It’s that time of year again. Time to buy gifts for spouses, children, and all the other friends and family who play a meaningful role in your life. Have you finished your Christmas shopping?
 
If you’re approaching retirement, you may want to give yourself a gift this year. No, not an expensive gadget or vacation. Rather, use this holiday season to give yourself the gift of a financially stable retirement.
 
The new year will be here before you know it. Take some time now to review your retirement strategy so you can take action and start 2020 on the right foot. Below are a few tips to get you started:

Increase your retirement contributions. 

Do you make retirement contributions to a 401(k), IRA, or another qualified retirement plan? These types of accounts are powerful retirement savings tools because of their tax-deferred status. You don’t pay taxes on growth as long as the funds stay inside the account. That may help your qualified savings compound at a faster rate than they would in a taxable account.
 
Consider increasing your contributions to your 401(k) or IRA in 2020. You can contribute up to $19,500 to a 401(k) in 2020. That number increases to $25,500 if you are age 50 or older. You can also contribute up to $6,000 to an IRA, or up to $7,000 if you are 50 or older.1
 
Of course, it may not possible for you to increase your contribution to the maximum level without busting your budget. Any increase in contributions is helpful. One effective strategy is to gradually increase your contributions over time. For example, you could set up your 401(k) contribution to increase 1% every year or even every six months.

Reduce your exposure to risk.

If you’re like many people nearing retirement, you’re not as comfortable with risk as you once were. That’s natural. Many people become more risk-averse as they approach retirement. After all, you don’t have as much time as you once did to recover from a market loss.
 
There are a few steps you can take to reduce your exposure to risk. One is to review your allocation and risk tolerance and make sure they’re aligned. Your risk tolerance is your specific comfort level with market volatility. It’s based on your unique needs, goals, and time horizon.
 
As you get older, your risk tolerance may change, so it’s important that your strategy changes along with it. You could shift your strategy to more conservative assets that have less exposure to risk and volatility. You could also utilize financial vehicles that offer growth potential without the chance of downside loss. A financial professional can help you identify strategies that can reduce your risk exposure.

Guarantee* your retirement income. 

Are you approaching retirement? If so, this may be the time to start thinking about your retirement income. You’ll likely receive income from Social Security. Maybe you’ll even receive a defined benefit pension. However, you also may need to take distributions from your 401(k), IRA, or other retirement savings.
 
Often those withdrawals aren’t guaranteed. A market downturn could limit your ability to take retirement income. Or if you withdraw too much in the early years of retirement, you may not have assets left in the later years.
 
Fortunately, you minimize these risks by creating guaranteed* income from your retirement savings. There is a wide range of retirement vehicles available that you can use to convert a portion of your retirement savings into income that is guaranteed* for life, regardless of what happens in the market or how long you live.
 
Ready to give yourself the gift of financial stability? Let’s talk about it. Contact us today at Carstens Financial Group. We can help you implement a strategy. Let’s connect soon and start the conversation.
 
1https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500
 
*Guarantees provided by annuities, 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.
19524 - 2019/12/3

Another year is in the books. It’s almost time to turn the calendar to 2020. For many investors, this is the time to look back on the past year and make adjustments for the upcoming year.
 
The performance of your portfolio in 2019 depends on your allocation and your specific investments. However, generally speaking, investors enjoyed positive returns in 2019. Through November 22, the top market indexes had the following returns:
 
S&P 500: 24.60%1
DJIA: 19.88%2
NASDAQ: 29.41%3
 
Those positive returns haven’t come without a few bumps in the road though. The markets experienced a few sharp downturns in 2019, especially through the summer. Issues like the trade war between the United States and China have created uncertainty among some investors. 4 However, other developments, like interest rate cuts and strong corporate earnings, have helped extend the longest bull market in history.4
 
What’s in store for 2020? When it comes to investing, it’s impossible to predict the future, especially in the short-term. However, if you are concerned about market volatility, there are steps you can take to minimize your exposure to risk. Below are a few action items to consider as we head into the new year:

Review your risk tolerance. 

Is your allocation aligned with your risk tolerance? If you’re like many investors, you may not actually know what your risk tolerance is. Risk tolerance is your specific ability to withstand volatility in your investments. Risk tolerance is unique for each person and is based on a wide range of factors, including your time horizon, your comfort level with risk, and your financial goals and needs.
 
Risk tolerance also changes over time. If you’re approaching retirement, you may not have the same tolerance you had when you were younger. Often, people who have decades until retirement have significantly more tolerance for risk because they have more time to recover from a loss. If you’re a few years away from retirement, you may be much more sensitive to a market downturn.
 
Now is a good time to review your risk tolerance and make sure your allocation is appropriate. A financial professional can use a variety of tools and methods to accurately gauge your tolerance for risk. He or she can then recommend specific allocation changes that may be more appropriate than your current investment approach.

Use risk protection tools. 

Changing your allocation is one way to reduce your potential risk levels. It’s not the only option though. You could also incorporate into your strategy retirement vehicles like fixed indexed annuities that reduce or eliminate market risk.
 
For example, there are a wide range of vehicles that allow for growth and interest accumulation based on market index returns, but without exposure to downside risk. You could use this option to eliminate risk on a portion of your allocation, thus reducing your overall risk and volatility exposure.
 
 
Ready to develop your 2020 investing strategy? Let’s talk about it. Contact us today at Carstens Financial Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.marketwatch.com/investing/index/spx
2https://www.marketwatch.com/investing/index/djia
3https://www.marketwatch.com/investing/index/comp
4https://www.cnbc.com/2019/12/02/in-2019-almost-every-investment-worked.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.
19523 - 2019/12/3