As Fall comes to a close and the holiday season comes in full force, we want you to know that we are here as a resource to you and your loved ones. We do know how difficult the holiday season can be, and many of you or your loved ones may be dealing with challenges to health, finances, or family.

Family financial meetings may not solve all of the troubles that may arise, but they can certainly help to build peace of mind as you work towards your long-term goals. Those well thought out, flexible and personalized financial plans, can really come in handy when fatigue sets in from the stresses of life that get thrown at you.

Please remember, as inclement weather increases, it is absolutely essential to review your existing Life Insurance coverages compared to your existing needs. We have wonderful resources to help consolidate your existing Life Insurances in order to help provide coverage that reflects your existing needs.

Are you thinking about retiring or starting to take Social Security? Those are things you can do without consulting a CFP® professional, but why would you? Income planning is one of the things that we do best, and we are here to help leverage your lifetime income benefits for your greatest advantage.

We’re here to help.

We have some exciting news! We recently launched a podcast, The Investment Answers Podcast. Your hosts are Travis -AND- Kelly Terlau!

A podcast is an online “radio show.” You can listen to it on demand — whenever it’s convenient for you. Subscribe and listen on your favorite listening platform: iTunes, Google Play, or your favorite podcast listening forum. Search for “Investment Answers Podcast,” then choose an episode to listen to! When you subscribe, you will get alerts announcing new episodes as they are released. (If you have an iPhone, you already have a purple Podcast App on your phone.)

Want to listen to us on your computer? Listen to our published episodes on our website. Our weekly email will have podcast links for your convenience. Of course, if you follow Investment Answers on Facebook, Twitter (@InvestmntAnswrs), or LinkedIn, we will begin sharing our episodes on those social platforms this fall.

Whether you’ve never tried listening to a podcast or you already have many that you enjoy, we hope you enjoy our discussions and this new, convenient format.

SHARE the wealth by SHARING podcast episodes with those who would benefit from these useful discussions.

According to Retirement Advisor, in 2014, nearly half of adults in their 40s and 50s have a parent age 65+ and are either raising a young child or financially supporting a grown child. The data has shown this trend is continuing to grow. Having started families later than past generations, their children may just now be entering college or still living at home. At the same time, aging parents may need financial assistance. It is a dilemma that is likely to become more common.

Caring for Parents

As life expectancies continue to rise, it becomes increasingly likely that you may need to help an aging parent. On our Knowledge Center, we have many resources. Print our Peace of Mind Checklist to help organize essential life documents and their locations. Some financial precautions you should consider now include:

• Investigate long-term-care insurance for your parents. If they can’t afford the insurance, you may want to purchase it for them.
• Have your parents prepare a listing of their assets, liabilities, and income sources, including the location of important documents. This can save time if you need to take over their finances.
• Make sure your parents have legal documents in place so someone can take over their financial affairs if they become incapacitated. Delegating healthcare decisions for when they are unable to speak on their own behalf is a vital part of long-term wellness.
• Understand the changing tax laws if you provide financial support to your parents. You may be able to claim them as dependents if you provide more than half of their support. You may be able to deduct medical expenses paid on their behalf.
• Find out if your employer offers a flexible spending account for elder care. This may allow you to set aside pretax dollars to pay elder-care expenses for a dependent parent.

Assisting Your Children

For many families, college costs are significant. While you may want to pay all college expenses for your children, it may not be feasible with competing needs to save for retirement and/or assist parents. Knowing your own financial situation will help your family discuss what is financially viable and what kinds of support are realistic for you to provide. Consider these strategies:

• Shift some of the burden of their education onto them by requiring them to work or take out student loans.
• Understand the financial aid system, investigating all financial aid sources. Search for scholarships that are not based on need. Apply to several different colleges, looking for the best financial aid package. Negotiate with your child’s preferred college to see if you can increase that package.
• Look for ways to reduce the costs of college. Your child can start at a community college, which is often cheaper than a four-year university, especially if the child commutes from home. Also consider a public university in your state, which will generally be more affordable than a private university.
• Once your child graduates from college, don’t assume your financial responsibilities are over. Adult children may return home for a variety of reasons — they can’t find a well-paying job, they have too much debt to live alone, or they divorce and need financial support. If your child returns home, realize there are increased costs — additional food, Squeezed Continued from page 1 phone bills, utilities, etc. Consider charging rent and imposing a deadline on how long he/she can stay. For more information on this, read our blog, “Loan Carefully” on our Knowledge Center.

Don’t Forget Yourself

When faced with the competing needs of children and aging parents, it’s easy to neglect your own need to save for retirement. But don’t feel guilty about your retirement needs. One of the best gifts you can give your children is the knowledge that you will be financially independent during retirement. Consider the following:

• A Certified Financial Planner™ professional is uniquely qualified to help you calculate how much you will likely need to save for retirement to afford the quality of lifestyle you desire. Once you have a realistic financial plan in place based on all of the expenses you have by supporting the generation before and after you, start out saving what you can for your own future. You may need to amend your retirement plans.
• Take advantage of all retirement plans. Enroll in your company’s 401(k), 403(b), or other defined-contribution plan as soon as you’re eligible. Also consider investing in individual retirement accounts.
• Reconsider what retirement may look like. It may not be a time of total leisure. Listen to our discussion about this on our podcast, “E5: Part-time Retirement,” where we discuss the many reasons why retirees return to the workforce.

You will never regret accumulating retirement savings over the decades of your life, actualizing the power of compounding interest, and allowing time to work as your greatest ally.

The sooner you start saving, the less you’ll have to put away each month to accumulate the needed funds for retirement. For example, say as a 25-year-old you open an IRA and save $100 a month ($1,200 per year). The IRA earns an average of 6% a year. After 40 years — when you’re 65 and ready to retire — your account balance could grow to over $185,000.

But let’s say instead, you put off saving until you are 45. At the same rate of saving in an IRA with the same returns, by the time you’re 65, your IRA balance would be just about $44,000. Starting when you’re 45, you’d have to contribute $420 a month until age 65 to save about $185,000.

At least that would be less painful than if you waited until you were 55. Then to match the end result, you’d have to save $1,175 per month. (These examples are provided for illustrative purposes only and are not intended to project the performance of a specific investment vehicle.)

One way people often try to compensate for getting a late start in saving is to shoot for a higher rate of return. Instead of settling for the 6% a year we used in the example, why not go for 10%? But there are two problems with that strategy. The first is investments don’t always provide consistent returns.

Second, to earn higher rates of return, you have to take on more risk. That’s fine when the big returns come in; but in the long run, big returns in some years are usually paid for with big losses in others.

Not everyone realizes time spent not saving can have a significant cost, and there are only so many ways to make up for it. The sooner you start putting more money aside, the better.

People are starting to redefine retirement from a time of total leisure to a time for more leisure with work still occupying part of their time. Some continue working out of financial necessity. Others work to keep busy or because they enjoy working. If you’re retired and are considering going back to work, answer these questions first:

Will You Earn Enough to Make Working Financially Worthwhile?

Calculate how much you’ll earn after paying taxes and work-related expenses. Consider whether the additional income will increase your marginal tax bracket or disqualify you from certain tax deductions or credits. Don’t forget to consider work-related expenses.

Will Your Earnings Affect Your Social Security Benefits?

If you are full retirement age or older, you can earn any amount of income without reducing your Social Security benefits. However, individuals between the ages of 62 and full retirement age lose $1 of benefits for every $2 of earnings over $17,040 in 2018. Additional income could make a portion of your Social Security benefits taxable. Up to 50% of benefits are subject to federal income taxes if adjusted gross income plus nontaxable interest plus one-half of Social Security benefits exceeds $25,000 for single taxpayers and $32,000 for married taxpayers filing jointly. 85% of Social Security benefits are subject to federal income taxes if that income exceeds $34,000 for single taxpayers and $44,000 for married taxpayers filing jointly.

Are You Approaching Age 70 ½?

If so, going back to work may prevent you from having to take minimum distributions from your 401(k) or other employer plan. You will, however, have to start taking distributions from traditional IRAs.

Are You Thinking About Starting a Business?

Many retirees choose to turn a hobby or work experience into a business venture. If you do, be careful not to deplete your retirement savings to fund the business. Find other sources for funding.

Do You Know Why You are Going Back to Work?

Be realistic about what you can expect from your new job. If it’s just a part-time job to keep you busy, you probably won’t have as much responsibility as you were used to at prior jobs.

With spring wrapping up and heading into the summer months, it is an ideal time to review your finances. Many are still paying off holiday purchases, tuitions are due for children or grandchildren, and New Year’s Resolutions are often long gone. Did you intend to implement a budget for 2018? If so, how are you holding up on your expenses and savings plan?

When families get together during the holiday season, emotions can run high. We recommend taking the summer months to review your own Financial Fitness and schedule those Family Meetings that you’ve been thinking might be a good idea.

Keep in mind with the 2018 tax changes, if you are on a fixed income from your retirement accounts, you may need to make adjustments to your tax withholdings so you’re not giving away too much of the money you’ve already earned to your state or the federal government in 2018.

We’re here to help with all of these challenges and opportunities. Call the office at 502-690-3434 to schedule an appointment, or schedule online.

In a recent survey, those who claimed Social Security benefits before full retirement age did so primarily because they stopped working (Source: National Bureau of Economic Research, 2017).

It seems children have a negative effect on retirement preparedness. Each child increases the risk of not being able to fund retirement by two percentage points. The increased risk is due to women with children having lower labor participation rates and earning lower wages. At the same time, consumption is higher. The cost for a family of four is 40% greater than the cost for two adults (Source: Center for Retirement Research at Boston College, 2017).

Postponing claiming Social Security benefits from age 62 until age 70 increases the size of benefits by about 75%. Delaying impacts not only the benefits at the time of claiming, but also the survivor benefit for married couples. The Society of Actuaries says nearly half of widows have no income other than Social Security (Source: Society of Actuaries, May 2017).

A recent study found that a preference for value, growth, large, or small stocks is related to an investor’s personality (Source: AII Journal, October 2017).

Use debt only for items that have the potential to increase in value, such as a home, college education, or home remodeling. Avoid incurring debt on items like clothing, vacations, or other luxuries.

Consider a shorter term when applying for loans. Even though your monthly payment will be higher, you will incur much less interest.

Make as large a down payment as you can afford. If you can make prepayments without incurring a penalty, this can also significantly reduce the total interest paid.

Consolidate high-interest-rate debts with lower-rate options. It is typically fairly easy to transfer balances from higher rate to lower rate credit cards. Another option is to obtain a home-equity loan to pay off consumer debt.

Compare loan terms with several lenders, since interest rates can vary significantly. Negotiate with the lender. Review all your debt periodically to find less-expensive options.

Review your credit report before applying for a loan, so you have an opportunity to correct any errors.

While we’ve become accustomed to hearing about hacking of personal data at large retailers, the medical industry is fast becoming the industry at the highest risk of data hacking — 91% of healthcare organizations experienced a data breach in the past two years (Source: Forbes, May 29, 2015).

The consequences of these data breaches can range from financial to medical fraud. Medical records typically contain payment information such as credit card numbers, but also carry data like Social Security numbers and insurance information, which can enable a criminal to obtain medical services and payments under another’s identity.

There are several reasons the healthcare industry has become a new target for hackers. First, the American Recovery and Reinvestment Act of 2009 and the Affordable Care Act in 2010 required health care organizations to digitize their health information. Second, because most information was previously held in hard copy form, the healthcare industry has not been as savvy about data protection. These two things opened up a whole new world for cybercriminals. Finally, healthcare information commands a much higher price on the black market. An FBI report shows that health insurance information has a $60 to $70 price tag compared to $1 for a Social Security number (Source: Forbes, May 29, 2015).

Cybercriminals profit from healthcare data by getting healthcare for themselves or selling it to someone who is uninsured and in need of medical care. But the big profit comes from private health insurance, Medicare, and Medicaid fraud. For example, for every Medicare or Medicaid number stolen, individuals can bill the government for services and equipment as well as prescription medicines.

How to Protect Your Information

While the healthcare industry is making strides in data protection, you should be diligent about protecting your medical information. Following are some steps you can take:

• Ask your physician for a copy of your medical records so you can review them for accuracy. You’ll want to make sure your medical history, prescribed treatments, allergies, blood type, etc., are accurate, so that if you are in an emergency situation, you’re not receiving treatment that could be detrimental.
• Take time to review the Explanation of Benefits you receive from your insurance company. This is the best document to review to uncover medical fraud.
• If your physician or a hospital is asking you to provide your Social Security number, find out why they need it and make sure it is absolutely necessary.
• Monitor your credit report on a regular basis to ensure that you don’t see activity that is the result of stolen payment information.
• Consider a medical identity monitoring service, which will identify all healthcare transactions on your account.

While investors want the highest returns possible, returns compensate you for the risks you take — higher risks are generally rewarded with higher returns. Thus, you need to assess how much risk you are willing to take to obtain potentially higher returns.

However, this can be a difficult task. It is one thing to theoretically answer questions about how you would react in different circumstances and quite another to actually watch your investments decrease significantly in value. What you are trying to assess is your emotional tolerance for risk, or how much price volatility you are comfortable with. Some questions that can help you gauge your risk tolerance include:

What Long-Term Annual Rate of Return Do You Expect to Earn on Your Investments?

Your answer will help determine the types of investments you need to choose to meet that target. Review historical rates of return as well as variations in those returns over a long time period to see if your estimates are reasonable. Expecting a high rate of return may mean you’ll have to invest in asset classes you aren’t comfortable with or that you may be tempted to sell frequently. A better alternative may be to lower your expectations and invest in assets you are comfortable owning.

What length of time are you investing for? Some investments such as stocks should only be purchased for long time horizons. Using them for short-term purposes may increase the risk in your portfolio, since you may be forced to sell during a market downturn.

How Long are You Willing to Sustain a Loss Before Selling?

The market volatility of the past several years will give you some indication of how comfortable you are holding investments with losses.

What Types of Investments Do You Own Now and How Comfortable are You with Those Investments?

Make sure you understand the basics of any investments you own, including the historical rate of return, the largest one-year loss, and the risks the investment is subject to. If you don’t understand an investment or are not comfortable owning it, you may be tempted to sell at an inopportune time. Over time, your comfort level with risk should increase as your understanding of how risk impacts different investments increases.

Have You Reassessed Your Financial Goals Recently?

Due to the significant market volatility of the past few years, your financial plan may need to be revamped. Otherwise, you may find you won’t have sufficient resources in the future to meet your goals. Based on your current investment values, determine what needs to be done to meet your financial goals. You may need to save more, change or eliminate some goals, or delay your retirement date.

Do You Understand Ways to Reduce the Risk in Your Portfolio?

While all investments are subject to risk, there are some risk-reduction strategies you should consider for your portfolio. These strategies include:

• Diversify your portfolio. Diversifying among several investment and insurance categories allows for a variety of resources and methods to meet your short- or long-term goals. A properly diversified portfolio may contain a combination of cash, stocks, bonds, mutual funds, annuities, properties, and so on.
• Stay in the market through different cycles. Remaining in the market over the long term helps reduce the risk of receiving a lower return than expected, especially for more volatile investments, such as stocks.
• Use dollar cost averaging to invest. Rather than accumulating cash so you have a large sum to invest, invest small amounts regularly. Dollar cost averaging is a method of investing a certain sum of money in set amounts at regular intervals. This spreads your purchases over a period of time, keeping you from making one major purchase at high prices. Since you are investing a set amount, you purchase more shares when prices are lower and fewer shares when prices are higher. While a valuable investment strategy, dollar cost averaging does not ensure a profit or protect against losses in declining markets. Before starting a program, consider your ability to continue purchases during periods of low price levels. This strategy requires the discipline to invest consistently regardless of market prices and can help develop a habit of regular investing.

Use us as a resource to help you assess your existing risk tolerance against your existing assets.