Accounting & Finance

summer-2019-long-term-care

Long term care – What is it? Who needs it? Should you have it?

Long term care is a range of support and services affecting your personal care needs. When you can’t do activities of daily living that includes bathing, dressing, toileting, incontinence care, transferring from a bed or chair, eating or you have severe cognitive impairment that requires substantial care then you need long-term care. Many of these […]

Long term care is a range of support and services affecting your personal care needs. When you can’t do activities of daily living that includes bathing, dressing, toileting, incontinence care, transferring from a bed or chair, eating or you have severe cognitive impairment that requires substantial care then you need long-term care. Many of these things we can take for granted, but as we age, or health becomes a challenge, it becomes more challenging to do these seemingly simple tasks. Long term care insurance is one way to help cover some of the costs that you would have to pay out of pocket for or have a family member assist you in your day to day routine.   

Medicare doesn’t cover long term care – the fact is it only covers a short term stay in a nursing facility but under strict guidelines that you are in a hospital for 3-days and then transfer directly to a facility because you are unable to return home but have expectations to return home and live independently.  It is important to get insurance while you are young and healthy as you must qualify in good health to get coverage. Many people say that it is an expensive insurance, but if you think about the costs associated with long term care, the insurance can be a bargain. Personal care with a home health aide can cost upwards of $22/hour, assisted living costs start at $3,500/month, and skilled care can be double assisted living costs. Paying for long term care insurance in advance of needing care instead of expending your life’s savings for care can be a huge value.

There are various levels of care, and they are adjusted as care needs change. Personal care can be given at home or in a facility which includes some basic daily needs. The next level is assisted living and then finally, skilled nursing care. The only covered services via Health and Human Services through Medicaid is skilled nursing care. You may have reduced quality of life if you don’t need that high level of care but don’t have insurance or assets to pay for the first steps of needing basic assistance.

Long term care insurance is a big part of your financial well being offering you peace of mind to know that if the unexpected happens, you won’t need to depend on your family or go through all of your assets to get the care you need. Once you reach the age of 65, you have a 70% chance of needing some form of long-term care during your lifetime. (Medicare and You, 2015) The unexpected need for care can arise at any age.  Over 50% of people on a claim are between the ages of 40-64. (Unum Ins Co)

If you are a business owner depending on how your business is structured, you can get a tax deduction based on your age and other factors when you buy long term care insurance through your business. This offering can be extended to your employees at no cost to you and can be part of your health insurance benefit package. They too can qualify for a tax deduction on their individual taxes. If you have a health savings account (HAS) premiums can be paid pre-tax.

Traditional long-term care insurance is still available but new products have given rise to alternative ways to protect assets, provide care and offer a different option versus a use it or lose it benefit. Hybrid whole life insurance policies have a rider add on that will allow you to pull forward the death benefit to use towards long term care while still leaving some death benefit coverage. There are one-time lump sum policies that allow you to carve out a piece of your savings and secure it for long term care needs instead of having a monthly payment moving into retirement years. If it turns out, you don’t need long-term care in each of these scenarios at some point your family will get the benefit of the insurance upon your death. Protecting yourself and your loved ones, taking the burden off your family to care for you is one of the best gifts you can give to you and them.

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summer-2019-what-the-future-holds-for-social-security

What the future holds for Social Security and should you expect to receive benefits when you retire?

Most Americans will eventually receive Social Security benefits. Each year, the Trustees of the Social Security Trust Fund release a lengthy report to Congress that assesses the health of this important program. The newest report, released back in April of this year, discusses the current financial condition and ongoing financial challenges that the program faces. […]

Most Americans will eventually receive Social Security benefits. Each year, the Trustees of the Social Security Trust Fund release a lengthy report to Congress that assesses the health of this important program. The newest report, released back in April of this year, discusses the current financial condition and ongoing financial challenges that the program faces.

Highlights of Social Security
Trustees Report

Social Security’s total cost is projected to exceed its total income (including interest) in 2020 and remain higher for the next 75 years. The U.S. Treasury will need to withdraw from trust fund reserves to help pay benefits. The Trustees project that the Old-Age and Survivors Insurance/Disability Insurance trust fund reserves or (OASDI) will be depleted in 2035, one year later than projected in last year’s report, unless Congress acts.

Once the trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 80% of scheduled benefits for 2035, with the percentage falling gradually to 75% by 2093.

The OASI Trust Fund, when considered separately, is projected to be depleted in 2034. Payroll tax revenue alone would then be sufficient to pay 77% of scheduled benefits. These figures are unchanged from last year’s report.

The DI Trust Fund is expected to be depleted in 2052, 20 years later than projected in last year’s report. The significant depletion date change reflects the fact that both benefit applications and the total number of disabled workers currently receiving benefits have been declining over the past few years. Once the DI Trust Fund is depleted, payroll tax revenue alone would be sufficient to pay 91% of scheduled benefits.

Why is Social Security facing
financial challenges?

Social Security is funded primarily through the collection of payroll taxes. Because of demographic and economic factors, including higher retirement rates and lower birth rates, there will be fewer workers per beneficiary over the long term, worsening the strain on the trust funds.

What is being done to address these challenges?

Currently, not much, but the reports urge Congress to address the financial challenges facing these programs soon, so that solutions will be less drastic and may be implemented gradually, lessening the impact on the public. Combining some of these solutions may also lessen the impact of any one solution.

Some Social Security reform proposals on the table are:

Raising the current Social Security payroll tax rate. According to this year’s report, an immediate and permanent payroll tax increase of 2.7 percentage points to 15.1% would be necessary to address the long-range revenue shortfall (3.65 percentage points to 16.05% if the increase started in 2035).

Raising or eliminating the ceiling on wages currently subject to Social Security payroll taxes ($132,900 in 2019).

Raising the full retirement age beyond the currently scheduled age of 67 (for anyone born in 1960 or later).

Reducing future benefits. According to this year’s report, to address the long-term revenue shortfall, scheduled benefits would have to be immediately and permanently reduced by about 17% for all current and future beneficiaries, or by about 20% if reductions were applied only to those who initially become eligible for benefits in 2019 or later.

Some financial advisors believe that although Social Security is not expected to be depleted until 2035, which means today’s retirees should not worry too much, those about 15 to 20 years out from retirement should start acting now to bolster their retirement savings should Congress fail to act.  Social Security was initially envisioned as one leg of a three-legged stool, the other legs being pensions and personal saving.  Other advisors increasingly see annuities as a solution to the challenges facing Social Security by serving as an income replacement to the looming cut in monthly social security benefits.  However, at the present time, annuities have been a misunderstood, complex and frustrating option for individuals and many advisors recommend that annuities should not represent more than half of an individual’s retirement assets.

Lastly, whether you have been saving for your retirement for decades or whether you’ve had to deal with health issues or layoffs, it is important to periodically review your personal social security statement on the Social Security Administration website at www.ssa.gov.

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summer-2019-trust-but-veriify

Trust but Verify

Few people would argue if I said that your health is your greatest asset. Given the importance of physical health, it is wise to work with a caregiver that you trust implicitly. Doctors proudly frame their educational accolades on the wall, are backed by large health networks, and possess specialized skills and experience a layperson […]

Few people would argue if I said that your health is your greatest asset. Given the importance of physical health, it is wise to work with a caregiver that you trust implicitly. Doctors proudly frame their educational accolades on the wall, are backed by large health networks, and possess specialized skills and experience a layperson does not have. The general public expects a vetting process allowing only the best and brightest to practice medicine.

A close second to physical health, in terms of importance, should be financial wellness. Doctors go through stringent training and accreditation procedures, but can the same be said for professionals in financial services? The industry has tests ensuring a basic level of competence, but the hurdles to begin practicing are not nearly as rigorous as those in the medical field.

Investment services, unlike medicine, also have varying levels of responsibility that firms owe to their clients. In some cases, the duty owed is merely to ensure that an investment is suitable at the time of purchase, whereas, in other instances, an ongoing duty of undivided loyalty exists. The distinction may seem subtle, but in plain English, would you rather have a service provider who merely chooses what is suitable for you or one that must act in your best interest? There is also a myriad of legal means by which the provider of services can be compensated, not all of which are fully disclosed. Given the potential for misaligned interests between investors and their financial advisors, an implicit trust may not suffice. How, then, can investors structure their relationships with advisors to more closely align with those found in the medical field?

By asking a simple question: “Are you a fiduciary?” Investment fiduciaries provide advice and direction for their clients. Fiduciaries work with individuals, institutions such as corporations and not-for-profits, and retirement plans. Today, advisors are even applying a fiduciary process in the wealth preservation and insurance markets. The same principles can be applied to all aspects of a client’s financial plan.

So, what is a fiduciary? A fiduciary is a party that owes a legal responsibility to another. A fiduciary is required to make decisions that are in the best interests of the people and assets in their care without regard to their own wellbeing — it is a relationship of undivided loyalty and trust. A fiduciary should always be willing to commemorate this great responsibility in writing; otherwise, the promise of loyalty is not worth the paper it is written on.

There are critical factors in the due diligence process before engaging a financial professional. Client goals and needs, professional experience, asset management philosophy, tenure, and advanced designations are all important considerations, but a base level of peace of mind can be achieved knowing that you are interviewing a fiduciary.

The role of a fiduciary is so important that the SEC has recently approved its new Best Interest Regulation that provides a framework for regulation of investment professionals. It is no coincidence that the SEC Chairman Rob Jackson said in his prepared remarks that “investors should seek out true fiduciary advice from financial professionals who have chosen to hold themselves to a higher standard.”

I was raised to believe that trust is earned, never given. I teach my children this lesson. I believe you can and should trust. Trust should be nurtured and deepened over time, and even after it is earned, I still believe we should all follow the wisdom of President Ronald Regan to always, “Trust but verify.” The fiduciary standard should act as that explicit verification.

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Think you have all your “Risk” Covered? Time for a Review?

While driving home from the Network Magazine event at Boos Rock last week, I was sharing my thoughts with Kelly on what I wanted to write this article about.  As an insurance professional in my 4th decade of practice, I am increasingly alarmed at the “commoditization” of auto insurance.  Very few companies advertise protection; it […]

While driving home from the Network Magazine event at Boos Rock last week, I was sharing my thoughts with Kelly on what I wanted to write this article about.  As an insurance professional in my 4th decade of practice, I am increasingly alarmed at the “commoditization” of auto insurance.  Very few companies advertise protection; it is all about low price. Now don’t get me wrong, everyone wants the best quality at the lowest price, but I suspect the majority of drivers have no idea what stacked underinsured coverage really protects or the difference between limited tort and full tort and the hundreds of thousands of dollars of protection that are in play for pennies of premium per day.

As Kelly and I continued this conversation, we heard sirens coming from all directions.  Next, the Upper Macungie Police cruiser flew by.  Then the Fogelsville Fire police and first responders flew by.  I always get nervous when I hear sirens, hoping and praying it’s not someone I know or insure.  As it turns out, I did get THAT call the very next morning.  It was a near-fatal auto accident, involving one of my clients, actually the son who is in his 20’s. He was completely innocent in this accident, just a simple case of being at the wrong place at the wrong time. We proceeded to set up the claim, and I invited the family to come to the office to review their auto policy in person. They were distraught with many questions.  Hopefully, I was able to offer some semblance of assurance that they will be well protected if litigation is brought.  As it turns out they have high levels of liability protection, plus a personal liability umbrella in place.  We discussed how the repairs would be handled once the car is released from impound and set them up in a rental car.  Finally, we explained how the medical transport and other medical bills would be handled.

The competition for Auto insurance has never been fiercer.  Advertising is directed at a low price, minimum coverage.  The minimum liability limits in PA are 15,000 per person/ $30,000 per occurrence for bodily injury and $5,000 of property damage liability. The state legislature set these limits in 1974.  In 1974 the average price of a new car was $3,500.  In 2019, the average price of a new car is tenfold; $34,000.  Back in 1974, when you bought your first car, your father took you by the hand to his Insurance Agent.  That Agent gave you the protection you needed, and you forged a life-long relationship.  Today, the first time car buyer, typically Googles “cheap car insurance,” absent an insurance professional, finds a low-cost coverage minus consideration of inflicting serious bodily injury upon others, or giving up rights if injured by someone else. I get the feeling that there is a lot of underinsured drivers with misguided priorities based on irresponsible advertising.

Another major shift in transportation is the advent of rideshare, i.e. UBER and LYFT.  There are an estimated 1.5-2 million UBER drivers in the US and 41.8 million UBER users.  Total UBER usage is about 15 billion trips since its inception a decade ago.  Complicating matters, personal auto policies specifically exclude coverage when the vehicle is being used for livery (hired for pay).  UBER has contracted with a third party to pick up when the personal auto policy excludes coverage.  However, those limits are obscure at best and vary by state.  Typically, there is a low level of liability protection when the UBER driver is “App On” minus riders. Limits of $50,000 / $100,000 per person/per occurrence for bodily injury liability and $25,000 for property damage liability is common.    When transporting riders, the liability limits increase to $1,000,000.  So, at any given moment, various companies are insuring a vehicle at various levels of protection all in a matter of seconds. A claims and litigation nightmare. This topic alone should make everyone increase their Underinsured Motorist coverage and stack it!  And don’t be so quick to delete the collision coverage on your 10-year-old sedan.

In the past five years, the auto insurance landscape has changed dramatically based on new technology and a shift in advertising.  Now more than ever it’s important to take inventory of your insurance portfolio to assure you are protecting your assets if you just happen to be the one who is at the wrong place at the wrong time.  For a professional giving advice to clients, please ask your clients to sit down with their Insurance Agent to make sure adequate protection is in place.  What was adequate last decade may not adequately protect you today.

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2019-CEO-Challenges

CEO Challenges for 2019

As we enter into a new year, we face a new era of challenges with no clear resolutions.  2019 presents a combination of hurdles never before faced by businesses.  CEO’s are now faced with an unstable economy, global unrest, legalization of marijuana, and tax law changes; coupled together, these challenges leave us to merely shake […]

As we enter into a new year, we face a new era of challenges with no clear resolutions.  2019 presents a combination of hurdles never before faced by businesses.  CEO’s are now faced with an unstable economy, global unrest, legalization of marijuana, and tax law changes; coupled together, these challenges leave us to merely shake our heads and wonder how we got here.  The most significant hurdles which challenge CEOs on a daily basis are a tight workforce and advances in technology.

The United States is currently facing a tight labor market that unfortunately shows no signs of easing.  The latest data shows the December unemployment rate at 3.9%; a rate we have not seen since 2000.  The tight labor market has skyrocketed recruiting and retaining talent to the top of the hot button issues for 2019.  Every business leader knows that personnel is a company’s greatest asset and the biggest key to achieving corporate goals.  Finding workers that are highly skilled and experienced and then holding on to them is becoming increasingly problematic.

Employers in every industry are expressing the same concern – the inability to attract and retain qualified employees.  Losing qualified employees can have devastating effects on a corporation.  During a discussion with one business executive in the Lehigh Valley, he commented that his company has experienced a spike in turnover which has affected efficiency, and ultimately profits.    Another manufacturer indicated that they have not been able to replace experienced workers. Thus they have been forced to pay a large amount of overtime to existing employees, which again, impacts the bottom line.

With all of the advancements in technology, CEO’s are faced with either attracting new talent with the latest skills or reskilling their existing workforce.  Business leaders must make training a priority in order to prepare their workforce to compete in a highly competitive market. However, training requires planning and commitment.  With existing time constraints due to the tight market, there is little time available after a worker has performed his primary job responsibilities.  Business leaders need to remember that although training is not revenue generating in the short term and can be costly during implementation, it will positively affect the bottom line in the long term.

The key is to be proactive in training and advancement.  Training should be structured based on both the employer’s and employees’ needs.  Personalized training, while costly, is the most beneficial method in the long run.  When filling the gaps in your workforce, evaluate workers for advancement not only based upon leadership skills but also on their willingness to get involved in technological advancements.  The trend has been to advance employees who could not only take leadership roles but also had soft skills.  In the new era, executives also need to target employees willing and capable of developing technology skills.

During these changing times, business leaders are forced to make long-term decisions based upon predictions and presumptions.  The combination of technology, automation, and a tight labor market will force business leaders to be creative with their workforce planning. In order to provide exceptional customer service in this fast-paced digital era, business leaders will need to offer more comprehensive employment packages in their recruitment of new talent or provide the necessary training to their current workforce in order to stay viable for the next 10 to 15 years.

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healthcare

Medicare as your employer plan?

Are your employer health insurance costs getting out of control?  Medicare may be an answer you’re not thinking about. Medicare is a federal health insurance program that is offered to American citizens turning 65 and other eligible individuals.  The two parts of original Medicare are parts A & B.  You can choose to add on […]

Are your employer health insurance costs getting out of control?  Medicare may be an answer you’re not thinking about.

Medicare is a federal health insurance program that is offered to American citizens turning 65 and other eligible individuals.  The two parts of original Medicare are parts A & B.  You can choose to add on a Supplement (options A – N; sometimes called Medigap) with a drug plan (Part D) or a Medicare Advantage (Part C) plan to cover additional costs not covered by original Medicare.

Medicare does work with employer coverages, and you should enroll in Part A when you turn 65 as it’s free for most people.  Part A helps cover the hospital portion of the benefit, and Part B is the medical portion.  Part B does have a cost and is determined by your income.  The option to waive Part B is available if you have employer coverage on your own or through a spouse.  If you don’t have other health coverage deciding to waive Part B will cause a penalty if you don’t sign up when you’re first eligible.  Part A is primary if you work for an employer with less than 20 employees participating in the health plan and you must enroll when you turn 65 to avoid a penalty and delays in acquiring Part A.  If your employer has more than 20 employees on their health plan than you could also decide to waive Part A.

Some employers may make you take full Medicare benefits when you turn 65.  Why do they do this?  The Affordable Care Act that was established in 2010 and took effect in 2014 with many changes happening before that.  It created a different group and individual health plan coverages costing the employer and employee more money to cover older employees.  Moving employees age 65 and older to Medicare helps to control the out of pocket costs the employers and employees pay including deductible costs and costs when visiting the doctors, hospitals, surgeries, treatment, etc.  Many times, the Medicare benefits offer better coverage with low or no deductibles and low or no out of pocket costs making this a great alternative to traditional employer plans.

A review of current employer plans versus Medicare Benefits is established before deciding to move off of your work benefits.  We look at health, how often you go to the doctors, and what medications do you take regularly.  Second, we take a look at your budget and determine what the costs would be for each choice.  Finally, we look at your health network preferences like doctors, hospitals and pharmacies.  How important is it to have coverage when you travel?  Medicare supplements and advantage plans do have domestic travel coverage options that vary based on plan choice.  Medicare plans can also offer ancillary benefits and can include things like dental, vision and even gym memberships to an approved facility.

Employers can typically save money on employee benefits by moving their 65 and older employees off the group coverages.  The costs associated with older employees tend to be more per month than for younger employees.  The savings can be hundreds to thousands of dollars per month if the employee workforce is older.  Employers can reimburse employees for their Part B, Part D, and Medicare Supplement policies but IRS rules apply.  The Medicare benefit plan arrangements must be integrated with other group benefit plans.

*Medicare reimbursement arrangements will be considered to be “integrated” with another group health plan if:

  • The employer offers a group health plan other than the employer payment plan that does not consist solely of excepted benefits and offers minimum value coverage;
  • The employee participating in the employer payment plan is actually enrolled in Medicare Parts A and B;
  • The employer payment plan is available only to employees who are enrolled in Medicare Part A and B, or Part D; and

The employer payment plan is limited to reimbursement of Medicare Part B or D premiums and excepted benefits, including Medigap premiums.*

When age 65 is looming, it’s best to meet with a Medicare Planning Specialist who can take the anxiety off employers as well as employees and help decide and determine the best course of action for their health insurance coverages.  Good health coverage and saving money can be accomplished.

*Excerpt taken from IRS Notice 2015-17—Employer Payment Plans and the ACA’s Market Reforms 03.30.15*

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Year-End Tax Planning for Small Business

As year-end approaches, each business should consider the many opportunities that might be lost if year-end tax planning is not explored. A business may want to consider several general strategies, such as the use of traditional timing techniques for delaying income recognition and accelerating deductions. A business should also consider customized strategies tailored to its […]

As year-end approaches, each business should consider the many opportunities that might be lost if year-end tax planning is not explored. A business may want to consider several general strategies, such as the use of traditional timing techniques for delaying income recognition and accelerating deductions. A business should also consider customized strategies tailored to its particular situations.

For the 2018 tax year, taxpayers have relative clarity with respect to available credits and deductions. With the exception of a handful of industry-specific tax credits and deductions that expired at the end of 2017, most temporary credits and deductions were permanently extended several years ago. A few others were extended for 5-years through 2019.

Clarity is a new concept for federal taxes, as several years’ worth of promises of impending tax reform finally resulted in the Tax Cuts and Jobs Act (TCJA). The Act made several high profile changes to the tax code, notably reducing tax rates for businesses and individuals, but also created new tax benefits and made several other business-friendly tax benefits even friendlier.

The last few months of the year provide an important “last chance” to change the final course of your business’s tax year before it closes for good. Among the reasons why year-end tax planning toward the end of 2018 may be particularly fruitful are the following:

Business credits and deductions. Many business-related tax credits and deductions that were periodically scheduled to expire were permanently extended in 2015. Others were twice extended one year for both 2016 and 2017, and are not available for the 2018 filing season unless extender legislation is enacted. A few were extended for a five-year period. Some others were modified and extended by TCJA. Taking inventory of what deductions and credits your business has been using and whether they remain available or will be removed in the near future can significantly impact your bottom line. Many of the provisions now periodically extended relate to energy-related activities or specific industries, but it is important to make sure that any credits are considered in light of their availability.

Depreciation and expensing. TCJA made some significant changes to encourage business to expand and invest in new property. First-year depreciation allowances on certain business property, or bonus depreciation, has fluctuated over the last few years, but TCJA provides for 100 percent bonus depreciation for property placed in service before 2023. Additionally, the limitation on expensing certain depreciable assets has been increased to $1 million, with a $2.5 million investment limitation. While 2018 is not necessarily the last time these benefits will be available, there has been no better time than 2018 to take advantage of them

Qualified business income deduction. Beginning in 2018, business owners to deduct up to 20 percent of their qualified business income (QBI) from sole proprietorships, partnerships, trusts and S corporations. This is one of the centerpieces of TCJA and broadly applies to many taxpayers. The IRS has released comprehensive guidance on the deduction, which provides a great deal of clarification on the requirements of the deduction. This is an entirely new deduction, with new documentation requirements, which may require a year-end review of records.

Cash method of accounting. Another provision arising from TCJA was a more permissive adoption of the cash method of accounting. Beginning in 2018, corporations with gross receipts up to $25 million can use the method, which is up from $1 million in prior years. Many of the traditional end-of-year planning techniques relating to timing, such as income deferral or income acceleration, are made easier where the cash method of accounting is used.

Employee benefits. TCJA made a large number of changes on the individual side relating to benefits that could impact employers. Employees can no longer claim miscellaneous itemized deductions, cannot generally exclude moving expense reimbursements, and the deduction for business meals and entertainment was also impacted. Employers should review their internal policies to determine if they need to be changed to reflect the changes.

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7 Essential Autumn Home Maintenance Checks

As the leaves change and the days get shorter, take the time this autumn to prepare for winter. By making this fall home maintenance into a tradition, you’ll have peace of mind in the winter and more time to hibernate. Indoor Tasks Heating system checkup Be sure to change the air filter in your furnace […]

As the leaves change and the days get shorter, take the time this autumn to prepare for winter. By making this fall home maintenance into a tradition, you’ll have peace of mind in the winter and more time to hibernate.

Indoor Tasks

Heating system checkup
Be sure to change the air filter in your furnace and check its efficiency before the cold weather begins. Call in an HVAC contractor to test the heating output and give the system a tune-up. This technician can also check for and correct possibly hazardous carbon monoxide levels generated by your heating system. Stock up on several air filters for the winter and change them every month. If you don’t have a programmable thermostat, purchase one for the system to help lower your energy costs.

After your furnace has been tuned up to its maximum efficiency, take a moment to inspect your heating ducts and vents. Dust them off and clear away anything that may have gotten into them over the summer. Then check your windows for any leaks that may compromise your heating efficiency. If you feel cold air coming in, purchase a plastic sealing kit from the hardware store and place the plastic around the window to keep the heat from escaping. Be sure to check your doors as well and fix their weather-stripping if needed.

Check the fireplace and chimney
Most chimney sweeps recommend an annual sweeping, but depending on how often you use the fireplace, you might be able to wait on a full sweep. But if you will be using the fireplace often, call a chimney sweep for an inspection.

Hopefully, you will have your older, seasoned firewood now ready for use after sitting for the spring and summer. It’s recommended to keep the firewood at least 30 feet from the house and covered. Seasoned wood is best for fires, as it burns cleaner and longer.

Review home fire safety
The introduction of the heating season brings new potential for fire hazards, so take a moment to review fire safety in your home. Check and replace fire extinguishers if necessary and change the batteries in your smoke detectors. Also, go over the home fire evacuation plan with your family.

 

Outdoor Tasks

The gutters
It’s best to inspect and clean the gutters a few times during the fall, especially if there are many leafy trees around your house. If gutters remain clogged, water will spill over them and onto the ground next to the foundation, which may cause damage to the foundation. Gutters and downspouts should be kept clean and should direct water away from the foundation, as well as from walkways and driveways so that they do not become slippery or icy.

Yard maintenance
The orange, yellow, and brown colors of the autumn leaves don’t look as nice on the ground as they do on the trees. Rake the leaves into piles and scoop them into yard waste bags. Most areas have ordinances about burning leaves, so check with your local area government first. When sweeping the leaves off your patio, don’t forget to clean, pack up, and store any patio furniture for the winter. Disconnect garden hoses and, if practical, use an indoor valve to shut off and drain water from pipes leading to outside faucets. This reduces the chance of freezing in the section of pipe just inside the house.

In the garage
It is recommended that you empty out unused fuel from any gas-powered equipment stored in the garage, such as a lawnmower because sediment can build up and clog the fuel lines. Store gasoline in tanks out of children’s reach and have it ready for use in your snow blower or emergency generator if need be.

Test your emergency generator
It’s a good idea to have an emergency generator if you live in an area that sees a lot of ice storms, as these are a major cause of blackouts during the winter. So, if you have one, haul it out and give it a test run to see if it is in good working order. Make sure you never run the generator in any enclosed space – like your garage – as it will present a carbon monoxide hazard. If you are looking to purchase a generator, talk to your insurance agent about exclusive offers such as those offered on Generac generators by State Farm® for its customers.

State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for and does not endorse or approve, either implicitly or explicitly, the content of any third-party sites hyperlinked from this page. State Farm has no discretion to alter, update, or control the content on the hyperlinked, third-party website. Access to third party sites is at the user’s own risk, is being provided for informational purposes only and is not a solicitation to buy or sell any of the products which may be referenced on such third-party sites.

The information in this article was obtained from various sources not associated with State Farm®. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. These suggestions are not a complete list of every loss control measure. The information is not intended to replace manuals or instructions provided by the manufacturer or the advice of a qualified professional. Nor is it intended to effect coverage under our policy. State Farm makes no guarantees of results from use of this information.

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A Financial Success Story

Earlier this year, I began working with a new client, a 61-year-old male who just lost his wife to a long battle with cancer. He was emotionally distraught in addition to confused and frustrated with thinking through what to do financially. He spent weeks sorting through documents, updating records, and speaking with pension and retirement […]

Earlier this year, I began working with a new client, a 61-year-old male who just lost his wife to a long battle with cancer. He was emotionally distraught in addition to confused and frustrated with thinking through what to do financially. He spent weeks sorting through documents, updating records, and speaking with pension and retirement plan specialists at her former employer, her life insurance provider, and bank representatives, all while planning a funeral. We finally had the opportunity to get together three months after her passing, and he came prepared with the following information: bank and credit union statements, his IRA statement, her lump-sum pension quote, and retirement plan statement, and his permanent life insurance policy statement.

His request was simple and common, “I want to be sure I have enough to live on in retirement, and I want to leave a legacy for the children.” They were adults now; he had two kids of his own, and she had one. He wanted her child to inherit most of her retirement plan and pension, however, he also knew he needed to use these assets when he retired in a few years. He already had taken care of his children by making them 50/50 beneficiaries on his life insurance and IRA. The two issues he wanted me to help with were his retirement income and taking care of her son financially.

This client is very conservative with no desire of account values decreasing, outside of pulling income, so investing into a growth-oriented portfolio was out of the question. My recommendation for the client began with shifting some of the inherited retirement assets into an annuity that guarantees him a minimum $1,200 per month income when he retires. The remainder we invested into a very conservative bond portfolio with half in government-backed bonds. I also recommended applying for a permanent life insurance policy because if he can get approved, we fund the premium using the bond portfolio and name her son as the beneficiary. He did get approved, and we put a permanent death benefit in place which grows each year as premiums are paid. Meanwhile, we are only putting about 4.5% of the bond portfolio toward the premium each year. The premium is low enough as to not deplete the bond portfolio, yet the tax-free death benefit is enough that it will be worth almost as much as the wife’s inherited retirement assets. From the cash in the bank and credit union accounts, we used half to purchase a fixed annuity which matures just before retirement and guarantees a steady interest rate each year. We also added a portion of his IRA to the annuity we bought with part of the wife’s retirement assets, which guarantees at least another $2,800 per month to the client.

The client has now secured $48,000 annually of guaranteed1 retirement income in addition to Social Security and a pension. He also has secured a death benefit to pass to her child upon his death, while his kids are already taken care of. Lastly, he will have significant liquid assets to use in retirement as needed, not including what he is still able to save over the next few years while working. I share this story for two reasons; the first being to encourage everyone to always prepare for the unexpected. Life always brings challenges and throws us curve balls; the best we can do is be as prepared as possible. Second, create a financial plan early and review often. Work with a financial professional to establish goals and to guide you through changes in life, the ups and downs, and the financial impact of losing loved ones.

This client I wrote about now has clarity of his financial plan and is very confident moving forward. It has been extremely rewarding to assist him and see the weight being lifted off his shoulders. Working with clients every day to improve their situation is my “why” and if I can help a few people take some initiatives or seek a second opinion on what they are currently doing, then I consider that a big win.

1 Guarantees are based on the claims-paying ability of the issuing insurance company.
References to specific securities, asset classes, or portfolio models are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Material discussed is meant for general informational purposes only and is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon only when coordinated with individual professional advice. This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries, and such opinions are subject to change without notice.

All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit, and inflation risk. Equities may decline in value due to both real and perceived general market, economic, and industry conditions. Past performance is not a guarantee of future results.

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Are you scared to retire?

Miriam Zettlemoyer, Consultant Alliance Planning  Transitioning from working years into retirement years can be difficult.  It can create great anxiety and people sometimes rather not deal with what retirement would look like financially and just continue to work.  It can seem like the easier option.  The thought of what might be on the other side […]

Miriam Zettlemoyer, Consultant
Alliance Planning

 Transitioning from working years into retirement years can be difficult.  It can create great anxiety and people sometimes rather not deal with what retirement would look like financially and just continue to work.  It can seem like the easier option.  The thought of what might be on the other side is too daunting a task but at some point, in their life age, health and life forces you to take a look.  I always tell my clients that it might not be as bad as you think.  We start with the budget and we look at current working year’s budget to moving into retirement budget – needs versus wants come into play. Next, we look at income current versus retirement income.

Predictable income can include social security income, pensions if available and other assets like retirement accounts, annuities that can produce income if there is a shortfall between budget and income.  After doing the math on both those items we can determine if there is money for variable cost items like travel, gifting, hobbies or other.  Healthcare can be a big cost if your current employer was paying for your coverage 100% but you may find that moving into a Medicare supplement plan option could reduce your annual out of pocket costs for deductibles, co-insurance, co-pays and other even if the premiums were 100% covered by your employer.  Working with an advisor can help you also get your “stuff” in order and make you think of things that you would normally not be on your mind.  Are your wills and powers of attorneys current and say what you want them to say?  Are your beneficiaries up to date on all your accounts and policies?  Should I keep paying on my life insurance and do I still need it?  Will my car last 20 years in retirement or is that an expense I should budget for?  Lots of questions that can be difficult to think about, but relief follows once answered.  Putting a plan in place to make sure you don’t outlive your retirement can include downsizing, determining a way to reduce necessary expenses, working an extra year to increase your social security income, rolling over some assets into an income producing product, moving in with family and keeping variable expenses to a minimum.

We haven’t addressed or talked about additional health needs and long-term care that can drain the assets quickly.  This is a concern as we age, and health deteriorates that our expenses could increase and use up our assets for care needs. Assisted living costs on average are $3,500+ per month and skilled nursing costs are averaging over $7,500 per month. One of the planning options available to help cover the cost is Long-Term Care insurance. You must however purchase this when healthy and be sure that costs for the insurance even if they increase are manageable into retirement. The markets have allowed for some hybrid life insurance and long-term care options as well as a one-time deposit into a life policy to be used in long-term care situations. These newer products avoid the use it or lose it mentality of the traditional long-term care products that you pay for and if you don’t use then you forfeit all the paid premiums but still include some underwriting/health requirements in order to qualify. Contrary to widespread belief Medicare will not cover long-term care situations. Medicare covers a very limited amount of care in a nursing home and with strict rules of being in a hospital for at least three days and then transitioning directly to a skilled facility for care.

A good advisor will be able to show you different options, plan your budget and income and give you peace of mind when moving into retirement to cover all your basis.  The baby boomer generation include people born from 1946 to 1964 and they started turning 65 in 2011.  Since then there were 10,000 boomers turning 65 per day that will continue for another 12+ years until year 2030.  Are you one of them?  Are you ready?  Meet with your advisor today to review and make sure you have all your ducks in a row. If they aren’t asking you some of these questions it might be time to look for another advisor.  The sooner you start the planning process the better chance you will have for financial success.

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