Take some time this summer to review your financial progress, set new goals and tie up loose ends.
Wednesday, July 4: Independence Day
Monday, September 3: Labor Day
Register with SSA.gov: Check your earnings history for accuracy and review your expected benefits through this site. If you’re close to retirement age, discuss with your advisor when and how you should file to maximize your benefits.
Enhance your estate plan: Check the beneficiaries of your IRAs, insurance policies, trusts and any other accounts, and update information that is no longer relevant. Ensure your plan protects you and your family in the case of an unexpected event.
Review insurance needs: Periodically review and update coverage to ensure proper protection.
Address life changes: Speak with your advisor about major life changes you’ve experienced and how your financial plan could be affected. These changes include marriages, births, deaths, divorces, a sudden windfall and more.
Download the complete checklist below and talk to your advisor to make sure you don't miss any important financial planning dates this summer.
Raymond James financial advisors do not render legal or tax advice. Please consult a qualified professional regarding legal or tax advice.
Emotion. Personality. Knowledge. Time. Each is one of many factors that determine what kind of investor you are.
So why is it important to know which type of investor you are? First, you can learn to identify the challenges of your investment style, as well as its advantages. And you can also discover other investment behaviors to determine if you can enhance your own style.
Most people’s lives are hectic enough without prioritizing time to develop investment skills. The laid-back investor discusses their ideas and goals with and completely delegates decision-making to their advisor. If you fall into this category, you prefer to rely on a professional to help develop and execute your financial plan and are more likely to rely on fundamental investment strategies, such as owning your own home, funding tax-deferred retirement plans, focusing on asset allocation and saving at least 10% of earnings.
The potential downside of being more detached is that it may take a lot of discipline to achieve financial independence. You may need to make trade-offs along the way, prioritizing different goals at different stages of life.
A bonus to being more removed is that the laid-back investor typically rides the market wave and takes a long-term approach. Plus, being able to trust your financial planner is key to building a strong and long-lasting relationship as you work toward achieving your goals. As you gain more knowledge and comfort with investing, you may move on to a more collaborative style.
Generally more experienced than laid-back investors, collaborative investors discuss ideas and goals with their advisors but act on decisions independently or in conjunction with their financial planner. The collaborative investor relies on objective advice and guidance based on their needs, goals and today’s investing environment. Relying on a professional’s knowledge can help collaborators steer clear of major missteps while maintaining discipline with their investments.
A collaborative investor should be careful, though, not to fall into certain decision traps that can affect perception or cloud judgment. A tendency to interpret information that confirms your preconceptions can sneak in before you even realize it. Shrugging off negative news or data about a beloved company is a red flag, a signal reminding the collaborative investor that it’s time to seek out their expert voice of reason.
Busy investors think just as much about making their money work for them as they did earning it in the first place. They discuss ideas and goals with their advisors but act on decisions independently. They’re interested in investing, but trust their advisor to do the heavy lifting, such as putting selected strategies in place or carrying out independently decided transactions. It’s a close relationship built on trust and knowing that your advisor is in your corner. While busy investors prefer to keep an eye on market returns, they also understand that investing is a long game.
Busy investors trust themselves, and for good reason. But in the investing world, that can result in overconfidence, which can lead to misjudging the likelihood of good and bad outcomes. The price this type of investor pays is the time and energy required to treat their wealth as a business. Working with a financial advisor provides a trusted alternative to being so hands-on and offers an objective sounding board who can validate their ideas.
An event-driven investor makes the most of their own decisions, but uses their financial advisor when it comes to specialized needs or specific life changes. They know their portfolio balance and have a solid grasp on the financial plan that’s been set based on conversations with their advisor. But when the unexpected arises – a wedding, birth, divorce, inheritance, health event – they turn to their advisors for custom solutions designed to help them address their immediate needs.
However, for many event-driven investors, this can mean that long-term planning is more cumbersome or less of a focus until a major life event happens. Working with a financial planner along the way opens the door to objective feedback and can lighten the event-driven investor’s financial workload.
Each type of investing has trade-offs. No single method will be right for everyone, and each represents a different level of immersion in your financial plan – and a different level of commitment and effort. But all four types have at least one thing in common: they can benefit from a guide as they forge their path to financial independence. Working with your financial advisor to develop a clearly defined plan for your journey can lessen the weight on any investor’s shoulders.
Investing involves risk including the possible loss of capital. Asset allocation does not guarantee a profit nor protect against loss.
For the first time since 1982, Social Security is dipping into its trust fund to pay benefits. What does this mean for future recipients?
First of all, it’s important to understand what all this dire talk really means. Over the years, as Social Security has collected more in taxes than it has paid out in benefits, the surplus has been put into a separate trust fund. The trust fund buys special U.S. Treasury bonds that earn interest for the fund. Up until this year, the payroll taxes plus the interest on the trust fund bonds have exceeded the amount needed to be paid out in benefits. This year’s report showed that Social Security has now reached the point where benefits paid out to Social Security recipients exceeded total revenues collected from employee Social Security taxes plus the interest earned on its bonds. Now that the crossover point has been reached, the trust fund will begin to deplete, ultimately projected to run out in 2034.
While it’s true that the Social Security trust fund could essentially go “bankrupt” in 2034 if no changes are made to the current system, the majority of Social Security benefits would still be funded through the ongoing Social Security tax system. Approximately three-fourths of the benefits paid out for Social Security are funded from tax revenues collected from current workers. The only purpose of the trust fund is to pay the difference when committed benefits exceed collected revenue.
So, if no changes are made to the system and the trust fund is totally depleted by 2034, what happens? The good news is that the system can continue to pay benefits from ongoing tax revenue and that revenue will cover most of the benefits. Social Security trustees continue to reiterate that the system should be able to pay approximately 75% of its benefits in 2034 even if the trust fund is completely exhausted. Therefore, while the headlines about Social Security continue to be scary, it’s important to realize that the system going “bankrupt” does not mean all payments will stop; it actually means that 75% of benefits are still fully funded.
The big question on people’s minds is whether their benefits will be cut. Current projections assume no changes to the system will be made; however, in reality, there are several potential adjustments that could extend the viability of the trust fund for many more years. It’s important to note that these proposals do not suggest cutting benefits for recipients ages 55 years or older. For everyone else, potential adjustments include:
1. Raising the percentage taken out of paychecks for Social Security payroll taxes (currently 6.2% for Social Security and 1.45% for Medicare paid by both employee and employer). Research has indicated that gradually raising the payroll tax by just two percentage points would be enough for Social Security to be solvent for the next 75 years.
2. Raising the limit on the amount of pay that is taxed for Social Security (currently $128,400).
3. Raising the age of retirement at which people start to receive full benefits (currently age 67 for those born in 1962 and after).
4. Lowering the annual adjustment for cost of living.
5. Cutting benefits. Many believe that actual cuts to benefits would be means tested so that those with limited income and assets would not be impacted. Politically, this would be the most difficult change for Congress to make.
While the long-term viability of Social Security is definitely a concern, bankruptcy of the Social Security trust fund does not mean everyone’s benefits will go to zero. Even when the trust fund is depleted, the system can still pay approximately 75% of benefits from then-current tax revenues. Most believe that benefits paid to older Americans – those age 55 and above – will not be affected. And even for younger workers, relatively minor changes to the system could extend the system’s viability for their lifetimes.
With more and more people retiring without pensions, Social Security plays a crucial role in most people’s retirement plans. We encourage you to have a conversation with your financial advisor about where you stand for retirement, how much Social Security you plan on receiving, and factors you can control to help you reach a financially successful retirement.
There is no assurance any of the trends mentioned will continue or forecasts will occur. Legislative and regulatory agendas are subject to change at the discretion of leadership or as dictated by events. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.
Familiarize yourself with these common swindles, often targeting retirees.
You get an unsolicited phone call or email saying you’ve won a large prize. All you need to do is send money to pay for shipping, taxes or some ancillary fee. You send the money, but the fictional prize never arrives.
Your grandchild calls to confess her troubles. Or so you think. It’s not uncommon for someone posing as your grandchild to call and, preying on your compassion, claim to be in a crisis situation and need money urgently. She may also beg you not to call her parents (which would give the scam away).
You donate to one charity and end up being on every charity list. That’s because they sell your name, phone number and email to other nonprofit and commercial organizations. These could include companies with similar names to charities you support – but they exist solely to scam donations.
Someone calls pretending to be from a major company, such as Microsoft, and says he can see that your computer has a virus. He offers to help you get rid of it by asking you to log into a website that lets him control your computer – then steals your ID information.
If you own a timeshare, you may get a call from someone claiming they’re authorized to sell it for you, for a fee. After paying, however, you never hear from them again.
A man comes to your door and offers to clean your gutters or trim your trees, which sounds like a good idea. Until he asks for prepayment and never completes the job.
You get an unsolicited call about a discounted price for some kind of medical equipment (i.e., heart monitor, wheelchair or bathtub bench). He asks for a deposit and your personal information or Medicaid number to send the equipment, which never arrives.
You’re approached by a “professional” who claims your home is under threat of foreclosure and offers to pay off your mortgage or taxes if you sign over the deed to the property. With your deed, the fraudster can then refinance the mortgage for the full value of your home and take the money. Keep in mind, even if you sign over a deed to someone, you are still liable for your mortgage obligations.
These predators claim to care deeply for you or your well-being, but after winning your trust, they gain access to your accounts to steal money or identity information.
Before purchasing or closing on a new property, a scammer intercepts an email from your realtor or title company. You’re then sent fraudulent payment instructions to complete the transaction. Red flags include last minute changes to instructions, a change in tone or word choice from prior emails, a new sender address and multiple payment requests.
These scams are common and widespread. But speaking with trusted loved ones or your financial professional before making decisions can help you avoid these traps. Additionally, keep in mind these tips for staying safe:
* Don’t pay for things you don’t remember ordering.
* Don’t give your personal information to unknown third parties.
* Work with financial institutions that use fraud protection to safeguard your credit card and banking information.
* Don’t click links in the body of suspicious emails, especially if they claim to come from your bank, credit card company, realtor or title company. Instead, log in to the company’s official website or call them directly to verify.
* Don’t let strangers into your house. Instead, ask for a business card and say your spouse, kids or lawyer will be in touch.
* Be wary of caregivers and suitors, especially if you notice signs of substance abuse or other red flags.
* Limit the purchases and donations you make by check, which may list your home address or other key data.
When facing the inevitable, it may help to take time to deal with the practical details beforehand.
Talking with family along with friends and professional advisors, however, can be the key to preparing as much as you can and getting through the inevitable with as little upheaval as possible.
But just how do you approach a loved one with the subject of their death? And where do you go from there? Perhaps first consider how you would want everything handled, and then start the conversation from that perspective.
Like many endeavors, it’s often good to start small and be patient.
Put it on the radar. Rather than sitting down for a heavy talk, try simply mentioning the subject and see how it goes. You might even break the ice with gentle humor: “You know, at some point we could consider chatting about the big scary death thing.” Remember, this can be a series of conversations.
Meet them where they are. Death is emotional and its effects are complicated. When your loved one is ready to talk, get a sense of what’s top of mind for them. Is it unsolved relationship issues? Finances? Legal hurdles to address? Listen for cues, and you’ll find the appropriate starting point. From there, the rest of the dialogue should come naturally.
Once the conversation has begun, everyone will soon start to feel more comfortable. And while certain topics can be difficult, it will be apparent that working through them and being on the same page will pay emotional dividends later on.
Beyond family. Once you’ve gotten a little more comfortable, encourage your loved one to share pertinent details with their family attorney, accountant and financial advisor who can help fill in any blanks and help ensure as smooth a transition as possible when the time comes. From reviewing beneficiaries and titles to make sure they align with the will, to practical matters like having access to liquid cash, to making decisions without liquidating assets or waiting for life insurance proceeds, the details become easier with professional guidance.
Wills and trusts. Everyone needs a will to express the desired transfer of financial and tangible assets. If desired, encourage your loved one to work with professionals to help document their wishes accurately. For some, a trust may be appropriate to help dictate how assets are distributed, while keeping affairs confidential by avoiding probate.
Letters and proxies. Not everything is covered by a will, so ask your loved one if they’d like to write a personal letter to communicate any additional wishes. It can be a way for them to share their values, life lessons and faith with the next generation. It’s also important that they designate a durable power of attorney – someone who can be trusted to handle financial business and make healthcare decisions on a person’s behalf.
Living wills. This advanced care directive specifies how someone wants healthcare providers to handle their life-sustaining treatment and end-of-life care in the event they cannot do so themselves.
Funerals and obituaries. Everyone has a different idea of what they want when it comes to final respects. Some prefer celebrations, while others want solemn occasions or even creative gatherings. Regardless, listen to what your loved one desires and perhaps help research costs and make arrangements in advance.
Security codes and passwords. When someone passes away, survivors will need documented information to access or shut down a variety of personal and financial accounts.
It’ll be important to surround yourself with love and support after the loss. Conventional wisdom suggests holding off on major decisions and taking at least a year to heal. However, certain practical matters will likely arise and need attention during this time. With help and professional guidance, tasks that seem daunting can be accomplished gracefully and peacefully.
Let people know. Make those you know aware of the loss. Reach out to family, friends and spiritual counselors for emotional support.
Confirm final arrangements. Contact the funeral home to confirm or clarify your loved one’s planned services. If you need clarification yourself, look to the will or personal letters for instructions.
Ample certificates. It is recommended you get two to three dozen original copies of the death certificate from the county where the death occurred. One will be needed for every account relating to the estate, as well as one to forward the person’s mail from the post office.
Time off and childcare. If you’re able to, take time off work – many companies offer bereavement leave for the loss of close loved ones. Keep the little ones in mind, too; they’ll need support and possibly childcare as you deal with the details and services.
As a practical matter, although this may be a difficult discussion to have for all parties, the time to create a plan is now, while everyone has the opportunity to contribute fully to helping ease the painful transition in the future. As you work through your loved one’s wishes, consider your own planning needs. While planning for death and its aftermath can be somber and uncomfortable, it’s never too early to start talking.
Sources: Raymondjames.com; caregiverslibrary.org; nextavenue.org; psychcentral.com
Material prepared by Raymond James for use by its advisors.