Insurance: Are You Adequately Covered?

Right now is a great time to examine your insurance coverage to assess if you are adequately covered and evaluate your risk. Without adequate coverage, your assets may face premature liquidation if you need to pay out of pocket for damages and do not have the financial means. For this reason, financial professionals often assess insurance coverage as part of the financial planning process.

Why do you need insurance coverage?

The idea of paying for insurance can feel daunting, but its meaning is simple: insurance helps protect you from financial hardship. Insurance can help provide for lost income, cover bills and debts due to death or disability, cover property damage or loss, funeral expenses, long-term care, or help pay for living expenses. Here are some ways to evaluate your insurance coverage needs:

You have a spouse

You are financially responsible for your dependents

You have debt

You do not have enough money to cover your debts and expenses related to death—funeral, estate taxes, attorney fees, and other costs.

It would be hard to replace your possessions if a loss occurs

You live in an area prone to natural disasters such as fire, flood, or tornadoes

Your family changed, grown, or members have moved away

There are new drivers in your family

There are changes ahead that will influence the amount of insurance you need

If you answered yes to any of the above, you must evaluate that you have the appropriate type and amount of insurance coverage for your situation. While insurance doesn’t cover everything, it can ease the financial burden if a disaster or loss occurs. Here are some of the policies to review to check you are not under or over-insured:

Auto insurance

Homeowners insurance, including all riders, such as flood insurance

Renter’s policy

Life insurance policies

Disability insurance

Long-term care insurance

Health insurance and supplemental policies

Your financial professional can help.

Your financial professional can review your insurance coverage and help you determine if you have enough coverage for your situation as part of financial planning. Give them a call today!

4 Tips to Turn ‘The American Dream’ of Owning a Home into Reality

Many Americans like having their own home, and it is still very much thought of as a part of the American dream. Nearly two-thirds of millennials and 45% of Gen Z say the desire to be a homeowner is why they buy a home. Many people choose homeownership because it is a part of our cultural mindset and economy. Today’s homebuyers are purchasing for many reasons:

Low-interest rates

More flexibility to work from home

A lower house payment versus rent payment.

Fear of missing out (FOMO) on low-interest mortgage rate loans

While 2021 had the most robust housing market in 15 years, experts predict that 2022 will be different. 2021’s housing market experienced low inventory, high demand, and a risk-averse lending environment. The extreme spikes in home prices may be in the past as home prices normalize in 2022. If you desire to be a home buyer in 2022, here are a few tips to help turn your American Dream into a reality:

Don’t panic- While the housing market is experiencing low inventory, high demand, and a risk-averse lending environment, don’t rush to buy and wait until the right home for you comes along.

Prepare your finances- Understand the upper limits of your budget and don’t stretch your comfort level. A qualification number is the maximum price/payment amount that likely will increase once mortgage insurance, taxes, homeowners insurance, etc., are included.

Mind your credit usage- Building your credit score will help you qualify for a lower interest rate on your mortgage. Limit your credit usage and pay off balances each month since your credit is pulled at qualification and 24-48 hours before closing and can occur numerous times.

Save for a larger down payment- The more cash you have available for a down payment, the better the interest rate will be on your loan. Putting down 20% can also help you avoid mortgage insurance which adds to your monthly payment. Also, you will need to be prepared to pay closing costs that are not included in your down payment.

Questions? Your financial professional can help. Your financial professional can answer questions about saving for a down payment or using retirement savings assets for a down payment on a new mortgage.

8 Ways The SECURE Act 2.0 Will Change Employee Retirement Plans

The SECURE Act 2.0 passed in March 2022 in the U.S. House of Representatives and is in The Senate waiting for revision or approval to expand retirement savings initiatives from the 2019 SECURE Act. The Senate proposed a similar bill in May 2021, and the two will likely combine. Here are the SECURE Act 2.0 proposals for employee retirement plans to help working Americans save more for retirement:

Automatic enrollment- Employees will automatically be enrolled at a 3% contribution rate but can opt-out or save less or save more up to their IRS contribution limit each year.

Automatic employee contributions increase- Employee savings plan contributions would increase each year by 1% up to 10%.

Employees choose where the employer matching dollars deposit- Employees can choose the Roth IRA or pre-tax retirement savings account. Before SECURE Act 2.0, all employer matching dollars were deposited into the pre-tax account.

Employees pay on student loans and still receive employer’s match- Employers will contribute their match and their employee’s contribution while the employee pays on their student loans.

Part-time workers’ are eligible for a 401(k) plan after two years- The SECURE Act will shorten the timeline for part-time workers who want to participate in their employer’s retirement savings plan from three to two years.

Catch-up provisions increase for employees in their 60’s- Catch-up provisions for 401(k) and 403(b) plan participants ages 62, 63, or 64 would increase to a catch-up provision maximum of $10,000 per year. Participants over age 50 enrolled in these retirement plans can currently contribute $6500 more for 2022.

Catch-up contributions must be made into a Roth IRA- Catch-up contributions deposit into a Roth IRA instead of the 401(k) starting in 2023 (in the house version). Currently, the employee can decide which account they want their catch-up contributions to go toward, either the Roth IRA or the 401(k) or 403(b).

Catch-up contributions will be indexed for inflation- Catch-up contributions for IRAs and Roth IRAs from owners ages 50 and older would be indexed for inflation. Since 2006, the $1000 extra hasn’t increased, regardless of inflation.

The SECURE Act 2.0 hasn’t passed yet, but a version of these proposals likely will before the year ends. The SECURE Act’s proposals are an effort to help working Americans save more for retirement. If you have questions as an employer or employee participating in a retirement savings plan, your financial professional can help. Reach out to them for the latest on the SECURE Act 2.0.

The pandemic and recession of 2020 have negatively affected the Old-Age and Survivors Insurance benefits, commonly known as Social Security retirement benefits. With fewer payroll taxes collected throughout this period due to declining workers, layoffs, decreasing working hours, and increased unemployment benefits, the fund is facing insolvency. The Social Security Administration has been spending more on benefits than bringing in from payroll deductions.

Initially designed for retired workers and survivors, the program’s funds depletion date of 2035 is now 2034. The Social Security Administration anticipates only paying between 75% to 78% of benefits to retirees and beneficiaries if Congress doesn’t act soon.

According to the Congressional Budget Office, the youngest eligible retirees claiming benefits early at age 62 starting in 2034 will receive approximately 5-6.5% less each year than those retiring at their full retirement age. However, those retiring at their full retirement age will receive around 8% less per year up to age 70.

Is there a fix for Social Security’s problems?

The Social Security Administration is selling Treasury bonds to keep the funds afloat. However, the funds will significantly deplete in the next twelve years. Some proposed solutions from the fund’s board of trustees include:

Increasing payroll taxes from approximately 12% to 16% to fund the Social Security program

Reducing or eliminating annual increases in Social Security payments

Raising the early retirement age from 62 to 65 and the full retirement age from 67 to 69.

Increasing the required number of years participants have to work before they can receive Social Security benefits

A 2021 Gallup poll found that 38 percent of U.S. adults not yet retired thought Social Security would be a significant source of their income. Today, 57 percent of retirees rely on Social Security as their primary source of income. Those retiring after 2034 will need to rely more on other retirement savings and less on their Social Security retirement benefits. Here are other ways to help ensure you’re financially prepared for retirement:

Participate in your employer’s retirement savings plan and contribute enough to receive their match. Automate your contributions to increase each year so that you eventually maximize your retirement savings.

Contribute to a Traditional or Roth IRA and invest in stocks, bonds, real estate, mutual funds, and other assets to help increase your retirement savings.

Work with a financial professional to establish a financial plan or revise an existing plan and evaluate your current retirement assets.

Whether Social Security retirement benefits are available at the current levels or not, planning for your future without it is essential.

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With healthcare costs continuing to rise, there are ways to help lower the cost of healthcare for yourself by becoming a wise consumer of healthcare. February is National Wise Health Care Consumer Month and a great time to empower people to make smart choices regarding their healthcare. Here are a few tips to help you become a wise consumer and keep your healthcare expenses in check:

Tip #1- Like most things we buy, we should shop our healthcare- Not all healthcare corporations have the same rates for the same medical procedures or even office visits. If you need surgery, shop for hospitals on your insurance plan to determine what it will cost. If you are a Medicare patient, most hospitals (but not all) accept Medicare Insurance, so be sure to select one that does.

Tip #2- Don’t forget about yearly physicals- The single best way to keep medical costs down is to detect health issues early when they are less complicated to treat and less expensive. Also, don’t ignore symptoms. If you’ve tried remedies on your own and still don’t feel well, it’s time to see a medical professional.

Tip #3- Partner with your medical provider- Take time selecting a doctor and giving them accurate medical information. Also, prepare for your appointments by writing down symptoms, medications you’re currently taking, and questions you may have. If you don’t understand something they say, ask for clarification.

Tip #4- Understand your health insurance plan– It is essential that you understand your insurance plan, co-pays, and in-network and out-of-network providers. If you do need to see a specialist, contact your insurance provider to ensure they will cover the specialist or if you need to seek a second opinion. Also, pre-authorization may be a requirement for specific specialists or procedures. Your insurance provider is a resource you can count on to help ensure you understand what they cover.

Tip #5- Ask for generic medications- Most medications come with a generic version and can save both you and the insurance company. If your doctor doesn’t know if there is a generic version, ask them to indicate on the prescription if a generic is allowed to assist the pharmacy in filling your prescription.

Tip #6- Make careful decisions about your health- People often accept their doctor’s diagnosis without question. If you receive a diagnosis, ask for a second opinion. As a consumer, it is up to you to ask questions about your health and not assume that the treatment plan will be the same from MD to MD. A few questions can help you decide what is best for your health and your wallet:

• What are the risks of my treatment?
• Is there another way to treat my condition?
• How much will my treatment cost?

Tip #7- Review medical bills and insurance explanation of benefits (EOB) statements- Consumers often receive the medical bills ahead of the insurance company’s explanation of the benefits statement. Waiting to compare both helps ensure that you don’t overpay. If you see discrepancies, contact your insurance provider first to confirm what the medical provider charged them and your remaining costs. In medical billing codes and coverage, errors can occur, leading to costly mistakes.

Tip #8- Take care of yourself- Your health determines how much medical care you will need now and as you age. While genetics plays a role in your overall health, exercise, food choices and consumption, mental health, and other factors also contribute to how much your medical expenses will be over your lifetime.

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April 18th, 2022, is the deadline to file your 2021 taxes and experts advise filing early ahead of scammers to ensure you get your return and someone else doesn’t. Many people may file their taxes this year expecting a return, only to find out a scammer received theirs. Tax identity theft is when someone uses your Social Security number to steal your tax refund or for work. People often discover tax identity theft when they file their tax returns.

With the significant cybersecurity leaks involving the personal information of millions of Americans compromising throughout the pandemic, this year’s tax season may be one of the worst ever for tax identity theft. What are five ways you can protect yourself from tax identity theft?

1. Run your credit report before filing your taxes– Your credit report will contain an active address for you and previous addresses. If you see a discrepancy and an unknown address in your profile, you may be the target of a scam. Alert the credit reporting agencies immediately and all companies where you have credit.

2. Select to receive W2s and 1099s electronically- Logging in to employee portals and online financial corporation portals to retrieve tax statements helps to deter mailbox theft and protects your personal information.

3. File early– The sooner you file, the more chance you have to be ahead of scammers who will likely file multiple returns using multiple tax id numbers.

4. Use tax preparation software that uses multi-factor authentication- Multi-factor authentication offers extra security by requiring two or more credentials to log in to your account to prepare your taxes. Your tax professional likely is already using this type of security when they file your tax return.

5. File electronically with a request for Direct Deposit- Electronic filing is faster than paper filing and decreases the chances of your return being stolen from your mailbox. Secondly, select direct deposit into your bank account as your refund option.

What if someone uses your identity to file a tax return?

If someone uses your Social Security number to file for a tax refund before you do, you’ll usually find out when you file your return with the IRS.

If you file by mail, the IRS will mail you a letter explaining that they received more than one return in your name. Follow the instructions in the letter.

If you try to submit your tax return online or through a tax preparer, the IRS will reject your tax return as a duplicate filing. If this happens, go to IdentityTheft.gov and report it. IdentityTheft.gov will create your

• FTC Identity Theft Report
• IRS Identity Theft Affidavit
• Personal recovery plan

If you choose, IdentityTheft.gov will submit the IRS Identity Theft Affidavit to the IRS online so that the IRS can begin investigating your case. You can also get the Identity Theft Affidavit (IRS Form 14039) from irs.gov and submit it by mail.

Source: What to Know About Tax Identity Theft

Taking steps to protect your personal information can help you avoid tax identity theft. Remember to keep your tax records in a safe place and shred them when no longer needed or keep them electronically. If someone calls, emails, or texts and says they’re with the IRS, it could be a scammer trying to steal your identity. Contact the IRS at 1-800-829-1040 to verify they are trying to reach you.

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This month during America Saves Week, February 21st through 25th, 2022, is a great time to do a check-in to help ensure you’re saving and preparing for a secure financial future. This year’s theme, “Building Financial Resilience,” reminds us that many have experienced financial setbacks from the economic fallout of the pandemic over the past two years.

Financial resilience is about more than just having enough money. Financial resilience includes preparing for unexpected events that can leave you financially unprepared. Throughout the week, each day focuses on the following themes:

Monday, February 21, 2022- Save Automatically

Tuesday, February 22, 2022- Save for the Unexpected

Wednesday, February 23, 2022- Save to Retire

Thursday, February 24, 2022- Save by Reducing Debt

Friday, February 25, 2022- Save as a Family

Here, we will list ways to build financial resilience using each day’s theme.

Save automatically- Through your payroll deduction, set a certain amount of your earnings to deposit into a savings account automatically. Or, set up automatic deposits from your checking account to your savings account each month. You’re less likely to forget to save when you set up automated savings.

Save for the unexpected– A ‘Rainey-day fund,’ also known as an emergency fund, is another savings account specifically for emergencies. Over time, this account grows by making automatic emergency fund deposits until it reaches the amount equal to three to six months of living expenses. Having emergency savings to financially cushion you from events such as job loss, major repairs, or illness helps to ensure that your retirement savings or other assets don’t prematurely liquidate- you can use your emergency savings instead!

Save to retire- Saving for retirement is essential to your future and can be automated so that you receive your employer matching dollars into your 401(k). Also, saving after-tax dollars through automatic contributions into a Roth IRA helps prepare you for a financially secure retirement. Work with a financial professional to determine a retirement savings strategy appropriate to your situation.

Save by reducing debt- When you carry debt each month, such as credit card, auto or recreational vehicle loans, etc., and pay interest each month, less money is going to you. Loans and credit cards are designed with minimum payment options to cost you more money over time while also making the lender more! Each dollar saved in interest is one more dollar you can keep in retirement savings or other investments.

Save as a family– Teaching your children about saving and why saving is essential helps prepare them to be financially savvy adults. Also, teaching them how to manage their money has positive, long-lasting effects, helping to deter the negative consequences of overspending when it comes to their own money.

Work with a financial professional- A financial professional can help you develop a savings strategy for your situation and a financial plan to help you reach your financial goals. Contact them today to get started.

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An experienced financial professional can help guide you through the financial planning process by providing advice in several areas of your financial life. Financial planning involves multiple areas of finance, such as budgeting, debt management, savings, retirement planning, insurance, and estate planning. In addition, financial planning may include holistic planning, which focuses on achieving your life goals by properly managing your financial resources, health, and other aspects of life. 

Reasons to work with a financial professional

While you can pursue financial planning independently, you can benefit by working with a financial professional.

• Determine if you’re on track with your goals: A financial professional can analyze your current financial situation and make recommendations on what is going well and what you can improve. 
• Get a Second Opinion: Even if you feel confident in your financial skills, a financial professional can give you a second opinion. They may fast-track your strategies and make suggestions to help you achieve your goals more efficiently. 
• Manage Roadblocks: If you lose your job, go through a divorce, or experience other life events that impact your finances, a financial professional can help you navigate the situation to make choices that set you up for a successful financial future. 

While every financial professional has their strengths and specialties, most can advise you on the following:

• How you can get out of debt.
• What you can do differently to save money.
• How much to keep in your emergency fund.
• The types of retirement savings vehicles that meet your situation.
• If you have the appropriate type of insurance for your situation.
• How to improve your tax situation.
• How to adequately save for your future goals. 

Consult Your Financial Professional

Together with your financial professional, review your situation to determine the ideal life plan for you. Contact us today to get started. 

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Each year, the Transamerica Center for Retirement Studies conducts an annual retirement survey. It’s intended to explore the attitudes and behaviors of Americans regarding retirement security and benefits. Here are several noteworthy findings from themost recent study in late 2020.

• Eighty-two percent of workers save for retirement through employer-sponsored plans or savings plans outside the workplace.
• Thirty-four percent of workers have taken either a loan, early withdrawal and/or hardship withdrawal from their 401(k) or similar plan or IRA.
• Among all workers, total household retirement savings is $93,000 on average.
• Baby Boomer workers have the most retirement savings at $202,000, compared with Generation X ($107,000), Millennials ($68,000), and Generation Z ($26,000).
• Forty-nine percent of workers expect to work past age 65 or do not plan to retire. This statistic is not surprising as many Americans’ retirement savings may be inadequate. 

Retirement Savings in the U.S. Compared to Other Countries

When it comes to retirement savings, the U.S. isn’t in the best spot. A report by Paris-based investment bank Natixis Investment Managers ranked the U.S. 18th in their global ranking of retirement security. Iceland, Switzerland, Norway, Ireland, New Zealand, Sweden, Denmark, Canada, Australia, and Luxembourg were in the top 10. The report discovered that despite an improvement in employment and high income per capita, retired Americans have a lower quality of life and income inequality, dragging the performance of the U.S. when it comes to retirement savings. 

Nowis the perfect time to reflect on your retirement savings and goals using these tips:

• Examine your retirement savings accounts to determine how much you have saved.
• If you’re not contributing to an employer-sponsored 401(k) or a similar retirement savings plan, enroll as soon as possible.
• Consider a Solo 401(k), SEP IRA, and other retirement options if you’re a business owner or self-employed.
• Explore annuities as a retirement savings asset class.
• Meet with a financial professional to discuss when you’d like to retire, what type of lifestyle you’d like in retirement, and how much you need to save to get there.

Consult Your Financial Professional

Together we can review your financial situation and determine the ideal retirement plan for your situation. Contact us today to get started. 

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Planning how to pay for the expenses of attending college or a technical school is essential, and there are ways to save to make secondary education more affordable. Here are three things to know about secondary education planning and financial aid:

What do you need to know about FAFSA filing?

If you or your child will require financial aid to help pay for college or a technical school, you must submit the Free Application for Federal Student Aid (FAFSA) form. The form will become available on StudentAid.gov on October 1, 2021, and you should plan to complete it as soon as possible. Gather these items ahead of time to make completing the form a breeze:

• Your FSA account credentials after submitting the Free application form
• 2019 tax records
• Social security number
• Driver’s license number

What types of financial aid is available?

A variety of financial aid sources are available to help pay for college or technical school. Finding the right option for you can sound daunting, but here are some financial aid options to keep in mind:

Grants: A grant is a form of financial aid that typically does not need to be repaid. Various federal grants are available, including Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), and Teacher Education Assistance for College and Higher Education (TEACH) Grants. Your state may also offer grants if attending college or trade school in-state.

Scholarships: Many nonprofit and private organizations offer scholarships to help students pay for secondary education. This type of assistance which bases on academic merit, talent, or a particular area of study, can make a real difference in helping you manage your education expenses.

Work-Study Jobs: The government provides a Federal Work-Study Program, which allows students to earn money to pay for school by working part-time throughout their studies.

Loans: Student loans borrow money from the government or a private entity to attend a college or technical school. You must repay the loan as well as any interest that accrues. It is important to understand your repayment options early so you can successfully repay what you owe.

What are some ways to have less financial aid debt?

When heading to college or technical school, it’s a good idea to consider ways to minimize student debt. First, exhaust every option in which you can receive free money to go toward tuition. Research grants and scholarships you may qualify for, and submit the necessary application requirements before the due date.

Save as much money as possible before starting college or technical school. Every dollar you save beforehand is one less dollar that you will need to borrow. And less money borrowed means less interest accruing, so save, save, save!

Consider attending a less expensive school. The more expensive school that you’re planning to attend may seem like a good idea, but choosing a less expensive school can save you money in the long run. Enrolling at an in-state public college or technical school can still provide a high-quality education for less.

Use this information to help you take charge of your education and make the best decision for your unique financial situation. Your financial advisor can also provide you with additional information to help you decide on planning for and accepting financial assistance.

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