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What’s Up With the Markets?

Anyone who followed the often-used investment adage, “Sell in May and go away,” is likely pleased with their decision after the markets struggled in the month of August.1

While recent market events may seem dramatic, August is historically the weakest month of the year for U.S. equities.2 By mid-August this year, both the Dow and S&P 500 experienced the greatest sell-offs of 2019. Meanwhile, the 30-year Treasury bond rate dropped to the lowest on record, and the 10 year Treasury yield fell below the two-year rate for the first time since 2007.3

Lately, concerns regarding a potential recession have increased. If you’re questioning your investment portfolio, we’re happy to help ensure it’s designed to weather economic turbulence and aligned with your financial goals. Give us a call to schedule an appointment.

Market analysts point to three factors that have increased the chances of the U.S. falling into decline in the next year or two:4

  1. The inverted yield curve — When the yield on longer-term Treasuries is lower than the yield on shorter-term Treasuries, it creates an inverted yield curve, which has historically been an indicator of a pending recession.
  2. Interest rates — While the Federal Reserve recently lowered interest rates, more cuts may be necessary to avoid an earnings recession, which is when there are two consecutive quarters of reduced corporate profitability.
  3. Trade — President Donald Trump initially announced, and later backed off, more trade tariffs on Chinese imports. However, the constant and prolonged trade uncertainty tends to shake up the markets and could even be the trigger for a recession.

While the August shake-up may be only temporary, some of these underlying factors could be a harbinger for more serious economic issues. For example, the continuing trade spat with China is sinking U.S. companies further when it comes to competing on a global scale.

According to the IMD World Competitiveness Center, the U.S. is no longer the world’s most competitive economy. Asian-Pacific countries, particularly Indonesia and Thailand, showed significant improvement in the rankings.

Meanwhile, several Middle Eastern nations — namely Saudi Arabia and Qatar — have also made significant progress.5

This year, the U.S. slipped from first to third in global competitiveness, falling behind Singapore and Hong Kong. While the U.S. ranked first in the categories of domestic economic strength and delivering on business needs, it didn’t make the top five in effective government policies on competitiveness or business efficiency.6

Content prepared by Kara Stefan Communications.

1 Troy Segal. Investopedia. May 1, 2019. “Sell in May and Go Away Definition.” https://www.investopedia.com/terms/s/sell-in-may-and-go-away.asp. Accessed Aug. 19, 2019.

2 Jacob Sonenshine. The Street. Aug. 5, 2019. “August Is S&P 500’s Worst Month – Especially When Stocks See Strong Year.” https://www.thestreet.com/markets/august-one-of-s-p-500-worst-month–15045736. Accessed Aug. 19, 2019.

3 Jeremy Herron and Sarah Ponczek. Bloomberg. Aug. 14, 2019. “U.S. Stocks Tumble as Economic Worries Mount: Markets Wrap.” https://www.bloomberg.com/news/articles/2019-08-13/stocks-to-rally-in-asia-on-tariff-delay-relief-markets-wrap?srnd=markets-vp. Accessed Aug. 19, 2019.

4 Anna-Louise Jackson. Acorns. Aug. 14, 2019. “Why August has been such a wild ride for the US stock market.” https://grow.acorns.com/why-the-stock-market-has-been-bumpy-so-far-this-august/. Accessed Aug. 19, 2019.

5 Daniel Moritz-Rabsen. Newsweek. May 30, 2019. “U.S. Economy Slips From First to Third Place in Global Competitiveness Ranking Amid Trump’s Tariffs.” https://www.newsweek.com/us-economy-slips-first-third-place-global-competitiveness-ranking-1439659. Accessed Aug. 19, 2019.

6 IMD. May 2019. “Singapore topples United States as world’s most competitive economy.” https://www.imd.org/news/updates/singapore-topples-united-states-as-worlds-most-competitive-economy/. Accessed Aug. 19, 2019.

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

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

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Small-Business Growth Has Economic Benefits

A promising way to jumpstart the U.S. economy is by helping more entrepreneurs establish their own businesses. The 30.2 million U.S. small businesses represent 99.9 percent of all businesses in this country. They employ nearly half (47.5 percent) of America’s total workforce.1

If you need further proof that small businesses can provide an economic boost, consider that in July 2019 alone, small-business loan applications grew to a post-recession record of more than 27% at big banks ($10 billion-plus in assets) and more than 50 percent at small banks. As small businesses grow, they use borrowed capital to hire more workers, expand to new locations and increase inventory.2

Small-Business Planning

Starting or expanding a business takes know-how, capital and a strategic understanding of your market. Because small-business entrepreneurship can be risky, it helps to first get your financial ducks in a row to help ensure that any business declines don’t affect your personal finances. Give us a call if you’d like some help structuring your assets to help protect them from business losses. Our goal is that they continue to grow throughout your career as a business owner.

Using strategic tactics can help keep capital flowing. Such options could include outsourcing accounts receivable collections to a third party in order to get paid sooner, applying for a microloan from a U.S. Small Business Administration partner financial institution to help cover a one-time overhead expense or keeping technology expenses low by shopping for free or low-cost software options that can scale with business needs.3

Another way to help reduce costs while supporting local economies is by starting or relocating businesses to a post-industrial town. Many of these places have seen declines as factories and plants have closed throughout the past decade. Not only can business owners find cheaper property and plentiful labor sources, the business may prove to be an important boost for the local economy.4

New Networking Options

For those who are consultants or own a small business, the career networking site LinkedIn can help simplify marketing. The website recently announced a new feature for freelancers and small-business owners to showcase their services on their LinkedIn profile, allowing members to search specifically for services based on keywords. For now, the new feature is available only to freelancers and small-business leaders who have a U.S. premium business subscription, but it’s scheduled to be rolled out to non-subscribers this fall.5

Other time-saving features on LinkedIn include the ability to use it as an informational website for your business instead of maintaining a separate site. Also, at any time you can print a PDF of your profile, which converts into a professional-looking resume.6

Content prepared by Kara Stefan Communications.

1 U.S. Small Business Administration. 2018. “2018 Small Business Profile.” https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-US.pdf. Accessed Aug. 23, 2019.

2 Rohit Arora. Forbes. Aug. 7, 2019. “Small Business Loan Approvals at Banks Hit Record Highs.” https://www.forbes.com/sites/rohitarora/2019/08/07/small-business-loan-approvals-at-banks-hit-record-highs/. Accessed Aug. 12, 2019.

3 Serenity Gibbons. Forbes. Aug. 8, 2019. “How Small Businesses Can Grow On A Tight Budget.” https://www.forbes.com/sites/serenitygibbons/2019/08/08/how-small-businesses-can-grow-on-a-tight-budget/. Accessed Aug. 12, 2019.

4 Adi Gaskell. Forbes. Aug. 12, 2019. “Can Entrepreneurship Breathe New Life Into Post-Industrial Towns?” https://www.forbes.com/sites/adigaskell/2019/08/12/can-entrepreneurship-breathe-new-life-into-post-industrial-towns/. Accessed Aug. 12, 2019.

5 Peter Economy. Inc. July 23, 2019. “If You’re Freelance or a Small-Business Owner, LinkedIn Just Revealed a New Feature That Changes Everything.” https://www.inc.com/peter-economy/if-youre-freelance-or-a-small-business-owner-linkedin-just-revealed-a-new-feature-that-changes-everything.html?cid=sf01001. Accessed Aug. 12, 2019.

6 Paige Doepke. Jan. 14, 2019. “How to Download a Resume from LinkedIn.” https://www.jobscan.co/blog/how-to-download-linkedin-resume/. Accessed Aug. 23, 2019.

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

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

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Clean Living

We frequently hear about the various effects of climate change and how they can be mitigated. It often feels as though households and companies must make significant sacrifices to undo a lot of the damage that’s been done. However, there also are many positive benefits that can come from making certain changes, both locally and globally.

For example, scientists say that planting billions of trees across the planet is the cheapest and most effective change we can make. Trees absorb and store the type of carbon dioxide believed to cause global warming. Moreover, scientists say what is “mind blowing” is that a massive worldwide planting effort could remove two-thirds of emissions currently in the atmosphere.1

This strategy doesn’t require restrictive limits for factories but still addresses climate change with an appealing solution. Planting trees also may address long-term health care costs as they mitigate air pollution, which contributes to instances of stroke, heart attack, diabetes, lung cancer and chronic lung disease.2

Additionally, planting more trees in your own yard can provide shade and potentially reduce the use of your central air conditioning, not to mention help clean the breathing air around your home.3

It’s common to instinctively balk at the idea of change, especially when things seem to be working fine as they are. But sometimes it’s a good idea to at least review our current situation, including our finances and insurance coverages. This can help ensure that they are aligned with our current financial goals and objectives. Being proactive may also help avoid an unexpected scenario down the road. Give us a call if you’d like an insurance review.

There may be some other simple things you can do around your home that both help the environment while offering immediate benefits to you. For example, while you likely use energy-efficient bulbs in light fixtures inside your home, when was the last time you upgraded your external lighting? Replacing older lighting solutions with LED (light-emitting diode) bulbs can help save money on your electric bill while providing brighter light to enhance safety and security. And, while solar lights may not be as bright as LEDs, they are continually being improved and are easy to install and maintenance free. Solar fixtures may help reduce your energy bill, allowing you to create a lighting design for landscaping that you may not have done before due to the expense.4

Another energy-efficient way to make your home more comfortable and reduce energy bills is through window tinting. You may use this on your car windows, so why not on your house windows? Lightly tinted window film can help block heat in the summer and reduce heat loss while allowing solar heat to penetrate during winter — all without altering your view outdoors. You can shop for window-tinting DIY kits at local home center stores or search online for a professional installation company.5

Content prepared by Kara Stefan Communications.

1 Damien Carrington. The Guardian. July 4, 2019. “Tree planting ‘has mind-blowing potential’ to tackle climate crisis.” https://www.theguardian.com/environment/2019/jul/04/planting-billions-trees-best-tackle-climate-crisis-scientists-canopy-emissions. Accessed Aug. 1, 2019.

2 IHME. April 3, 2019. “State of Global Air 2019 Report.” http://www.healthdata.org/news-release/state-global-air-2019-report. Accessed Aug. 16, 2019.

3 Conserve Energy Future. “30+ Terrific Ways To Conserve Natural Resources.” https://www.conserve-energy-future.com/terrific-ways-to-conserve-natural-resources.php. Accessed Aug. 1, 2019.

4 Duke Energy. “Energy-Efficient Lighting: Inside and Out.” http://www.myenergytips.com/article.aspx?accountId=210005&articleId=46709&nl=25396&userID=30921685. Accessed Aug. 1, 2019.

5 James Dulley. Daily Herald. July 12, 2019. “Window films can reduce your cooling bills.” https://www.dailyherald.com/entlife/20190712/window-films-can-reduce-your-cooling-bills. Accessed Aug. 1, 2019.

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

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

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Tech Trends

There are different formulas for launching highly successful companies. First, create a product that solves a problem that no one knew they had — for instance, how online search engines replaced encyclopedias. Then, there are ideas that help solve problems that plague millions of people.

Back pain, for example. Not only do approximately eight in 10 adults experience low-back pain at some point in their lifetime, but it’s also the most common cause of job-related disability.1

One individual who suffered severe back pain while sitting at work all day decided to invent a new kind of desk. This desk would allow him to stand while he worked, alleviating his back pain. This man was a co-founder of VARIDESK, a new type of office furniture manufacturer. But this new company didn’t just enter the office supply industry; it introduced a new sales model that was key to its rampant success: Selling online direct to consumers.2

According to Ernst & Young, one of the country’s largest accounting firms, there are four main drivers of growth-oriented companies. They: (1) identify growth goals, (2) build an appropriate corporate structure, (3) develop supportive capital strategies and (4) utilize quality talent acquisition strategies.3

Designing a personal investment portfolio follows a similar process. You want to identify your long-term financial goals, build an asset allocation strategy, develop a capital strategy for ongoing contributions/rebalancing and find an experienced financial advisor to help manage your financial picture. Once you’ve established this framework, you can consider interesting and potential growth ideas like those emerging every day from the tech industry. Just remember to keep your portfolio diversified to help reduce your day-to-day market risk. If you could use assistance constructing your investment portfolio, please call us to schedule a consultation.

Speaking of diversifying, don’t forget that new technology is being developed throughout the world. It’s important to consider global opportunities to help diversify a tech sector position. In fact, the Chinese are becoming highly adept at reaching U.S. consumers, particularly in the app market. Despite the current trade war, many Chinese tech firms have made significant market inroads in just the last year. For example, the Chinese app TikTok was the third-most downloaded app in the U.S. in the first quarter and contributed to first-quarter revenues that were 67 percent higher year-over-year for the same period in 2018.4

More and more, we see tech and health industries merging as the technology industry focuses on better ways to deliver, communicate and monitor consumer health concerns. A new app allows patients to record their doctor’s notes during an office visit. The recently launched free app Medcorder is part of a greater trend that underpins the intersection of health and technology. Led by tools that help hospitals, health plans and other industry stakeholders improve the patient experience, investors have put up $30 billion in capital for health-tech start-ups since 2011.5

And yet, with more tech comes more security and privacy concerns, at both the corporate and consumer level. The key commodity today is consumer data, and companies will pay big bucks to get it — even though you may not even know that a company is gathering the data. To that end, be aware that if you use Google maps and apps on your phone, the company maintains a log of your location and activities spanning years. If the thought of someone being able to tap this data concerns you, Google does provide tools to limit your tracking history. Check out this article for details.6

The cable industry is presently working on a quantum leap in broadband speed and accessibility. In just two years, one gigabit broadband Internet has expanded availability from 4% of U.S. households to 80%. Now the cable industry focus is on 10G technology, which will increase speeds by tenfold, reduce lag time, enhance reliability and security, and enable a larger spectrum of immersive skills and applications.7

Content prepared by Kara Stefan Communications.

National Institute of Neurological Disorders and Stroke. August 7, 2018. “Low Back Pain Fact Sheet.” https://www.ninds.nih.gov/Disorders/Patient-Caregiver-Education/Fact-Sheets/Low-Back-Pain-Fact-Sheet. Accessed April 29, 2019.

CNBC. “What is the right path to accelerate growth?” https://www.cnbc.com/advertorial/what-is-the-right-path-to-accelerate-growth/. Accessed April 29, 2019.

3 Ibid.

Arjun Kharpal. CNBC. April 29, 2019. “How Chinese apps like TikTok are quietly racking up American users.” https://www.cnbc.com/2019/04/29/how-chinese-apps-like-tiktok-have-been-catching-on-with-us-consumers.html. Accessed April 29, 2019.

Christina Farr. CNBC. April 28, 2019. “Google vet launches an app for patients to record their doctor’s notes, as more Silicon Valley execs migrate from tech to health.”

https://www.cnbc.com/2019/04/28/google-vet-david-weekly-launches-medcorder-app-to-record-doctor-notes.html. Accessed April 29, 2019.

Todd Haselton. CNBC. April 25, 2019. “Google knows everywhere you go — here’s how to stop it from tracking you and delete the logs.” https://www.cnbc.com/2019/04/25/how-to-stop-google-from-storing-your-location-history.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail. Accessed April 29, 2019.

Phil McKinny. CableLabs. Jan. 7, 2019. “10G Platform: Coming to Homes, Offices and Cities Near You.”

https://www.cablelabs.com/10g-platform-coming-to-homes-offices-cities-near-you. Accessed April 29, 2019.

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

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

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Stock Market Roundup: What to Watch

Between 1926 and 2018, the S&P 500 experienced double-digit annual losses only 11 times. Not only did the market recover, but the index has never permanently lost ground in any rolling 15-year period during that timeframe.1

While past performance is no guarantee of future results, that bit of history is good for stock investors to keep in mind in the wake of recent market volatility. Here’s another factor to consider: Major stock movements in the market may not be reflective of what’s in your specific portfolio.2 In fact, if you’ve planned effectively, your portfolio is likely well diversified and aligned with your long-term goals. When you assemble a portfolio built for the long-term, those day-to-day fluctuations shouldn’t be a major concern, and they generally do not have a significant, long-term impact. If you’d like to review your current asset mix to determine if it’s designed to withstand market volatility going forward, please give us a call.

One trend gaining traction in portfolio construction is factor-based investing. This tactic analyzes stock characteristics associated with either higher returns or lower risk, by evaluating factors such as momentum, value and size. Some wealth managers see this as a way to enable better portfolio construction and risk management. Morningstar reports that investors currently hold nearly $800 billion in nearly 1,500 factor-based exchange-traded products.3

Another new development that may impact the stock market is the current U.S. trade war with China. Morgan Stanley projects that the recent collapse in trade negotiations and subsequent tariff hikes on Chinese products may edge the world economy closer to recession. In this scenario, the wealth manager anticipates that the Federal Reserve would drop the federal funds rate back to zero within a year.4

Wall Street also is keeping its eye on tensions with Iran. Even a minor confrontation could spur a hike in oil prices given the current tight supply line. One stock analyst pointed out that events in the energy industry (e.g., 1973 Saudi oil embargo, 1979 Iran revolution, 1990 Iraq invasion of Kuwait, the overthrow of Saddam Hussein in 2002-03) have terminated more periods of global economic expansion than any other type of event throughout the last 40 years.5

If you’re paying attention to corporate investments, you may be interested to know that many are still engaging in stock buybacks thanks to a lower corporate tax rate. Despite the fact that tax reform proponents claimed the lower rate would incentivize companies to reinvest in growth and expansion, that theory hasn’t panned out yet. In the first three quarters of 2018, stock buybacks increased by 52.6 percent whereas capital investment rose by only 8.8 percent. However, what may be bad news for job seekers could be fortunate news for investors. Buybacks reduce the number of outstanding shares of a company, which boost the earnings per share and typically lead to higher stock prices.6

However, there is another development on the horizon that is designed to get companies to focus more on long-range planning rather than short-term price hikes. The Long-Term Stock Exchange (LTSE), which recently received a nod of approval from the Securities and Exchange Commission, could provide another investment platform. Still months away from a launch with guidelines in the works, the objective of the LTSE is to reshape incentives for the next generation of public companies so that they can focus on the long term. In other words, the LTSE would host a platform for companies committed to implementing long-range plans rather than reacting to quarterly earnings expectations.7

Content prepared by Kara Stefan Communications.

T. Rowe Price. May 15, 2019. “3 Steps to Take When Markets Become Volatile.” https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/retirement-and-planning/personal-finance/3-steps-to-take-when-markets-are-volatile0.html. Accessed May 20, 2019.

Ibid.

Jeff Benjamin. Investment News. May 18, 2019. “The growth of factor-based investing.” https://www.investmentnews.com/article/20190518/FREE/190519942/the-growth-of-factor-based-investing. Accessed May 20, 2019.

Yahoo Finance. May 20, 2019. “Full blown trade war will push world towards recession – Morgan Stanley.” https://finance.yahoo.com/news/full-blow-trade-war-push-153826217.html. Accessed May 20, 2019.

William Watts. Marketwatch. May 16, 2019. “Are stock-market investors complacent about Iran?” https://www.marketwatch.com/story/are-stock-market-investors-ignoring-iran-just-like-they-ignored-china-2019-05-15. Accessed May 20, 2019.

Knowledge@Wharton. May 14, 2019. “Have Stock Buybacks Gone Too Far?” https://knowledge.wharton.upenn.edu/article/have-stock-buybacks-gone-too-far/. Accessed May 14, 2019.

Annie Gaus. TheStreet.com. May 18, 2019. “Stock Exchanges in Need of Reform. Is the Long-Term Stock Exchange the Answer?” https://www.thestreet.com/investing/stocks/stock-exchanges-need-reform-ltse-the-answer-silicon-valley-14964363. Accessed May 20, 2019.

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

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

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Where is Dad’s Money?

Imagine if, sadly, Dad dies or becomes incapacitated. You’re in charge of handling all his financial affairs, from managing his investments to putting income sources in place for Mom.

There’s just one problem: He was an old-school guy who never consolidated his assets or set up online accounts. Also, it appears he worked with different brokers and you don’t even know who they are.

What now?

Go talk to your neighbor next door, or the harried woman at work or even your millennial dog walker. Why? Because this is a common problem, and more people are working through it than you might think.

But more importantly, share your challenge with your own financial advisor. No one has a more vested interest in helping you manage assets to your best advantage. You may also learn various ways to track down and help manage your parents’ assets, and, the best part is, you don’t have to go it alone. Give us a call — we can help.

You know your dad as well as anyone. Hopefully, he kept organized financial records that are easy to find. However, because prior generations didn’t have easy access to today’s financial software and cool apps, he may not have a conveniently centralized record of his accounts, policies and important legal documents.

Naturally, you’ll want to start with his desk or a file cabinet. From there, consider these tips:

  • Review all the mail for statements and bills.
  • Look for any record of a safe deposit box — such as a bill for the rental or a key — as many people retain a safe deposit box at their local bank.
  • Contact your dad’s past employers to find out if they know of any pensions or retirement plans your dad held, or employer-purchased life insurance.
  • Check unclaimed property lists in every state where your father lived; states collect and hold unclaimed deposits and accounts.

Look for bank accounts, bonds, stocks, mutual funds, certificates of deposit, dividend or payroll checks, life insurance policies, retirement accounts, safe deposit box contents, and securities and utility deposits held by financial institutions or holding companies. 1

Assets are considered dormant or abandoned if there’s no activity in the account for a year or more. Bear in mind that if you miss out on claiming well-hidden assets, those assets may eventually become property of the state where those accounts are domiciled in a process known as escheat.2

For state searches, start at www.unclaimed.org, sponsored by the National Association of Unclaimed Property Administrators. It’s a free website that allows you to search for unclaimed property held by each state.3 You also might want to check out www.MissingMoney.com to conduct a national search.4

If you need additional help, you may consider hiring a forensic accountant. Television shows often depict forensic accountants as people who uncover offshore accounts, shell companies and other shady financial accounting practices. They are, but they also can use those clever skills to find, for example, whatever mining oil stock Dad invested in 20 years ago and conveniently forgot to tell Mom.5

Forensic accountants have the experience and knowledge necessary for conducting a thorough investigation to find accounts no one in the family knows about — not because Dad intentionally hid assets but because he was a private guy. For instance, a forensic accountant might pull an IRS transcript that shows 1099-DIVs and 1099-INTs issued to your dad at some point. These are forms that banks issue for account activity involving amounts of $10 or more. The point is, forensic accountants know all sorts of methods that you may not have considered.6

Content prepared by Kara Stefan Communications.

Roberta Codemo. Legal Zoom. “How to Recover Unclaimed Inheritance Money.” https://www.legalzoom.com/articles/how-to-recover-unclaimed-inheritance-money. Accessed June 24, 2019.

Ibid.

National Association of Unclaimed Property Administrators. “Start your free search for money that might be due you.” https://www.unclaimed.org. Accessed June 24, 2019.

4  MissingMoney.com. “What to expect.” http://www.MissingMoney.com. Accessed June 24, 2019.

5  Investopedia. April 25, 2019. “Forensic Accounting.” https://www.investopedia.com/terms/f/forensicaccounting.asp. Accessed June 24, 2019.

6  The Wealthy Accountant. Aug. 16, 2017. “Forensic Accounting: The High-Paying Part-Time Business.” https://wealthyaccountant.com/2017/08/16/forensic-accounting-the-high-paying-part-time-business/. Accessed June 24, 2019.

Neither our firm nor its agents or representatives may give tax or legal advice. Be sure to speak with qualified professionals about your unique situation.

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

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

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Social Security: Facts and Tidbits

The Social Security Administration issues about 5.5 million new cards each year. Social Security numbers go out of use when their owners pass away and are never reused. Also, the first three digits of the Social Security number reflect the application location for your first card.1

Here’s another interesting tidbit: You can apply to have your Social Security number changed if you can successfully argue a necessary reason, such as a stolen identity, being stalked by an individual who may track your Social Security number or objecting to a sequence of numbers for cultural or religious reasons.2

If you’re counting on Social Security as a primary source of retirement income, there are some things you should know. For instance, the more income you earn now, the fewer household expenses your Social Security benefit will cover. That’s because while a lower income earner may get a lesser benefit based on his record of earnings, that benefit may cover a higher portion of his prior earnings. Low earners retiring at age 65 in 2018 can expect Social Security to cover about half their prior earnings. However, the higher earner’s benefit is expected to cover only a third of his prior earnings. 3

Be aware that Social Security benefits tend to be less than what people expect they will receive. In 2018, the average retirement benefit was about $1,413 a month ($17,000 a year). In terms of how our government-sponsored benefits compare to the rest of the world, the U.S. ranks in the bottom third of developed countries as measured by the percentage of an average worker’s earnings replaced by a public pension.4

If you’re concerned that you don’t have enough assets to supplement your Social Security benefit in retirement, please give us a call. We can help identify potential retirement income gaps and create a strategy using a variety of insurance products to help you pursue your financial goals.

A recent study found that only 4 percent of retirees optimize their benefits; which means that 96 percent of retirees don’t get the full amount of benefits to which they may be entitled. That averages out to a loss of about $111,000 per household.5

How do you optimize your benefits? It’s often discussed that the best way is to delay taking them until age 70 — and then live for an extended period of time. Let’s consider a hypothetical example. If your benefit is $2,000 per month at your full retirement age of 66, but you delay drawing it for another four years, that benefit will grow by 8% a year for a total of $2,600 more a month for the rest of your life. From a cumulative perspective, if you then live to age 90 you would receive a total of $652,560 in Social Security benefits.6 However, all situations are different, and your personal needs and objectives should be considered to help you determine the appropriate time to claim your benefits.

It’s also worth noting that since the decline of company-sponsored pensions, Social Security may be the only source of retirement income that is not subject to market volatility and the vagaries of the economy. Because the risk pool covers nearly the entire U.S. adult population — including people not expected to live long in retirement — and because you can’t borrow from future benefits or request a lump sum, it’s a very stable source of income. And, it’s relatively cheap for the government to administer the program, costing only 0.7 percent of annual benefits.7

Content prepared by Kara Stefan Communications.

1 Len Penzo. Len Penzo dot Com. Aug. 13, 2018. “18 Fast Facts You Didn’t Know About Social Security Numbers.” https://lenpenzo.com/blog/id1510-18-fast-facts-you-didnt-know-about-social-security-numbers-2.html. Accessed July 5, 2019.

2  Sean Williams. The Motley Fool. Nov. 12, 2017. “7 Weird Social Security Facts You Never Knew About.” https://www.fool.com/retirement/2017/11/12/7-weird-social-security-facts-you-never-knew-about.aspx. Accessed July 5, 2019.

3 Center on Budget Policy and Priorities. Aug. 14, 2018. “Policy Basics: Top Ten Facts about Social Security.” https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security. Accessed July 5, 2019.

4 Ibid.

5 CBS News. June 28, 2019. “Almost all Americans take Social Security at the wrong time, study says.” https://www.cbsnews.com/news/study-says-retirees-lose-more-than-100k-by-claiming-social-security-at-the-wrong-time/. Accessed July 5, 2019.

6 Jackie Youseff. Vanguard Blog. May 30, 2018. “The Social Security timing debate.” https://vanguardblog.com/2018/05/30/the-social-security-timing-debate/comment-page-4/. Accessed July 5, 2019.

7 Center on Budget Policy and Priorities. Aug. 14, 2018. “Policy Basics: Top Ten Facts about Social Security.” https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security. Accessed July 5, 2019.

Our firm is not affiliated with the U.S. government or any governmental agency.

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

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

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Affordable Housing a Challenge for many Americans

If you live in or have recently visited one of America’s larger cities, you may have noticed that the homeless problem has grown in recent years. A 2018 analysis by real estate data company Zillow showed that while the level of homelessness has declined nationally — down 13 percent over the past eight years, according to the U.S. Department of Housing and Urban Development — rates of homelessness are growing quickly in large metropolitan areas with high housing costs, such as Los Angeles, New York, San Francisco and Washington, D.C.1

A recent home affordability report published by ATTOM Data Solutions revealed that median residential home sale prices were too high for the average U.S. worker to afford in about three-quarters of the nation’s real estate markets.2

Take Los Angeles, for example. According to the California Housing Partnership Coalition, workers need to earn almost $50 an hour to afford the median monthly rent of $2,471.3

In Chicago, among the 86,000 people who experienced homelessness in 2017, about 18,000 had a college education and more than 13,000 had jobs — illustrating that the problem is frequently less about accountability and more about affordability.4

There are several ways to gauge today’s real estate market. On the one hand, homeowners with significant equity may be sitting on an asset that can help fund their retirement if they take advantage of high real estate sale prices today. On the other hand, let’s say you sell your home — where will you live? For people actively planning for retirement in the next few years, it’s worth thinking about your long-term housing needs. The time could be right to downsize in preparation for retirement while you can command a robust price and then reposition a portion of your assets for long-term financial security.

Of course, selling your home for top dollar doesn’t exactly help solve America’s homeless problem — although it may help prevent you from having housing issues down the road.

In late June, President Trump signed an executive order designed to eliminate a multitude of regulatory barriers that hinder the development of affordable housing. His objective is to address restrictions on zoning and growth management, rent control, building and rehabilitation codes, energy and water efficiency mandates, maximum-density allowances, historic preservation requirements, and wetland and environmental regulations.5

The president also signed a bill into law that enables military veterans to borrow above the current cap of $484,350 (for most counties) without a down payment.6

Content prepared by Kara Stefan Communications.

1 Megan Cerullo. CBS News. Dec. 11, 2018. “Homelessness on the rise in some U.S. cities.”

https://www.cbsnews.com/news/homelessness-on-the-rise-in-some-u-s-cities/. Accessed July 23, 2019.

2 Alexandre Tanzi. Bloomberg. June 26, 2019. “Homebuying Difficult for Americans in Three-Fourths of Markets.” https://www.bloomberg.com/news/articles/2019-06-27/homebuying-difficult-for-americans-in-three-fourths-of-markets. Accessed July 5, 2019.

3 Jamie Yuccas. CBS News. July 5 2019. ” ‘There’s no way out of this’: Lack of affordable housing contributes to Los Angeles homeless crisis.” https://www.cbsnews.com/news/homeless-population-los-angeles-county-california-rises-2019-07-05/. Accessed July 5, 2019.

4 Peter Nickeas. Chicago Tribune. July 2, 2019. “Thousands of Chicago’s homeless have jobs, some college education, contrary to stereotypes, new study says.” https://www.chicagotribune.com/news/breaking/ct-chicago-homeless-study-myths-20190702-wtmsehe6ffayxjdbpi3sjav3oq-story.html. Accessed July 23, 2019.

5 White House. June 25, 2019. “Executive Order Establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing.” https://www.whitehouse.gov/presidential-actions/executive-order-establishing-white-house-council-eliminating-regulatory-barriers-affordable-housing/. Accessed July 5, 2019.

6 Jessica Guerin. Housing Wire. June 26, 2019. “Bill eliminating VA loan cap signed into law.” https://www.housingwire.com/articles/49421-bill-eliminating-va-loan-cap-signed-into-law. Accessed July 5, 2019.

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

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

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Upcoming Changes for Medicare Supplement Insurance Plans

A Medicare supplement insurance plan, also known as a Medigap or Med Supp plan, is purchased in combination with original Medicare to help pay out-of-pocket costs not covered by original Medicare. As of Dec. 31, 2018, nearly 13.6 million people were covered by Med Supp plans, representing nearly a 4% increase from the previous year. Among the different types of supplemental insurance plans, each named with a letter, Plan F is by far the most popular. More than half of Med Supp plan members purchase Plan F.1

However, this dominance is likely to change next year. In 2015, as part of the Medicare Access and CHIP Reauthorization Act, Congress established a provision to stop offering Plan C and Plan F to newly eligible Medicare beneficiaries starting in 2020. Plans C and F offer a benefit that pays for the Part B deductible ($185 in 2019). Eliminating this benefit among original Medicare beneficiaries will help curb government spending for the program.2

Note that any eligible beneficiary who turns age 65 before Jan. 1, 2020 will still be able to enroll in Plan C or F after that date, but the plans will no longer be offered to people who turn age 65 in 2020 or beyond.3

There are currently 10 different supplemental insurance plans available, ranging from A to N. Each type of plan offers the exact same benefits — some may offer basic benefits (e.g., Plan A) while others are more comprehensive (e.g., Plan F). However, be aware that not every state permits all plans and that the cost of each plan will vary by issuers within each state. In fact, Massachusetts, Minnesota and Wisconsin each have customized the requirements for their own Medigap plans, but within each of those states, all individual plan benefits are standardized. This means the only variance is the cost and the issuer.4

Because the popular Plan F will no longer be offered to new Medicare beneficiaries, many anticipate that Plan G will become the plan of choice because it offers all the same benefits except coverage for the Part B deductible.5

As of this writing, Plan G premiums are considerably less than Plan F premiums (the national average in 2018 was $155.70 per month compared to $185.96 for Plan F). If premiums remain that low, the total annual savings on premiums for Plan G ($363 a year) would more than cover the $185 needed to pay for the Part B deductible.6

There’s another potential change on the horizon for Medigap plans. The House Ways and Means Committee has recently initiated an interest in offering long-term care benefits through Medicare supplemental insurance plans. The committee is seeking recommendations for daily and lifetime caps as well as waiting periods to help keep the plans affordable.7

These changes follow on the heels of recent alterations to Medicare Advantage (MA) plans. Until a recent rule change that went into effect this year, Medicare did not offer any long-term care benefits beyond coverage for 100 days at a nursing home following a hospital stay. However, MA plans now have the option to offer benefits that cover home aide assistance when prescribed by a licensed healthcare provider. Be aware that this new rule does not apply to original Medicare; only MA plans.8

Content prepared by Kara Stefan Communications.

1 Mark Farrah Associates. May 20, 2019. “Medicare Supplement Enrollment Up Nearly 4% in 2018.” https://www.markfarrah.com/mfa-briefs/medicare-supplement-enrollment-up-nearly-4-in-2018/. Accessed June 28, 2019.

2 Ibid.

3 Sarah O’Brien. CNBC. June 26, 2019. Medigap changes coming next year for future 65-year-olds. https://www.cnbc.com/2019/06/26/medigap-changes-coming-next-year-for-future-65-year-olds.html. Accessed June 28, 2019.

4 Ibid.

5 Ibid.

6 Gail MarksJarvis. Reuters. Sept. 19, 2018. Medicare supplement plans are changing; what you need to know. https://www.reuters.com/article/us-column-marksjarvis-medigap/medicare-supplement-plans-are-changing-what-you-need-to-know-idUSKCN1LZ18F. Accessed June 28, 2019.

7 Susannah Luthi. Modern Healthcare. June 3, 2019. “House committee eyes expanding Medigap long-term care benefit.” https://www.modernhealthcare.com/politics-policy/house-committee-eyes-expanding-medigap-long-term-care-benefit. Accessed June 28, 2019.

8 Alex Guerrero. MedicareResources.org. Jan. 12, 2019. “To what extent will Medicare cover long-term care?” https://www.medicareresources.org/faqs/to-what-extent-will-medicare-cover-long-term-care/. Accessed July 16, 2019.

Our firm is not affiliated with the U.S. government or any governmental agency.

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

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

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The Millennial Effect

Recessions have consequences, and the Great Recession of 2008 may have produced one of the most influential consequences of all: the millennial mindset. Because of their early experiences in the “real world,” this generation is poised to have long-term significance — comparable to baby boomers — in work, play and politics. If you think boomers drove changes, just wait and see what millennials have in store. To put it in millennial terms, “Hold my avocado.”1

It’s been more than 10 years since the onset of the Great Recession. During that timeframe, millennials ranged in age from 12 to 27. Even the youngest were old enough to understand the impact of parents losing their jobs, not being able to make mortgage payments and, within a few years, feel the effects themselves when having to pay for college through student loans. Not only was their financial security threatened, but their future also looked bleak with a poor job market and low wages.2 Today, millennials are grown and still playing financial catch-up.

 

One of the best ways to deal with economic consequences is to prepare for them beforehand. That means saving during the good times in preparation for another weak economic cycle. If we can help you or the millennials in your life develop a savings strategy or help plan for retirement income, please give us a call.

 

In recent months, the Federal Reserve published a report observing that the millennial generation lacks the income and assets — in other words, economic power — comparable to consumer spending habits of previous generations. This is important because consumer spending is one of the driving forces of economic growth. Not only does this generation see relatively low wages and work for others, but they are less inclined to start their own businesses. Today, only 0.22 percent of millennials start a new business in any given month, compared to 0.37 percent of baby boomers, and they generate less annual business revenue.3

 

We tend to think of millennials as a singular generation but, much like baby boomers, the demographic comprises two groups: older and younger. Older millennials suffered the most from the last recession, as they lacked upwardly mobile job and income opportunities. Younger millennials came into their own during the recovery phase, so they are not quite as far behind. However, in terms of financial consequences, the two groups share a common trait of risk aversion and carry substantial student loan debt.4

 

In the corporate world, millennials are agents of change. By this time next year, they will represent 50 percent of the U.S. workforce, and their size alone can wield substantial power. They expect instant information, results and gratification, meaning they will insist companies stay up-to-date with advanced technology and automation — not necessarily a bad influence.5

 

In fact, older employees in the workplace are poised to benefit from millennial tendencies. While it’s easy to cry, “I didn’t get that perk when I was their age,” it’s worth recognizing that you can benefit from it now. One of the hallmarks of the millennial approach to work is that they expect to be valued and well-rewarded for hard work; a standard that older employees may use as well. Companies also are deploying new benefits to compete for millennial talent, including top-ranked perks and incentives, such as:6

·         Recognition

·         Wellness benefits

·         Work-life integration

·         Student loan assistance

When it comes to politics, millennial voters tilted Democrat when entering adulthood — a trend that continues to grow as they age. Today, 59 percent of millennials identify as Democrats and 32 percent as Republicans, and more members of this demographic identify as Independents than in older generations.7

 

Content prepared by Kara Stefan Communications.

1 Raisa Bruner. Time. Aug. 9, 2017. Hold My Avocado’ Is the Viral Catchphrase Millennials Have Been Looking For.” https://time.com/4893355/hold-my-avocado/. Accessed June 24, 2019.

2 Venessa Wong. BuzzFeed News. Sept. 25, 2018. “Here’s How Millennials’ Lives Were Changed By Recession 10 Years Ago.” https://www.buzzfeednews.com/article/venessawong/millennials-lives-changed-by-recession-2008-2018. Accessed June 24, 2019.

3 Jared Hecht. Forbes. Jan. 15, 2019. “How The Great Recession Killed The Entrepreneurial Spirit Of Millennials.” https://www.forbes.com/sites/jaredhecht/2019/01/15/how-the-great-recession-killed-the-entrepreneurial-spirit-of-millennials/. Accessed June 24, 2019.

4 Hillary Hoffower. April 4, 2019. “The Great Recession split the millennial generation down the middle, creating 2 groups with very different financial habits.” https://www.businessinsider.com/millennial-generation-gap-great-recession-financial-crisis-money-habits-2019-3. Accessed June 24, 2019.

5 Tejas Maniar. Mayfield Fund. March 25, 2019. “Benefits Trends for the Millennial Workforce.” https://www.mayfield.com/benefits-trends-for-the-millennial-workforce/. Accessed June 24, 2019.

6 Denise Power. Columbus Chamber of Commerce. March 21, 2019. “The Millennial Mindset: Employee Benefits for the Workforce’s Largest Generation.” https://columbus.org/2019/03/the-millennial-mindset-employee-benefits-for-the-workforces-largest-generation/. Accessed June 24, 2019.

7 Pew Research Center. March 20, 2018. “Trends in party affiliation among demographic groups.” https://www.people-press.org/2018/03/20/1-trends-in-party-affiliation-among-demographic-groups/. Accessed June 24, 2019.

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

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

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