admin, Author at Peak Financial Freedom Group

Why You Should be Worried About Inflation

Written on May 20, 2019.

You may have heard that we’re on the brink of war – a trade war that is, with China. Trump’s proposed tariffs on imported Chinese goods and services has already affected the market, and could affect inflation. If tariffs are imposed on $300 billion worth of Chinese goods, the core inflation rate would rise noticeably above 2% next year, according to Goldman Sachs Group.

If you think that diligently saving for retirement means you are all set for a long, prosperous 30 plus years, think again: Inflation hasn’t been high recently, but it still poses a major threat to your retirement. Even if the inflation rate were to stay around 2% like it has been for the past few years, it will still erode the value of your nest egg over time: If you retire at 65 and prices increase by 2% a year, $75,000 will have the same buying power as $50,000 when you are 85.

There’s no telling what the inflation rate could be 15 years from now when you’re already retired – in the 1970’s prices increased at an annual pace of more than 7%. To complicate things further for retirees, the price of some services increases faster than others, such as health care, which is the third largest expense for Americans 65 and older. So, what can you do to protect your retirement from inflation?

You can start saving more for retirement while reducing your taxes by increasing your savings rate as you get closer to retirement. Once you turn 50, you can contribute an additional $1,000 to your IRA for a total of $7,000 a year, and an additional $6,000 to a 401(k) for a total of $25,000 a year for 2019. A bigger nest egg can help to protect your savings from inflation.

Investing always involves some risk, but a diversified portfolio with stocks and bonds tends to outpace inflation over time. More aggressive investing could also outpace the inflation rate. But, as you get closer to retirement you’ll want steady income you can rely on. While Social Security payments rise with inflation, they may not keep pace with it exactly, and there are several reasons why you can’t rely solely on Social Security in retirement.

If you’re concerned about the threat inflation can pose to your retirement and how the trade war could raise the inflation rate, contact the professionals at Peak Financial Freedom Group. We can help you create a comprehensive retirement plan that helps to protect your nest egg against inflation. Click here to schedule your complimentary financial review today.

When Retirement Isn’t Your Choice

Written on May 17, 2019.

If you’re nearing retirement age and know you’re not financially prepared for retirement, your solution may be to work longer. While forgoing an early retirement can be prudent, your career might not last as long as you’d like it to. According to the Center for Retirement Research, 37% of retirees had to stop working sooner than they anticipated. And, the longer they planned to work, the less likely they were to reach their goals. The truth is that retirement isn’t always voluntary. There are many reasons why Americans end up retiring earlier than they planned, such as job loss, health issues, and unexpected caregiving responsibilities.

According to the Employee Benefit Research Institute, almost a third of American workers predict that they will work until age 70 or older, but only 7% of people surveyed actually ended up working until age 70. This can be an issue because older workers tend to have a harder time getting hired, and when they do, they often have to work for a lower salary. Spending what would normally be your highest earning years unemployed can be especially detrimental to your retirement plan, especially if you’ve waited to prepare for retirement until your 50’s.

Your mind might be ready to work into your 70’s, but your body might not be. Workers are sometimes forced to retirement earlier than they planned because of health issues. No matter how healthy you are now, anything could happen in the next few years. And, your job may be taking a toll on your health if it is physically demanding, or requires you to sit for long periods of time or lose sleep.

Even if your health remains perfect as you age, you might have a family member who requires your care. Caring for aging parents, a spouse, or grandchild can make you need to catch a retirement curveball if they require enough of your time and attention that you leave your job. Unfortunately, caring for your loved ones can be a time consuming but unpaid job that might disrupt your retirement plans.

If you get hit with a retirement curveball, a financial advisor can asses your situation and help you create a plan. Don’t assume you’ll be able to work for as long as you want – unexpected job loss, health issues, and unexpected caregiving responsibilities happen all too often. To prepare for the unexpected, contact the professionals at Peak Financial Freedom Group. We can help you create a comprehensive retirement plan that may help you if you have to stop working earlier than you expected to. Click here to schedule your no cost, no obligation financial review to learn how prepared for retirement you are now and how you can protect yourself from the unexpected.

Finding Happiness in Retirement

Written on May 14, 2019.

There’s no doubt that our culture is obsessed with youth and often overlooks the benefits of aging. You may not have looked forward to getting older when you were younger, but now that you’re nearing retirement you may have gained a different perspective. The fact is, older Americans tend to be happier, according to a Gallup-Healthways poll that measured various aspects of well-being like sense of purpose, social relationships, financial well-being, community involvement, and physical health. There could be many reasons for these findings, from financial stability, to an active social life. However you plan on finding happiness in retirement, remember that aging is associated with an increased sense of well-being from a financial and emotional standpoint.

Older Americans were reportedly more satisfied with their standard of living and financial stability, and experienced less stress and worry related to these things. At a certain point in life, you learn that money doesn’t buy happiness, but it can make life easier and make you feel confident about your future well-being. When you begin planning for retirement, you may be surprised by how much wealth you’ve accumulated over the course of your career. It can be nice to know that you’ve worked hard to earn your nest egg, and can enjoy yourself in retirement without worrying about your financial stability.

Many say that people gain wisdom as they age. Part of being wise is understanding what makes you happy and orienting your life around those things. Older Americans were reportedly not only financially better off, but emotionally better off than those under 30. This was measured by asking people what they felt the day before: Smiling/laughing, learning/doing something interesting, being treated with respect, enjoyment, and happiness, or, sadness, anger and stress. Americans aged 60 to 99 were the age group most likely to be emotionally well off. The great thing about retirement is that you have the time to pursue activities you find interesting and enjoyable, be it spending time with your grandchildren, traveling, or volunteering.

After some people retire, they may feel a loss of purpose when they no longer have regular career-related goals to accomplish. Becoming involved in their community could be a solution if you want to enhance your happiness in retirement. Community involvement may play an important role, as another study shows that Americans who receive recognition from their communities have a higher well-being. Volunteering and community involvement are important parts of retirement for some people who are interested in aging in place and want to use their free time to help others and improve the place they’ve called home for many years. And, Americans who have received recognition for their work are less likely to experience worry and stress.

Here at Peak Financial Freedom Group, we know how important your retirement is. After a successful career, retirement can be a time to slow down, enjoy what you’ve earned, and focus on your family, friends, and community. We can help you plan for a long retirement with a comprehensive plan that takes your unique goals into account. Click here to schedule your no cost, no obligation financial review today.

How the Rules of Homeownership Have Changed

Written on May 10, 2019.

Are you thinking about downsizing in retirement? Maybe you plan to make your vacation home your primary residence once there’s no office to commute to everyday. Or, maybe you’re considering buying a property to rent out to generate income in retirement. Either way, if you’re thinking about buying a house you should probably take some time to learn how it will impact your tax situation. It may have been a while since you bought a home, and the rules of homeownership have changed in the past few years thanks to tax reform.

If you itemize your taxes, then you have the opportunity to deduct your mortgage interest. This is a way to help make homeownership more affordable. Around 21% of taxpayers claim this deduction, saving them an average of $1,950 in 2016. But the following year, tax reform almost doubled the standard deduction to $12,000 for single filers and $24,000 for married couples filing jointly, thus reducing the number of people who chose to itemize. If you used to itemize but now take the standard deduction, keep in mind that you can no longer deduct your mortgage interest on your current home, or any new home you might buy.

As an experienced home owner, you likely know that property taxes are a cost to consider and plan for. Tax reform capped the state and local tax deduction at $10,000. This now means you can deduct up to $10,000 in total, not per property. Therefore, this could make owning multiple homes more costly, especially in states and cities with high taxes. Also, you can no longer deduct mortgage interest on second homes bought after the new law took effect, which is one thing to consider if you are thinking about buying a second home.

You may not be able to deduct all of your mortgage because the mortgage interest deduction is now capped at $750,000 instead of $1 million for new mortgages. Home equity loans are also no longer deductible, so be sure to review and plan carefully before committing to such an illiquid asset.

These homeownership rule changes could also impact your ability to sell your home, especially if it is worth over $750,000 or comes with high property taxes. This could ultimately change your decision to downsize in retirement, invest in a rental property, or buy a vacation home.

Buying a second home and moving in retirement are big decisions. If you need help navigating the new tax code when deciding how second homeownership will affect your overall retirement plan, contact the professionals at Peak Financial Freedom Group. We can help you create a comprehensive retirement plan that helps to minimize your tax burden, so click here to schedule your no cost, no obligation financial review.

3 Things to Keep in Mind When Estate Planning

Written on May 6, 2019.

Estate planning is an important part of retirement planning for many reasons: You’ve worked hard for your money and want to see your children and grandchildren benefit. And, you want to see it passed down in the most efficient way possible. Unfortunately, costly mistakes are all too easy to make, from forgetting to name a beneficiary to not updating your estate plan over time. Since your estate and legacy plan is a part of your overall retirement strategy, it is important to discuss how you plan to transfer your wealth before you pass with your trusted financial professional. So, try and keep these three helpful things in mind when estate planning.

Many people may not know that their will does not control who inherits all of their assets, such as retirement accounts, life insurance, and annuities. In order to pass these on, you must name a beneficiary for each retirement account, insurance policy, and annuity. If you don’t, these assets will likely be paid to your probate estate, possibly triggering income tax. Believe it or not, some people incorrectly name beneficiaries; don’t forget to distinguish family members of the same name with signifiers like Sr. and Jr., and update last names in the cases of marriage and divorce.

Estate planning becomes more complicated when it comes to how to pass on a retirement account to minors or individuals with special needs. Children cannot claim assets without a court-appointed conservator to manage the asset until they turn 18. Individuals with special needs could benefit more from a trust rather than directly inheriting assets because if they receive too many assets they could no longer qualify for government benefits. You should also consider how inheritance could affect your beneficiary’s tax burden, and consult a professional for a tax efficient strategy.

It’s important to review your estate plan regularly, and update it when there are major life changes like the birth of a new beneficiary, marriage, divorce, or when beneficiaries become eligible to receive money. How you distribute assets may change over time, as could your own financial situation. All of this is part of your financial and overall retirement plan, thus making it crucial for you, your family, and your trusted financial professional to discuss.

Here at Peak Financial Freedom Group, we understand the importance of properly passing on your hard-earned money to your loved ones the way you want when you pass. We want to help you create a comprehensive retirement plan that takes this into account by making sure your assets are passed on in the most efficient way possible. Don’t wait to start planning for the inevitable. You may need to create an estate and legacy plan from scratch or simply update your existing one, so click HERE to schedule your complimentary financial review today.

A Change to Social Security

Written on May 3, 2019.

Social Security may be in jeopardy: The latest projection from the trustees of Social Security and Medicare shows that the program won’t be able to pay out full benefits by 2035 if Congress makes no changes. The program is already running low on funds, and there have been budget cuts over the past few years.

This is just one reason why you can’t rely solely on Social Security in retirement. Most recently, the Social Security Administration has slowly stopped mailing out most Americans’ Social Security benefit statement and encouraging people to access their statements online. From 2012 to 2018 the number of people who reviewed their online statement dropped from 96% to 43%.

The research shows that when these statements are only available online and are not mailed to recipients, they are less likely to make the optimal decisions when claiming their benefits. So if you’re under 60, be aware that the only Americans who will still receive paper benefit statements are those 60 and over who have not claimed their benefits and did not set up an online account. Most important, if you are nearing the age at which you’ll claim benefits you should create an online account and check your statements regularly.

Research shows that when people review their Social Security benefit statements they are less likely to claim at a younger age, as if you claim before your full retirement age your benefit will be reduced. Working longer and waiting to claim at, or past, your full retirement age could be a strategy to get the most out of your Social Security benefit. If you wait until age 70 to claim your benefit, it could be up to 132% of your benefit if you had claimed it at your full retirement age. However, there are many factors to consider when deciding when to start collecting.

To make an online account, either look for a letter with an activation code or go onto the Social Security administration’s website and use a valid email address to create an account with your Social Security number and address.

Even if Social Security is not in jeopardy, it’s important to have a comprehensive retirement plan in place. The professionals at Peak Financial Freedom Group can assess your finances and help to create such a plan for you. Take the first step by clicking here to schedule your no cost, no obligation financial review today.

The Power of Nostalgia

Written on April 30, 2019.

You might think that the more recent an event, the easier it would be to remember it. And you might think that things that happened to you a long time ago would be harder to recall, but the human brain and memory are actually more complex. There is what psychologists call a “reminiscence bump,” which is the tendency for older adults to more easily recall events from their adolescence and early adulthood. It turns out that in studies where people are asked to produce memories, a disproportionate amount tend to be from this time in their life.

There are many reasons for this: There are many “firsts” during that period of time, like a first graduation, job, and first experiences like falling in love and losing a loved one. And, this is generally the period where people develop their sense of self, form their beliefs, and make important decisions that affect them for the rest of their lives. Because of this, it could be the case that the reminiscence bump can be used to help to keep you young.

In a landmark “Counterclockwise” study at Harvard University, a group of men in their 70s were taken to a retreat locale that was a sort of time machine back to 1959: The participants listened to Perry Como, watched Ed Sullivan, read magazines from the 50’s, and were not allowed to speak about anything that took place after 1959. If you’re a nostalgic person you may think this just seemed like a fun way to spend a week, but the point of the study was to measure the physical effects of the surroundings on the older participants.

Believe it or not, reliving aspects of the time when the participants were younger seemed to make them younger. There was measurable improvement in their physical strength, manual dexterity, memory, cognition, hearing, and vision. Outside observers even said the participants looked younger when shown before and after pictures. Talk about age just being a number! You could say it pays to be old fashioned.

Transitioning into retirement is no small task, but it can be a good time to reconnect with one’s self after a busy career, go back to one’s roots, and pursue what makes us happy – be that golf or watching reruns of Leave it to Beaver and listening to the Beatles. Here at Peak Financial Freedom Group, we can help you create a comprehensive retirement plan that takes your unique retirement goals into account. Click here to schedule your no cost, no obligation financial review today.

Aging in Place

Written on April 26, 2019.

Many homeowners age 50 and older say that they want to “age in place,” but the reality is that many homes were not built to accommodate the needs of older people. If you want to remain in your house during your golden years, you may need to do some home remodeling. Fortunately, there are modifications you can make to your home to accommodate yourself as you age. And, they will be easier to make before you actually need them. Features like no-step entries and a first floor bedroom and full bathroom can keep you in your home as you age.

Bathrooms can be remodeled to accommodate wheelchairs with curbless showers with grab bars and high-seat toilets. Narrow doorways can be widened to accommodate wheelchairs. The sidewalk and steps leading to the front door can be replaced with a ramp for wheelchairs. If you or your spouse are not using wheelchairs, replacing deep-pile carpet with low-pile carpet or installing no slip flooring to prevent falls can help to make your home safer as you age.

If you’re caring for aging parents, you may have noticed that one thing that makes staying in your home as you age difficult is all the upkeep: To reduce maintenance, you can install quartz countertops which are stain resistant and never need sealing, and LED lights which last longer. Replacing fixed shelves with roll-out shelves means no need to bend over, and retrofitting upper cabinets with pull-down shelving units means avoiding lifting heavy items.

Small changes like adding lights to the front of our home and along the sidewalk to you can see at night and a bench by the front door so you can rest can make a difference. If you’re thinking of remaining in your home in your golden years, it could be beneficial to consider the necessary alternations before they become necessary. Features like no-step entries and first floor bedrooms can make your home more livable as you age.

If you’re thinking of how to change your home to fit your needs as you age, you understand the importance of planning. Just like your house, your financial plan needs to be ready for when you retire. The professionals at Peak Financial Freedom Group can help you create a comprehensive retirement plan that takes your unique needs into account. Click here to schedule you no cost, no obligation financial review today.

Estate Planning for Your Loved Ones

Written on April 23, 2019.

An estate plan is like a car; it requires regular maintenance, and may need parts replaced as it ages. Some experts recommend reviewing your estate plan every three years, or after a major life event. You may need to update your estate plan to reflect the changes to the tax code, as well as life events like the death or birth of a beneficiary. You also should consider if your beneficiaries are prepared to receive money, or if they still are, even if they were when you originally laid out an estate plan.

One of the changes to the tax code to note this year it that there is no longer federal tax on estates valued between $5.6 million and $11.2 million for singles, and on estates worth up to $22.4 million for married couples. This could mean the opportunity to pass on more of your wealth to your heirs, but with that opportunity comes a responsibility to make sure they are fit to receive your wealth.

The most obvious case of when an heir is not ready to inherit money is if they are a child: Children under 18 years old cannot sign legal contracts, and insurance companies, financial companies, and the court system will not release large sums of money to children in their own names. Without some preparation, the court system can take custody of your child heir’s funds, and there could be little control over how the money is used. This is why it’s important to update your estate plan after the birth of a new heir.

There are of course reasons why children are not given direct access to their inheritance; the part of the brain responsible for decision-making doesn’t fully develop until around age 25. It’s also possible that someone over 18 is not fit to receive a large sum of money if they, for example, have a substance abuse or gambling problem, a disability, or are being sued or going through a divorce.

Setting up a trust can help by appointing a trustee to oversee that the funds are being used properly. A trust can also help to protect the assets from lawsuits, bankruptcies and divorces. If you have reservations about your heir’s ability to handle their own inheritance, including a trust in your estate plan could make sense. Estate planning can be an important part of a retirement plan and setting up a trust can be a significant estate planning step.

You’ve worked hard to earn what you have, and should feel confident about the plan for your legacy. The professionals at Peak Financial Freedom Group can help you with estate and legacy planning, so click here to schedule your no cost, no obligation financial review.

Exploring Alternative Investments

Written on April 19, 2019.

We’re living – and retiring – in unique times, and some retirement strategies reflect this. Many of those nearing retirement are on their own, as companies typically don’t fund pensions now. As Americans live longer, nest eggs need to stretch further. In a time of low interest rates, some high net worth individuals are exploring alternative investments to help grow their wealth.

Alternative investments are geared towards high net worth individuals with investment experience because of their high minimum investment requirements. Examples of alternative investments include private equity, hedge funds, managed future, real estate, commodities and derivatives contracts. Compared to mainstream investments like stocks and bonds, alternative investments have low liquidity, and may be more difficult to value. The risk and return vary widely among different types of alternative investments.

Because interest rates are at a historical low, some are looking to alternative investments to grow wealth more aggressively. Real estate tends to be a popular alternative investment because of the option for renting out the property while waiting for its value to appreciate. Some look to gold in times of crisis because it can be an effective inflation hedge. One option is to hold gold bars, coins, and jewelry, and another Is to invest in gold exchange-traded funds or gold futures and options. Private equity seeks long-term appreciation from the growth of private companies, as opposed to public markets.

An alternative investment could bring balance to your retirement portfolio by helping you diversify and hedge against downside. Potentially higher income levels could make alternative investments a good strategy for high net worth individuals who have less to worry about during periods of market volatility. After all, you don’t want to let market volatility ruin your retirement. However, alternative investments also tend to be more complicated and less transparent, requiring a certain amount of investment know-how to make the best use of them.

For high net worth individuals, alternative investments could help to grow wealth. In a time when pensions are not the norm, and interest rates are low, it may be time to consider alternative investments. If you’re looking to diversity your retirement portfolio, contact the professionals at Peak Financial Freedom Group. Click here to schedule your no cost, no obligation financial review today to take the first step towards a comprehensive retirement plan.

Author: admin