Tag Archives: social security benefits

Multi-Generational Wealth Management

The investment industry is concerned with attracting the next generation. As clients age, the issue of who will manage the estate after they pass must be addressed. At Korving & Company we have been fortunate.

First, we have a long-standing and personal relationship with our clients. We know them as individuals, not as numbers on an investment account. That means that when the children come to see us, they usually tell us how much their parents trust us and usually ask us to manage their assets.

Second, we provide great service. Of course everyone claims to provide great service, but we actually deliver it.  We are Certified Financial Planners.  We go beyond managing people’s portfolios to helping and advising them on life’s issues. We have helped people move into retirement homes, buy cars; we help them with social security questions and insurance issues. We help them manage their taxes.  The next generation appreciates the fact that we provide more services than the typical investment advisor.

Third, we manage money with the primary goal of preventing loss. We provide our clients with a fair rate of return on their money. Many younger people have experienced dramatic losses over the last two decades, which include several financial panics. They appreciate being able to invest for the long term without fear.

Finally, the founding principals of Korving & Company are a multi-generational team. We understand the issues of the aging as well as the concerns of the younger generation …. because that’s who we are.

We have even written a book on the subject, BEFORE I GO. For a free look, click on the link.

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Don’t make these common mistakes when planning your retirement.

Planning to retire? Have all your ducks in a row? Know where your retirement income’s going to come from? Great! But don’t make some basic mistakes or you may find yourself working longer or living on a reduced income.

Retirement income is like a three legged stool. Take one of the legs away and you fall over.

The first leg of the stool is Social Security. Depending on your income goals, do it right and you can cover part of your retirement income from this source. Do it wrong and you can leave lots of money on the table.

The second leg is a pension. Many people have guaranteed pensions provided by their employer.  But these are gradually disappearing, replaced by 401(k) and similar plans known as “defined contribution” plans. If you don’t have a pension but want a second guaranteed lifetime income you can look into annuities that pay you a fixed income for life.

The third leg of the stool is your investment portfolio. This is where most people make mistakes and it can have a big impact in your retirement.

Mistake number one is leaving “orphan” 401(k) plans behind as you change jobs. These plans often represent a large part of a typical retiree’s investment assets. Our advice for people who move from one company to another is to roll their 401 (k) assets into an IRA. This gives you much more flexibility and many more investment choices, often at a lower cost than the ones you have in the typical 401(k).

Mistake number two is trying to time the market. Many people are tempted to jump in and out of the market based on nothing but TV talking heads, rumors, or their guess about what the market is going to do in the near future. Timing the market is almost always counter-productive. Instead, create a well balanced portfolio that can weather market volatility and stick with it.

Mistake number three is “set it and forget it.” The biggest factor influencing portfolio returns is asset allocation. And the one thing you can be sure of is that over time your asset allocation will change. You need to rebalance your portfolio to insure that your portfolio does not becoming more aggressive than you realize. If it does, you could find yourself facing a major loss just as you’re ready to retire. Rebalancing lets you “buy low and sell high,” something that everyone wants to do.

Mistake number four is to assume that the planning process ends with your retirement. The typical retiree will live another 25 year after reaching retirement age. To maintain you purchasing power your money continues to have to work hard for you. Otherwise inflation and medical expenses are going to deplete your portfolio and reduce your standard of living. Retirement plans should assume that you will live to at least 90, perhaps to 100.

Retirement planning is complicated and is best done with the help of an expert. Check out our website and feel free to give us a call. We wrote the book on retirement and estate planning.

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More information on Social Security benefits.

Let’s face it, Social Security is a confusing mix of benefits.  Depending on your age, health, marital status and the age of your spouse, your benefits can vary significantly.  Once you make a decision, it’s often impossible to change your mind or correct a mistake.

For example, how do you determine the Social Security benefits available to a 50-year-old disabled divorcee whose ex-spouse is deceased?

We have a series of “Social Security Savvy” guides available for people in different stages of life to help answer those questions.  They are titled:

  • Making Smart Decisions if you are Married.
  • Making Smart Decisions if you are Divorced.
  • Making Smart Decisions if you are Widowed.

For copies of these brief, easy-to-read guides, contact us via our website or e-mail us.

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Some Social Security Statistics From “Wealth Management”

  • Percent of couples nearing the end of their careers who disagree on their anticipated retirement ages: 62
  • Average retirement age today, up from 57 in 1991: 61
  • Maximum annual Social Security benefits for those retiring at age 66: $30,396
  • Average annual Social Security payment received by retired individuals and married couples, respectively: $14,748; $23,928
  • Amount (matched by employer) the average earner will pay into Social Security this year: $2,522
  • The taxable maximum the Social Security Act of 1935 set as the income subject to Social Security taxes: $3,000
  • The taxable maximum for 2013 earnings: $113,700 
  • Average period life expectancy (the number of post-retirement years collecting benefits) for a 65-year-old male in 1940: 11.9
  • Ratio of workers to retirees in 1935: 40 to 1
  • The ratio today: 2.9 to 1 
  • Increase in the number of people receiving Social Security disability benefits [from 1965 to 2011] : 510 percent

If those last three statistics don’t scare you, they should.

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Delaying Social Security can outperform investment returns

The May 2014 edition of Investment News has an article by Mary Beth Franklin discussing the benefits of delaying social security benefits.

We have discussed the advantages and disadvantages of taking social security early, on time, and late. It’s obvious that you can’t collect social security from the grave. As Franklin says “you must be present to win.”

The person who begins before full retirement age gets full use of his money to spend or invest. Waiting to collect means that while you get a much larger check, you have to make up for the money you failed to collect earlier.

But if you don’t need the money at age 62 or 66, delaying social security can be thought of as investing in an annuity to be used later in life. Based on one analyst’s calculations

“those who reach age 90 (which would be the 28th year after delaying) have generated the equivalent of a 5% real rate of return in what is essentially a government-backed bond.”

Social security payments are indexed for inflation.

“The assumptions that are embedded in the social security formulas and benefits … were built when longevity was shorter and interest rates were higher.”

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