Fall is here. Ok, it’s not actually official until September 22. However, the unofficial start of fall arrived in late August. Starbucks added pumpkin spice drinks to their menu. For many, that’s a surefire sign that cooler weather, football, and fall bonfires are right around the corner.
While fall may be a favorite time of year for many people, it hasn’t historically been a great season for investors. In fact, September is historically the worst month for stock market returns. Going back to 1950, the Dow Jones Industrial Average (DJIA) has a -0.8% average return in September while the S&P 500 has a -0.5% average return.1 Those averages are worse than the average return for any other month. September isn’t down every year, but it happens frequently enough that the phenomenon has generated a nickname - the September Effect. What’s the cause of the September Effect? And how can you prepare? Below are some tips and guidance to help you plan. Why does the September Effect happen? There’s no clear answer why the September Effect happens. Or even if it’s a real phenomenon at all. Some people think it’s related to tax planning. People sell down positions before the fourth quarter in order to harvest potential tax losses. The widespread selling causes a downturn in the market. Others suspect that the phenomenon is related to the end of summer. People think about their portfolio and investments over the summer, but don’t take action because they’re busy with vacations and other activities. After summer is over, they sell positions and make adjustments and, again, the widespread selling causes a slight downturn. Of course, there’s also the possibility that there is no actual cause. It’s possible that the phenomenon is completely coincidental. It doesn’t happen every year. In fact, over the past 25 years, the median return in September for the S&P 500 has been positive.1 It’s possible that there is no actual September effect and the historical returns are a matter of circumstance. How do you prepare for the September effect? you may be curious about how you should prepare for the September effect, or if you should at all. The short answer is that it usually isn’t wise to plan your retirement strategy based on short-term expectations. While September may have a history of being negative, that doesn’t mean it always is. Also, it’s incredibly difficult to predict the market’s movement in the short-term, if not impossible. You could make changes to your strategy in expectation of a downturn and the market could do the exact opposite. Instead, focus on your long-term strategy. Your retirement planning approach should be based on your unique goals, needs, and risks. That strategy shouldn’t change just because one month may have poor returns. If you don’t have a long-term retirement strategy, now may be the time to develop one. Let’s talk about it. Contact us at Carstens Financial Group. We can help you analyze your needs and implement a strategy. We can help you analyze your goals and possible risks and implement a plan. Let’s connect soon and start the conversation. 1https://www.investopedia.com/ask/answers/06/septworstmonth.asp 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. 19184 - 2019/8/23 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 Carstens Financial Group. 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 Not Your Parents’ RetirementThe 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 Carstens Financial Group. 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 ARNOLDS PARK, Iowa (July 19, 2019) – As an extension to his commitment to service and placing the needs, goals and desires of others first, Carstens Financial Group is proud to announce the return of the fifth-annual Carstens Financial Group Charity Pro-Am.
This year’s Pro-Am, benefiting the Wounded Warrior Project (WWP), will be held August 5 and August 6, at Emerald Hills Gold Club in Arnolds Park. The Pro-Am will feature professional golfers from The Dakota Tour, a 19-event professional golf tour played in the Midwest states of Minnesota, Iowa, Nebraska, Wyoming and North and South Dakota. Players will be paired with up to 80 amateurs during the Pro-Am. The Pro-Am gives local, amateur golfers the opportunity to enjoy a round of golf for a good cause while playing with professional golfers. The event will include several events at Emerald Hills Gold Club with proceeds benefiting the WWP as well as promoting comradery among veterans, golfers and community members. Activities will include:
The Wounded Warrior Project will help serve more than 100,000 warriors by 2019, through employment opportunities, health and wellness programs and a variety of other services. Carstens Financial Group recognizes the positive impact of the Wounded Warrior Project on warriors’ lives and is excited to support a cause that will not only help local veterans, but veterans across America. They have raised more than $63,000 to date for the WWP. For more information on Carstens Financial Group Charity Pro-Am visit Emerald Hills Golf Club or Carstens Financial Group in Arnolds Park, Iowa. RSVP to the charity dinner by calling 712.332.5960 or by sending a completed registration form and payment to Carstens Financial Group, P.O. Box 751, Arnolds Park, IA 51331. About Carstens Financial Group Carstens Financial Group understands that your retirement needs are as individual as you are and works to address those unique needs through estate strategies, pre-retirement and retirement funding and business insurance services. By taking a “big-picture” approach, the company provides clients with solid communication and candor, as well as a full range of products and services to meet the individual goals and objectives of each client. President Kirt Carstens has more than two decades of experience cultivating long-term client relationships and striving to help them create the retirement of their dreams. To learn more about Carstens Financial Group, visit www.kcarstens.com. Licensed Insurance Professional. Securities and Advisory Services offered through Client One Securities, LLC Member FINRA/SIPC and an Investment Advisor. Carstens Financial Group and Client One Securities, LLC are not affiliated. 16701 - 2018/6/25 What's up with risk and return?In an ideal world, you could save money and prepare for retirement without any risks or threats. Unfortunately, risk is a natural part of any financial strategy. There are a wide range of risks that could potentially derail your plan. Medical emergencies, disability, job loss, and more could cut into your savings and limit your ability to retire comfortably.
Your savings and investments also face market risk. Volatility is a component in nearly every financial market. Assets rise in value, but they can also fall. Depending on your allocation, those declines could put your investments at risk. Risk and return also tend to go hand-in-hand. Many of the assets that have the highest long-term historical returns also have the high levels of volatility. Assets that tend to have little risk exposure also may have limited return potential. How do you grow your assets without taking on too much risk exposure? One effective strategy is to align your allocation with your risk tolerance. Your risk tolerance is your own personal threshold for downside movement. Everyone’s risk tolerance is different. It should be based on your specific needs and goals, as well as other factors. Is your allocation aligned with your risk tolerance? Do you know your risk tolerance level? If not, now may be the time to review your plan. A financial professional can help you determine how much risk is right for you. Below are a few factors to consider as you get started: Goals Any risk tolerance analysis should start with a review of your goals. Why are you saving money? The size of your goal will influence your strategy. For example, assume you’re saving for retirement, which is a sizable goal. You’ll likely need to grow your money over a long period of time to reach your objective, so you may need to take some risk to get your desired level of return. However, assume you’re saving for a down payment for a home purchase. In this case, growing your money may not be as important as simply protecting it. An account or asset with little or no risk could be more appropriate for a goal of that size. Time Horizon When will you actually need to use your savings? The amount of time you have until you need to use your assets is known as your time horizon. The longer your time horizon, the more tolerance you may have for risk. Assume you intend to retire in five years. You may not have much tolerance for market loss. If the market declines, you may not have time to participate in the recovery. On the other hand, assume you aren’t retiring for 30 years. If the market declines, you have plenty of time to recover, so it may make sense to take on greater risk exposure in the pursuit of higher returns. Personal Preference Every person is different, so there’s no universal correct answer on how much risk is appropriate. Your personal preferences should be an important consideration. Some people are naturally more comfortable with risk than others. How do you feel when your investments decline in value? Does it cause stress and anxiety? Or does it barely register on your radar? If your risk level keeps you up at night or causes you to question your strategy, that could be a sign that you are allocated too aggressively. Ready for an allocation that is right for your risk tolerance? Let’s talk about it. Contact us today at Carstens Financial Group. We can help you analyze your needs and implement a strategy. 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. 19014 - 2019/7/1 Declare Your Independence in RetirementFireworks, parades, and pool parties. That’s what comes to mind for most people when they think about the Fourth of July. The holiday is a great midpoint in the summer to enjoy a couple days off work and celebrate with friends and family.
Amid the festivities, it’s easy to forget what we’re celebrating. The Fourth marks the signing of the Declaration of Independence in 1776. The signing of that document declared that the 13 American colonies were free, independent states and were no longer subject to British rule. Retirement is your time to declare your own independence from the constraints of a busy career. You get to take control of your schedule, and spend your time doing what makes you happy. Whether you want to travel, pursue a favorite hobby or simply relax with family, retirement is your time to truly live independently. Financial independence is a key element in an enjoyable retirement. You’ll need enough assets and income to support your lifestyle for several decades or more. It takes focus, discipline and a long-term strategy. Below are a few tips to help you declare your financial independence. Save more. Saving is always important, but it’s even more so as you approach retirement. The final years of your career represent your last opportunity to contribute to your 401(k), IRA, or other savings vehicles. This is the time to scale back your spending and boost your savings rate. Use a budget to cut your spending as much as possible. Then allocate savings contributions to both long-term and short-term vehicles. Your 401(k) plan and IRA can be effective long-term accounts because of tax deferral, though you can’t access those funds until age 59½. You also may want to save money in nonqualified accounts, which won’t offer tax deferral, but which you can use to generate income earlier in life. Minimize risk. Nothing can derail your journey to financial independence like risk. There are a variety of risks that could threaten your retirement. One is market risk. Volatility is a natural element in the financial markets. However, you can take steps to minimize your exposure. If you haven’t reviewed your strategy lately, now may be the time to do so. As you get closer to retirement, it may make sense to shift to a more conservative allocation. Also consider vehicles that reduce your risk exposure. For example, annuities offer features that minimize risk. In a fixed indexed annuity, you receive interest based on the performance of a market index, like the S&P 500. If the index performs well, you may receive more interest, up to a limit. However, if the index performs poorly, your annuity value doesn’t go down. An annuity could be an effective way to get growth potential without downside risk. Create guaranteed income. Annuities aren’t just for risk protection. They can also be used to create guaranteed lifetime income. Guaranteed income is important to establishing financial independence. When your retirement income is guaranteed, you can make confident, informed spending decisions. You can also be sure that you won’t outlive your income, no matter how long you live. Many annuities offer guaranteed withdrawal benefits. With this feature, you’re allowed to withdraw a certain percentage of the contract value each year. As long as you stay within the allowed amount, your withdrawal is guaranteed for life, even if your annuity value goes down. Ready to chart your path for financial independence in retirement? Let’s talk about it. Contact us today Carstens Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation. Annuities contain limitations including withdrawal charges, fees, and a market value adjustment which may affect contract values. Annuities are products of the insurance industry; guarantees are backed by the claims-paying ability of the issuing company. Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. 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. 19012 - 2019/7/1 Where in The World Would You Retire? 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. MalaysiaWant 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 Carstens Financial Group. 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 Financial Reset in the 2nd Half of 2019The 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 assets 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 upside potential without the downside risk that exists in the financial markets. With a fixed indexed annuity (FIA), you 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 an interest payment. 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 Carstens Financial Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation. Annuities contain limitations including withdrawal charges, fees, and a market value adjustment which may affect contract values. Annuities are products of the insurance industry; guarantees are backed by the claims-paying ability of the issuing company. Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged. 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 Tips to Jumpstart Your SavingsIt’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. Guarantee* your assets 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 growth opportunities with downside guarantees*. For instance, a fixed indexed annuity allows you to earn interest that is linked to a market index. If the index performs well, you may earn more interest. If it performs poorly, your principal is protected. Fixed 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 live, 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 Carstens Financial Group. 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. 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 How the Strategies Differ 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 Carstens Financial Group. 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 |
Kirt CarstensCarstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future. Archives
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