Next is the interest note which pays a higher return (estimate between 8-11%). If an underlying index falls to below 70% of its initial level, that investment falls to that level also. (That happens about 8% of the time going back to 1988) It continues to pay the interest and the ultimate value of the note is determined by that index’s value at the end of the term when added to the interest paid. For example if a note paying 10% is triggered because the underlying index fell to 70% of its initial value, but climbed back to 90% of that value by the end of the term, the investor would break even.

Growth notes are generally for slightly longer periods (18 mo-2yrs) and link the investor’s funds to an index like the Nasdaq.

A multiple to the ultimate value at the end of the term is usually applied…. possibly 150%. It often includes a buffer….15% so that in the event of a decline in the index over the term the investor is protected to that level.

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Personal care for those who can no longer care for themselves takes on very different forms. The location of the care and the extent of the care provided dictate costs varying from $ 5,000 to $ 10,000 per month. Home health care is between $ 25 and $ 40 per hour and usually includes a four-hour minimum. Moderate-cost assisted living facilities are becoming more common in residential communities in formerly private homes. I know of some for about $ 6,000 per month. I’m not recommending the purchase of Long Term Care Insurance, just pointing out that the likelihood of needing care is very high and it needs to be incorporated into everyone’s retirement plan, i.e. how would I pay for my or my spouse’s care? For those who can qualify, life insurance can advance the death benefit for those who become chronically ill.

Stock market volatility is a concern to those near retirement and an even greater concern to people who are retired. Holding a higher percentage of bonds in a portfolio is a common strategy as people become more risk-averse. Diversification is not as easy as it sounds. I have seen statements of retirees’ investment accounts that held multiple mutual funds. Upon careful examination, many of the mutual funds had redundancies, i.e. each owned Microsoft, Apple, and Google. It’s not that these are poor stocks to own, just that if you have several mutual funds and each owns similar stocks, you’re not really diversified. Better choices could include different funds geared toward value stocks, dividend-paying stocks, and growth stocks. With investment management different in each, duplication would be less likely. Some investments offer buffering which provides downside protection in exchange for upside caps. Index annuities offer an alternative to the market. They have less liquidity but since retirement funds are meant to last for years, the advantages far outweigh the drawbacks. Also with bond interest rates at a near all-time high, the performance of index annuities can compete with stock market returns.

Although some have made significant returns in cryptocurrency, it is much too volatile. It makes investing in the stock market seem like putting money in a savings account.
Precious metals are a good long-term hedge against inflation. I say long-term because there are commissions to purchase gold and silver and commissions when you sell them, so short-term investments in precious metals may not be wise.

It goes without saying that everyone, retired or not, should have savings for emergencies. Right now banks and many other financial institutions are offering CDs and money market accounts with interest in excess of five percent. Shop around….many of the CDs have NO penalties.

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I find that how people spend their time in retirement is extremely interesting. My guests share their experiences, which you won’t find in a Kiplinger Report or Money Magazine.

One retired member of our church has spent part of the last twenty years assisting extremely poor children with their school in Mexico. That is in addition to doing a well-researched weekly bible study and assisting his wife who cares for her 97 year old mother who lives with them.

Another friend I know has a brother who suffered a severe stroke over 20 years ago.  My friend was told his brother would have to be institutionalized.  He has been taking care of his brother who has no bladder or bowel control, for that entire time. He just recently retired from administrative work for his church which has taken up most of his time in recent years.

Financially I speak about the importance of having a plan and how that plan must be flexible and allow for unforeseen events.  I describe ways to make the best use of our resources during these times of inflation. For younger people, I talk about compound interest and the importance of beginning to save for future goals, including retirement, at an early age.

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Critics of the law say that it has not gone far enough in helping more Americans achieve a secure retirement. Presently only 50% of American workers are covered under a retirement plan.

Changes in Social Security and Medicare were not part of the law. Neither are in a solid financial position and changes will be necessary in the future to keep them solvent.

In March of this year, the House of Representatives passed the Secure Act 2.0. It is in the Senate where a few revisions may be made. It will likely pass. Only 5 in the House voted against it. It contains many changes including matching contributions from employers to pay down their employees’ student loans. Average student loan payments are $400/month.

For older Americans, the catch-up provision that now allows workers over 50 to pay $6,500 into their 401(k) has been increased to $10,000.

the bill will create a “Lost-and-Found” within the Department of Labor that will enable workers to find their lost retirement plans. Presently, there are 24 million retirement accounts that are represented, amounting to over $1.35 trillion in assets.

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As a retired person you may drive very little. If so, the increased cost of fuel will be less significant than if you are still working and have a long commute. Unless you drive over 25,000 miles per year, I wouldn’t replace a reliable older vehicle with a hybrid or electric car. The cost of a new vehicle includes sales tax, registration higher insurance rates, and likely up-charge over the sticker price. It would take many years of saving at the pump to re-coup the acquisition costs of a new vehicle purchase.

Everyone’s food preferences differ. If you spend a lot at the grocery store, consider shopping at one of the big box stores and possibly invest in one of those devices that seals leftovers securely for freezer storage….and importantly, track what you spend and compare that with the cost of those items one year ago.

For a personalized financial consultation, please contact Al Smith at 303-744-1128 or schedule online.

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• Social Security
• Retirement
• Financial Wellness
• College Planning
• Investing
• Tax Planning
• Insurance Planning
• Human Resources Continued Education Requirements
• Fraud Prevention and Awareness in a Digital World

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That was a very brief example of how the planning process might work. If any of you have done a major home improvement or landscaping project, you are aware that the hurdles, glitches, and other difficulties can be almost nightmarish…..but they can be prepared for. I am close to someone personally who did one of these projects…. someone she trusted had to be there daily to oversee the work until its completion months later.

With retirement, no one has ever been accused of beginning the planning process too early. Have you ever heard of anyone who was criticized for saving TOO much for retirement or starting at too early an age? As I’ve spoken about often on my radio show, only three things will determine how large your nest egg will be as you leave work and enter a new phase in your life.

1. How much you set aside every week or month

2. The long term return on those funds you save

3. The age at which you begin to set those funds aside

Of those variables, the most significant is AGE…..it is also the one over which you have no control. The advice then is obviously if you have not yet started to save for retirement, begin now. If you are very young you may be able to save only $100 per month. Of course, you can increase that and what’s interesting is that if someone waits till the age of forty, they would need to set aside over $ 700 per month to match the nest egg of some who starts in their early 20s.

Other things in your control include the age at which you retire.

In the absence of adverse health, the age at which you retire can be extended well beyond the traditional age of 65. Other factors include asking, “Do I enjoy my work? Is my spouse retired? How would I spend my time when I do retire?”

These are questions that go far beyond the obvious one, “Do I have enough resources to live on if I retire?”

Other factors under your control include how much you save over time. Some people I’ve met have high incomes and work for companies with attractive retirement plans that permit healthy contributions by their employees. If there is disposable personal income after maxing out company retirement plans, it would be wise to maintain a personal savings/investment portfolio.

Some things outside your control include personal health, continuation of employment, inflation, or a market downturn.

Although outside your control, steps can be taken to make these circumstances less painful. I know of a family where the primary breadwinner was out of work for over one year. Because they had no debt outside of a small mortgage, considerable savings, and a good income from the other working spouse, they were able to weather this financial storm and continue tithing to their church. The primary breadwinner is now working in the same lucrative field he was before becoming unemployed.

My many years of working with retired people have taught me that the happiest ones are those who found their purpose in retirement…often spending their time helping others.

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If you own a small business and are having a prosperous year, consider purchasing a new business vehicle, equipment, or other capital expenditure. Check with your accountant to make certain of deductibility.

Before converting from a traditional IRA to Roth, look over your year-to-date income to see how much you can convert and still remain in the same tax bracket. This must be done by Dec. 31st.

If you are considering making a contribution to a traditional IRA or Roth, you have until you file your taxes in 2022 to make that contribution. Be sure to indicate the year you want it to be credited.

If you are over 72 you will have to withdraw your required minimum distribution from your IRA. If you have more than one IRA, it doesn’t matter where the total comes from, as long as it meets the required percentage. Failure to withdraw your RMD triggers a 50% penalty.

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Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and Golden Eagle Financial, Ltd. are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.

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