement funds more harm than good.

On that note, remember that tuning out the noise is okay. The financial world is a noisy place, a place of non-stop trading and information flows. Any notable news development becomes a front page (or home page) item. It may seem risky to accept so much of this breaking news passively, with no reaction on your part as an investor or a saver – but passivity has its virtues. A little passivity – in your temperament, in your investment approach – may leave your retirement savings in surprisingly good shape over the long run, compared to the savings of someone who reacts to every temperature shift in the market climate.

Pay attention to these little things as you pursue big financial objectives. In hindsight, you will likely be glad you did.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - bankrate.com/finance/investing/saving-money-or-investing-more-important-over-time.aspx [6/25/16]
2 - forbes.com/sites/arielleoshea/2016/08/08/3-common-saving-mistakes-you-can-fix-right-now/ [8/8/16]

Financial Health...For Now & Tomorrow



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Telephone - 314-858-1602

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St Louis, MO 63127

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Thursday, February 16, 2017

Life Insurance Before Age 40


Millennials have good reasons to obtain coverage now.

Provided by Benjamin Bogetto



Do you plan to buy life insurance before you turn 40? Maybe you should. You may save money in the long run by doing so.

At first thought, the idea of purchasing a life insurance policy in your thirties may seem silly. After all, young adults are now marrying and starting families later in life than past generations did, and you and your peers are likely in excellent health with a good chance of living past 80.

In fact, LIMRA – a life insurance research and advocacy group – recently surveyed millennials and found that 30% thought saving for a vacation mattered more than buying life insurance coverage. The perception seems to be that insurance is something to purchase when you start a family or when you hit your forties or fifties.1
  
Getting a policy before you marry or start a family may be a great idea. The reasons for doing so might be compelling.
  
Your premiums will be lower. The older you become, the more expensive life insurance becomes. Data compiled last summer by Life Happens, a non-profit life insurance education effort, confirms this.

Life Happens asked several prominent U.S. insurers to supply their preferred premium rates for healthy non-smokers aged 25, 35, 45, and 55 buying a $250,000 whole life policy (the kind designed to build cash value with time). The average preferred premium rates for 25-, 35-, and 45-year-olds fitting this description were:

25-year-old male: annual premium of $1,987
35-year-old male: annual premium of $2,964
45-year-old male: annual premium of $4,747

25-year-old female: annual premium of $1,745
35-year-old female: annual premium of $2,531
45-year-old female: annual premium of $3,947
  
The numbers starkly express the truth – whole life insurance premiums more than double between age 25 and age 45.2
  
Premiums on term life policies are even lower. Term life insurance is essentially coverage that you “rent” for 10, 20, or 30 years – it cannot build any cash value, but in some cases, a term policy can be adapted or exchanged for a whole life policy when the term of coverage ends.
   
If you are young, term coverage is remarkably cheap. NerdWallet recently researched term life premiums for healthy 30-year-olds. It found the following sample rates for 20- and 30-year term policies valued at $250,000:

30-year-old male: annual premium of $156 for a 20-year term policy, $240 for a 30-year term policy
30-year-old female: annual premium of $141 for a 20-year term policy, $206 for a 30-year term policy

The downside of term coverage is that you are “renting” the insurance. Just as you cannot build home equity by renting a house, you cannot build cash value by “renting” a policy.3 

A whole life policy may become quite valuable. As Life Happens notes, the average such policy bought at 25, 35, or 45 may have a guaranteed cash value of anywhere from $100,000-200,000 when the policyholder turns 65, assuming the policy is kept in force and no loans are taken from it. Universal life policies permit tax-deferred growth of the cash value.1,2

Make no mistake, a whole life policy is a lifelong commitment. It must be funded every year or it will lapse. That should not scare you away from the value and utility of these policies – the cash inside the policy can often be borrowed or withdrawn. Sometimes families use cash value to fund college educations or help with medical expenses or retirement. Such withdrawals can lessen the death benefit of the policy, but what is left is often adequate. Cash withdrawals from a whole life policy are usually exempt from taxes, just like the death benefit.1    
    
Maybe this is the time to put time on your side. Age-wise, life insurance will never be cheaper than it is for you today. Getting coverage now – even if you are single – may be a money-smart move as well as a great life decision. 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - cnbc.com/2016/10/17/think-about-life-insurance-sooner-rather-than-later.html [10/17/16]
2 - lifehappens.org/product-selector/comparing-the-cost-permanent-and-term-life-insurance/ [1/26/17]
3 - nerdwallet.com/life-insurance#basic [1/26/17]

Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

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Tuesday, January 24, 2017

How Much Will You Spend When You Retire?

Will you have enough money to make ends meet?

Provided by Benjamin Bogetto


You may have heard that people spend less once they are retired. Statistically, that is true. The question is whether a retiree has enough income to meet his or her expenses.

Ideally, retirees should be able to live comfortably on 70-85% of their end salaries and draw their retirement fund down no more than 4-5% per year during a 30-year retirement. Are these two objectives realistic for the average retiree household?1,2 

According to the most recently published Bureau of Labor Statistics data, a household maintained by someone 65 or older had a mean income of $46,627 in 2015 and a disposable income of $42,959 after taxes. That average retiree household spent an average of $44,664 in 2015. So, on average, seniors spent more than they had on hand.2,3

Basic math tells us that 46,627 is roughly 70% of 66,500 and roughly 85% of 55,000. So, a retirement income of $46,627 would correspond to about 70-85% of a typical middle-class salary in 2015. In other words, it appears all too easy for the middle-class worker to transform into the financially challenged retiree.

Why is the average retiree household spending more than its net income? Three possible reasons come to mind. One, the cost of living may be rising faster for retirees than some assume. Social Security bases its cost-of-living adjustments to retiree benefits on changes in the CPI-W (Consumer Price Index for Urban Wage Earners and Clerical Workers). Some economists think Social Security should use a different yardstick. Two, annual health care costs may suddenly jump for some seniors. Three, it is not unusual for new retirees to spend more than they anticipate as they travel and enjoy life.4

How do average retiree expenses break down? Housing costs accounted for $15,529 of that aforementioned $44,664 in 2015 household expenses. Transportation costs took another $6,846. Health care costs made up $5,756 of the total ($3,900 of that went to health insurance, $672 for medicines). Another $1,298 went for mortgage costs.2,3
 
When you spend more than you make in retirement, you dip into your savings. That fact takes us straight toward a larger problem.
  
Most baby boomers are approaching retirement with a savings shortfall. The 2016 Employee Financial Wellness Survey from PwC (PriceWaterhouseCoopers) found that 50% of baby boomers had less than $100,000 in a workplace retirement plan. So, drawing down that amount by 4% a year would bring them less than $4,000 in annual retirement income. Of course, some of these employees will be able to tap IRAs, brokerage accounts, or income streams from other sources – but when your workplace retirement plan savings are that scant after age 50, other sources must compensate mightily. For many retirees, Social Security will not take up the slack. The average projected monthly Social Security benefit for 2017 is just $1,360.2
 
From the numbers in this article, you can glean that the average American retiree faces more than a little financial pressure. If you are a baby boomer who has saved and invested for decades and wants to work longer to give your invested assets a few more years of growth and compounding, you may have above-average prospects for a comfortable retirement.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - cbsnews.com/news/how-much-retirement-income-do-you-really-need/ [3/3/16]
2 - fool.com/retirement/2016/12/18/how-much-money-does-the-average-baby-boomer-need-i.aspx [12/18/16]
3 - bls.gov/cex/2015/combined/sage.pdf [8/16]
4 - fool.com/retirement/2016/09/24/heres-why-your-social-security-check-is-hardly-goi.aspx [9/24/16]

Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

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Thursday, January 19, 2017

Making & Keeping Financial New Year’s Resolutions

What could you do (or do differently) in the months ahead?

Provided by Benjamin Bogetto

  
How will your money habits change in 2017? What decisions or behaviors might help your personal finances, your retirement prospects, or your net worth?
 
Each year presents a “clean slate,” so as one year ebbs into another, it is natural to think about what you might do (or do differently) in the 12 months ahead.
 
Financially speaking, what New Year’s resolutions might you want to make for 2017 – and what can you do to stick by such resolutions as 2017 unfolds?
   
Strive to maximize your 2017 retirement plan contributions. Contribution limits are set at $18,000 for 401(k)s, 403(b)s, most 457 plans, and the federal government’s Thrift Savings Plan; if you will be 50 or older in 2017, you can make an additional catch-up contribution of up to $6,000 to those accounts. The 2017 limit on IRA contributions is $5,500, and $6,500 if you will be 50 or older at some point in the year. (If your household income is in the six-figure range, you may not be able to make a full 2017 contribution to a Roth IRA.)1
 
Under 40? Set up automatic contributions to retirement & investment accounts. There are two excellent reasons for doing this.

One, time is on your side – in fact, time may be the greatest ally you have when it comes to succeeding as a retirement saver and an investor. An early start means more years of compounding for your invested assets. It also gives you more time to recover from a market downturn – a 60-year-old may not have such a luxury, but a 35-year-old certainly does.

Two, scheduling regular account contributions makes saving for retirement a given in your life – month after month, year after year. You can contribute without having to think about it, and without having to wait months or years to amass a lump sum. Those two factors can become barriers for people who fail to automate their retirement saving and investing.
 
Can you review & reduce your debt? Look at your debts, one by one. You may be able to renegotiate the terms of loans and interest rates with lenders and credit card firms. See if you can cut down the number of debts you have – either attack the one with the highest interest rate first or the smallest balance first, then repeat with the remaining debts.

Rebalance your portfolio. If you have rebalanced recently, great. Many investors go years without rebalancing, which can be problematic if you own too much in a declining sector.
 
See if you can solidify some retirement variables. Accumulating assets for retirement is great; doing so with a planned retirement age and an estimated retirement budget is even better. The older you get, the less hazy those variables start to become. See if you can define the “when” of retirement this year – that may make the “how” and “how much” clearer as well.
 
The same applies to college planning. If your child has now reached his or her teens, see if you can get a ballpark figure on the cost of attending local and out-of-state colleges. Even better, inquire about their financial aid packages and any relevant scholarships and grants. If you have college savings built up, you can work with those numbers and determine how those savings need to grow in the next few years.
 
How do you keep New Year’s resolutions from faltering? Often, New Year’s resolutions fail because there is only an end in mind – a clear goal, but no concrete steps toward realizing it.
 
Mapping out the incremental steps can make the goal seem more achievable. So, can visualizing the goal – something as simple as a written or calendared daily or weekly reminder may reinforce your commitment to it. Two New York University psychology professors, Gabriele Oettingen and Peter Gollwitzer, have developed what they call the “WOOP” strategy for achievement. Its four steps: pinpoint a challenging objective that can be met; think about the best result that could come from trying to reach the goal; identify any obstacles in your way; and distinguish the “if-then” positive steps you could take that would help you realize it.2
    
Financial new year’s resolutions tend to boil down to a common goal – the goal of paying yourself first. That means saving and investing money for your future rather than paying your creditors or buying expensive consumer items bound to depreciate. Think ahead – five, ten, or even twenty or thirty years ahead – and make this the year to plan to accomplish money goals, both big and small.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - kiplinger.com/article/retirement/T047-C001-S003-making-ira-and-401-k-contributions-in-2017.html [11/7/16]
2 - usatoday.com/story/money/2016/12/20/five-doable-strategies-financial-success-2017/95521556/ [12/20/16]

Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

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Wednesday, December 28, 2016

Do Our Attitudes About Money Help or Hurt Us?

We may need to change them to better our financial prospects.

Provided by Benjamin Bogetto

 

Our relationship with money is complex & emotional. When we pay a bill, go to the mall, trade in a car for a new one, hunt for a home or apartment, or pass someone seemingly poor or rich on the street, we feel things and harbor certain perceptions.
 
Are our attitudes about money inherited? They may have been formed when we were kids. We watched what our parents did with their money, and how they managed it. We were told how important it was – or, perhaps, how little it really mattered. Parental arguments over money may be ingrained in our memory.

This history has an effect. Some of us think of money, finance, investing, and saving in terms of getting ahead, in terms of opportunity. Others associate money and financial matters with family struggles or conflicts. Our family history is not responsible for our entire attitude about money – but it is, undoubtedly, an influence.

Our grandparents (and, in some cases, our parents) were never really taught to think of “retirement planning.” Just a century ago, the whole concept of “retiring” would have seemed weird to many Americans. You worked until you died, or until you were physically unable to do your job. Then, Social Security came along, and company pensions for retired workers. The societal expectation was that with a company pension and Social Security, you weren’t going to be impoverished in your “old age.”
  
Very few Americans can make such an assumption today. Many are unaware of the scope of retirement planning they need to undertake. An alarming 54% of pre-retiree respondents to a 2016 Prudential Financial survey had no clue how much they needed to save for retirement. Additionally, 54% had balances of less than $150,000 in their workplace retirement plans. Have they been lulled into a false sense of security? Did they inherit the attitude that when you retire in America, Social Security and a roof over your head will be enough?1

How can pessimistic attitudes about money, saving, & investing be changed? Perhaps the first step is to recognize that we may have inherited them. Do they stem from our own experience? Or are we simply cluttering our minds with the bad experiences and negative assumptions of years ago?
   
One example of this leaps readily to mind. Earlier this year, Bankrate surveyed investors per age group and learned that just 33% of millennials (Americans aged 18-35) owned any equities, while 51% of Gen Xers did. (That actually represented a dramatic increase: in 2015, only 26% of millennials were invested in equities.)2,3

College loan debt and early-career incomes aside, millennials watched equity investments, owned by their parents, crash in the 2007-09 bear market. Some are quite cynical about the financial world. A 2015 Harvard University study showed that a mere 14% of respondents aged 18-29 felt that Wall Street firms "do the right thing all or most of the time” as they conduct business.3
 
How do you feel about money? What were you taught about it when you were growing up? Did your parents look at money positively or negatively? These questions are worth thinking about, for they may shape your relationship with money – and saving and investing – here and now. 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto & Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - businessinsider.com/reasons-for-americas-retirement-crisis-2016-11 [11/29/16]
2 - ibtimes.com/should-you-invest-stock-market-why-millennials-might-be-missing-out-when-it-comes-2389589 [7/6/16]
3 - thestreet.com/story/13135109/1/why-millennials-dont-trust-wall-street-or-investing-in-stocks.html [5/2/15]

Financial Health...For Now & Tomorrow



Contact us Today

Telephone - 314-858-1602

10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127

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Location: St. Louis, MO 63127, USA

Tuesday, November 15, 2016

Could Insurance Save Your Retirement?

The right coverage might help to insulate you against a money crisis. 
  
Provided by Benjamin Bogetto


 
Most people begin insuring themselves when they marry or start a family. They buy coverage in response to two potential calamities – disability during their working years, and death.

Somewhere between youth and death comes retirement, and in retirement, the role of insurance is often downplayed. Does a retired multimillionaire really need a life insurance policy? Now that he or she is not working, what is the point of having disability coverage?
  
Make no mistake, insurance can play a vital role in retirement planning. It may help to keep a retiree household financially afloat in a money crisis. It can also be used creatively to address other financial concerns.
  
What can life insurance do for a retiree before he or she dies? Many permanent life insurance policies accumulate cash value over time. Potentially, that cash value could be tapped to pay off medical expenses, education debt, mortgage debt, or debts owed by a business. It could fund a buy-sell agreement. It could go into an investment vehicle that could later pay out income. While the death benefit of a policy may be reduced as a consequence, the trade-off may be worth it for the policyholder.1
  
What else can life insurance do for a retiree household? It can help the kids. Sometimes a retired dad or mom is 20-30 years older than his or her spouse, and the kids are minors. If the older spouse dies, the death benefit can help to provide for these minor children, who could have special needs.1

There is also the matter of income replacement, even in retirement. When a retiree receiving a pension dies, the surviving spouse may subsequently get far less pension income. A life insurance death benefit may help to make up for it. In another scenario, a widowed spouse may elect to live on a life insurance policy’s lump sum death benefit for a year or two, as an alternative to drawing down tax-advantaged retirement savings accounts.1,2

How about disability insurance? In some households, one spouse retires, but another spouse keeps working well into his or her sixties and earns a large income. A couple or family would definitely miss that income if it went away. Keeping disability insurance coverage may be very wise in such instances.2

Long-term care coverage is expensive, but not compared to the cost of eldercare. Imagine paying $6,235 a month for a semi-private room in a nursing home. Outrageous? No. Merely average. According to the Department of Health and Human Services, that is the average monthly cost for such care today. That comes to $74,820 annually.2

Financially speaking, that kind of expense could break the back of a retiree household. Medicare and disability insurance will not absorb the cost – one that could deplete a retiree’s entire savings, with the next step being Medicaid or turning to adult children (who will be retired or approaching retirement themselves). When eldercare is needed, the daily benefit from long-term care coverage can feel invaluable. That benefit can also fund home health care and assisted living services.2  
  
Liability insurance may come in handy. In certain states (such as California), retirement accounts are not protected against creditor lawsuits. So if a judgment against a retiree in one of those states is large enough, retirement account assets may be seized to satisfy it if liability limits on an auto or homeowner policy are too low. This is why an umbrella liability policy may have merit for some retirees.2
  
Insurance should not be a “missing piece” in your retirement plan. You may need life, disability, long-term care, or liability coverage more than you think.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is not affiliated with First Heartland Capital, Inc.  

Bogetto &Associates does not provide legal or tax advice.  These topics are discussed in conjunction with your CPA, Tax Advisor and Attorney.

Citations.
1 - investopedia.com/articles/personal-finance/010716/do-you-need-life-insurance-after-you-retire.asp [1/7/16]

2 - money.usnews.com/investing/articles/2016-09-13/4-kinds-of-insurance-that-can-save-your-retirement [9/13/16]

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