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Category: Life

Certain Uncertainties in Retirement

The financial uncertainties we face in retirement may risk reducing our sense of confidence, potentially undermining our outlook during those years.

Indeed, according to the 2018 Retirement Confidence Survey by the Employee Benefits Research Institute, only 17% of pre-retirees said they are “very confident” about having enough assets to live comfortably in retirement. In addition, just 32% of retirees were “very confident” in their prospects for doing so.[i]

Today, retirees face two overarching uncertainties. While each one can lead even the best-laid strategies awry, it is important to remember that remaining flexible and responsive to changes in the financial landscape may help you meet the challenges posed by uncertainty in the years ahead.

 

An Uncertain Tax Structure

A mounting national debt and the growing liabilities of Social Security and Medicare are straining federal finances. How these challenges will be resolved remains unknown, but higher taxes – along with means-testing for Social Security and Medicare – are obvious possibilities for policymakers.

Whatever tax rates may be in the future, taxes can be a drag on your savings and may adversely impact your retirement security. Moreover, any reduction of Social Security or Medicare benefits has the potential to increase financial strain during your retirement.

Consequently, you will need to be ever mindful of a changing tax landscape and strategies to manage the impact of whatever changes occur.

 

Market Uncertainty

If you know someone who retired (or wanted to retire) in 2008, you know what market uncertainty can do to a retirement blueprint.

The uncertainties have not gone away. Are we at the cusp of a bond market bubble bursting? Will the eurozone find its footing? Will U.S. debt be a drag on our economic vitality?

Over a 30-year period, uncertainties may evaporate or resolve themselves, but new ones may also emerge. Solutions for one set of financial or economic circumstances may not be appropriate for a new set of circumstances.

Scottish philosopher Thomas Carlyle said, “He who could foresee affairs three days in advance would be rich for thousands of years.” Preparing for uncertainties is less about knowing what the future holds as it is being able to respond to changes as they unfold.[ii]

To read more about financial and estate planning, visit our website at capsouthwm.com/services/financial-estate-planning/

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity

[i] https://www.ebri.org/docs/default-source/rcs/1_2018rcs_report_v5mgachecked.pdf?sfvrsn=e2e9302f_2

 

[ii] https://www.brainyquote.com/quotes/thomas_carlyle_118785

 

The Value of Insuring Against Life’s Risks

When you are planning for your future, what do you think about? You may think about your retirement, enjoying having the time and money to take trips and pursue your interests. Maybe you think about your home and enjoying the feeling of stability that can come with home ownership. In making these plans, people often find that their long-term view involves money, in some fashion.

 

That said, life also involves risk, and the unforeseen events that can change our plans in an instant. As an example, sudden injury or disability could leave you in a financial bind, unable to work for an extended period of time, if ever again. For this reason, among others, insurance can be an important tool in your pursuit to build and maintain your wealth and help protect it from unforeseen and destructive forces.

 

Did you know that:

  1. Sixty-eight percent of American workers have no long-term disability income protection,[i]
  2. Roughly 70 million Americans aged 18-38 have no life insurance,[ii] and
  3. About one in eight drivers is uninsured?[iii]

 

If you ask a homeowner, replacing a roof is probably the least satisfying expense he or she will ever face. While the value of such an investment is obvious, it doesn’t quite provide the satisfaction of new landscaping. Yet, when a heavy rain comes, ask that same owner if he or she would have preferred the nice flowers or a sturdy roof.

 

Insurance is a lot like that roof. It’s not a terribly gratifying expenditure, but it may offer protection against the myriad of potential financial storms that can touch down in your life.

 

The uncertainties of life are wide ranging, and many of them can threaten the financial security of you and your family. We understand most of these risks — a home destroyed by a fire and a car accident are just two common risks that could subject you to outsized financial loss.

 

Similarly, your inability to earn a living to support yourself and your family due to death or disability can wreak long-term financial havoc on those closest to you.

 

Insurance exists to help protect you from these forms of wealth destruction.

 

Some insurance (e.g., home or car) may be required. When it isn’t (e.g., life or disability), some individuals may be tempted to avoid the certain financial “loss” associated with insurance premiums and assume the risk of much larger losses that are less likely to happen.

 

But insurance premiums aren’t a financial “loss;” they are designed to help protect you and your family as you build personal wealth. Keep that in mind as you consider your coverage options and make decisions about your future; it’s possible that you are making a decision that could affect the rest of your life.

 

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable.  CapSouth does not guarantee the accuracy or completeness of the information.  This material has been prepared for planning purposes only and is not intended as specific tax or legal advice.  Tax and legal laws are often complex and frequently change.  Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

 

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf

[ii] https://www.ajc.com/business/personal-finance/free-term-life-insurance-yep-thing-and-here-how-you-can-get/zzoBg0QQqRgjoBMAN1QfWM/

[iii] https://www.insurancejournal.com/news/national/2018/03/15/483414.htm

Help Reach your 2019 Financial Resolutions

The start of the new year always seems to represent new beginnings. It’s a time to remake our priorities and to reimagine our futures. Although the calendar may not recognize its significance, our humanity marks the passing of the old year with poignancy.

We awaken to the opportunities that surely await us—just over the proverbial horizon. We may suppress our yearnings, but, nonetheless, we lay our hopes on the promise that the new year will be different, more fulfilling, more exciting, more focused. We’ll achieve our goals in the new year.

Never mind the statistics about short-lived New Year’s resolve. We are beginning again. Putting the missteps and misgivings aside, we take aim. The more daring and adventuresome among us, emboldened by even greater prospects ahead, develop resolutions—or at least we aspire to do so.

So, how do you develop sound, achievable New Year’s resolutions, especially those involving your finances? And why are they so important?

Here are five tips about goals and resolutions:[I]

  1. Successful resolutions should be constructed with goals. And goals should include benchmarks or steps, each leading you closer to fulfilling your resolution.
  2. Your brain speaks the language of resolutions. Your brain instinctively performs executive functions, which draw you closer and closer to what you resolve.
  3. Goals provide focus. They give you direction and vision. You have a place to go. Goals give clarity to your resolutions.
  4. Goals provide purpose. You know what you want, you make resolutions, and goals provide the catalyst.
  5. Goals make you feel good, so say neuroscientists who study the brain’s emotional circuits.

Setting New Year’s resolutions can be easy and fun, and lead to some exciting changes in your life. Making your goals, based on your resolutions, become reality requires a few steps.[i]

  • Keep them short and easy. Create achievable resolutions. Setting Herculean goals will only set you up for failure.
  • Take it easy. Do one behavioral change at a time. Replacing unhealthy behaviors that have developed over a lifetime may take time.
  • Share your aspirations. When you discuss your resolutions with your family and friends, you create a kind of support (or accountability) group. You may have others wanting to join you in your pursuits. Going to the gym. Saving money. Investing. The more who are signed on, the more likely you (and they) are to achieve the goals.
  • Get help. You may want to adjust your resolutions along the way, making them more challenging or, on the other hand, more realistic. And if you get overwhelmed, seek advice from a trusted friend or a professional. They may give you all the encouragement you need at the time. Financial professionals can provide invaluable guidance to pursuing your goals.

Developing goals to achieve your New Year’s resolutions can be challenging. A goal, technically, differs from a resolution. Goals help you produce the desired results in your life.[i] Resolutions are designed to bring change to aspects of your life: health, diet, finance, behavior. Goals provide the stepping stones to achieving your resolution.

Resolutions are the “what.” Goals are the “how.” And your dreams are the “why.”

Here are some principles to help you to develop your goals:[ii]

Develop goals that inspire and motivate you. Think about what and why something is important to you. Your goals should have a sense of urgency to them. You simply must achieve them.

Put it in writing. Writing out your goals reinforces your commitment. Use strong command words like “will” or “shall.” Don’t use “would like to” or “might.” The weaker words convey hesitation and doubt. Goal setting is as much mental as physical.

Develop a plan. Although the idea of achieving a goal may excite, you can’t ignore the journey, your action plan. Write down the steps to achieve your goal (which brings you closer to your New Year’s resolution), and cross off the steps as you complete them.

Stay at it. Don’t give up. Goal setting involves dedication. Remind yourself regularly to keep on track. Monitor your plan and look forward to achieving each of your goals. Keep yourself motivated. One day you’ll be able to look back with pride at achieving your dream.

As you look forward to the promise of a new and better year, we encourage you to develop resolutions and to stay focused on your plan. We are available and ready to help you with pursuing your financial goals and creating your happy financial future. 800.929.1001

From all of us at CapSouth, have a happy, healthy, and fulfilling New Year!

[i] http://www.differencebetween.info/difference-between-goal-and-resolution

[ii] https://www.mindtools.com/pages/article/newHTE_90.htm

[i] https://www.apa.org/helpcenter/resolution.aspx

[i] https://www.psychologytoday.com/us/blog/smashing-the-brainblocks/201512/8-reasons-we-really-do-need-make-resolutions

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