Planning Your Future Well-Being
The briskness of Autumn is in the air. It is a time of change as the leaves from the trees are turning beautiful shades of gold, orange and red. Summer activities may be replaced with watching or playing Football and attending Pumpkin Festivals. Farmers markets begin to shift to Fall harvested vegetables such as squash, potatoes, brussels sprouts, and cabbage.
October is a good month to sit back and take a breath. It falls between the rush of a new school year and the start of the busy holiday season. It is a good time to rotate your wardrobe for the winter and review your finances in advance of the holidays.
So, don your favorite cooler weather clothing, grab a cup of Pumpkin Spice coffee or tea, and spend a moment looking over the items below. There may be some valuable ideas you hadn't considered in the past that will prove to be beneficial to your future financial well-being
Ten Financial Freedom Tips for October
1. Are you thinking about prepaying your mortgage? Consider the poor families and businesses in the Panhandle when Hurricane Michael hit. For many of the inhabitants their largest asset was the equity in their house. It is estimated the losses are in the billions, and much of it was uninsured or underinsured. Is it possible that could have been blown away or seriously reduced by this unfortunate unexpected event? It is about cash flow when disaster hits.
2. Always - Always - Always
- Always get a line of credit on your house when you don't need it and no natural disasters are pending. The financial institution probably will not extend a line of credit when you need it, or if a looming storm or fire is pending.
- Always remember it is as important to manage your liabilities as it is to manage your assets.
- Always know prepaying your mortgage in a lump sum each month does not lower your monthly mortgage payment. Prepaying the mortgage benefits the lender not the borrower.
- Always keep in mind the market and an individual buyer determines the value of your house. Your mortgage, or lack of it, has nothing to do with its value. Your house does not increase faster as a result of not having a mortgage on it.
3. Do you own high-yield bonds? This might be a good time for a review of your bond holdings. The Kiplinger Letter of September 13th says that “defaults are starting to creep-up.” The default rates for junk bonds have hit 2.5% and they estimate that by mid-2020 they will go to 4%.
4. Are you navigating the super-highway when it comes to your retirement? Be sure you get with an advisor that helps you answer the seven most important exit questions!
- Will my money last as long as I do?
- Do I have enough predictable income to handle my essential lifestyle?
- What are the major threats to my money, and what can I do to eliminate or minimize these threats?
- What can I do to improve the efficiency of my money without incurring additional market risk?
- When should I take Social Security?
- What do I need to know about Health Insurance, Medicare, Long -Term Care and Longevity Planning?
- Are my Estate Documents current and reflect my intentions?
5. 2019 is coming to a close. This is a good time to review your estate planning documents. Are your Estate Planning documents in order? It is important we avoid threats with our money. We suggest you work with a competent estate planning attorney to execute at least the following basic estate planning documents:
- Last Will and Testament
- Designation of Health Care Surrogate
- Durable Power of Attorney
- Living Will
- HIPAA - individuals authorized to receive information on your medical care
6. Are you nearing retirement and is Social Security part of your plan for essential income to cover living expenses? A reality, it’s not often that spouses die at the same time. In retirement, when one spouse dies the Social Security income for the survivor is reduced by the amount of the lower benefit. It is important to plan for this event, and the best way to plan for it is permanent life insurance. Remember, the only life insurance that makes any sense is the policy that is in force when you need it the most. Many Americans don't realize that life insurance is just as important in retirement as it is when you are raising your children. The loss of Social Security income is just one example of its importance. Don't leave this earth without it!
7. Life Insurance is not just for the working spouse! One should consider insuring the non-working spouse, especially if young children are involved. There is significant cost and time in raising children that will need to be replaced. Life Insurance helps mitigate that cost. The surviving spouse could also lose the retirement Social Security benefit of the non-working spouse.
8. Investing and Saving. What are the differences? We find that most people seek rate of return and growth with their money, but that comes with risk. We suggest you consider the safety of your money along with considering investment opportunities.
9. Medicare open enrollment for 2020 is here, and it lasts until December 7th! It can be a maze of confusion. The decision you make may have to last a lifetime. It is important to get it right the first time. Seek an advisor that know that specializes in Medicare. They should be able to guide you in the right direction.
10. What comes to mind when you think of Long-Term Care? Most people respond by thinking of a nursing home. According to One America, over 80% of Long-Term Care is administered in the home. It is important that your long-term care insurance contract is comprehensive. Ask for a specimen contract and be sure to read the exclusions. The policy should contain the following benefits:
- Home Care
- Nursing Home Care
- Assisted Living Care
- Adult Day Care
Sincerely,
Gary Pevey, CLU ChFC