It’s that time of year again. Halloween is here. It’s time to stock up on candy, carve your pumpkin, and find the perfect costume. Soon, scary movies will be on television and you’ll have little ghouls and goblins showing up at your door for trick-or-treating.
 
This may be the scariest time of the year, but it only lasts a month. The truth is there could be gaps in your retirement strategy that could come back to haunt you for years or even decades. Below are a few common retirement planning mistakes that can have frightening long-term consequences. If any of these sounds familiar, it may be time to meet with a financial professional.

Having the wrong allocation. 

Asset allocation is an important part of any retirement strategy. Your allocation influences your risk exposure and your potential return. Generally, risk and return go hand-in-hand. Assets that offer greater potential return usually also have higher levels of risk. You can use asset allocation to find the right mix of assets for your retirement income goals and risk tolerance.
 
Having the wrong allocation can be problematic. For example, many people have less tolerance for risk as they approach retirement. As you get closer to retirement, you have less time to recover from a loss and thus less tolerance for risk. However, if you don’t adjust your allocation, you could have more risk exposure than is appropriate. A downturn could substantially impact the amount of income you have set aside for retirement.
 
One way to protect your assets and reduce your risk exposure is to use a fixed indexed annuity (FIA) for part of your allocation. FIAs offer potential interest that is tied to the performance of an external market index, like the S&P 500. If the market performs well, you may earn more interest, up to a maximum amount set by the insurance company.
 
However, if the index performs poorly over a given period, you won’t lose any premium. Most FIAs have a principal guarantee* which means you won’t lose money due to market loss. You may earn zero interest, but your  contract value won’t go down.

Not guaranteeing* your income. 

Income is the name of the game in retirement. One key to a successful retirement is having income that meets or exceeds your expenses. However, much of your income may be unpredictable. While Social Security income is guaranteed, your income from your personal savings may not be. It can be difficult to plan your retirement when you don’t know how much income you will have or how long it needs to last.
 
Again, an FIA can help you manage this risk. Many FIAs offer optional benefits called guaranteed* withdrawal riders. With these features, you’re allowed to withdraw a certain amount each year. As long as you stay within the allowed withdrawal amount, the income is guaranteed* for life, no matter how long you live or what happens in the financial markets. This predictable income can help you make more informed financial decisions and live comfortably in retirement.

Not working with a financial professional. 

Are you more of the DIY type? That’s an understandable approach, but it could also create some frightening risks. For instance, you may not see potential risks, like gaps in your asset allocation. Or you may not fully estimate your income need for a long retirement.
 
A financial professional can use their knowledge, experience, and resources to develop a customized strategy for you. They can identify gaps in your plan and recommend appropriate strategies, such as FIAs or other financial vehicles. Sometimes an outside opinion can help you identify risks that you didn’t see yourself.
 
Ready to take the terror out of your retirement strategy? Let’s talk about it. Contact us at DSM Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19301 - 2019/9/24

It’s hard to believe the year is almost over, but October is already upon us. Soon the holidays will be here and then we will flip the calendar to 2020.
 
These last few months are also your last opportunity to make important financial decisions before the end of the year. It’s a great time to review your strategy and make adjustments as you head into 2020.
 
Below are a few items to include on your end-of-year planning checklist:

Review your tax strategy. 

The deadline for filing your 2019 taxes may be in April 2020, but that doesn’t mean you can’t get started on your planning today. In fact, by starting your planning now, you can take advantage of deductions and other opportunities.
 
For example, there may be deductions that you haven’t fully used. You could make a contribution to your favorite charity before the end of the year to take advantage of the charitable deduction. You could make contributions to tax-deductible retirement accounts, like an IRA. Do you have any outstanding medical bills? You may be able to deduct those costs if you pay them before the end of the year.
 
Also, consider whether you can defer income until next year. Perhaps you’re due a sizable bonus or other compensation. Perhaps you could defer that income until after January 1 so it’s not included in your 2019 return. If you’re considering selling appreciated assets, like stocks, you may want to wait until after the beginning of the year to delay the capital gains. A financial and tax professional can help you identify these opportunities and make informed decisions.

Increase your contributions. 

Will you maximize your contributions to your 401(k) and IRA this year? If not, you still have time to do so. In 2019, you can contribute up to $19,000 to a 401(k), or up to $25,000 if you are age 50 or older. You can contribute up to $6,000 to an IRA, or up $7,000 if you are 50 or older.1
 
This also may be a good time to consider your contributions for 2020. The IRS has not yet announced the 2020 contribution limits. However, increasing your contribution rate could help you accumulate more assets. Even a moderate increase of a percentage point could compound to significant savings over time. Think about increasing your retirement savings as you head into 2020.

Check your benefits. 

The fall is usually open enrollment season for many employers. This is a good time to review your health coverage and other benefits to see if they still fit your needs. If you’re nearing retirement and have access to an HSA through your employer, you may want to consider making contributions. An HSA can be a tax-efficient funding source for healthcare costs and you can take the assets with you into retirement.

Adjust your allocation. 

Finally, this may be the right time to review your allocation. Your needs and risk tolerance could change over time. It’s common for people to become more risk-averse as they approach retirement. It’s important that your allocation changes along with your tolerance for risk.
 
A fixed indexed annuity (FIA) could help you take some of the risk out of your strategy. FIAs offer the potential to earn interest based on the performance of a market index. If the index performs well over a certain time period, you may earn more interest, up to a limit. However, if it performs poorly, you could earn zero interest; however you don’t lose money due to market declines.
 
Ready to start on your fourth-quarter financial checklist? Contact us at DSM Financial. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation
 
1https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000
 
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about investments and potential insurance products as deemed appropriate by a licensed fiduciary. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Registered Investment Advisor and Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. Advisory services offered through ChangePath, LLC, a Registered Investment Adviser with the SEC. ChangePath, LLC and Kincaid Financial Resources are unaffiliated entities.
 
19305 - 2019/9/25

Who handles the money in your household? If your home is like most, it depends on the kind of financial planning involved. A new study from UBS found that 85 percent of married women handle the day-to-day financial management in their household. However, the same survey found that only 23 percent of married are in charge of their long-term planning. The remainder defer that work to their husband.1
 
Why do so many women defer their long-term financial planning to their spouse? According to the study, 82 percent of women said they think their spouse is more knowledgeable about long-term financial planning.1
 
Partnership is always important in marriage, especially when it comes to financial planning. Finances are often a major cause of arguments and disagreements, so it’s helpful for both spouses to be involved in decision-making.
 
It’s also important for women to take control of their financial future because they may face challenges and risks that men do not face. Below are two such challenges. If you haven’t developed a long-term financial strategy, now may be the time to do so. A financial professional can help you get started.

Longevity 

People are living longer than ever, primarily because of advances in health care and increased understanding about health and nutrition. However, women usually have the edge on men in terms of life expectancy.
 
According to the Society of Actuaries, the average 65-year-old man has a 50 percent chance of living to 87 and a 25 percent chance of living to 92. However, a 65-year-old woman has a 50 percent chance of living to 92 and a 25 percent chance of living to 96.2
 
This means that many women can expect to outlive their husbands. While that idea may not be pleasant to think about, it’s an important planning consideration. A longer lifespan means a longer retirement. That means you’ll need to make your assets and income last longer so you can live comfortably.

Career Earnings 

Many women also may earn less over their career than their husbands or even their male counterparts in the workplace. According to a study from PayScale, a salary website, the average woman hits her peak in annual earnings at age 44. Men, on the other hand, hit their peak at age 55.3 PayScale also found that women earn less over the course of their career. The average woman has a peak annual income of $66,700. Men peak at just over $100,000.3
 
There are a number of reasons why this earnings gap exists. Some women may take time off to care for children. Others may sacrifice their career so their husbands can pursue a more demanding and time-consuming career. Others may suffer from the well-known pay gap that exists in the United States.
 
Regardless of the reason, it’s important for women to know that the earnings gap exists so they can plan accordingly. Career earnings often translates into savings. A woman who has less career earnings may also have fewer assets saved for retirement.
 
Ready to take control of your long-term financial planning? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
 
1https://www.thinkadvisor.com/2019/03/07/many-women-defer-to-spouses-on-big-financial-decisions-ubs/
2https://www.fidelity.com/viewpoints/retirement/longevity
3https://www.cnbc.com/2019/06/11/gender-pay-gap-womens-earnings-peak-11-years-before-mens-payscale.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19093 - 2019/8/1

The world has changed significantly in the past few decades. Thirty years ago, there weren’t cell phones. Computers weren’t widely owned. There was no Uber or Airbnb. Social media was unheard of and virtual reality was the stuff of science fiction.
 
The world changes quickly, and not just in terms of technology. Retirement has changed significantly in the past few decades as well. The next generation of retirees will face challenges that previous generations didn’t face.
 
The good news is that you can overcome these potential challenges if you plan ahead. Below are a few ways in which retirement has changed over time. Do you have a strategy to address these challenges? If not, now may be the time to develop one. A financial professional can help you get started.

Longevity 

People are living longer than ever. Usually, that’s a good thing, but a long lifespan can create financial challenges. According to the Society of Actuaries, today’s retirees can plan on a long lifespan. They estimate that a 65-year-old couple has a 50 percent chance of one spouse living to age 94 and a 25 percent chance of one spouse living to 98.1
 
If you retire in your mid-60s, there’s a chance your retirement could last 30 years. That means you’ll need your assets and your income to last that long. That could be difficult, especially if you overspend in the early years of retirement.

Income Sources 

There was a time when retirees could count on income from Social Security and an employer defined benefit pension to fund their retirement. Those days are long gone. Defined benefit pensions are quickly disappearing from employer benefit options. In fact, the percentage of Fortune 500 companies that offer defined benefit pensions has dropped from 59 percent in 1998 to 16 percent in 2017.2
 
While you can likely count on Social Security income, it may not be enough to fund a full retirement. That means you may need to take withdrawals from your savings and investments to generate income. You’ll likely need an income strategy to make sure you savings lasts through a long, fulfilling retirement.

Health Care 

Health care costs have risen dramatically in recent decades. Medicare helps cover some of those costs, but it doesn’t cover everything. In fact, Fidelity estimates that the average retiree will spend $285,000 out-of-pocket on healthcare.3 That figure is above and beyond what is covered by Medicare, and includes things like premiums, deductibles, copays and more.
 
How do you plan for high out-of-pocket healthcare costs? One effective strategy is to budget for them. You also may want to consider an investment strategy that generates enough income to cover potential health care costs.
​
Complexity 

Retirement income. Healthcare costs. Budgeting. Longevity. How do you plan a retirement strategy that considers all these potential challenges and more? For many retirees, the complexity of managing these issues is the real challenge.
 
Fortunately, you can address retirement issues head-on by developing a personalized retirement income plan. A retirement plan can help you project your income, budget your spending, and make sure that your assets last as long as you need them to.
 
Ready to plan for a 21st-century retirement? Let’s talk about it. Contact us today at
DSM Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.fidelity.com/viewpoints/retirement/longevity
2https://www.planadviser.com/mere-16-fortune-500-companies-offer-db-plan/
3https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs\
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19094 - 2019/8/1

Summer has finally arrived. It’s time for sunshine, barbeques and maybe even vacations to the beach. If you’re still working, you may only get one or two weeks a year to escape from the office and enjoy the great weather. However, once you’re retired, you’ll have the time and flexibility to enjoy a beach and a tropical climate as much as you want.
 
In fact, many retirees choose to not only vacation frequently, but to actually relocate to a warm, tropical location. Many do it for lifestyle reasons. They want to be able to enjoy the outdoors year-round. Others may do it for health reasons. They may have illnesses or conditions that are less severe in warmer weather.
 
Some people also move to tropical locations for financial reasons. There are many places, especially in other countries, where your retirement dollars might stretch further than they do in the United States.
 
In fact, every year International Living magazine rates the best tropical retirement destinations in its Global Retirement Index. Below are a few of the top locations in 2019’s index. If you’re looking for a warm tropical climate and want to make your retirement assets last, you may want to consider either a part-time or full-time relocation to one of these countries.

Panama 

Panama claimed the top spot in 2019’s Global Retirement Index. It’s a modern, sophisticated country in Central America that’s popular with American ex-pats and retirees for a few reasons. One is the climate. It’s a tropical country with year-round great weather, but it also isn’t a frequent target of hurricanes or tropical storms. Whether you love the beach, golf, or other outdoor activities, you’ll find plenty of options in Panama.
 
Panama is also a great location for your wallet. The country actively courts retirees from other countries with its Pensionado program. This program offers substantial discounts on everything from airline tickets to hotel rooms and even energy costs. Also, you don’t pay taxes in Panama on income that originates in your home country.
 
Medical costs are also affordable in Panama. According to the study, office visits for minor issues have minimal costs and most patients can enjoy a direct relationship with their physician or specialist.
 
Malaysia

Want to relocate to somewhere tropical, but also with a completely different culture? You could try Malaysia, which ranks fifth in the Global Retirement Index. The country is home to pristine beaches, but also rainforests and mountains if you’re in the mood to explore. You can live in the city or a small countryside village.
 
The cost of living is also appealing. According to the report, Malaysia offers a cost-of-living at a fraction of the expenses here in the United States. In fact, a couple may be able to live comfortably in a beachside town for less than $2,000 per month. Health care is also affordable in Malaysia. Retirees in the country report low costs and high-quality care with access to skilled physicians and specialists.

Portugal 

Want an inexpensive location with plenty of travel opportunities? Portugal could be the right option for you. According to the Global Retirement Index, Portugal is the second most affordable country in Europe, just behind Bulgaria. Retirees interviewed as part of the study say they can live comfortably in Portugal for less than $2,500 per month.
 
While Portugal is a foreign country, it could be an easy transition for an American retiree. English is widely used, and even basic knowledge of Spanish and Portuguese is sufficient. Also, Portugal is rated as the fourth-safest country in the world according to the 2018 Global Peace Index.
 
The biggest benefit to living in Portugal may be the lifestyle. You have access to beach towns or a relaxed lifestyle in the country. It’s also easy to travel throughout Europe. You can quickly travel to Spain, France, Italy, the United Kingdom, or more via train or air.

Steps to Take Before Retiring Overseas 

Is an overseas retirement right for you? If so, it’s important to have a solid plan in place before you make the leap. One important piece of your plan is your income strategy. How will you generate income in retirement? And how much income can you expect?
 
A financial professional can help you map out your income sources, such as Social Security, defined benefit pensions, retirement account distributions and more. He or she can also help you estimate your spending in your new home country and determine how much income you will need. You may also want to take advantage of vehicles like annuities, which can be used to create guaranteed income for life.
 
You also may want to take this time to assess your investment strategy and allocation. In particular, consider how your investments and potential gains may be taxed in your new home country.
 
Also review whether your allocation is appropriate for your needs and goals. If you don’t need as much income in your new country, that could impact your strategy. Perhaps you should reduce your risk exposure. Or maybe you can pursue growth strategies. Your financial professional can help you find the right strategy for your objectives.
 
Ready to retire overseas? It all starts with a sound financial plan. Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your goals and develop a strategy. Let’s connect soon and start the conversation.
 
https://internationalliving.com/the-best-places-to-retire/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18977 - 2019/6/18

The year is flying by. It may be hard to believe, but we’re already halfway through 2019. Did you set financial goals at the beginning of the year? If so, how are those goals looking at the halfway point?
 
The good news is you have six more months to hit your objectives. Whether your goal was to save more money, pay down debt, or simply organize your financial strategy, you still have time to make it happen before the end of the year.
 
This also may be a good time to review your retirement plan. Generally, the financial markets have had a good year. The S&P 500 is up more than 13 percent year-to-date. However, that hasn’t come without turbulence. The index lost nearly 5 percent in May.1
 
If you’re approaching retirement, it’s important to periodically review your retirement strategy to make sure it aligns with your risk tolerance and time horizon. If you suffer a loss, you may not have time before retirement to recover. Below are a few tips to help you reduce the risk exposure in your strategy.
 
Rebalance your allocation. 

It’s possible that your target allocation is perfect for your risk tolerance and time horizon. However, it’s also possible that your actual allocation doesn’t match your target.
 
Investment portfolios naturally become unbalanced over time. Some asset classes perform better than others. Some increase in value while others decline. This happens all the time with investments and financial markets.

However, as asset classes increase and decrease in value, they also become unaligned with your target allocations. For instance, an asset that was supposed to account for only 5 percent of your allocation, may account for much more if it increases in value. Similarly, an asset that declines in value may account for much less than its target percentage. The result is that you get a portfolio that doesn’t match your desired allocation and may even have more risk than you want.
 
Fortunately, you can correct this issue by rebalancing your allocation back to the desired target. In fact, it’s good to do this regularly, even on a quarterly basis. Many financial professionals can set up your account to automatically rebalance so you know you’re always aligned with the right strategy.

Shift to more conservative assets. 

When was the last time you reviewed your allocation? If it’s been a while, you may need to do more than rebalance. It could be time to change your allocation altogether.
 
As people get older and approach retirement, they tend to become more conservative. This is because your time horizon has shortened. You have fewer years until you retire and actually need to use your money. A more conservative allocation reduces the odds of a sizable loss. It helps you protect what you have while still potentially growing your assets.

Review your strategy and discuss it with your financial professional. Is it time to move to a more conservative allocation? If so, consult with your financial professional to determine what types of strategies are right for you.

Consider an annuity. 

Finally, you may want to consider additional risk protection tools. One possible tool is an annuity. Some annuities, like fixed indexed annuities, offer some upside potential without the downside market risk that exists in the financial markets.
 
With a fixed indexed annuity (FIA), you could receive interest that is tied to the performance of an external index, like the S&P 500. If the index performs well, you receive a portion of the upside performance as interest. If the index performs poorly and loses value, you don’t receive interest, but you also don’t lose any money.
 
An FIA can be an effective tool to minimize risk in your portfolio. There are a number of different FIAs available, so it’s important to explore your options. Your financial professional can help you determine if an FIA is right for your strategy.
 
Ready to reset your strategy for the second half of 2019? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
1https://money.cnn.com/data/markets/sandp/
 
18924 - 2019/5/29

It’s graduation season. Do you have a graduate who finishing up on college? If so, this is a time to celebrate your child’s accomplishment and their entrance into adulthood.
 
It also may be a time to celebrate your new freedom. You have one less dependent in the house and one less tuition bill to pay. You might see a healthy boost in your bank account and budget in the near future, especially if you’re now an empty-nester.
 
Before you start spending all that extra cash, this could be a good time to review your retirement strategy. If you’re behind on your savings, you’re not alone. Many people wait until after their kids graduate and leave the home before they get serious about saving for retirement.
 
The good news is there’s still time to get back on track. Below are three steps you can take today to boost your savings and take back control of your retirement strategy. If you’ve waited until your kids were grown to get serious about retirement, now is the time to take action.
​
Use a budget. 

Do you use a budget? If the answer is no, you have company. According to a recent survey, 60% of Americans don’t use one. ¹ That’s an unfortunate statistic because a budget is one of the most powerful financial tools at your disposal.
 
A budget is especially important if you now have a boost in cash flow because you’re no longer supporting a child or making tuition payments. You can use your budget to plan and analyze your spending so that additional cash flow goes toward retirement instead of unnecessary purchases.
 
There are a variety of online tools you can use to create your budget. A spreadsheet can also be effective. The key is to set spending goals for each type of purchase and then regularly review your budget to make sure you hit your targets.

Boost your contributions. 

The most effective way to boost your retirement assets is to simply contribute more money to your retirement accounts each year. Once you turn 50, you have an opportunity to increase your savings rate through something called “catch-up contributions.” A catch-up contribution is simply an extra allowable contribution amount for those approaching retirement.
 
In 2019, you can make a regular contribution of up to $19,000 to a 401(k). However, if you are 50 or older, you can contribute an additional $6,000, giving you a total allowable amount of $25,000. You can contribute up to $6,000 to an IRA, plus an additional $1,000 if you are 50 or older. ² Catch-up contributions can help you boost your savings and get your retirement back on track.

Potential Growth and Income 

As you approach retirement, you may find that you have less tolerance for risk. That’s natural. After all, you don’t have as much time as you once did to recover from a substantial market loss.  Of course, you also need to keep growing your assets, so you can’t avoid risk completely.
 
How do you balance your need for growth with your aversion to risk? One way to do it is with an annuity. Many annuities offer potential growth opportunities without downside market risk. For instance, a fixed indexed annuity allows you to earn interest that is linked to the performance of an external market index. Based on the performance of the index you may earn more interest however if the  index performs poorly, your principal is protected.
 
Annuities also offer ways to create guaranteed* lifetime income streams. You can convert a portion of your assets into a cash flow that will last for life, no matter how long you live. That could provide some certainty and predictability as you head into retirement.
 
Ready to get your retirement on track? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and goals and implement a strategy. Let’s connect soon and start the conversation.
 
1 https://money.cnn.com/2016/10/24/pf/financial-mistake-budget/index.html
 
2 https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.  Guaranteed lifetime income is through annuitization or an optional rider which may include fees.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18775 - 2019/4/16

Another school year is nearly over. If you have kids, you know how fast time flies. One day you’re dropping them off at daycare or sending them to kindergarten. The next thing you know, they’re preparing for college. Blink and you might miss it.
 
If your child is in middle school or even college, you may feel like you’re behind on their college savings. Of course, at the same time, you may also feel like you’re behind on your retirement savings. Both are big financial goals, and both are important, but there’s also only so much money available to contribute to savings. How do you balance the two goals?
 
Savings for college is much different than saving for retirement. There are different variables and factors involved. Below are a few things to consider.

Time Horizon 

Time horizon is the amount of time you have before you actually need to use your savings. The longer your time horizon, the more risk you can afford to take. If you suffer a loss, you have time to recover, but as your time horizon shortens, you may want to become more conservative since you don’t have as much time to recover losses.
 
Depending on your age, your time horizon for college may be much shorter than your time horizon for retirement. You could have decades until retirement. On the other hand, if you have a child already in elementary or middle school, you may have 10 years or less until they’re ready for college.
 
Your time horizon should influence your saving strategy for both retirement and college savings. Don’t apply the same allocation to both goals. Rather, look at your time horizon and determine how much risk you can afford. Unless your kids are very young, you likely don’t have time in your college strategy to recover from a sizable loss, so you may want to take a more risk-averse position.

Amount 

According to the College Board, the average cost of tuition and fees in the 2017-18 school year at an in-state public college was $9,970. For an out-of-state public school, the cost was $25,620 and a private school was $34,740.¹  If your child attends college for four or five years, it’s possible the cost could be over six figures.
 
That’s a sizable amount, but it’s still not close to what you’ll need for retirement. Consider that you may live in retirement for several decades. You’ll need enough assets to cover your bills, your discretionary spending and more. Consider that Fidelity estimates the average retired couple will need $285,000 just to cover medical expenses. ²
 
While college is big financial goal, it’s usually not as sizable as your retirement need. Don’t delay saving for retirement. It’s too big of a goal to fund at the last minute. Even if you have to start small, it pays to start saving early.

Alternative Funding 

It’s also important to remember that your child has other funding options available for college. They could earn a scholarship or a grant. They may qualify for financial aid. Student loans aren’t popular, but they are an effective funding tool.
 
You may not have similar options available for retirement. You’ll likely receive Social Security benefits, but those payments usually aren’t enough to fund a full retirement. You’ll likely need to rely on your savings to make up the difference. While saving for college is important, don’t let it interfere with your retirement savings.
 
Ready to plan your college and retirement strategies? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
 
1 https://www.collegedata.com/en/pay-your-way/college-sticker-shock/how-much-does-college-cost/whats-the-price-tag-for-a-college-education/
2 https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
 
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18786 - 2019/4/18

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The deadline for filing your 2018 tax return is right around the corner. Have you filed your return yet? If so, were you satisfied with the outcome? Or were you surprised by how much you paid in taxes last year?
 
The recent tax law dramatically changed the tax code. For many Americans, the law means reduced taxes. If you don’t plan accordingly, however, it’s possible that you could owe money to the IRS after your filing. It’s also possible that you could pay more in taxes than necessary.

Now is a great time to review your strategy and identify action steps that could reduce your tax exposure. If you haven’t reviewed your financial plan recently, you may be missing out on a number of tax-efficient tools and products. Below are a few tips to consider as you review your taxes:

Review your deductions. 

One of the biggest changes of the Tax Cuts and Jobs Act is the elimination and reduction of a wide range of deductions. Most itemized deductions were eliminated, including those for alimony payments and interest on many types of home equity loans. Caps were also implemented for state, local and property tax deductions. The law also eliminated personal exemptions.1
 
To make up for these changes, the law more than doubled the standard deduction.1 For many people, that means it will be more advantageous to take the standard deduction than to itemize deductions. If you’ve planned your spending based on the ability to itemize and deduct certain expenses, you may want to reconsider your strategy. Those deductions may no longer be allowed under the new law.

Check your withholding amount. 

The law also reduced tax rates across the board and changed the income brackets for each rate level. As a result, many employers adjusted their withholding amounts. Not all did, however. And some may have adjusted their withholdings incorrectly.
 
In fact, according to a study from the Government Accountability Office, 30 million people, or just over 20 percent of taxpayers, are not withholding enough money from their paychecks to cover taxes.2 Are you part of that group? If you’re not sure, talk to your financial professional about whether you should increase your withholdings.

Maximize your tax-deferred savings. 

Tax deferral is a great way to reduce current taxes and save for the future. In a tax-deferred account, you don’t pay taxes on growth in the current year as long as your money stays in the account. You may face taxes in the future when you take a distribution.
 
Many qualified retirement accounts, such as 401(k) plans and IRAs, offer tax-deferred growth. In 2019 you can contribute up to $19,000 to your 401(k), plus an additional $6,000 if you are age 50 or older. You can put as much as $6,000 into an IRA, or up to $7,000 if you’re 50 or older.3
 
Want more tax deferral beyond your 401(k) and IRA? Consider a deferred annuity. Annuities offer tax-deferred growth. They also offer a variety of ways to increase your assets. Some pay a fixed interest rate and have no downside risk. Others let you participate in the financial markets according to your risk tolerance and goals. A financial professional can help you find the right annuity for your strategy.

Develop sources of tax-efficient retirement income. 

Taxes don’t stop when you quit working. If you’re approaching retirement, now may be the time to plan ahead and minimize your future tax exposure. You can take steps today to create tax-efficient income for your retirement.

For example, distributions from a Roth IRA are tax-free assuming you’re over age 59½. You may want to start contributing to a Roth or even consider converting your traditional IRA into a Roth.
 
You can also use a permanent life insurance policy as a source of tax-efficient income. You can withdraw your premiums from your life insurance cash value tax-free. Also, loans from life insurance policies are tax-free distributions. You may want to discuss with your financial professional how life insurance could reduce your future taxes in retirement.

Ready to take control of your tax strategy in 2019? Let’s talk about it. Contact us today at DSM Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.thebalance.com/trump-s-tax-plan-how-it-affects-you-4113968
2https://www.cnbc.com/2018/08/01/30-million-americans-are-not-withholding-enough-pay-for-taxes.html
3https://www.cnbc.com/2018/11/01/heres-how-much-you-can-sock-away-toward-retirement-in-2019.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18582 - 2019/2/27