Blog Archives

Five Annuity Myths – And Why They’re Wrong

Written on July 29, 2020.

Annuities Can Generate Reliable Income, Though They Often Get a Bad Rap

When you think about financial planning and the money you’ll live on in retirement, stocks and bonds probably come to mind. These market-based investments are often in the spotlight, and it’s true that they can help you grow your wealth. However, it’s also true that they may a number of downsides, one being that growth is unpredictable. This means that if you’re approaching retirement, or you’re already retired, one poorly timed downturn in the market could greatly set you back or even lead to you running out of money in retirement.

Since risk is inherent in investing, many people look for safer options. However, things like checking accounts or even high-yield savings accounts may not be the answer. Though they won’t lose money in a technical sense due to FDIC insurance, the value of your savings may still erode over time due to inflation.

So, what’s a savvy saver to do? One potential option is an annuity. If you’d like to save for retirement and create a guaranteed income stream – one that isn’t directly tied to the markets – a fixed indexed annuity offers an excellent option for consideration. Unfortunately, annuities get a bad rap because of misinformation, stereotypes, and myths. Below, we’ll tackle five of the most common reasons people hesitate to consider annuities as a viable retirement income option.

10 Questions to Help You Choose a Financial Advisor

Written on July 7, 2020.

Be Intentional About Who Will Guide Your Retirement Planning

We all dream of a relaxing, carefree retirement that allows us to enjoy the fruits of our decades of hard work. However, this may be possible with proper planning. Whether you’re getting an early start or you’re nearing retirement age, it’s helpful to seek out the guidance of a professional financial advisor to ensure you’re taking the right steps to maximize your nest egg.

With so much riding on your retirement planning, it’s important to be intentional about the advisor you choose. You’ll want to find someone who you feel comfortable with, who takes the time to answer questions, and who can provide the type of advice and services you need.

With that in mind, consider the following ten questions as a suggested interview for potential financial advisors:

Five Tips to Help Protect Your Retirement Savings in an Economic Downturn

Written on June 22, 2020.

You Have More Power Than You Realize to Keep Your Finances on Track

The COVID-19 pandemic and ensuing economic turmoil have caused many people to reexamine their finances. Even if you have taken control of your financial future by being diligent about saving for retirement, it’s normal to feel out of control when facing an uncertain economy and the prospect of a recession that may last for some time.

So, how can you shield your retirement portfolio in troubling times? Luckily, you have more power than you realize when it comes to recession-proofing your nest egg. These five tips will help you stay on track even in an economic downturn.

Tip #1: Bulk Up Your Savings

The typical rule of thumb is to maintain an emergency fund with three to six months of living expenses, but an economic downturn could last longer than that. Aim to up your cash reserves to one year’s worth of expenses and utilize a high-yield savings account to maximize your efforts. Doing so can give you greater peace of mind when unpredictable financial events happen.

Five Reasons the Pandemic May Be a Good Thing for Your Retirement

Written on May 20, 2020.

Finding the Silver Lining of COVID-19

There is no disputing that the COVID-19 pandemic has been a tragic event for millions. Illness, death, job loss, fear, and a world essentially shut down for weeks on end has wreaked havoc – and it isn’t over just yet. Truly, the negative impacts of this global health crisis cannot be overstated.

And yet, as is often the case in times of turmoil, there is a silver lining if we look closely. Below we’ll examine five ways that COVID-19 may positively impact your retirement.

1. We’ve been forced out of our routines.

Routines can be positive, certainly. More often than not, though, they become less routine and more “rut.” We begin living life on autopilot, which can rob us of opportunities, experiences, and fresh perspectives, but we stay in the rut because it feels safe and certain. If there is anything that can be unequivocally said about this pandemic, it is that it has dragged each and every one of us out of our usual ruts. Though it has created much uncertainty, it has also caused us to think about many aspects of our lives in new ways – and this can be a good thing if we remember to look for the opportunities that may present themselves.

The CARES Act Has Changed 2020 RMD Rules

Written on April 22, 2020.

When President Trump signed the Coronavirus Aid, Relief and Economic Security (CARES) Act on March 27, he enacted the largest aid package in American history.[i] One important impact is that Required Minimum Distributions (RMDs) for 2020 are, in essence, suspended. In this way, the federal government chose to sacrifice short-term tax revenue in order to provide immediate financial relief to retirees.

This change bears discussion, however, as there are many questions about what the CARES Act means for those who have already taken their 2020 RMDs, as well as any impact on taxes and inherited accounts.

Let’s begin with a review of the basic tenets of the RMD portion of this new law.

Understanding the CARES Act

This relief package allows defined contribution plans, including 401(k)s, 403(b)s, 457(b)s and IRAs to suspend 2020 RMD requirements. Now, RMD rates were already a bit lower since 2020 is the first year, per the SECURE Act [ii], in which the age change from 70.5 to 72 began, but skipping RMDs in 2020 altogether is a meaningful change. With so many Americans facing financial struggles due to the COVID-19 pandemic, the flexibility to opt-out of distribution means that retirement portfolios have more time to recover from the current market volatility.

[i] https://www.forbes.com/sites/jackbrewster/2020/03/27/trump-signs-2-trillion-stimulus-bill-into-law-largest-aid-package-in-us-history/#77d59e864ea5

[ii] https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement

Financial Literacy Month, Coronavirus and Financial Resilience

Written on April 14, 2020.

Beginning 16 years ago, April was declared Financial Literacy Month as part of a strategy to enhance and increase nationwide financial literacy. It was implemented with the hope that it would lead to increased government advocacy of financial literacy programs, as well as spark more interest in programming already offered through schools, non-profit organizations, and businesses.

The creation of a month-long focus on financial literacy was a pointed acknowledgment of its importance in helping Americans gain necessary financial knowledge – knowledge that proves integral during a time of crisis like we are facing now with the COVID-19 (coronavirus) pandemic.

Though prevention is always preferable over a cure, it’s never too late to learn more and change your financial behaviors. Doing so can help you become more resilient in the face of financial adversity during times of personal or worldwide crisis. So, here are three ways you can personally celebrate Financial Literacy Month this year:

Scams Abound Amid Pandemic Panic

Written on April 6, 2020.

Sadly, as is the case in any crisis, there are those among us who are looking to capitalize on cruelty and take advantage of heightened vulnerabilities. Hackers are trying to lure victims to click on COVID-19 related hyperlinks that contain malicious software and other computer viruses. In some cases, these scams look like official messages from the government and they send people to fake websites where their sensitive information can be stolen.

The following guidelines can help you protect yourself from these digital scams and stay clear of suspicious links you may come across in your internet travels.

How to Spot a Phishing Email

Phishing is a practice in which scammers send emails that appear to be from legitimate organizations. In the case of COVID-19, they may promise to share important information about the coronavirus or how to keep your family safe. In short, they prey on a public fearful of a dangerous virus.

CARES Act Signed into Law –Brings Relief to Millions of Americans

Written on April 1, 2020.

On March 27 the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to address the unprecedented public health and economic crisis related to COVID-19.

This $2 trillion bill is meant to impact both individuals and businesses and contains significant tax-savings measures. It could affect prior tax years while also creating immediate cash-flow.

Impact on Individuals

Stimulus Checks

Perhaps the most impactful provision for American citizens is the CARES Act’s promise of cash payments of up to $1,200 per single individual and $2,400 for a married couple. Parents will also receive an additional $500 per qualifying child. Payments are phased-out for individuals with incomes greater than $75,000 and for married couples filing jointly with income greater than $150,000.

Tax News: IRS Announces Extended Deadline for 2019 Tax Returns

Written on March 22, 2020.

Americans Can Defer for 90 Days

As we continue to face uncertain times, the IRS has made a welcome announcement.

Treasury Secretary Steven Mnuchin has announced that the IRS has decided to extend the filing and payment deadline for 2019 tax returns, allowing taxpayers to defer until July 15. Mnuchin indicated this move will put $300 billion into the economy during a time of great economic concern over the consequences of the COVID-19 pandemic.

How to Remain Hopeful and Keep Perspective During the Covid-19 Outbreak

Written on March 18, 2020.

We are facing something we have never faced before in our lifetimes. That is a fact and, in time, when the news of the pandemic spreading and the recommendations on social distancing getting broader by the day, it can be hard to feel certain or safe about anything.

Although Peak Financial clients have benefitted tremendously from the risk and volatility reduction strategies used to manage their assets, it is still very troubling to watch the unprecedented market decline and hard to tune out the constant media noise regarding losses. But most importantly, we need to maintain our health and the health and safety of our family, friends, and neighbors. Covid-19 which emerged late in 2019 in China has spread rapidly worldwide since then and is a global pandemic. The measures taken by leaders around the globe have for the most part been strong, leaving most children without a classroom to go to, parents working from home or without a job altogether, and investors uncertainty causing panic about what is to come.

Five Annuity Myths – And Why They’re Wrong

Annuities Can Generate Reliable Income, Though They Often Get a Bad Rap

10 Questions to Help You Choose a Financial Advisor

Be Intentional About Who Will Guide Your Retirement Planning