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Money Moxie

How Financially Disastrous Are Natural Disasters?

By | 2017, Money Moxie, Newsletter | No Comments

Since our last Money Moxie®, we have seen two massive hurricanes lash the U.S. coast. In spite of these and other risks, the stock market has continued to add to its 2017 gains. What’s going on? Is the market’s response rational?

Counting on rational behavior —or even reasonable behavior—from investors during a crisis could be costly. So, even if you don’t expect to be directly impacted by a hurricane or other disaster, you may still feel some financial fallout.

Gas Prices: Hurricane Harvey pushed gasoline futures up 10 percent in trading on the New York Mercantile Exchange as investors anticipated refineries would shut down. The increase soon spread. According to AAA, the national average rose from $2.35 to $2.66 a gallon—a 13 percent increase.

Employment: Economic suffering is also evident in employment. Following Hurricane Harvey, the Labor Department reported the largest one-week jump in initial jobless claims since superstorm Sandy. Two weeks after Sandy (2012) and Katrina (2005), jobless claims soared higher by 23 percent and 30 percent, respectively. So, the full impact of Hurricane Irma on this measurement is still coming.

Consumer Spending: Nearly 70 percent of the U.S. economy is driven by stable consumer spending. When gas prices rise nationally and employment falls locally, there is less money for discretionary spending. The city of Houston, for example, has nearly 3 million workers and contributes around $500 billion to the economy. (Internationally, that places Houston’s economic value above that of the entire country of Sweden.)

Destruction and Reconstruction: Destruction is not counted in economic output. It shows up only as falling wealth. Reconstruction, often financed by debt, will eventually have a large impact on growth and cause a bump for inflation.

The overall impact could subtract around one half of a percent from U.S. growth. Fast forward 6 months and there should be a boost that approximately evens things out.

Investors concerned with natural disasters would be wise to maintain perspective. The lasting impact will be evident in the higher debt and human costs. Ultimately, this impact on individual lives is the most devastating.

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Medicare Open Enrollment

By | 2017, Money Moxie, Newsletter | No Comments

Medicare open enrollment is right around the corner. If you are already using a Medigap plan or a Medicare Advantage plan, now is your time to move if you want to change your carrier.When is the open enrollment period?
October 15th through December 7th of every year.

Who needs to pay attention?
Those using a Medigap plan, Medicare Advantage plan, prescription drug plan, or if during your initial enrollment period you opted not to purchase additional coverage above traditional Medicare parts A & B.

What is traditional Medicare?
Traditional Medicare is composed of three parts: A, B, and D. Part A is coverage for hospitals and doesn’t have monthly premiums. Part B is coverage for doctor visits, etc. and the base cost is $134 per month for most people. This typically comes out of your monthly Social Security check. Part D is prescription drug coverage purchased from a third party.

What is the difference between a Medigap and Medicare Advantage plan? Medigap is an additional insurance that complements traditional Medicare. It covers most of the “gaps” or holes that are not covered by parts A & B. You can go to any doctor that accepts Medicare.

Medicare Advantage plans combine parts, A, B, D, and Medigap into one nice package. They operate more like traditional insurance where they have a service provider and you are tied to their network.

What else should I know about Medigap? Medigap plans are lettered from A to N with costs that vary depending on the benefits provided. The most popular plan is F as it is the most comprehensive and covers things like the Part B deductible and foreign travel emergencies. Because it is the most comprehensive, it is usually the most costly. However, by rule, any Medigap plan has the same benefits regardless of the service provider, even though the costs can vary significantly.

The only differentiator between companies is the level of service. Price then is a driving factor, but you should use a provider that is reputable. People that have comprehensive Medigap plans may pay more on a monthly basis, but typically don’t have to pay very much out of pocket. If your health is ok to poor and you see a doctor regularly, then this may be a good option for you.

What else should I know about Medicare Advantage plans? Medicare Advantage plans, also called Part C, will often cost less than Medigap plans. They will typically have deductibles and co-insurance like traditional insurance through an employer. They work by Medicare giving an insurance provider a certain amount per year to manage your expenses. If the insurance provider manages your expenses for less, then they make money. Because of that, monthly costs vary significantly with some plans as low as $0 per month.

People that use Medicare Advantage plans usually pay less on a monthly basis, but typically have more out of pocket expenses. If you are in good health and don’t regularly see a doctor, then this may be a good option for you.

What are some small facts that have big impacts? When you originally sign up for Medicare, you can choose either Medigap or Medicare Advantage without being denied. If you are on a Medicare Advantage plan and then try to go back to a Medigap plan, you could be denied based on health. You will never be denied access to a Medicare Advantage plan.

Are there any differences between prescription drug providers? Yes, costs can vary significantly. Shop around to find the best deal for your specific medication regimen. You can also go to Medicare.gov, enter the prescriptions you take, and it will screen for the best providers. To get there, visit Medicare.gov and click on Drug Coverage (Part D), then click on Find Health & Drug Plans.

What resources are out there to help me research my options? The website www.medicare.gov has a plethora of information. You can use it to sign up for Medicare or any of its parts A, B, C, or D. You can also find contact information for Medigap providers. If you would like to speak to a person you can call 1-800-Medicare (1-800-633-4227).

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Investing According to Your Goals & Your Time Frames

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In financial planning, goals and investing go hand-in-hand. These are then combined with your personal attitudes towards risk to determine the investments that should be used.

When investing in the market, it is important to understand the associated risks, such as market volatility. This includes level of fluctuation and the amount of time you are willing to endure these ups and downs of the market.

One important consideration is to determine when the assets you are investing will be needed to fund your goal. For example, saving for retirement is a long-term goal, saving for your children’s education is most likely an intermediate-term goal, and saving for a new car would probably be a short-term goal.

Referencing the chart on this page will help you determine the time frame of your goals. If it is zero to three years, it would be best to keep your assets in a conservative location.

If your time frame is 10+ years, choosing to invest aggressively may be the best choice for you. A lot of the decisions also rely on your personal investment risk tolerance.

As your financial advisors, we can help guide you to investments that best match your investment goals, timelines, and objectives.

For instance, if your goal is saving for retirement, a 401(k), 403(b), or Roth IRA may be the best option due to the tax benefits. We can also look at your holdings and determine if they are invested to match your risk tolerance and time frame of when the assets are needed.

If a goal is to save for a down payment on a home in the next five years, an advisor can help you open an account that would be best suited for that goal.

For example, a 401(k) would not be the best option for this situation due to the taxes and 10% penalty for early withdrawal. Plus, in this situation there would be a loss of opportunity for growth on those assets. The best option may be an individual account with transfer on death, or a joint account with rights of survivorship.

We can help you set up appropriate types of accounts for you goals and then help manage the levels of risk. We even look at minimizing tax consequences.

There are a lot of options that come into play when determining how and where to invest. When looking at time frames, you may have to take risk–but take only the appropriate amount. If you’re planning to buy a home in a year and invest your down payment in a very risky stock, the results could be disastrous. You could delay your goals or even destroy a dream.

Use the chart as a guideline to help fund your goals and remember we are always here. Let us help guide you!

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Preparing for Disasters

By | 2017, Executive Message, Money Moxie, Newsletter | No Comments

Watching nature unleash her fury over the last two months has been upsetting. Our hearts go out to those who are reeling from the devastation as they pick up the pieces of their lives.

As each potential disaster becomes a reality, it forces us to focus on our personal situations. We have heard numerous clients and friends – including myself – say they have pulled out their emergency “go” kits and reviewed their plans to make sure everything is in order. These plans often focus on food, water, clothing, and the essentials to maintain life for a short period of time. We want to be ready should we find ourselves in an emergency situation.

But, what if your emergency situation is financial? Your ability to weather a financial crisis may depend on your financial plan. Financial plans are designed to take into account and help you prepare for the many financial situations you may encounter.

Financial disasters can range from how will I pay for the car when it breaks down to how will I pay for care in my aging years when I can no longer stay at home? There are a myriad of situations to consider. Knowing you have a plan in place to address a financial emergency can help you take control should a situation arise.

Good intentions will not help in a financial disaster. Get prepared. If you have not created or reviewed your financial plan, I invite you to do it now! Your financial success is important.

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Millennial Financial Success

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Each generation seems to think the next generation is less prepared and doesn’t appreciate what they have. In reality, each generation is changing and evolving to its surroundings.

Time described generational issues, “The young seem curiously unappreciative of the society that supports them. ‘Don’t trust anyone over 30,’ is one of their rallying cries.”1 Surprisingly, this was printed in 1967.

Millennials–those born between 1981 and 2001–are the generation that will be required to forge financial success without a pension. As investors, they need to redefine their landscape. These are some common Millennial financial mistakes:

1. Not having a proper emergency fund: When you don’t have an emergency fund, every little unexpected event is a catastrophe. Paying with credit cards is easy, but hard to pay off. Avoid this trap by having an emergency fund of three to six months of living expenses readily available.

2. Forgoing the employer retirement match: About 75 percent of millennials are saving in their employer retirement plan; however, only 40 percent take advantage of the full company match.2 Those are free dollars that can help fund a retirement.

3. Holding onto debt: Student loans and car payments seem to hang around for way too long. Most people can afford to pay off debt faster than the minimum payment yet choose not to. Paying off fixed monthly payments frees up money that can work for you, instead of against you. Get aggressive and start to chip away at that debt.

4. Not using a financial advisor: A financial advisor can help you dream with numbers. Between work, social commitments, and family, most millennials don’t have time to focus on their finances. Financial advisors are here to help and work with all ages, incomes, and stages in life. We can create a plan and help you work toward making it a reality.

(1) Time Magazine, 1967
(2) http://www.benefitspro.com/2014/11/17/millennials-arent-meeting-their-match-in-401ks

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Your Future Is Here. Now What?

By | 2017, Money Moxie, Newsletter | No Comments

You’ve worked hard for your future and now it is here. Thirty-six holes, a fishing trip, and a dip in the hot springs–and it’s only Thursday. Now what?

Maybe you have always dreamed of working with 4H or the Boys and Girls Club of America. Perhaps you’ve realized that you need a little bit more income in retirement for the lifestyle you want; or you retired early and want health insurance until Medicare kicks in.

If any of these situations sounds familiar, it might be worth considering an encore career. Some encore careers are part-time roles in similar industries, while others involve finding a new role.

Luckily, there are several resources available for those considering an encore career. The AARP website (www.aarp.org) has a section on encore careers while organizations like encore.org (www.encore.org) aim to create a movement to give back to communities.

There is also another resource that you may be overlooking: SFS. Hopefully, a successful career and your relationship with us has put you on the path to financial freedom.

We can help you develop an income distribution plan using your current assets to subsidize your new, probably reduced income, and to ensure your monthly income is sustainable.

In addition to helping with the transition, we can help you throughout your encore career. We will continue to monitor your financial health and manage income distribution while also providing advice on things like health insurance, Medicare, and Social Security strategies.

Discuss the options for an encore career with us. It can be a great way to continue being involved in your community and it can help with your financial freedom.

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Women in Transition: The Loss of a Spouse

By | 2017, Money Moxie, Newsletter | No Comments

One of the hardest life transitions women face is the loss of a spouse. Whether it is from death or divorce, picking up the pieces and moving forward is challenging – emotionally and financially.  One of the hardest life transitions women face is the loss of a spouse. Whether it is from death or divorce, picking up the pieces and moving forward is challenging – emotionally and financially.

Where there were shared responsibilities, suddenly you are in charge of everything from getting the car fixed to managing the daily budget and long-term financial plan. It can feel quite overwhelming. Not to mention, this transition comes at an incredibly emotional time.

Adjusting to your new conditions will not happen overnight and may actually take several years.  This is a time of profound self-discovery for women, who may find themselves examining issues of identity, life meaning, and aging. Creating a support group – family, friends, and professionals – gives you a pool of people you can use as a sounding board that will keep your “best interest” in mind when providing advice.

While there will be many things to tackle over the next year, here are some important things to do in the short-term:

Locate and organize your important documents and financial records. It is easy to overlook something when you are dealing with emotional stress. Having a system for gathering and organizing financial records can provide some sense of control.

Important financial documents and records are generally the first items to focus on. The bills still need to be paid and the cash flow needs to be managed.

  • Checking and savings accounts statements
  • Investment account statements
  • Retirement plan statements
  • Stock and bond certificates

Legal documents may need to be updated, reviewed, or available for reference. These include:

  • Will
  • Trust
  • Power-of-attorney
  • Medical directive

Other important papers should also be organized so that you can determine if adjustments need to be made, such as updating ownership records or beneficiaries. Some may be required for documentation as you make changes.

  • Social Security statements
  • Insurance policies
  • Marriage, birth, and death certificates
  • Property deeds
  • Ownership titles – vehicles and recreational equipment

Keep in mind that everything does not have to be done immediately. Gathering this information will allow you to set up a system for tracking important details. Keep a notebook or use a computer spreadsheet that you can easily access for account numbers, phone numbers and addresses, who to call for information on accounts, professional contacts, and deadlines to monitor.

After the initial legal and financial matters settle, you will begin adjusting to your new financial circumstances. As you move forward, remember that it may be two steps forward and one step back. Take comfort in knowing you are making the best decisions you can, financially and otherwise, for you and your family.

Remember, you are not alone. Even though you believe you can do it all, reach out to us as your trusted advisors. We can help you navigate this new landscape, avoid some of the pitfalls, give you advice, and be a sounding board as you make important decisions.

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A Confession from a Successful Investment Advisor

By | 2017, Executive Message, Money Moxie, Newsletter | No Comments

Dear Friends and Financial Partners!

That’s quite a headline, “A Confession from a Successful Investment Advisor.” Here’s the confession:

The truth is astonishingly simple, “If we’ve been at all successful, it’s because you, our clients, have been successful. Our success only comes through your success.” Since June 4, 1982, when we became a Registered Investment Advisor, we have always strived to put your best financial interest first.

Over the years, many clients have shared with us how we helped them send their children through college or on missions, retire early, or live comfortably during their declining years. They have told us how our financial planning and investment management have allowed them to maintain lifestyle, travel, and handle life’s major medical expenses.

As a fiduciary, we strive to put ourselves in your shoes, endeavoring to give you the best advice based on our professional financial knowledge. So thank you, thank you for trusting us with your financial concerns and assets.

We are grateful to be your financial and investment advisor. By far the most gratifying—not just satisfying—part of our job is seeing you reach your financial goals throughout your lifetime.

Bullish Best Wishes,

Roger M. Smedley, CFP®
CEO

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Just for Women – Follow Up – Active Living

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Active Living

Julie Roberts, Nurse Practitioner (NP) from the Intermountain LiVE Well Center in Salt Lake City, was a featured presenter at our “Just For Women” Conference held at the Gathering Place at Gardner Village. The ladies from last year’s conference requested her back. It was so great to learn from her again. She spoke on making simple changes that will help us achieve big progress in our healthy living. She focused on the four pillars of health:

1. Sleep Well: Make a sleep schedule. Stop eating two hours before bedtime. No TV, electronics, or reading in bed. Set an alarm to go to bed. Target 7-9 hours each night. This helps manage your mood, weight, and chronic disease.

2. Stress Less: Get to know your stress and learn how to manage it. Use apps like “Insight” or “Calm” to manage your stress. Breathing techniques can help you lower your blood pressure. Start each day with 10 minutes of stillness. Take a mental break and find time to relax each day.

3. Eat Well: The key is to build daily healthy habits and stick with them. Eat a rainbow of color every day. Fill half of your plate with fruits and vegetables. Eat lean meat the size of a deck of cards. Get 25-30 grams of fiber per day. Our snacks should be fruits and vegetables.

4. Move More: Get your heart rate up every day. Your goal should be 150 minutes a week of exercise. If you want to lose 1 pound a week, cut out 250 calories by exercise, and reduce your food intake by 250 calories per day. Do strength training two times a week and daily stretching exercises. Use apps as a tool to track your nutrition like “My Fitness Pal” or “Lose it.’” Use a prompt to help you remember to exercise. Keep it simple so it will work.

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Just for Women – Follow Up – Cybersecurity

By | 2017, Money Moxie | No Comments

The recent outbreak of the “WannaCry” ransomware confirms the responsibility each of us has to protect our personal information. In today’s world we use technology for photos, communication, transactions, and learning. Unfortunately, criminals are getting more sophisticated in their efforts to defraud us.

Stephen Olsen, FBI Special Agent, warned us to be vigilant in the use of electronic devices and gave us many tips to follow:

• Back up your data regularly on another drive. Then unplug the drive. If your backup drive is plugged in then it will be compromised along with your computer.

• Opening an email should be safe. However, links and attachments may not be. Its links may lead you to a nefarious site. Instead of clicking the link, go directly to the correct company website in your internet browser.

• If you were not expecting an email from a friend or associate, contact the sender to verify before opening any links or attachments. This may seem like overkill, but criminals are very adept at enticing unsuspecting victims to open links and attachments. One click could give them access to all your personal information. When in doubt, delete the email.

• Be diligent in creating and changing your passwords. They should be a minimum of eight characters. Use combinations of upper and lower case letters, numbers, and symbols. Use different passwords for your accounts. If you store the passwords on your computer, consider using a password management program instead.

• If you become the victim of a ransomware attack, do not pay the ransom. Criminals often don’t release your computer files after they receive your money and there is little recourse to get your money back.

Protect your personal information by keeping your computer software, including security software, current. Apply updates, upgrades, and patches when they are made available by the software vendor. Please call us with any questions.

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