The Scoop on COVID-19 Medicare Scams

RETIREMENT AND LONGEVITY

November 11, 2020

Scammers are casting a wide net for victims. Here’s how to sidestep it.

There’s a good reason the U.S. has the Medicare Fraud Strike Force. Scams against the system are persistent – and they cause all taxpayers to endure the rising cost of healthcare premiums. With a pandemic providing a smoke screen for criminals, new scams have popped up.

Some of the latest fraud complaints are about telemarketing calls, text messages, social media messages and door-to-door salesmen offering COVID-19 tests or face masks in exchange for your Medicare number. Once they have this information, they can rip off the system. Scammers are also masquerading as COVID-19 contact tracers to get this data.

In this type of environment, it’s prudent to be cautious about giving out your Medicare number. It’s also not a bad idea to regularly check your Medicare summary notices for errors in billing, and be wary if a new provider is prescribing what seems like unnecessary testing or drugs.

Medicare calling? Not likely.

There have also been reports of inbound calls from someone pretending to be a Medicare representative, then asking for a Social Security number and personal financial information (and using scare tactics, saying you will lose eligibility for benefits). Knowing that Medicare will not make inbound calls to ask for your data is the armor you need to combat this. Hang up and report the scam call to 1.800.MEDICARE.

If you’re ever concerned you may have disclosed information that could lead to identity theft or financial account takeover, contact your advisor. You can also get a free credit report each week until April 2021 at annualcreditreport.com. To place a freeze or alert on your credit report, contact the three nation- wide credit bureaus directly: Experian, Equifax and TransUnion.

A $1.2 billion scheme

To get an idea of the impact of this type of fraud, consider one of the largest Medicare schemes, amounting to $1.2 billion in 2019. It involved an international call center that lured in unwitting victims, telehealth consults, and doctors being paid kickbacks for prescribing unnecessary back or knee braces. The scheme was complex and widespread.

If you’re among the Medicare beneficiaries these fraudsters are targeting, you can fight back by being as stingy as possible with your data. When in doubt, don’t give it out. And don’t take it personally – these criminals are taking advantage of a tragic moment on a broad scale.

Next steps

  • Report suspicious calls and billing errors to Medicare by calling 1.800.MEDICARE.
  • Consider checking your credit report now that you can access it for free each week at annualcreditreport.com.
  • Contact your advisor if you think your personal financial information has been compromised.

Business Budgeting in a Pandemic-Shaken World

BUSINESS OWNERSHIPNovember 09, 2020

Reviewing your finances can help prepare your business for future disruptions.

If you are like most small businesses, 2020 has been a year of wild fluctuation in budgets and planning. While daily operations may have been one way at the start of the new year, by March and April the entire landscape had changed with the advent of COVID-19 and the ensuing shifts in state and local regulations.

Changing revenue streams, temporary shutdowns and being forced to pivot quickly are all part of the everyday world of doing business these days. And while being adept, resilient and shifting with changing market conditions are normal for every small business, COVID-19 has brought new meaning to being nimble, especially with budgets.

If you have made it thus far, pat yourself on the back, but know that the coming months or even years could matter even more to the strength of your business. Budgeting to reflect the new realities of daily operations may mean all the difference.

Financial forecasting

When it comes to budgeting in a chaotic environment where you’re not sure what revenue streams will be, looking at cash flow is job number one. If you have never utilized financial forecasting tools, now is the time to do so. Your advisor has specialized software that can do this and stress test your revenue stream, but even a simple Excel spreadsheet can help you look at the future in multiple ways. Financial forecasting tools can also allow you to run hypothetical scenarios and make contingency plans for each one, so you can adjust quickly in any new landscape. While you may not be able to predict the future, having an adjustable plan in place can provide peace of mind.

Real estate

Another budget item to consider is your real estate footprint. Are you leasing or do you own your commercial space? Does it make sense to sublease your space or possibly downsize your space?

Now is a good time to look ahead and consider the space you absolutely need for your staff and everyday operations, and think about other options if you have extra space. Some ideas could include inviting a partner, client or even a vendor you closely work with to share space – and the cost – or opening up part of your space for coworking, where solo entrepreneurs safely share office space and common functions. Reach out to your network and you may also find other small businesses who are figuring out creative ways to reduce monthly real estate costs.

Emergency funds

Finally, shoring up emergency funds is a must-do for all small businesses during the pandemic. Ensuring three to six months of continued operations in the face of another shutdown is a good goal. Check out your insurance options with your advisor and make sure any disruption insurance is up to par. Get a clear picture of exactly what your current insurance will cover and what you’ll need to file claims. Do you need to allocate funds to bolster your current insurance coverage? Consider all the options.

Keeping focused on your long-term goals and preparing as best you can to weather unexpected scenarios could add longevity and sustainability to your business vision.

Next steps

Three ways you can take action to plan ahead for business disruptions:

  • Check your insurance coverage.
  • Talk to your advisor about long-term planning for your business.
  • Consider creative real estate options to reduce your monthly costs.

Sources: dailyherald.com; bizjournals.com; forbes.com; bench.co

Social Security Increases Benefits by 1.3% for 2021

RETIREMENT AND LONGEVITY October 13, 2020

More than 64 million Americans will see the increase in their payments beginning in January.

The Social Security Administration has announced a cost of living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income (SSI) benefits. More than 64 million Americans will see the 1.3% increase in their payments beginning in January of 2021.

The increase – slightly lower than last year’s 1.6% adjustment – is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers and was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation.

According to the Social Security Administration, on average, retired workers currently collect $1,523 per month in Social Security payments, or roughly $18,276 per year. The 1.6% COLA will add about $20 per month to those payments, or $240 for the year.

Keep in mind, all federal benefits must be direct deposited. So if you haven’t already started receiving benefits, you need to establish electronic transfers to your bank or financial institution. Contact your financial advisor for more information.

Source: Social Security Administration

Could You Thrive in a Niche Retirement Community?

RETIREMENT AND LONGEVITY September 28, 2020

Things to consider – and learn – before joining a community with like-minded retirees.

Not long ago, most planned retirement communities revolved around a golf course, a few tennis courts and an Olympic pool thrown in for good measure. But today, there are many choices available. That’s because baby boomers are choosing to enjoy their lifestyles and pursue their passions in retirement, rather than settle for “traditional” retirement living.

If you think about it, we gravitate toward those with similar interests, values and lifestyles. Simply put, it can be fun to be around like-minded people. It can also make it easier to form important relationships as we age.

First things first

Begin your search for the perfect niche retirement community with a frank discussion of what you desire in retirement. What medical support do you need? Do you enjoy physical activities or those that are more cerebral? What about RV storage if you enjoy road trips? Once you and your spouse or partner identify your retirement desires, you can pinpoint a community that will fulfill them.

Also consider the fact that a niche retirement community may be limited in the diversity of activities offered. If you are the kind of person who thrives in a changing environment, you may consider another option or find a niche that caters to your need for variety. Otherwise, if you are invigorated at the thought of grabbing your paintbrush, palette and easel, an artists’ enclave may be just the thing for you.

Next, it’s time to think about a budget. Will you rent or buy? In some cases, there are entrance fees – such as those at university-based retirement communities (UBRC) – and subsequent monthly fees to cover medical care, meals and other amenities. To create your budget, set up time with your advisor. He or she will be happy to help guide you through this process.

Now the fun part

Choosing a niche retirement community should be as fun as it sounds. First and foremost, visit the community. Talk to people who live there and read reviews. Remember, information is your ally.

According to aplaceformom.com, residents of the most successful niche retirement communities engage over shared interests/traits, like astronomy, heritage, equestrian, fitness, golf, RVs, learning or cultural experiences.

Or retirement from like professions, industries or services such as the post office, military or the arts.

Notable examples

The Burbank Senior Artists Colony in California, welcomes professional and aspiring actors, artists, musicians and other creative types, as well as retired professionals. There’s a 40-seat performance theater, artist studios and classrooms, a library, galleries as well as healthcare services.

Under the dark, rural Florida skies, you’ll find the Chiefland Astronomy Village. Because the village’s skies aren’t affected by light pollution, stargazers flock to the community.

At Fox Hill Club in Bethesda, Maryland, retirees enjoy wellness offerings for the mind, body and spirit. There’s a gym, a full-service spa, three health-conscious gourmet restaurants, an organic herb garden, indoor golf range, outdoor walking trails, swimming pool with electronic lifts, and physical therapy.

For letter carriers, there’s Nalcrest, a letter carriers’ retirement community, about 70 miles east of Tampa, Florida. It offers 500 garden-style apartments and all residents must be 55 and older.

Horse-minded retirees can find their niche at The Ridge at Chukker Creek, Aiken, South Carolina. This community offers sweeping views of horse pastures, a spring-fed pond, and a nature preserve with riding trails. Residents live in single-family homes; horses reside in the community’s shared barns.

A rising senior class

The fastest growing niche is the university-based retirement community (UBRC). Besides obvious learning and classroom benefits, UBRCs usually offer healthcare services as part of the housing component. Residents may also have access to campus fitness centers and athletic events.

Similar in name only, it would be difficult to find two UBRCs that are alike. But senior housing expert Andrew Carle gives five criteria that, from the perspective of residents, the university and the housing provider, contribute to a successful UBRC:

  • Proximity to the campus itself.
  • Formalized programming between the university and the community, encouraging intergenerational diversity and a range of activities.
  • Senior housing services offering a continuum of care, from independent to assisted living.
  • At least 10% of the community being alumni, former faculty, or former employees of the university.
  • Sound financial planning, with a documented financial relationship between the senior housing provider and university.

Give it some thought

For most, planning where to live in retirement can be overwhelming. The good news: there are resources to help. Seniorliving.org, for example, is a veritable goldmine of retirement information and provides tools to help you evaluate and understand the many types of senior living opportunities available.

Answering Four Common Questions About COVID-19 and 529 Plans

FAMILY AND LIFE EVENTSSeptember 29, 2020

Learn how virtual classes, gap years, K-12 expenses and refunds may impact your education savings.

The COVID-19 outbreak has upended normal life across the world, and higher education has been no exception. As more college students respond to the pandemic by taking a gap year (i.e., a year-long break from school) or opting for reduced course loads, you may be wondering what these and other changes could mean for your 529 plan. Fortunately, we’ve got answers.

My college student is enrolled in virtual classes this semester. What expenses are covered under my 529 plan?

Higher education expenses that would normally be covered under a 529 plan also apply to virtual classes. These expenses include tuition, books, school supplies, fees, computer equipment and peripherals. Room and board will also be covered if your student is enrolled at least half time. To explore estimated expenses for an academic year, visit the respective college or university’s cost of attendance page.

If my college student takes a gap year or enrolls in fewer classes this semester, how would it affect my education savings?

Since 529 plans do not have an expiration date, your funds will be ready when you need them. This means you can resume distributions as you normally would once your student returns to school. If your student has opted for a reduced course load, then tuition, supplies and fees will all be covered by your 529 plan. However, they will need to be enrolled at least half time for room and board to qualify under your plan. If you have any questions regarding your student’s level of enrollment (partial, half time or full time), contact their educational institution.

I have a K-12 student. Can I use my 529 plan to purchase a computer? What about tutoring services?

The K-12 provision in 529 plans applies exclusively to tuition expenses. You may use up to $10,000 each year to cover these costs. While K-12 distributions are considered a qualified expense under federal law, not every state treats K-12 distributions in the same manner. To determine how your state treats K-12 distributions, consult with a local tax professional.

I received a refund from my student’s school. What are my options?

You have several options when it comes to managing amounts refunded by the school. The first is to use the refunded amount toward other qualified education expenses that same calendar year. This will ensure that your 1099 matches the incurred expenses. The second option is to re-contribute the refunded amounts back into the 529 plan within 60 days of the day the school issued the check. This contribution will be counted as a current year contribution. Just remember to safely store documentation of the refund and re-contribution for your records.

Earnings in 529 plans are not subject to federal tax and in most cases state tax, as long as you use withdrawals for eligible education expenses. However, if you withdraw money from a 529 plan and do not use it on an eligible education expense, you generally will be subject to income tax and an additional 10% federal tax penalty on earnings. Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk, and may lose value.

Mark Your Autumn Calendar With These Planning To-Do’s

RETIREMENT AND LONGEVITY September 16, 2020

Important dates and timely planning tips for October, November and December.

Fall/Winter 2020 market closures

  • Thursday, November 26: Thanksgiving Day
  • Friday, December 25: Christmas Day

Dates to remember

  • Thursday, October 1: Last day to establish a SIMPLE IRA plan or a Safe Harbor 401(k) to be effective for 2020.
  • Thursday, October 15: Open enrollment for Medicare Parts C and D begins. Make any changes to your coverage by December 7.
  • Thursday, October 15: The final day to file a 2019 income tax return for those issued an extension.
  • Thursday, December 31: New Year’s Eve is the year-end charitable gift deadline for check and wire transfers.

Things to do

Confirm cost of living: Next year’s Social Security adjustment is typically announced in October.

Gear up for open enrollment: Prepare your documents for Medicare open enrollment, if eligible. If you’re working and your employer offers benefits, take the time to understand them.

Head to the polls: The 2020 presidential election is set for November 3, so mark your calendar and cast your vote. Studies show voting can help you feel more connected to your community, plus taking action can help alleviate feelings of uncertainty.

Be a savvy donor: As deadlines for year-end gift and charitable contributions approach, make a strategy for your philanthropic goals. Consult with your advisor if you’re interested in bunching, which means donating a few years’ worth of contributions in one year, usually to a donor advised fund, to help you meet the threshold for itemizing on your tax returns.

Steer clear of fraud: Start by tracking and reviewing all of your bank and credit card statements for irregular activity. You can also request a copy of your consumer credit profile and stay on the lookout for scams asking you to confirm or update your account information via email.

Tune up your plan: It’s important to monitor your retirement and investment accounts regularly and make adjustments to insurance and estate plans as needed. The holidays can be a good time to do this if you want to discuss what you’re planning with close friends or relatives.

Size up your portfolio: If you’re invested in mutual funds, don’t forget about capital gains distributions dates that typically fall in December. Consider balancing your realized capital gains with losses where appropriate. Talk to your advisor about whether this strategy might help lower your tax liability.

Reflect on resolutions: Before beginning your New Year’s celebrations, review the financial planning you did for the past year. Did you meet your goals?

Withdrawals from tax-deferred accounts may be subject to income taxes, and prior to age 59½ a 10% federal penalty tax may apply. Raymond James financial advisors do not render legal or tax advice. Please consult a qualified professional regarding legal or tax advice.

ESG Criteria and the Election: Emissions, Diversity and More

MARKETS AND INVESTING September 16, 2020

What do President Trump and Democratic nominee Joe Biden’s election platforms include in relation to environmental, social and governance (ESG) issues?

Below, Washington Policy Analyst Ed Mills and Institutional Equity Strategist Tavis McCourt, CFA, discuss what the 2020 U.S. election results could mean for ESG-related policies and company ratings. To learn more about sustainable investing and how a customized strategy can fit your financial and personal goals, reach out to your financial advisor.

Carbon emissions standards

The net-zero carbon goals set forth in the Green New Deal and modified for Biden’s platform (goal deadline of 2030 in the Green New Deal, 2050 under Biden platform) would make it easier to track and compare CO2 emissions. Such regulations could impact some companies’ ESG ratings. While many ESG investors may currently focus on companies’ level-one carbon footprint, carbon reduction regulations could call for specific disclosures around three levels of carbon output: product, manufacturing and supply chain. Companies with large manufacturing footprints or outsourced supply chains would likely see the most impact to their ESG scores or profiles.

The implementation of these net-zero policies would likely require a Democrat sweep and a vote to eliminate the Senate filibuster.

COVID-19 response

Recent ESG ratings have been materially adjusted due to companies’ perceived responses to COVID, which may have included expanding health benefits and days off, allowing work from home where applicable, providing personal protective equipment to essential employees, and balancing return-to-work plans with employees’ childcare needs. If a Biden administration and Congress addressed these issues in an infrastructure bill, it could remove the negative pressure on ESG ratings for companies that have not responded as well or adequately disclosed what their response entailed.

Manufacturing

The Biden platform includes several policy proposals titled “Made In All Of America By All Of America’s Workers” that are aimed at fueling an economic recovery for working families. These policies would likely be included in any economic recovery bills passed early next year in the event of a Democratic sweep. Overseas supply chains in areas of cheap labor or weak labor laws hurt ESG scores, so for companies forced to bring some of their manufacturing footprint – or at least part of their supply chains – back to the U.S., their ESG scores could improve even if margins are lower. Republican initiatives to bring manufacturing back to the U.S. could have the same effect.

Racial and gender equality

Any pay gap legislation or programs around childcare, education or fair housing that would improve diversity in the workforce would benefit companies that have been negatively impacted by ESG investors or ratings firms for poor support of those programs. The government taking over some of those initiatives would level the playing field a bit across corporations. These proposals are tenets of several policy ideas from the Biden platform, woven throughout the Build Back Better campaign.

Sustainable energy and clean tech investments

These policies seem clear, and the involved companies should see increased revenue from the projects as well as improved ESG profiles themselves, even if already viewed positively.

Healthcare public option

Given the proposal from the Biden campaign, a public option on the healthcare exchanges may be a policy focus if Democrats control the House, Senate and White House and if the Senate filibuster is eliminated. It may not become law as proposed, however. If passed, the public option could materially impact healthcare companies if corporations are legally permitted to and decide to transition their employees to the public option rather than provide it themselves. Right now, strong benefits packages – especially insurance coverage – positively boost ESG profiles and attract employees, but the public option could be established in a way to allow corporations to not offer coverage, and therefore not be subjected to the same ESG hit or negative press they would otherwise take.

Pharmaceutical policy

Stricter regulations around drug pricing and the over-prescription or over-marketing of opioids could impact ESG investors. Some proposals to increase transparency could provide ratings agencies a better view of the poor performers in that area.

Policies are being proposed by both parties, but the Trump administration has yet to implement substantive changes. The Biden administration may result in more concrete progress forward. Major action requires legislative changes, and Congressional action is more likely in the event of a Democratic sweep and elimination of the filibuster. It remain questionable whether a Republican-controlled Senate would support bipartisan action, especially if the pharmaceutical industry invests heavily to help Republicans maintain their majority.

Corporate taxes

Known as the fair minimum tax rate, the U.N. Principles for Responsible Investment view paying “fair tax rates” as a top tenet of their ESG guidelines. If U.S. companies suddenly have to pay increased taxes to at least the 15% minimum tax rate, companies that have managed their taxes below that rate may see a benefit to their ESG scores. The Biden platform is calling for some corporate tax rates to revert to a middle ground between where they are now and pre-Trump tax cut levels (the average being mentioned is 28%). Raising taxes is always difficult without a single party sweep, and even a Democrat sweep may need the filibuster eliminated to pass a minimum corporate tax rate.

China trade policy

There is a push from the Republicans to de-list Chinese equities due to human rights issues, support Hong Kong/Taiwan independence and, generally, pursue more direct action around the relationship with China. Regardless of the results of the November election, trade policy with China will likely be renegotiated – it’s a very bipartisan issue – but the Trump administration seems to be more focused on de-listing Chinese companies from U.S. exchanges.

Department of Labor

The U.S. Department of Labor (DOL) is proposing a rule that would make it more difficult for ESG funds to be used in retirement plans. The DOL is also working on a rule that would make proxy access for investors more difficult. As both of these rules are being proposed under the current Trump administration, they may be more likely to come into fruition under another Trump victory. A change in proxy access for investors could dramatically impact the influence that activist investors, such as the Climate Action 100+, have on companies in terms of ESG propositions.

Universal broadband and net neutrality

One of the tenets of Biden’s Build Back Better campaign is universal broadband in the U.S. While this issue has been brought up in past administrations, the COVID pandemic and resulting work- and school-from-home situation has brought this issue to the forefront. While the Trump administration has not outright opposed universal broadband, we believe it would not be a policy they’d push if reelected.

A Biden administration would likely fold this into an infrastructure spending bill for the economic recovery, and we’d also expect them to push to restore net neutrality. For the last few years, even before COVID, telecom companies that came out in favor of or that were working to build universal broadband and net neutrality saw benefits to their ESG profiles. However, if these issues were to be federally instituted, that ESG boost for vocal supporters would likely dwindle. On the other hand, companies that were actively involved in building the new universal broadband network would likely see a strong boost in ESG ratings/profiles.

Utilizing an ESG investment strategy may result in investment returns that may be lower or higher than if decisions were based solely on investment considerations. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Sustainable/Socially Responsible Investing (SRI) considers qualitative environmental, social, and corporate governance, also known as ESG criteria, which may be subjective in nature. There are additional risks associated with Sustainable/Socially Responsible Investing (SRI), including limited diversification and the potential for increased volatility. There is no guarantee that SRI products or strategies will produce returns similar to traditional investments. Because SRI criteria exclude certain securities/products for non-financial reasons, investors may forgo some market opportunities available to those who do not use these criteria. Investors should consult their investment professional prior to making an investment decision. All expressions of opinion reflect the judgment of the author and are subject to change. This information should not be construed as a recommendation. The foregoing content is subject to change at any time without notice. Content provided herein is for informational purposes only. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results.

Correcting Your Retirement Course

RETIREMENT AND LONGEVITY

March 25, 2020

Sailing towards the horizon

You’ve got options if your best-laid income plans veer off track.

You saved decisively and proactively, invested prudently and accumulated a nest egg you’re proud of. Now, you’re ready to enjoy a retirement filled with freedom, new experiences and fond memories. But even the best-laid plans can go awry.

Consider these common blind spots related to retirement savings withdrawals.

Blind spot: Framework lacking finesse

Creating a sound retirement withdrawal strategy is no easy feat. It requires structuring your income streams to cover the expected costs of housing, food, healthcare, entertainment, transportation and more for an unknown period of time, often two to three decades.

Unfortunately, many new retirees find they spend more than their withdrawal strategy allows; others realize later that their plan doesn’t use the full power of their various income streams.

The fix

Coordinate with your financial and tax advisors to structure your retirement income in a way that maximizes expected cash flow while minimizing taxes. And if overspending is the main reason your withdrawal strategy is off course, consider drafting a spending policy statement (SPS) with the help of your advisor.

Similar to an investment policy statement, an SPS documents your long-term spending goals. It serves as a reminder to avoid actions that could throw off your future plans. By putting these intentions in writing and revisiting them regularly with your advisor, you’ll be better able to manage spending expectations and evaluate your options when new situations arise.

Blind spot: Ignoring the small stuff

Overspending, particularly on discretionary items, can slowly chip away at your savings and eventually disrupt your long-term projections.

The fix

One option is to curtail your costs – perhaps with the help of an SPS, described above. Cutting back doesn’t have to be painful. It could mean forgoing your daily latte in favor of homebrew or hosting potlucks instead of dinner parties. A little discipline can help you bring your spending back in line with your plan.

Blind spot: Being too consistent

Many retirees craft their retirement strategy around withdrawing a percentage of their total portfolio each year, increasing that amount to account for inflation. Under this formula, a $1 million portfolio and 4% withdrawal rate would provide pretax income of $40,000 in year one and, assuming inflation runs 3% annually, $41,200 in year two, $42,436 in year three and upward from there.* However, if your retirement assets decline in value over several years while the amount you withdraw is rising, there could be monetary trouble later on.

The fix

Help to avoid this issue by working with your advisor annually to set a fixed withdrawal percentage based on the year-end value of your portfolio. This tactic causes some years to be flush while others are leaner, but you’ll have the confidence of knowing you’re not negatively affecting future plans with today’s spending.

Alternately, you and your advisor can consider establishing a “floor” – an amount that covers your basic needs and can be withdrawn in any market environment – enabling discretionary spending to be adjusted based on your portfolio’s performance.

Blind spot: Fuzzy on tax efficiency

Retirees often underestimate the effect an inefficient withdrawal plan has on what they pay in taxes. Many even avoid withdrawing from tax-favored retirement accounts for as long as possible, seeing 72 as the earliest they’ll want to draw from traditional IRAs and 401(k)s to avoid paying the ensuing income tax bill. Unfortunately, by that time, the balances in those accounts may be large enough that your required minimum distributions may push you into the next highest tax bracket.

The fix

Since withdrawing from retirement accounts can begin as early as 59½ without penalty – and sometimes earlier under special rules – consider withdrawal strategies with your advisor and tax professional that could keep you from paying higher tax rates on your income in the future.

Establishing multiple sources of retirement income also gives you the option of withdrawing the money as tax-efficiently as possible, especially helpful when an unexpected expense crops up.

Blind spot: Forgetting the longevity factor

Thanks to advances in medicine, better understanding of diet and ever-evolving technology, we’re living longer than generations before us. While that’s a good thing, planning fastidiously for potential long-term care needs is an often overlooked aspect of a comprehensive retirement withdrawal strategy. Consider this: the 2019 Genworth Cost of Care Survey cited the national median cost of a private nursing home room as $8,516 per month, and currently, some care costs are rising at nearly double the rate of U.S. inflation.

Your retirement as a whole could be affected if you, like so many, find you require increased or specialized care as you age and your plan can’t accommodate the added expense.

The fix

Rein in the unknown by creating a specific funding plan with your advisor. Consider long-term care funding options such as traditional long-term care insurance or life insurance with long-term care payout riders, as well as asset-based long-term care contracts. Keep in mind that you should be planning for long-term care years before you’ll ever need it. If you wait past your 40s and 50s, affordable policies may no longer be an option for you. Now is also a good time to bolster your emergency fund, so you’ll be best prepared for whatever the future holds.

Though modern retirement has a lot of moving parts, proper planning and a willingness to make course corrections can create a retirement defined by independence and new beginnings.

*This is a hypothetical example for illustration purposes only and does not represent an actual investment.

Sources: genworth.com; marketwatch.com; fool.com; money.usnews.com; kiplinger.com

Investing involves risk, and you may incur a profit or loss regardless of strategy selected. Raymond James financial advisors do not render advice on tax matters. You should discuss any tax matters with the appropriate professional. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance, and time horizon before making any investment or withdrawal decision. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. Guarantees are based on the claims-paying ability of the insurance company.

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Student Loan Payments Suspended for Six Months

FAMILY AND LIFE EVENTS

March 31, 2020

As part of the coronavirus relief package, student borrowers will receive a six-month reprieve from loan payments.

The Coronavirus Aid, Relief, and Economic Security Act, known as the CARES Act, was passed into law on March 27, 2020. The CARES Act has numerous provisions aimed at providing relief to businesses and individuals affected by the coronavirus outbreak – including student borrowers.

Many working Americans are still paying off their student loans (with an average balance of over $35,000, according to Experian) and are facing economic hardships due to the coronavirus outbreak. As a result, the CARES Act includes the following provisions:

  • Suspended loan payments. Payments on federal student loans are suspended for six months until September 30.
  • No interest. Interest will not accrue on a suspended loan for the duration of the suspension.
  • No impact on loan forgiveness programs. Suspended payments will be considered as complete payment for federal student loan forgiveness programs.
  • Tax benefit for employer assistance. Student loan repayment assistance payments made by employers will be tax-free up to $5,250 per employee.
  • Suspended wage garnishment. Wage garnishment – when an employer is required to send a portion of your earnings straight to the lender – is suspended. Wages garnished for student loan repayments since March 13, 2020, will be repaid to impacted individuals.

Note that private student loans and federal loans held outside of the Department of Education will not receive relief from the CARES Act. Another important caveat? These provisions have no impact on any automatic payments you may have in place, so should you wish to take advantage of the suspension, you’ll need to take action to pause them.

While the suspension of payments doesn’t provide the same amount of relief as outright forgiveness, it allows borrowers to focus their financial resources on other expenses such as food, housing or high-interest debt. Remember, student loan interest won’t accrue and federal student loan forgiveness programs won’t be impacted during the suspension period, so student borrowers will pick up right where they left off.

Please reach out to your financial advisor or tax professional with any related questions.