10 Reasons to Update Your Will

Over the last few weeks we’ve been discussing items Beyond The Portfolio. This week I’ll cover 10 reasons that might prompt you to take a look at your will and see if it needs to be updated.

FIVE THINGS YOU SHOULD KNOW

Equity Markets – were positive this week with U.S. stocks (S&P 500) up 1.65% while international stocks (EAFE) rose 0.22%
Fixed Income Markets – also saw gains this week with investment-grade bonds (AGG) up 0.35% while high yield bonds (JNK) gained 0.88%
Stuck Ship in Suez Shocks Supply – This week saw a surprising disruption to global supply chains thanks to one of the largest container ships in the world, Ever Given, getting stuck sideways across the Suez Canal on Tuesday and yet to be freed as of writing. While emergency crews have worked to dislodge the 1300 ft long vessel, experts believe it may not be freed until next Wednesday when tides should rise. The number of ships stuck waiting has reached over 300 and has sent ripple effects across global trading, with an estimated $9.6 billion worth of daily traffic unable to traverse the canal.
Vaccine Rollout Improving – After an underwhelming initial rollout, the U.S. appears to be ramping up the pace of COVID-19 vaccinations with Biden pledging this week to double his administration’s original goal to 200 million doses by his 100^th day in office. So far 85 million Americans (25.7%) have received at least one dose, while 46.3 million (14%) have completed the second round of shots.
Key Insight – [VIDEO] Over the last few weeks we’ve been discussing items Beyond The Portfolio. This week I’ll cover 10 reasons that might prompt you to take a look at your will and see if it needs to be updated. [ARTICLE] Are you lacking confidence in your ability to retire? If so, you are not alone. This week's articles address income streams during retirement, such as social security, and items you can do now to help you during retirement.

INSIGHTS for INVESTORS – by Jon Heideman

Are you lacking confidence in your ability to retire? If so, you are not alone.

30-year-old Planning Paul asks, "How am I supposed to retire?" 45-year-old Curious Carol asks, "Where will my retirement income come from?" 60-year-old Nervous Neal asks, "Will I outlive my retirement needs?" If you have wrestled with these thoughts, you are not alone. I know I have. In a 2017 study by Aegon, 54% of Americans are "not/somewhat confident" that they will retire with a lifestyle they consider comfortable. And in the same study, the primary concern of 50% of Americans is their health in older age.

Can my Social Security Benefits help?

For most of us, we have paid into social security during our working careers. One term that is thrown around is "Full Retirement Age," or FRA. AARP.org defines this as the age when you are entitled to 100% of your Social Security benefits, which are determined by your lifetime earnings. Below are a few facts from the JP Morgan Asset Management Guide to Retirement:

Depending on when you were born, the FRA is between age 66 and 67.
You can start taking distributions at age 62 at a discounted rate of 70% to 75% of your FRA, depending on age
The maximum benefit you can receive is at 70 at a premium rate of 132% to 124% of your FRA, depending on age
An individual that has wages of $70,000 per year would have the following:
- If you started distributions at age 62/FRA/70, your monthly benefit would be around $1,873/$2,613/$3,310, respectively
- If you started taking early distributions at 62, the breakeven point, as compared to beginning distributions at your FRA, is around age 76.
- If you started taking late distributions at 70, the breakeven point, as compared to your FRA, is around age 80.
- At age 90, if you take distributions at age 62/FRA/70, your cumulative benefit would be around $956,000/$1,180,000/$1,341,000, respectively.

Everyone's situation is different and should be consulted on. However, the decision you make could result in a significant cash flow difference by age 90. For some, this might not be much. For others, it could be the difference in their retirement. Regardless of the situation, I would encourage you to use social security to be used as a portion of your retirement plans and not your only strategy.

What can I do now?

The good news is --- YOU can do a lot. Regardless of your age and situation, you can help your retirement income. Whether you are Planning Paul, Curious Carol, or Nervous Neal, you can make a difference for yourself. Many of you reading this are already doing this (great job!) But for those that need help, you have options:

Ask your employer about an employer-sponsored retirement plan, such as a 401(k), 403(b), or SIMPLE IRA. These can be ways you put money away for retirement, which your employer can add funds to help your retirement. For these plans, ask about a "ROTH" option. The ROTH option allows you to make after-tax employee contributions that grow-tax-free in the future (yes, no taxes in retirement).
You can set-up a traditional or ROTH IRA. We always recommend that if your employer matches the above item, then make sure you contribute the minimum amount to get the full benefit (it's free money). But after that, an IRA could be a great option since the investment options are typically less restrictive.
Did you forget an old 401(k) or 403(b) at a former employer? No sweat, we can roll that into an IRA with us. We often have many accounts that get opened over our working career, and money is scattered around. Let us help you "right-size" and simplify what you have. There is no need to create an additional headache.

If you haven't started saving for retirement, now is better than never. Age and lifestyle factor into this, but generally, your savings ratio (which is your total annual savings divided by your annual gross household income) should be between 15% and 25%. Again, we understand all situations are different. Still, consider your saving rates and making a plan to achieve a retirement lifestyle you feel comfortable with.

Anything else?
To protect for unexpected events, health concerns, or tragedies, we can help. Insurance is a great way to defer risk. Whether it is life insurance, disability insurance, or long-term care insurance, we can help. These are tools in your toolbelt that can help preserve what you have worked so hard for --- your legacy. Ask us how we can help.

Have a great weekend!

Jon and the team at TEN Capital