Some good reasons to retain it. Do you need a life insurance policy in retirement? One school of thought says no. The kids are grown, and the need to financially insulate the household against the loss of a breadwinner has passed. If you are thinking about dropping your coverage for either or both of those reasons, you may also want to consider the excellent reasons to retain, obtain, or convert a life insurance policy after you retire. Take these factors into account and consult with your financial professional before making a decision. Could you make use of your policy’s cash value? If you have a whole life policy, you might want to utilize that cash in response to certain retirement needs. If you need extended care, for example, you could explore converting the cash in your whole life policy into a new policy with an extended care rider. This might even be doable without tax consequences. If you need additional income, many insurers will let you surrender a whole life policy you have held for some years and arrange an income contract with the cash value. You can access the money, tax free, as long as the amount that is withdrawn is less than the amount paid into the policy. Remember that withdrawing money or taking a loan against a policy’s cash value, naturally reduces the policy’s death benefit.1 Do you receive a “single life” pension? Maybe a pension-like income comes your way each month or quarter, from a former employer or through a private income contract with an insurer. If you are married and there is no joint-and-survivor option on your pension, that income stream will dry up if you die before your spouse dies. If you pass away early in your retirement, this could present your spouse with a serious financial dilemma. If your spouse risks finding themselves in such a situation, think about trying to find a life insurance policy with a monthly premium equivalent to the difference in the amount of income your household would get from a joint-and-survivor pension as opposed to a single life pension.2 Will your estate be taxed? Should the value of your estate end up surpassing federal or state estate tax thresholds, then life insurance proceeds may help pay the resulting taxes and prevent the need for your heirs to liquidate some assets. Are you carrying a mortgage? If you borrowed to purchase your home or have refinanced and are carrying a mortgage, a life insurance policy may make sense. It could potentially relieve your heirs from shouldering some of or all that debt if you die with the mortgage still outstanding.2 Do you have burial insurance? The death benefit of your life insurance policy could partly or fully pay for the costs linked to your funeral or memorial service. In fact, some people buy small life insurance policies later in life to prepare for this expense.2 Alternatively, you may seek to renew or upgrade your existing term coverage for permanent life insurance. Consult an insurance professional you know and trust for insight. 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 not illustrative of any particular investment.
Citations. 1 - Nasdaq.com, April 30, 2020 2 - Forbes.com, May 19, 2020 A look at Regulation Best Interest.
Recently, you may have heard that financial industry regulators established a new set of rules designed to guide investors who work with an investment professional. This new set of rules is called “Regulation Best Interest” rule, known colloquially as “Reg BI.” 1 This rule establishes a series of guidelines about how to meet investors’ best interests. It provides steps for financial professionals to follow in an effort to give investors a higher level of comfort when making decisions. It also outlines strategies that take investors' overall financial situation into account when proposing solutions. For many investors, such procedures were already in place, and the new rules may not affect our day-to-day practices in ways that you may immediately notice. A conversation with your trusted financial professional about “Reg BI” and how it might affect your investment strategy might be in order; they can answer any questions you may have about this regulation. 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. Citations. 1 - finra.org, July 14, 2020 In this month’s recap: stocks notched a solid gain, overcoming the rise of reported COVID-19 cases and plans of a slowdown in economic re-openings. U.S. Markets Stock prices climbed higher in June, as investors looked beyond an increase in COVID-19 cases as well as reports that several states planned to slow the pace of their economic re-opening. The Dow Jones Industrial Average gained 1.69%, while the Standard & Poor’s 500 Index tacked on 1.84%. The Nasdaq Composite, already up 6.75% in May, rose another 5.99%.1 Momentum Lost Stocks opened the month higher, but the momentum quickly stalled, as states struggled to re-open their economies while facing an increase in COVID-19 cases. Investor sentiment was further dampened by a subdued forecast of economic recovery issued by the Federal Reserve. Focus Shifted But the market turned and rallied on a series of upbeat news announcements. First, by the Fed, which said that it would extend its bond-buying program to include the debt of individual companies. Second, a strong retail sales report buoyed spirits. And finally, the news of an effective COVID-19 treatment for critically ill patients strengthened investor sentiment. Bump Up in COVID-19 Market direction reversed late in the month, due to an increase in COVID-19 cases in Florida, Texas, and California, which prompted some states to roll back their re-opening plans. However, stocks still closed out the month strong, posting back-to-back gains to cement a solid showing. Sector Scorecard Industry sectors were mixed in June, with gains in Consumer Discretionary (+1.54%), Industrials (+0.95%), Materials (+0.18%), and Technology (+4.78%), while losses were posted by Communication Services (-1.07%), Consumer Staples (-1.72%), Energy (-4.54%), Financials (-2.48%), Health Care (-4.49%), Real Estate (-0.98%), and Utilities (-5.81%).2 What Investors May Be Talking About in July Assessing the economy has become increasingly difficult due to the uncertainties caused by the pandemic. For example, May’s employment report from the Bureau of Labor Statistics showed that the economy added 2.5 million new jobs. Wall Street economists were stunned by the news, having forecast a drop of 8.3 million.3 T I P O F T H E M O N T H Take a second look at monthly payments you may have contracted years ago (cell phone usage, for example). Plan prices may have dropped. Are you overpaying? Rise in Real-Time Data This has left many economists and analysts to look for more creative ways to gauge “real-time” economic activity. In an effort to expand their toolset beyond traditional government reporting, forecasters are now mining a robust vein of real-time data, such as satellite imaging, to count cars parked at retail locations. They also are looking at data, generated by Google and Apple, to determine traffic, pedestrian volumes, and the number of people taking public transportation. Restaurant apps are getting used too. They can help show whether people are returning to social settings. Traditional economic indicators remain vital, but expect a growing focus on newer, “big data” tools that give critical real-time snapshots. World Markets Economic re-opening and supportive central bank policies propelled markets overseas, as the MSCI-EAFE Index gained 2.92%.4 European markets responded to a general easing of economic lockdown and fresh central bank support. Germany rose 6.25%, while France picked up 5.12%. The U.K. lagged, gaining only 2.16%.5 Pacific Rim stocks were mostly higher. Japan tacked on 1.88%, while Australia climbed 1.35%.6 Indicators Gross Domestic Product: The final reading of GDP growth for the first quarter was unchanged, at -5.0%.7 Employment: The unemployment rate dropped to 13.3%, as employers added 2.5 million new jobs in May. Many of the sectors hit hardest by employment cuts, such as the travel, hospitality, and retail industries, led the rebound in hiring.8 Retail Sales: Retail sales leaped 17.7% in May. Clothing and furniture stores led the group.9 Industrial Production: Industrial production climbed 1.4%; though, manufacturing output managed a stronger increase of 3.8%.10 Housing: Housing starts increased 4.3% in May; though, permits for future home construction rose 14.4%. The increase in permits indicates that home building may be emerging from its COVID-19-related contraction.11 Existing home sales dropped 9.7% in May.12 Sales of new homes rose 16.6%, which was above consensus estimates.13 Consumer Price Index: For the second straight month, consumer prices fell, dipping 0.1% in May. Core inflation, which excludes the more volatile food and energy components, also retreated by 0.1%.14 Durable Goods Orders: Orders for long-lasting goods jumped 15.8%, well above the consensus estimate of 10.3%.15 Q U O T E O F T H E M O N T H “Only those who will risk going too far can possibly find out how far one can go.” T.S. Eliot The Fed Following its Federal Open Market Committee two-day meeting in June, the Federal Reserve said that it planned to keep its federal funds rate near zero. Fed Chair Jerome Powell confirmed that the Fed would maintain its monthly purchases of Treasury bonds and mortgage-backed securities. The Fed also issued its forecasts for 2020 to 2022. It anticipates the federal funds rate remaining at zero, with inflation of 0.8% for 2020, 1.6% in 2021, and 1.7% in 2022. Fed officials said that they expect the GDP to fall by 6.5% this year, but increase 5% in 2021 and 3.5% in 2022. Officials also expect unemployment to steadily decline over the next 2½ to 5½ years.16 Sources: Yahoo Finance, June 30, 2020 The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Gary G. Blom CRPC | Financial Advisor Michael Howell MBA | Financial Advisor Address: 3340 Tully Rd. Ste B4, Modesto, CA 95350 Website: www.blomandhowell.com Office: (209) 857-5207 | Fax: (209) 857-5098 Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.) CA Insurance License #0C95684. Securities offered through SCF Securities, Inc. – Member FINRA/SIPC. Investment Advisory Services offered through SCF Investment Advisors, Inc. 155 E. Shaw Ave. Suite 102, Fresno, CA 93710 | (800) 955-2517 | Fax (559) 456-6109 SCF Securities, Inc. and Blom & Howell Financial Planning are independently owned and operated. www.scfsecurities.com This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. 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 market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs, or expenses. Investors cannot invest directly in indices. All economic and performance data is historical and not indicative of future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The Nasdaq Composite Index is a market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Standard & Poor's 500 (S&P 500) is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe. The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices. NYSE Group, Inc. (NYSE:NYX) operates two securities exchanges: the New York Stock Exchange (the “NYSE”) and NYSE Arca (formerly known as the Archipelago Exchange, or ArcaEx®, and the Pacific Exchange). NYSE Group is a leading provider of securities listing, trading and market data products and services. The New York Mercantile Exchange, Inc. (NYMEX) is the world's largest physical commodity futures exchange and the preeminent trading forum for energy and precious metals, with trading conducted through two divisions – the NYMEX Division, home to the energy, platinum, and palladium markets, and the COMEX Division, on which all other metals trade. The SSE Composite Index is an index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange. The CAC-40 Index is a narrow-based, modified capitalization-weighted index of 40 companies listed on the Paris Bourse. The FTSEurofirst 300 Index comprises the 300 largest companies ranked by market capitalisation in the FTSE Developed Europe Index. The FTSE 100 Index is a share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization. Established in January 1980, the All Ordinaries is the oldest index of shares in Australia. It is made up of the share prices for 500 of the largest companies listed on the Australian Securities Exchange. The S&P/TSX Composite Index is an index of the stock (equity) prices of the largest companies on the Toronto Stock Exchange (TSX) as measured by market capitalization. The Hang Seng Index is a free float-adjusted market capitalization-weighted stock market index that is the main indicator of the overall market performance in Hong Kong. The FTSE TWSE Taiwan 50 Index is a capitalization-weighted index of stocks comprises 50 companies listed on the Taiwan Stock Exchange developed by Taiwan Stock Exchange in collaboration with FTSE. The MSCI World Index is a free-float weighted equity index that includes developed world markets and does not include emerging markets. The Mexican Stock Exchange, commonly known as Mexican Bolsa, Mexbol, or BMV, is the only stock exchange in Mexico. The U.S. Dollar Index measures the performance of the U.S. dollar against a basket of six currencies. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. 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. CITATIONS:
1. The Wall Street Journal, June 30, 2020 2. FactSet Research, June 30, 2020 3. The WashingtonPost.com, June 5, 2020 4. MSCI.com, June 30, 2020 5. MSCI.com, June 30, 2020 6. MSCI.com, June 30, 2020 7. CNBC.com, June 25, 2020 8. The Wall Street Journal, June 6, 2020 9. The Wall Street Journal, June 16, 2020 10. MarketWatch.com, June 16, 2020 11. CNBC.com, June 17, 2020 12. CNBC.com, June 22, 2020 13. Reuters.com, June 23, 2020 14. The Wall Street Journal, June 6, 2020 15. MarketWatch.com, June 25, 2020 16. CNBC.com, June 10, 2020 A few things you may want to think about before filing for benefits.
Whether you want to leave work at 62, 67, or 72, claiming the retirement benefits you are entitled to by federal law is no casual decision. You will want to consider a few key factors first. How long do you think you will live? If you have a feeling you will live into your nineties, for example, it may be better to claim later. If you start receiving Social Security benefits at or after Full Retirement Age (which varies from age 66 to 67 for those born in 1943 or later), your monthly benefit will be larger than if you had claimed at 62. If you file for benefits at FRA or later, chances are you probably a) worked into your mid-sixties, b) are in fairly good health, and c) have sizable retirement savings.1 If you really need retirement income, then claiming at or close to 62 might make more sense. If you have an average lifespan, you will, theoretically, receive the average amount of lifetime benefits regardless of when you claim them. Essentially, the choice comes down to more lifetime payments that are smaller versus fewer lifetime payments that are larger. For the record, Social Security’s actuaries project that the average 65-year-old man to live 84.0 years, and the average 65-year-old woman, 86.5 years.2 Will you keep working? You might not want to work too much, since earning too much income may result in your Social Security being withheld or taxed. Prior to Full Retirement Age, your benefits may be lessened if your income tops certain limits. In 2018, if you are aged 62 to 65, receive Social Security, and have an income over $17,040, $1 of your benefits will be withheld for every $2. If you receive Social Security and turn 66 later this year, then $1 of your benefits will be withheld for every $3 that you earn above $45,360.3 Social Security income may also be taxed above the program’s “combined income” threshold. (“Combined income” = adjusted gross income + nontaxable interest + 50% of Social Security benefits.) Single filers who have combined incomes from $25,000 to $34,000 may have to pay federal income tax on up to 50% of their Social Security benefits, and that also applies to joint filers with combined incomes of $32,000 to $44,000. Single filers with combined incomes above $34,000 and joint filers whose combined incomes surpass $44,000 may have to pay federal income taxes on up to 85% of their Social Security benefits.3 When does your spouse want to file? Timing does matter, especially for two-income couples. If the lower-earning spouse collects Social Security benefits first, and then the higher-earning spouse collects them later, that may result in greater lifetime benefits for the household.4 Finally, how much in benefits might be coming your way? Visit SSA.gov to find out, and keep in mind that Social Security calculates your monthly benefit using a formula based on your 35 highest-earning years. If you have worked for less than 35 years, Social Security fills in the “blank years” with zeros. If you have, say, just 33 years of work experience, working another couple years might translate to a slightly higher Social Security income.1 A claiming decision may be one of the most significant financial decisions of your life. Your choices should be evaluated years in advance – with insight from the financial professional who has helped you plan for 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. Citations. 1 - MarketWatch.com, November 2, 2019 2 - SSA.gov, May 28, 2020 3 - BlackRock.com, May 28, 2020 4 - MarketWatch.com, November 11, 2019 The SECURE Act and CARES Act may complicate the decision.
As a small-business owner, figuring out retirement choices can be a little intimidating. How do you pick the most appropriate retirement plan for your business as well as your employees? There are three main types of retirement plans for small businesses: SIMPLE-IRAs, SEP-IRAs, and 401(k)s. Read on below to learn more about each type of retirement plan. Also, keep in mind that recent legislative changes that occurred with the passing of the SECURE Act and CARES Act may complicate the decision. SIMPLE-IRAs. SIMPLE stands for Savings Incentive Match Plan for Employees. This is a traditional IRA that is set up for employees and allows both employees and employers to contribute. If you’re an employer of a small business who needs to get started with a retirement plan, a SIMPLE-IRA may be for you. While this plan doesn’t require an employee to contribute, employers must contribute 2% of their employee’s salary to a retirement fund. If you do choose to offer a matching contribution to your employee’s SIMPLE-IRA plan, you can match up to 3% of your employee’s compensation. Employees can also participate in a SIMPLE-IRA plan by having automatic deductions go straight from their paycheck to their SIMPLE-IRA.1,2,3 Distributions from SIMPLE-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. However, during the 2020 calendar year, the CARES Act allows eligible participants to take an early distribution of up to $100,000 without paying the 10% penalty. Generally, once you reach age 72, you must begin taking required minimum distributions. For a business to use a SIMPLE-IRA, it typically must have fewer than 100 employees and cannot have any other retirement plans in place. There are also no filing requirements required by the employer.2 SEP-IRAs. SEP plans (also known as SEP-IRAs) are Simplified Employee Pension plans. Any business of any size can set up one of these types of retirement plans, including a self-employed business owner. This type of retirement plan may be an attractive option for a business owner because a SEP-IRA does not have the start-up and operating costs of a conventional retirement plan. It also allows for a contribution of up to 25% of each employee’s pay. This is a type of retirement plan that is solely sponsored by the employer, and the contribution to each employee’s SEP-IRA must be the same amount. Employees are not able to add their own contributions. Unlike other types of retirement plans, contributions from the employer can be flexible from year to year, which can help businesses that have fluctuations in their cash flow.4 Much like SIMPLE-IRAs, SEP-IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. The CARES Act applies to SEP-IRAs too. Generally, once you reach age 72, you must begin taking required minimum distributions. 401(k)s. 401(k) plans are funded by employee contributions, and in some cases, with employer contributions as well. In most circumstances, you must begin taking required minimum distributions from your 401(k) or other defined contribution plan in the year you turn 72. Withdrawals are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. As of right now, the CARES Act exemptions apply only in the 2020 calendar year.5 Because of the recent legislative changes, resulting from the passage of the SECURE Act and the CARES Act, let’s talk further about which of these plans may work best for you and your business.5 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. Citations. 1 - IRS.gov, January 15, 2020 2 - IRS.gov, January 8, 2020 3 - IRS.gov, January 9, 2020 4 - IRS.gov, January 15, 2020 5 - U.S. Chamber of Commerce, February 20, 2020 |
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