Social Security Updates

Good news for retirees: Social Security benefits are scheduled to increase 2.8 percent in 2019, the biggest bump since the 3.6 percent increase in 2012.The average beneficiary – who received about $1,405 a month in 2018 – can expect to see just over $39 more each month, or about $468 more over the course of the year.1

Such cost of living increases are meant to cover household expenses that rise due to inflation. However, if you can absorb those additional costs, you could think about redirecting that additional payout toward helping to meet your long-term financial goals. For example, an emergency savings account or a life insurance policy designed to pay for funeral expenses. If you would like help with this, please give us a call.

There are a few more updates to Social Security for 2019. For one, the supplemental benefit paid to those who are blind or disabled will increase to $771 from $750 per individual; to $1,157 from $1,125 for couples. Second, if you’re currently working while receiving benefits, you can earn a bit more before those benefits are reduced. Moving forward, you may now earn up to $17,640 before $1 is deducted for every $2 you earn. In the year before you turn your full retirement age, you may earn up to $46,920 before $1 is deducted for every $3 you earn until the month you reach your full retirement age. And third, for those who are still working and have not yet started receiving benefits, the maximum amount of earnings subject to the Social Security tax will increase to $132,900 from $128,400.2

Some advocate eliminating the earnings cap to keep Social Security solvent in the future. That’s because the brunt of taxes dedicated to Social Security comes from lower-income earners, while high earners avoid this tax on earnings above $132,900. In fact, due to the increase in income disparity in the United States, a much higher level of earned income is now exempted from this payroll tax compared to the 1980s – $300 billion in 1983 versus $1.2 trillion in 2016.3

Other changes in addition to eliminating the taxable income cap have also been proposed. One option, which could benefit both the Social Security fund as a whole and individual retirees, is encouraging retirees to delay claiming Social Security benefits. For every year delayed, one’s benefits increase 8 percent. Those who wait to take the benefit until age 67 receive about 43 percent more a month; those who wait until age 70 receive about 75 percent more in lifetime monthly benefits.4

Social Security benefits – both funding and payouts – can be complex. It is worthwhile to stay abreast of the policies, changes and strategies that can help maximize benefits. For additional information, try out this quiz – which also gives a detailed explanation of the correct answers to help you become better educated about Social Security.5

Content prepared by Kara Stefan Communications.

John Wasik. Forbes. Nov. 2, 2018. “5 Things You Should Know About Social Security Changes.”https://www.forbes.com/sites/johnwasik/2018/11/02/5-things-you-should-know-about-social-security-changes/. Accessed Nov. 9, 2018.

2 Ibid.

Sean Williams. USA Today. Nov. 9, 2018. “Why the Social Security program will never run out of cash.”https://www.usatoday.com/story/money/2018/11/09/when-does-social-security-run-out/38452267/. Accessed Nov. 9, 2018.

Knowledge@Wharton. Oct. 3, 2018. “Delaying Social Security: How Lump Sum Payments Can Help.”http://knowledge.wharton.upenn.edu/article/delay-social-security/. Accessed Nov. 8, 2018.

Matthew Frankel. USA Today. June 2, 2018. “47% of American pre-retirees failed this basic Social Security quiz. Can you pass it?”https://www.usatoday.com/story/money/personalfinance/retirement/2018/06/02/pre-retirees-failed-basic-social-security-quiz/35343701/. Accessed Nov. 9, 2018.

Our firm is not affiliated with the U.S. government or any governmental agency.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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What Should You Look for in a Financial Advisor?

All financial advisors are not equally helpful. In this episode, Michael and Anthony Pellegrino illustrate why your choice of financial advisor could guide — or derail — your journey into retirement. The advice you receive will set the foundation for your financial future; you need to make sure that the person you turn to for help has your best interests at heart.

As Michael explains, there are two primary categories of advisors. The first is a fiduciary. All of Goldstone Financial Group’s advisors are certified fiduciaries and are thus legally obligated to put their clients’ needs above their own financial interests. The second category of advisors holds to a suitability standard. Unlike fiduciaries, suitability-grade professionals do not consider the client’s long-term financial health. So long as the advisor deems a product suitable for the situation at hand, they can sell it — regardless of whether it will still be useful in five or ten years. The only way that a client can be certain that their advisor has their best interests at heart is to sign on with a fiduciary.

However, a fiduciary certification alone doesn’t guarantee that an advisor is right for you. As Michael and Anthony Pellegrino point out in this episode, a genuinely effective advisor has other positive qualities.

Good Listening Skills

Even the best-qualified advisors will fall short if they don’t bother to engage with their clients. They need to listen to their clients’ goals, acknowledge their concerns, and ask the questions that will give them enough context to establish a solid financial plan.

Accessibility

Advisors should be accessible — and yet, many retirees find it difficult to schedule an appointment that lasts long enough for their advisor to address their questions and concerns fully. This issue is particularly pressing at larger firms that have higher turnover rates for advisors. With these organizations, clients might cycle through advisors every six months, and never get a chance to build a long-term, trusting relationship with any one person.

Proactivity

We exist in an ever-changing market environment. Retirees need advisors who can be proactive and adaptive in good and bad times alike. If an advisor is reactive and only makes a move after circumstances have changed for the worse, they won’t be as effective as someone who acted preemptively.

To sum up — when you look for an advisor, search for a fiduciary that you like and trust!

 

News Around the Internet

By Anthony Pellegrino | Goldstone Financial Group 

Where there is internet, is there more prosperity? Generally speaking, yes.

It costs much more to lay fiber to outlying communities than it does in larger metropolitan areas, which may contribute to the growing geographical discrepancy between income, education and even health care. Some places, like Indiana, hope to bring rural areas up to speed by expanding broadband access. Indiana, for example, is planning a $1 billion infrastructure update.1

Internet access opens the door for opportunities in a variety of areas, including education. Enrollment for online higher education classes is increasing each year, according to the report “Grade Increase: Tracking Distance Education in the United States.” Most of this enrollment (67.8 percent) is by students attending public institutions, with about half of students also attending on-campus classes. While online educational enrollment is rising swiftly, the number of students studying on a campus dropped by more than 1 million between 2012 and 2016.2

Keeping in touch with friends and the world’s current events is also simplified by internet access. Use of social media websites and apps is widespread among all demographics. According to a Pew Research Center study, while the share of teens using Facebook fell 20 percentage points over three years, a larger share of lower-income teens continue to use Facebook. Sociologists interviewed noted that higher-income teens often seek the prestige of the next “hot” social media platform, whereas lower-income teens continue to rely on Facebook to connect with a diverse network of friends and family.3

Unfortunately, the internet also has become a tool for negativity, particularly when it comes to bullying and misinformation. While social media has done much to establish and strengthen connections among people, it also enables the propagation of cyberbullying, a growing threat for teens and preteens. In 2018, 26 percent of parents reported their child had been a victim of cyberbullying. However, this share has dropped from 34 percent in 2016.4 First Lady Melania Trump has made cyberbullying her primary focus, encouraging adults to provide children with information and tools to develop safe online habits.5

Perhaps one of the most detrimental uses of the internet in recent years has been the spread of misinformation, particularly “fake news” stories that look like legitimate articles but which report inaccurate or fabricated facts and statistics. The problem is exacerbated by social media users who read and believe the stories, then share them with friends and followers.

Worse yet, these fake articles are circulated by bots on Twitter and other websites. A “bot” is an automated account made to look like a human user that is programmed to spread false information. More than 13.6 million Twitter posts shared misinformation linked to bots between May 2016 and March 2017.6

Sadly, people tend to be more interested in dramatized falsehoods than the truth. One researcher found that while true news stories tend to spread to no more than about 1,600 people, shared false stories on the internet tend to reach tens of thousands of readers, even though they originated from far fewer sources.7

Content prepared by Kara Stefan Communications.

1 Lindsey Erdody. Indiana Business Journal. Sept. 14, 2018. “Broadband blitz to lift economy, study says.” https://www.ibj.com/articles/70471-broadband-blitz-to-lift-economy-study-says. Accessed Oct. 4, 2018.

2 Online Learning Consortium. Jan. 11, 2018. “New Study: Distance Education Up, Overall Enrollments Down.”https://onlinelearningconsortium.org/news_item/new-study-distance-education-overall-enrollments/. Accessed Nov. 30, 2018.

Hanna Kozlowska. Quartz.com. Aug. 15, 2018. “Do teens use Facebook? It depends on their family’s income.” https://qz.com/1355827/do-teens-use-facebook-it-depends-on-their-familys-income/. Accessed Nov. 30, 2018.

Sam Cook. Comparitech. Nov. 12, 2018. “Cyberbullying facts and statistics for 2016-2018.” https://www.comparitech.com/internet-providers/cyberbullying-statistics/. Accessed Nov. 30, 2018.

Jordyn Phelps. ABC News. Aug. 20, 2018. “First lady Melania Trump speaks out against cyberbullying.” https://abcnews.go.com/Politics/lady-melania-trump-speaks-cyberbullying/story?id=57284988. Accessed Nov. 30, 2018.

Maria Temming. Science News. Nov. 20, 2018. “How Twitter bots get people to spread fake news.” https://www.sciencenews.org/article/twitter-bots-fake-news-2016-election. Accessed Nov. 30, 2018.

Maria Temming. Science News. March 8, 2018. “On Twitter, the lure of fake news is stronger than the truth.”https://www.sciencenews.org/article/twitter-fake-news-truth. Accessed Nov. 30, 2018.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

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Goldstone Financial Group TV: Should You Roll Over Your 401k?

Anthony Pellegrino | Goldstone Financial Group | Goldstone Financial Group TV: Should You Roll Over Your 401k?

 

In this ongoing series, Goldstone Financial Group principals Michael and Anthony Pellegrino answer personal finance questions from the residents of Chicago. This episode centers on employer-sponsored retirement accounts — and, more specifically, the strategies a retiree can use to grow the money they save further.

 

How limited am I to my company’s 401K options?

MICHAEL PELLEGRINO: Unfortunately, you probably are relatively limited. Most people only have a few options available when they sign on to a company 401(k) plan. If you do enroll, it’s crucial that you contribute — and if your employer offers a match, take them up on it! That’s free money in your account. Aside from that, I’d suggest working with an advisor to see if you’re eligible to make an IRA or Roth contribution.

ANTHONY PELLEGRINO: Another factor to consider is age. Most people assume that they can’t touch their 401(k) while they’re working, but you have more options once you reach 59.5 years of age. If you’re still working and contributing at that point, a fiduciary could help you put together an in-service rollover. You can go in and access some part or all of your 401(k) and then roll over those funds to an IRA. At that point, you have more options for your investment — and you don’t have to stop contributing to your 401(k), either! You’ll have two buckets to grow your investment, instead of one.

 

Should I leave my old 401k with my past employer?

MICHAEL PELLEGRINO: That’s one option, but you may have others. It’s important to look at the specifics of your 401(k) before you make any decisions. Again, though, an employer-sponsored plan is going to limit your options. It might be worth looking into rolling the money over into other investment vehicles — an IRA account, for example.

 

Should I take out money from my pension fund from a previous employer, or should I leave it there to grow over time?

ANTHONY PELLEGRINO: Those of us at Goldstone Financial Group specialize in these “lump-sum pension option rollovers.” People come to us all the time to ask about lump-sum buyouts, wondering whether they should take their pension money out all at once or access it in installments as “income” in retirement. In our view, a pension is just a large annuity. Once you start drawing income, you give up all access to its liquidity. You’re locked into that model, and you have no way to move the money you’ve saved into other investment vehicles. Worse, a pension does not come with death benefits — if a retiree were to pass on after spending decades with a company, their family would get nothing.

MICHAEL PELLEGRINO: As fiduciaries, we can create a comparison of your options and help you determine whether you should keep your 401(k) as is or roll those funds over into another investment vehicle.

Anthony Pellegrino on OnMogul

Anthony Pellegrino | Goldstone Financial Group | Planning For Long-Term Care? Goldstone Financial Group Can Help

Anthony Pellegrino, Goldstone Financial Group founder and firm principal, has dedicated his practice not only to helping individuals plan for their financial future but also remaining by their side as a partner in achieving their desired results. When Goldstone Financial Group helps a client prepare for retirement, they aren’t afraid to talk about the worst-case scenarios.

“Everyone likes to hope for the best – heck, we like to hope for the best,” Anthony Pellegrino says, “But we have to think about the practical issues, too. The last outcome we want is for a client to put away money every day for two, even three decades and then find themselves struggling to pay their bills after an unexpected and financially catastrophic life event.”

Read the full article here!