96% of Social Security claimants fail to make the optimal claiming decision. That means they lose out on an estimated $3.4 trillion in potential retirement income ($111,000 per household) because they don’t choose the option that maximizes their income.
That’s why it’s so important to get the most accurate and up-to-date information, assess your personal situation properly, and file for Social Security the right way (and at the right time).
4 Things You Might Not Know About Social Security
(1) Your Social Security Benefits may be taxed...
(2) You may be able to claim at age 62 on your own SS and switch to spousal benefits later to receive a higher benefit.
(3) You can suspend SS benefits and restart them at a higher value later. Maybe you find yourself starting a business or consulting part-time.
(4) You can use Delayed Retirement Credits to maximize your benefits. For every month from your FRA until age 70 that you postpone filing for benefits, Social Security increases your eventual benefit by two-thirds of 1 percent — a total of 8 percent for each year you wait. For example, wage earners who reach full retirement age at 67 but delay claiming benefits until 70 will get an extra 24 percent tacked on to their monthly payment.
(5) BONUS: You may be able to collect SS as a divorced spouse and then wait to claim on your own work history. You can file what Social Security calls a “restricted application” to claim only ex-spousal benefits and postpone claiming your retirement benefits if: You were born before Jan. 2, 1954. You have reached full retirement age (currently 66, gradually rising to 67 over the next several years). You were married for at least 10 years to your former spouse. You are currently unmarried. Your former spouse has filed for his or her own Social Security benefits or your ex-spouse is at least 62 and you have been divorced at least two years.
SHOULD YOU DO NEXT? Create your own online SS account https://www.ssa.gov/site/signin/en/
REQUEST Free No Obligation SS Planning Tool
OTHER ARTICLES/RESOURCES Thinking of retiring? https://www.ssa.gov/osss/prd/pdf/en/55-plus-insert.pdf
COLA raise likely for 2021 -- Kiplinger forecasting 1.2% https://www.kiplinger.com/retirement/social-security/601286/2021-cola-a-raise-likely-for-social-security-recipients-after-all?rid=EML-retire&rmrecid=4628004169&utm_campaign=20200902-retire&utm_medium=email&utm_source=retire
Interesting and Intriguing information, I've recently read, watched, or listened to that helps feed my curiosity so why not feed yours. Have a great weekend.
I recently traveled to the Upper Peninsula, it was a great experience and the water was refreshing. Afterward, I stumbled upon this article! According to the comments, it's not "Perfect"... but I would have liked to see it before I went, thought I'd share. https://www.onlyinyourstate.com/michigan/weekend-waterfall-itinerary-mi/
Ok, I had no idea of the USPS numbers, so here they are... Consistent Revenue!
USPS Income and Expense data for Fiscal Year Ending:
9/30/19, Revenue $71.1B, Expenses $79.9B,
9/30/18 Rev $70.6B, Exp $74.4, Loss $3.9B
9/30/17 Rev $69.6B, Exp $72.2, Loss $2.7B
9/30/16 Rev $71.4B, Exp $77.1B, Loss $5.7B
9/30/15 Rev $68.9B, Exp $74B, Loss $5.1B
Have you heard of Shopify? Get to know them. Their CEO is Tobi Lutke and it's actually a Canadian company. Youtube interview here, be aware they may have been some expletives.
Apple has added $420 billion to its market cap over the last month, which is more than the current market cap of 493 companies in the S&P 500. $AAPL
Look out for more of these coming consistently and they will also live at our Insights section of the Agile Wealth Partners website, for reference. https://www.agilewealthpartners.com/blog
So what can we do with our bonds?
I wanted to share some notes that I wrote on about the perplexing nature of bonds. Depending on your age you most likely to have little to no bonds in growth stages of life and increasing amounts as you approach retirement. Please understand this is not a recommendation to sell all or any of your bonds without some thought and investigation. Note on 1. There are some areas in the fixed income bond arena we feel comfortable with and will squeak out some gains or at least hold value but not sure that is a solution for all of your fixed assets and they need to be monitored. Two final points, I have ran into some pre retirees with less than say 5 years to retirement over the last several months who had almost 90% in. stocks, it has worked out as we really lucked out again rising back so fast, but if you haven't tactically managed this and you just let it ride up until now consider some of these items below as an alternative to your portfolio. Finally all this can only make sense and come together if you are doing comprehensive planning and making sure everything is working together if not please do not attempt to randomly add one of the items below and think it will just fit.
Text version below...
So what can we do with our bonds?
I. Keep 'em... at least some of your bonds. Bonds are
there to preserve your portfolio. You'll need to
figure out what % your comfortable holding, thoughts below
may help you narrow in on this.
2. More Stocks-you sure could buy more stocks, let's make sure the
mix fits your goals and risk level. Also we want to be
aware that stocks are being pushed to expensive
levels because other bond buyers are being pushed
to stocks as well. Always interesting nooks to be exposed however.
3. Structured Notes-they have come a long way
since 08-09' when FDIC insured brand became popular.
They essentially give your investments some buffer of
protection to the downside and have limitations to upside.
They are not perfect and they take some work
but at these levels of stocks and bonds they are, interesting.
4. Annuity - Income or appreciation contracts. Fixed rate annuities are
not great but keep an eye out for rate updates sometimes companies make decent offers. Fixed index however allow us to participate in gains that is not tied to current low rates and are still fixed/ protected from loss which helps our fixed portfolio. If using using for income expect even greater leverage
5, Long term care Protection- If your fixed assets
are going to be dead money for the next few years why
not earmark some of those assets in an Asset Based
long term care solution. Often this solutions provides two
and sometimes up to four or five times the leverage of your
fixed nest egg if used for long term care and if not use you
don't lose it. The return on investment is generally 7- 11% on
you invested dollars which of course higher than we are expecting.
6. Bitcoin- It's interesting, I wrote this as an item
then erased it, then after continued thought put it
back on. As a store of value and not as a get rich scheme
Bitcoin could have a place. Maybe it ends up being l-5% of
your 40% fixed bucket. I'd advise you work with a professional
but don't discount bitcoin all together. I could say the same for-Gold
Did the Market just give us a gift?I wanted to share a video that illustrates what I was saying back in February. In my post here, about bonds, I was discussing the importance of changing your allocation and taking advantage of trends based on what the market is giving you. Once you enter retirement you may be relying on Stocks more than you think to achieve your desired income as interest rates are low and may be stuck lower for longer.
At that time, the market was one day from all-time highs and, I had suggested being ready for what may come; however as you all know I do not predict what the market does next. Although it looked obvious the market was going to get tired and that bonds were showing us some underlying fear, in reality, a virus ultimately was its undoing in the end.
If I told you that we could go back in time and sell that day we would all take that gift. As I write this today, maybe you have not looked... The SP500 Index, my choice guide, is only 14% from the February highs! This is surely surprising as we have shut down most of the country for over 2 months and things will be slow to recover.
So where does this leave us? As I said above I don't predict, and I will still allow assets and trends to guide us; however, I am not very comfortable here and suggest starting or investigating these actions listed below. With market returns projected to be on the lower end of historic averages and bonds yielding near nothing, we need to realize we are in for a different retirement plan than many of us originally had.
We need to consider the following:
- Opportunistic rebalancing
- Creating fixed income streams
- Use alternative tools such as structured notes
- Adjust portfolio with lower volatility holdings
- Decide what your core portfolio percentage is
(The long term Core holdings you will not touch)
The video below suggests how devastating retirement portfolio dips can be; therefore, it is very important to plan for such occurrences as you will most likely experience a handful in a 30-year retirement. Most importantly when they happen is a factor that can change your retirement trajectory forever.
I wish everyone well and hope you and your family are staying positive and healthy. Take care.
The Agile Wealth Partner's team tackles some of the recent stimulas measures the government is going through and how best to apply them according to your financial plan.
Join us on youtube where we break down the checks, how to plan around them and any cash like assets you may have regardless of stimulas, that may be sitting on the sidelines that should be used for planning purposes.
I'm think you're probably saying... yes John I care what should I do!?
Ultimately I care, of course, at the same time however I am truly looking at this as a long term opportunity than a long term crisis. I am not completely comfortable on how this will all end nor do I care to predict as I said in my last piece, Bonds at all-time highs, however, history has shown 20%+ sell offs are rare and 30% drops are even rarer. Here is a chart that shows the draw-downs we have experienced and the ending market return for that year. The key here is to see that there are not many market drops over 20% and when there are it is often an opportunity at some point around that drop. Another takeaway market drops are not substantial until they hit 12%.
We have to look out a bit to when the Coronavirus slows and we feel we have good control over things, more importantly, the travel and business that continues to get canceled is no longer being canceled. At that time we will be sitting on free money, 10yr bond under .50%, cheap energy as oil is selling off as well, and fair market valuations.
Sure all this may need some time to get sorted out but in the meantime work with your advisor or shoot me a call/email to take a second look because if we approach this correctly there is a huge opportunity here. If you are in the first few years of your retirement please seek advice as that would be the time frame which I am the most concerned. As you can see below, we often are higher after sell-offs like these. Below highlights months where we experienced the largest sell-offs and the subsequent return after in 1, 3 and 5 years. (bottom)
As we can see time is the key factor here, so in the meantime, we should be doing a few things in our financial plans.
As you may be reading or watching on the news, we are starting to see some cracks in the armor of this market, more on this later.
Most importantly rather than focusing on all the negativity and stories surrounding the markets today along with all the political garbage going on I wanted to point out some actual news that should be making us take action or at the least getting a game plan together.
Bonds are at all time highs and don't really have much room to go up as the 10 years is sitting at sub 1.5%, couple this with markets being just under their all time highs! See above...
As you can see the yellow line above shows a path that would take the 10 yr to 0% which has very low probability of happening. If this were to be the case your bond would increase roughly 4-5% and would yield 0%. Most studies show your projected rate of return on your core risk free bonds at the moment is the yield it currently is earning. So look to earn 1.5% on your bonds over the next few years which puts real returns into the negative.
So what does this mean, we have a defined risk asset and a high probability outcome ahead of us. In some views it's worry and fear that dominate the conversation. In my eyes it's opportunity, here are some of the outcomes that stem from this situation:
As for the market, yes this signals some flight to safety and may be start of something larger but if you are in good position tactically just be aware of the idea that a small sell off could become larger and be ready. Don't try to predict just have a game plan on what you would do if stocks went down over 10%. It's not about predicting more than it is about knowing your plan when and if something does change.
I'll assume most of us have more to do than worry about the market like, creating strategic allocation, Core allocation minimums and planning around what is actually happening NOW...Bonds are at all time highs and it's an opportunity!
PS Go talk to your bankers and mortgage reps to see if you can't lower some of your rates on debt!
With a Happy New Year come new tax laws… Well, in 2020 they did! Below I go through some of the changes that may in fact affect you in one way or another but first I wanted talk a bit about RISK and share a great read with you. It's an interesting way of looking at risk and it's really fascinating how we can't predict the risk but we surely need to prepare for it. I'd say it helps us realize why us financial advisors can be so boring and negative at times, we don't have a crystal ball and we never will, so if we seem to over do it in the protection department then you can see why! Take care and enjoy.
You have probably seen the news that the SECURE Act (which stands for Setting Every Community Up for Retirement Enhancement) was signed into law on December 20, 2019. The goal of the new law is to take steps towards solving the retirement crisis in the United States.
Some of the new law’s provisions may affect your retirement plan.
Here is what’s inside.
Bottom line: This is good news for those who want to work and contribute to retirement savings accounts.
Similar to the old rule, first-time recipients of RMDs can still delay the first distribution until April 1 of the year following the year in which they turned 72… although that extension only applies to the first distribution, not any of the subsequent RMDs.
Important note: This change only applies to individuals who turn 70 ½ in 2020 or later. So, if you turned 70 ½ on December 31, 2019, you will have to follow the old rules.
Bottom line: If you are already withdrawing more than the required minimum amount from your IRA, the new law likely won’t affect you. If you would prefer to delay the stay of RMDs and qualify under the age rules, then the new law may create some tax planning opportunities for you.
This rule comes with a few exceptions. If the beneficiary is disabled, chronically ill, or no more than 10 years younger than the original IRA owner, then lifetime distributions are still allowed. If the beneficiary is a minor, the 10-year rule doesn’t kick in until the child reaches 21 years old.
Bottom line: Check your listed beneficiaries, and talk to your financial planner about a Plan B for your IRA.
One notable exception to this rule: it does not apply to employees who are a part of a collective bargaining agreement.
Bottom line: If you are a part-time employee, you may be eligible to participate in a retirement plan at work.
What does all of this mean for your retirement?
The answer is, as always, “It depends”. There are some things you may consider doing on your own (like checking beneficiaries on your IRA and inquiring with your employer about your eligibility for new benefits). However, there’s no substitute to working with a professional financial advisor that you trust.
If you have any questions about how the new SECURE Act will affect your retirement, give us a call.
The Pic will tke you to the linked site.Using the new platform Halo I can now get back to looking at these fascinating investments called structured notes. Below I will provide and info graphic that will highlight much of the moving parts within them but the exciting part is the increase in offerings, ideas and liquidity because of partners like Halo. Take ca look, if your curious please reach out, take care. The graphic will take you to the linked site.
From the pile of things I read of late I think these could be of use and if not interesting to ponder at the least.
Interesting updates across entire article regarding some laws but about mid article an interesting development about the elimination of the stretch IRA as the Secure act tries to balance creating revenue but adding some flexibility, take a look...
Just below in this same article they talk about Indexing capital gains with inflation! This is very interesting and could be helpful for many in the future although it may be a way for more people to actually cash in profits of low cost basis holdings rather than holding them beyond death in which then they are stepped up in cost basis and passed on to heirs essentially tax free!
The Agile Investor is a blog that focuses on being prepared and informed on the topics of wealth management, investments, financial markets and investor psychology. I partner with people to help them achieve the conviction needed to obtain financial independence.