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Retirement, investments, financial planning for every stage of life—learn about it all here at Invested,
a blog from your Wealth Management Advisors at Kirtland Financial Services.

All Posts > Retirement

Investments Retirement Estate Planning

Investment planning during retirement is not the same as investing for retirement and, in many ways, is more complicated.

Your working years are your saving years. With luck, your income increases from year to year as you receive promotions and/or pay raises; those increases offer some protection against rising costs caused by inflation. While you're working, your retirement objective generally is to grow retirement savings as much as possible, and investments that offer higher potential reward in exchange for greater potential for volatility and/or loss are often the focus for those retirement savings.

When you retire, on the other hand, spending rather than saving becomes your focus. Your sources of income may include Social Security, employer pensions, personal savings and assets, and perhaps some income from working part-time. Typically, a retiree's objective is to derive sufficient income to maintain a chosen lifestyle and to make assets last as long as necessary.

This can be a tricky balancing act. Uncertainty abounds--you don't know how long you'll live or whether rates of return will meet your expectations. If your income is fixed, inflation could erode its purchasing power over time, which may cause you to invade principal to meet day-to-day expenses. Or, your retirement plan may require that you make minimum withdrawals in excess of your needs, depleting your resources and triggering taxes unnecessarily. Further, your ability to tolerate risk is lessened--you have less time to recover from losses, and you may feel less secure about your finances in general.

How, then, should you manage your investments during retirement given the above complications? The answer is different for everyone. You should tailor your plans to your own unique circumstances, and you may want to consult a financial planning professional for advice.

The following discusses two important factors you should consider: (1) withdrawing income from retirement assets, and (2) balancing safety with growth.
 

Choosing a sustainable withdrawal rate

A key factor that determines whether your assets will last for your entire lifetime is the rate at which you withdraw funds. The more you withdraw, the greater the likelihood you'll exhaust your resources too soon. On the other hand, if you withdraw too little, you may have to struggle to meet expenses; also, you could end up with assets in your estate, part of which may go to the government in taxes. It is vital that you estimate an appropriate withdrawal rate for your circumstances, and determine whether you should adjust your lifestyle and/or estate plan.

Your withdrawal rate is typically expressed as a percentage of your overall assets, even though withdrawals may represent earnings, principal, or some combination of the two. For example, if you have $700,000 in assets and decide a 4 percent withdrawal rate is appropriate, the portfolio would need to earn $28,000 a year if you intend to withdraw only earnings; alternatively, you might set it up to earn $14,000 in interest and take the remaining $14,000 from the principal. An appropriate and sustainable withdrawal rate depends on many factors including the value of your current assets, your expected rate of return, your life expectancy, your risk tolerance, whether you adjust for inflation, how much your expenses are expected to be, and whether you want some assets left over for your heirs.

Fortunately, you don't have to make a wild guess. Studies have tackled this issue, resulting in the creation of tables and calculators that can provide you with a range of rates that have some probability of success. However, you'll probably need some expert help to ensure that this important decision is made carefully.
 

Withdrawing first from taxable, tax-deferred, or tax-free accounts

Many retirees have assets in various types of accounts--taxable, tax-deferred (e.g., traditional IRAs), and tax-free (e.g., Roth IRAs). Given a choice, which type of account should you withdraw from first? The answer--it depends.

Caution: Roth IRA earnings are generally free from federal income tax if certain conditions are met but may not be free from state income tax.

 

Retirees who will not have an estate

For retirees who do not intend to leave assets to beneficiaries, the answer is simple in theory: Withdraw money from a taxable account first, then a tax-deferred account, and lastly, a tax-free account. This will provide for the greatest growth potential due to the power of compounding.

In practice, however, your choices, to some extent, may be directed by tax rules. Retirement accounts, other than Roth IRAs, have minimum withdrawal requirements. In general, you must begin withdrawing from these accounts by April 1 of the year following the year you turn age 70½. Failure to do so can result in a 50 percent excise tax imposed on the amount by which the required minimum distribution exceeds the distribution you actually take.


Retirees who will have an estate

For retirees who intend to leave assets to beneficiaries, the analysis is more complicated. You need to coordinate your retirement plan with your estate plan.

If you have appreciated or rapidly appreciating assets, it may be more advantageous for you to withdraw from tax-deferred and tax-free accounts first. This is because these accounts will not receive a step-up in basis at your death, as many of your other assets will, and your heirs could face a larger than necessary tax liability.

However, this may not always be the best strategy. For example, if you intend to leave your entire estate to your spouse, it may be better to withdraw from taxable accounts first. This is because spouses are given preferential tax treatment with regard to retirement plans. As a beneficiary of a traditional IRA or retirement plan, a surviving spouse can roll over retirement plan funds to his or her own IRA or retirement plan, or, in some cases, may continue the deceased spouse's plan as his or her own. The funds in the plan continue to grow tax deferred, and distributions need not begin until the spouse's own required beginning date.

For retirees who have a "stretch" IRA, you may want to take advantage of your ability to defer taxes over a number of generations.

Tip: Retirees in this situation should consult a qualified estate planning attorney who has some expertise with regard to retirement plan assets.
 

Balancing safety and growth

When you retire, you generally stop receiving income from wages, a salary, or other work-related activity and start relying on your assets for income. To ensure a consistent and reliable flow of income for your lifetime, you must provide some safety for your principal. This is why retirees typically shift at least a portion of their investment portfolio to more secure income-producing investments, and this makes a great deal of sense.

Unfortunately, safety comes with a price--reduced growth potential and erosion of value due to inflation. Safety at the expense of growth can be a critical mistake for some retirees. On the other hand, if you invest too heavily in growth investments, your risk is heightened, and you may be forced to sell during a downturn in the market should you need more income. Retirees must find a way to strike a reasonable balance between safety and growth.

One solution may be the "two bucket" approach. To implement this, you would determine your sustainable withdrawal rate (see above), and then reallocate a portion of your portfolio to fixed income investments (e.g., certificates of deposit and bonds) that will provide you with sufficient income for a predetermined number of years. You would then reallocate the balance of your portfolio to growth investments (e.g., stocks) that you can use to replenish that income "bucket" over time.

The fixed income portion of your portfolio should be able to provide you with enough income (together with any other income you may receive, such as Social Security and required minimum distributions from retirement plans) to meet your expenses so you won't have to liquidate investments in the growth portion of your portfolio at a time when they may be down. This can help you ride out fluctuations in the market, and sell only when you think a sale is advantageous.

Be sure that your fixed income investments will provide you with income when you'll need it. One way to accomplish this is by laddering. For example, if you're investing in bonds, instead of investing the entire amount in one issue that matures on a certain date, spread your investment over several issues with staggered maturity dates (e.g., one year, two years, three years). As each bond matures, reinvest the principal to maintain the pattern.

As for the growth portion of your investment portfolio, common investing principles still apply:
  • Diversify your holdings
  • Invest on a tax-deferred or tax-free basis if possible
  • Monitor your portfolio and reallocate assets when appropriate

Caution: For retirees investing in bonds, don't assume that individual bonds and bond funds are the same type of investment. Bond funds do not offer the two key characteristics offered by bonds: (1) income from bond funds is not fixed--dividends change depending on the bonds the funds has bought and sold as well as the prevailing interest rate, and (2) a bond fund does not have an obligation to return principal to you when bonds within the fund mature. Additionally, the risk associated with bond funds varies depending on the bonds held within the fund at any given time, whereas the risk associated with individual bonds generally decreases over time as a bond nears its maturity date (assuming the issuer's financial situation doesn't deteriorate). Finally, fees and charges associated with bond funds reduce returns. Even so, you may still find bond funds attractive because of their convenience. Just be sure you understand the differences between bond funds and individual bonds before you invest.

Get started with Kirtland Financial Services today!


 
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

Retirement


Myth: Social Security will provide most of the income you need in retirement.

Fact: It's likely that Social Security will provide a smaller portion of retirement income than you expect.


There's no doubt about it — Social Security is an important source of retirement income for most Americans. According to the Social Security Administration, nearly nine out of ten individuals age 65 and older receive Social Security benefits.*

But it may be unwise to rely too heavily on Social Security, because to keep the system solvent, some changes will have to be made to it. The younger and wealthier you are, the more likely these changes will affect you. But whether retirement is years away or just around the corner, keep in mind that Social Security was never meant to be the sole source of income for retirees. As President Dwight D. Eisenhower said, "The system is not intended as a substitute for private savings, pension plans, and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built."

No matter what the future holds for Social Security, focus on saving as much for retirement as possible. When combined with your future Social Security benefits, your retirement savings and pension benefits can help ensure that you'll have enough income to see you through retirement.
 

Myth: If you earn money after you retire, you'll lose your Social Security benefit.

Fact: Money you earn after you retire will only affect your Social Security benefit if you're under full retirement age.


Once you reach full retirement age, you can earn as much as you want without affecting your Social Security retirement benefit. But if you're under full retirement age, any income that you earn may affect the amount of benefit you receive:
  • If you're under full retirement age, $1 in benefits will be withheld for every $2 you earn above a certain annual limit. For 2020, that limit is $18,240.
  • In the year you reach full retirement age, $1 in benefits will be withheld for every $3 you earn above a certain annual limit until the month you reach full retirement age. If you reach full retirement age in 2020, that limit is $48,600.
Even if your monthly benefit is reduced in the short term due to your earnings, you'll receive a higher monthly benefit later. That's because the SSA recalculates your benefit when you reach full retirement age and omits the months in which your benefit was reduced.

Click here to find your full retirement age.

 

Myth: Social Security is only a retirement program.

Fact: Social Security also offer disability and survivor benefits.


With all the focus on retirement benefits, it's easy to overlook the fact that Social Security also offers protection against long-term disability. And when you receive retirement or disability benefits, your family members may be eligible to receive benefits, too.

Another valuable source of support for your family is Social Security survivor insurance. If you were to die, certain members of your family, including your spouse, children, and dependent parents, may be eligible for monthly survivor benefits that can help replace lost income.

For specific information about the benefits you and your family members may receive, visit the Social Security Administration (SSA) website at ssa.gov, or call 800-772-1213 if you have questions.


Myth: Social Security benefits are not taxable.

Fact: You may have to pay taxes on your Social Security benefits if you have other income.


If the only income you had during the year was Social Security income, then your benefit generally isn't taxable. But if you earned income during the year (either from a job or from self-employment) or had substantial investment income, then you might have to pay federal income tax on a portion of your benefit. Up to 85% of your benefit may be taxable, depending on your tax filing status (e.g., single, married filing jointly) and the total amount of income you have.

For more information on this subject, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits.


Myth: Social Security is going bankrupt soon.

Fact: Social Security is facing significant financial challenges but is not going bankrupt.


Social Security is largely a "pay-as-you-go" system with today's workers (and employers) paying for today's retirees through the collection of payroll (FICA) taxes. These taxes and other income are deposited in Social Security trust funds and benefits are paid from them.

According to the SSA, due to demographic factors, Social Security is already paying out more money than it takes in. However, by drawing on the Old-Age and Survivors Insurance (OASI) Trust Fund, the SSA estimates that Social Security should be able to pay 100% of scheduled benefits until fund reserves are depleted in 2034. Once the trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 77% of scheduled benefits. This means that in 2034, if no changes are made, beneficiaries may receive a benefit that is about 23% less than expected. (Source: 2019 OASDI Trustees Report)

That's not good news, but Congress still has time to make changes to strengthen the program and address projected shortfalls. Until then, consider various income scenarios when planning for retirement.

Social Security may be only one part of a retiree’s income plan. For a full look at your retirement goals and to see how your Social Security may fit into that plan, make an appointment with Kirtland Financial Services today!

MAKE YOUR APPOINTMENT NOW!

 
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.

Retirement

Social Security benefits are a major source of retirement income for most people. Your Social Security retirement benefit is based on the number of years you've been working and the amount you've earned. When you begin taking Social Security benefits also greatly affects the size of your benefit.
 

How do you qualify for retirement benefits? 

When you work and pay Social Security taxes (FICA on some pay stubs), you earn Social Security credits. You can earn up to 4 credits each year. If you were born after 1928, you need 40 credits (10 years of work) to be eligible for retirement benefits. 
 

How much will your retirement benefit be? 

The Social Security Administration (SSA) calculates your primary insurance amount (PIA), upon which your retirement benefit will be based, using a formula that takes into account your 35 highest earnings years. At your full retirement age, you'll be entitled to receive that amount. This is known as your full retirement benefit. Because your retirement benefit is based on your average earnings over your working career, if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily. 

Your age at the time you start receiving benefits also affects your benefit amount. Although you can retire early at age 62, the longer you wait to begin receiving your benefit (up to age 70), the more you'll receive each month. 

You can estimate your retirement benefit under current law by using the benefit calculators available on the SSA's website, ssa.gov. You can also sign up for a my Social Security account so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you're not registered for an online account and are not yet receiving benefits, you'll receive a statement in the mail every year, starting at age 60.
 

Retiring at full retirement age

Your full retirement age depends on the year in which you were born. If you retire at full retirement age, you'll receive an unreduced retirement benefit.
 
If you were born in: Your full retirement age is:
1943-1954 66
1955 66 + 2months
1956 66 + 4 months
1957 66 + 6 months
1958 66 + 8 months
1959 66 +10 months
1960 or later 67

Note: If you were born on January 1 of any year, refer to the previous year to determine your full retirement age. 
 

Retiring early will reduce your benefit

You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you begin receiving benefits early, your Social Security benefit will be less than if you wait until your full retirement age to begin receiving benefits. Your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1% thereafter. This reduction is permanent — you won't be eligible for a benefit increase once you reach full retirement age. However, even though your monthly benefit will be less, you might receive the same or more total lifetime benefits as you would have had you waited until full retirement age to start collecting benefits. That's because even though you'll receive less per month, you might receive benefits over a longer period of time.
 

Delaying retirement will increase your benefit

For each month that you delay receiving Social Security retirement benefits past your full retirement age, your benefit will permanently increase by a certain percentage, up to the maximum age of 70. For anyone born in 1943 or later, the monthly percentage is 2/3 of 1%, so the annual percentage is 8%. So, for example, if your full retirement age is 67 and you delay receiving benefits for 3 years, your benefit at age 70 will be 24% higher than at age 67.
 

Monthly benefit example





The following chart illustrates how much a monthly benefit of $2,000 taken at a full retirement age of 67 would be worth if taken earlier or later than full retirement age. For example, as this chart shows, this $2,000 benefit would be worth $1,400 if taken at age 62, and $2,480 if taken at age 70.

This hypothetical illustration is based on Social Security Administration rules. Actual results may vary.




 

Working may affect your retirement benefit

You can work and still receive Social Security retirement benefits, but the income that you earn before you reach full retirement age may temporarily affect your benefit. Here's how:
  • If you're under full retirement age for the entire year, $1 of your benefit will be withheld for every $2 you earn over the annual earnings limit ($18,240 in 2020)
  • A higher earnings limit applies in the year you reach full retirement age, and the calculation is different, too — $1 of your benefit will be withheld for every $3 you earn over $48,600 (in 2020)
Once you reach full retirement age, you can work and earn as much income as you want without reducing your Social Security retirement benefit. And keep in mind that if some of your benefits are withheld prior to your full retirement age, you'll generally receive a higher monthly benefit at full retirement age, because after retirement age the SSA recalculates your benefit every year and gives you credit for those withheld earnings.


Retirement benefits for qualified family members

Even if your spouse has never worked outside your home or in a job covered by Social Security, he or she may be eligible for spousal benefits based on your Social Security earnings record. Other members of your family may also be eligible. Retirement benefits are generally paid to family members who relied on your income for financial support. If you're receiving retirement benefits, the members of your family who may be eligible for family benefits include:
  • Your spouse age 62 or older, if married at least 1 year
  • Your former spouse age 62 or older, if you were married at least 10 years
  • Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
  • Your children under age 18, if unmarried
  • Your children under age 19, if full-time students (through grade 12) or disabled
  • Your children older than 18, if severely disabled
Your eligible family members will receive a monthly benefit that is as much as 50% of your benefit. However, the amount that can be paid each month to a family is limited. The total benefit that your family can receive based on your earnings record is about 150% to 180% of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member's benefit will be reduced proportionately. Your benefit won't be affected. 

For more information on retirement benefits, contact the Social Security Administration at (800) 772-1213 or visit ssa.gov.


 

Retirement

Approximately 68 million people today receive some form of Social Security benefits, including retirement, disability, survivor, and family benefits. (Source: Fast Facts & Figures About Social Security, 2019) Although most people receiving Social Security are retired, you and your family members may be eligible for benefits at any age, depending on your circumstances.

How does Social Security work?
The Social Security system is based on a simple premise: Throughout your career, you pay a portion of your earnings into a trust fund by paying Social Security or self-employment taxes. Your employer, if any, contributes an equal amount. In return, you receive certain benefits that can provide income to you when you need it most--at retirement or when you become disabled, for instance. Your family members can receive benefits based on your earnings record, too. The amount of benefits that you and your family members receive depends on several factors, including your average lifetime earnings, your date of birth, and the type of benefit that you're applying for.

Your earnings and the taxes you pay are reported to the Social Security Administration (SSA) by your employer, or if you are self-employed, by the Internal Revenue Service. The SSA uses your Social Security number to track your earnings and your benefits.

You can find out more about future Social Security benefits by signing up for a my Social Security account, so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you're not registered for an online account and are not yet receiving benefits, you'll receive a statement in the mail every year, starting at age 60. You can also use the Retirement Estimator calculator on the Social Security website, as well as other benefit calculators that can help you estimate disability and survivor benefits.

Social Security eligibility
When you work and pay Social Security taxes, you earn credits that enable you to qualify for Social Security benefits. You can earn up to 4 credits per year, depending on the amount of income that you have. Most people must build up 40 credits (10 years of work) to be eligible for Social Security retirement benefits but need fewer credits to be eligible for disability benefits or for their family members to be eligible for survivor benefits.

Your retirement benefits
Your Social Security retirement benefit is based on your average earnings over your working career. Your age at the time you start receiving Social Security retirement benefits also affects your benefit amount. If you were born between 1943 and 1954, your full retirement age is 66. Full retirement age increases in two-month increments thereafter, until it reaches age 67 for anyone born in 1960 or later.

But you don't have to wait until full retirement age to begin receiving benefits. No matter what your full retirement age, you can begin receiving early retirement benefits at age 62. Doing so is sometimes advantageous: Although you'll receive a reduced benefit if you retire early, you'll receive benefits for a longer period than someone who retires at full retirement age.

You can also choose to delay receiving retirement benefits past full retirement age. If you delay retirement, the Social Security benefit that you eventually receive will be as much as 8 percent higher. That's because you'll receive a delayed retirement credit for each month that you delay receiving retirement benefits, up to age 70. The amount of this credit varies, depending on your year of birth.

Disability benefits
If you become disabled, you may be eligible for Social Security disability benefits. The SSA defines disability as a physical or mental condition severe enough to prevent a person from performing substantial work of any kind for at least a year. This is a strict definition of disability, so if you're only temporarily disabled, don't expect to receive Social Security disability benefits—benefits won't begin until the sixth full month after the onset of your disability. And because processing your claim may take some time, apply for disability benefits as soon as you realize that your disability will be long term.

Family benefits
If you begin receiving retirement or disability benefits, your family members might also be eligible to receive benefits based on your earnings record.

Eligible family members may include:
  • Your spouse age 62 or older, if married at least 1 year
  • Your former spouse age 62 or older, if you were married at least 10 years
  • Your spouse or former spouse at any age, if caring for your child who is under age 16 or disabled
  • Your children under age 18, if unmarried
  • Your children under age 19, if full-time students (through grade 12) or disabled
  • Your children older than 18, if severely disabled
Each family member may receive a benefit that is as much as 50 percent of your benefit. However, the amount that can be paid each month to a family is limited. The total benefit that your family can receive based on your earnings record is about 150 to 180 percent of your full retirement benefit amount. If the total family benefit exceeds this limit, each family member's benefit will be reduced proportionately. Your benefit won't be affected.

Survivor benefits
When you die, your family members may qualify for survivor benefits based on your earnings record. These family members include:
  • Your widow(er) or ex-spouse age 60 or older (or age 50 or older if disabled)
  • Your widow(er) or ex-spouse at any age, if caring for your child who is under 16 or disabled
  • Your children under 18, if unmarried
  • Your children under age 19, if full-time students (through grade 12) or disabled
  • Your children older than 18, if severely disabled
  • Your parents, if they depended on you for at least half of their support
  • Your widow(er) or children may also receive a one-time $255 death benefit immediately after you die.
Applying for Social Security benefits
The SSA recommends apply for benefits online at the SSA website, but you can also apply by calling (800) 772-1213 or by making an appointment at your local SSA office. The SSA suggests that you apply for benefits three months before you want your benefits to start. If you're applying for disability or survivor benefits, apply as soon as you are eligible.

Depending on the type of Social Security benefits that you are applying for, you will be asked to furnish certain records, such as a birth certificate, W-2 forms, and verification of your Social Security number and citizenship. The documents must be original or certified copies. If any of your family members are applying for benefits, they will be expected to submit similar documentation. The SSA representative will let you know which documents you need and help you get any documents you don't already have.

Your Social Security benefits are just one part of your retirement income. For a full analysis of your retirement plans and benefits, make an appointment with a Wealth Management Advisor from Kirtland Financial Services. Your initial consultation is free!

Make Your Appointment Now

 
This information was prepared by Broadridge Financial for Kirtland Financial Services.
 

Investments Retirement

Only about 23% of American workers say they are "very confident" they will have enough money to live comfortably throughout retirement.¹ To help reduce such uncertainty in your life, consider these five common investment pitfalls—and how you might avoid them.

Mistake #1: Waiting to Maximize Your Contributions
The sooner you start contributing the maximum amount allowed by your employer-sponsored retirement plan, the better your chances for building a significant savings cushion. By starting early, you allow more time for your contributions -- and potential earnings -- to compound, or build upon themselves, on a tax-deferred basis.

Mistake #2: Ignoring Specific Financial Goals
It is difficult to create an effective investment plan without first targeting a specific dollar amount and recognizing how much time you have to pursue that goal. To enjoy the same quality of life in retirement that you have become accustomed to during your prime earning years, you may need the equivalent of 80% or more of your final working year's salary for each year of retirement.

Mistake #3: Fearing Stock Volatility
It is true that stock investments face a greater risk of short-term price swings than fixed-income investments. However, stocks have historically produced stronger earnings over the long term.² In general, the longer your investment time horizon, the more you might consider adding stock funds to your portfolio.

Mistake #4: Timing the Market
Some investors try to base investment decisions on daily price swings. But unless you have a crystal ball, "timing the market" could be very risky. A better idea might be to buy and hold investments for several years.

Mistake #5: Failing to Diversify
Investing in just one fund or asset class could subject your investment portfolio to unnecessary risk. Spreading your money over a well-chosen mix of investments may help reduce the potential for loss during periods of market volatility. Diversification may offset losses in any one investment or asset category by taking advantage of possible gains elsewhere.³

Now that you are aware of these five common investment errors, consider yourself lucky: You are ready to potentially benefit from other people's experiences—without making the same mistakes.

Adding the guidance of a Wealth Management Advisor can help you navigate your investment decisions as part of a larger financial plan for retirement. Make an appointment online today or call 505-254-4363. We’re here to help!

 
1. Source: Employee Benefit Research Institute, "The 2019 Retirement Confidence Survey," 2019.
2. Source: SS&C Technologies, Inc. Stocks are represented by total returns from Standard & Poor's Composite Index of 500 Stocks, an unmanaged index generally considered representative of the U.S. stock market. Fixed-income investments are represented by annual total returns of long-term (10+ years) Treasury bonds. Indexes do not take into account the fees and expenses associated with investing, and individuals cannot invest in any index. Past performance is no guarantee of future results. With any investment, it is possible to lose money.
3. Diversification does not ensure a profit or protect against a loss in any market.

Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.

© 2020 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

 

Investments Savings Retirement
Investing is risky! Right?

You have many options for investing your money, each with a different potential for risk and return. Many options offer the potential for higher returns but pose a risk to your principal balance. Other investing options, such as the Market-Linked Certificate of Deposit (CD), offer an alternative path for potentially growing your money.

Kirtland Financial Services can help you invest in several different ways—now including Market-Linked CDs.

A market-linked CD offers the same type of security for your principal investment as a traditional certificate of deposit but with the potential to earn more than investing in a traditional bank CD.

WHO MIGHT CONSIDER A MARKET-LINKED CD?
  • Anyone who has suffered market losses in the past and is hesitant to risk principal again.
  • Anyone who wants to grow their money beyond the constraints of traditional savings methods.
  • Retirees and others who are in risk-averse situations.

ARE MARKET-LINKED CDs INSURED?
Yes, Market-Linked CDs carry federal deposit insurance administered by the Federal Deposit Insurance Corporation (FDIC) and are backed by the full faith and credit of the US Government up to a maximum amount for all deposits held in the same legal capacity per depository institution. In general, the FDIC feature guarantees principal of, and any accrued interest on, the Market-Linked CDs up to $250,000 if held to maturity.

ANYTHING ELSE I SHOULD KNOW?
Market-Linked CDs are highly versatile instruments that may fit a variety of market outlooks and may hedge a variety of existing positions.

They also offer an estate feature known as a “death put” or “survivor’s option”—a benefit that may be appealing to investors concerned about their estate because their beneficiaries may be able to redeem the Market-Linked CD at par, without interest, before maturity upon death or adjudication of incompetence, subject to the terms and limitations of the issuer.

The Wealth Management Advisors at Kirtland Financial Services are ready to discuss the ins and outs of Market-Linked CDs as a possible investment option as part of your overall financial strategy.

Let the team at Kirtland Financial Services help you focus your goals and make an investment plan that’s right for you and your situation.

Make your appointment now!

 
Principal protection is the return of an investor’s initial principal amount if held to maturity. MLCDs should be purchased with the intention of holding until maturity. Some MLCDs may offer an early redemption opportunity, allowing holders the option to redeem prior to maturity. Generally, MLCDs held to maturity are entitled to full return of the principal amount invested. A secondary market for the MLCDs may develop, although there is no guarantee that any person will maintain a secondary market. The value of the MLCD sold prior to maturity in the secondary market will be subject to the prevailing marketing conditions and may include a transaction charge. The sale proceeds may be less or more than the original purchase amount paid. Market-Linked CDs are FDIC insured up to the FDIC limits. Any amount that exceeds the FDIC limits is subject to the credit and claims paying ability of the issuer. 

Subject to particular offering documentation. Participation in any underlying or linked product is subject to certain caps and restrictions. There is no guarantee of return above principal.

Return of principal is subject to the credit risk of the issuer.

Investments Retirement

Think of your favorite recipe.

How many ingredients does it have—just a few or is the dish more complex? What methods and tools do you need to make it? And once you have your ingredients mixed together, do you taste-test along the way to see if you need to make any adjustments?

These considerations are just as important for your investment and retirements plans as they are for your favorite dish. Some goals are more complex, requiring more varied avenues to work toward them. Your situation may require more time and different strategies to plan for retirement than another person’s, and that’s okay! And you absolutely want to “taste-test” your plans by meeting with your Wealth Management Advisor to make sure you’re on track or to make any adjustments to try to get back on course.

If you’re getting closer to your planned retirement age, check in with the Wealth Management Advisors to see if your retirement is on track by considering each step of the retirement checklist:

Retirement Budget
Understand what your income will look like in retirement so you can confidently spend your money.

Emergency Savings
The threat of emergencies doesn’t go away just because you’re no longer at risk for a job loss. Prepare by saving three to six months’ living expenses in an easily-liquidated source.

Taxes
Have a sound tax strategy will help you through the process of spending your retirement funds.

Lifestyle & Location
Have your plans for retirement changed regarding your housing options and location? If so, you may want to revisit your strategy.

Retirement Strategy
Planning the ‘when’ when it comes to tapping your 401(k), TSP or other retirement plan savings is a major part of being retirement-ready.1 And don’t forget about old retirement accounts from past employers! Use this time to bring all your retirement accounts together into one strategy. Make sure you're including all your past retirement accounts in your retirement strategy.

Estate Strategy
Retirement inevitably ends with your passing. Be ready for that day by planning how you want your assets to be distributed and who will handle your estate when you’re gone. Ask your Wealth Management Advisor about the exclusive Life Notes estate planning book from Kirtland Financial Services to help record your plan!

Health Insurance
Understand your options with Medicare and build a strategy for healthcare-related expenses.

Extended Care
Many retirees face health issues that require them to spend a portion of their retirement in long-term care facilities. Make sure you’ve planned for the possibility.
 
Social Security
Make sure you know how Social Security will factor into your income strategy.

Bucket List
It’s the best part of retirement! What are your goals and priorities going to be in retirement? Check in with your Wealth Management Advisor to help you stay on track.

Planning—following your recipe—can help you work toward a great final product. From the time you walk into your first job all the way through to deciding what will happen to your estate when you’re gone, planning helps you focus on your goals, not just react.

The professionals at Kirtland Financial Services specialize in helping you identify long-term goals and educating you on your options for working toward those goals. With a broad view of all your options, you will be able to more confidently make choices that are right for you.

Let Kirtland Financial Services help you with:
  • PROTECTION PLANNING - Do you have the right insurance options in place to protect your assets?
  • TAX PLANNING - How will tax laws impact you? 
  • INVESTMENTS - You have many options to try to grow your savings.
  • RETIREMENT PLANNING - It’s never too early to start.
  • ESTATE PLANNING  - Plan for the future you won’t see.
Work toward a delicious retirement!  Schedule your appointment today. 

 
1. Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Generally, once you reach age 70½, you must begin taking required minimum distributions.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
 

Investments Retirement


What kind of role can a financial professional play for an investor? The answer: a very important one. While the value of such a relationship is hard to quantify, the intangible benefits may be significant and long lasting.

A good financial professional can help an investor interpret today’s financial climate, define goals, and assess progress toward those goals. Alone, an investor may be challenged to do any of this effectively. Moreover, an uncounseled investor may make self-defeating decisions.

Some investors never turn to a financial professional. They concede that there might be some value in maintaining such a relationship, but they ultimately decide to go it alone. That may be a mistake.
 
No investor is infallible. Investors can feel that way during a great market year, when every decision seems to work out well. In long bull markets, investors risk becoming overconfident. The big-picture narrative of Wall Street can be forgotten, along with the reality that the market has occasional bad years.

This is when irrational exuberance can creep in. A sudden market shock may lead an investor into other irrational behaviors. Perhaps stocks sink rapidly, and an investor realizes (too late) that a portfolio is over weighted in equities. Or, perhaps an investor panics during a correction, selling low only to buy high after the market rebounds.
 
Often, investors grow impatient and try to time the market. Poor market timing may explain this divergence, according to financial research firm DALBAR.

In 2018, the average equity fund investor lost twice as much as the S&P 500. In January of 2019, investors were buyers again for only the 4th month out of the last 20. The average investor bought into an 8% advance in January and managed to outperform the S&P 500 by 0.57%. However, DALBAR, Inc. notes that a pat on the back may not be in order.

“This is a time where the average investor really needs coaching and perspective from a trusted expert. These last 6 to 8 months have been a silent killer of an investor’s portfolio. The average investor may be feeling like they successfully timed the market this time. After all, they sold during the horrible month of December and bought during the recovery of January.” said Cory Clark, Chief Marketing Officer at DALBAR, Inc. “This view can only perpetuate emotional investing and lead to devastating effects. The average investor lost a significant portion of their portfolio value in the second half of 2018 and January’s gains served only as a numbing agent to hide the sting that lies beneath.”

The other risk is that of financial nearsightedness. When an investor flies solo, chasing yield and “making money” too often become the top pursuits. The thinking is short term.

A good financial professional may help a committed investor and retirement saver stay on track. He or she can help the investor set a course for the long term, based on a defined investment policy and target asset allocations with an eye on major financial goals. The client’s best interest is paramount.

As the investor-professional relationship unfolds, the investor may begin to notice the intangible ways the professional provides value. Insight and knowledge inform investment selection and portfolio construction. The professional helps explain the subtleties of investment classes and how potential risk often relates to potential reward. Perhaps most importantly, the professional can help the client get past the “noise” and “buzz” of the financial markets to see what is really important to his or her financial life.
 
This is the value a financial professional helps brings to the table. You cannot quantify it in dollar terms, but you can certainly appreciate it over time.

The Wealth Management Advisors of Kirtland Financial Services value the client relationships above all else. Come meet the team, and experience the difference having a professional can make in your financial planning.

Learn more about Kirtland Financial Services now. 

Your first consultation is FREE. 

MAKE YOUR APPOINTMENT TODAY!

 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. 

DALBAR’S 2018 Quantitative Analysis of Investor Behavior (QAIB) study examines real investor returns from equity, fixed income and money market mutual funds from January 1984 through December 2018. The study was originally conducted by DALBAR, Inc. in 1994 and was the first to investigate how mutual fund investors’ behavior affects the returns they actually earn. The average equity investor return is measured using equity fund flows. Past performance is no guarantee of future results.

Citations. 1 - zacksim.com/heres-investors-underperform-market/ [5/22/17]

Investments Retirement Estate Planning

Where are all your important documents? Are they centralized and organized so you (or your family) could easily find needed information. Now is the time to get it together!

Before retirement begins, gather what you need. Put as much documentation as you can in one place, for you and those you love. It could be a password-protected online vault; it could be a file cabinet; it could be a file folder. Regardless of your method, by centralizing the location of important papers you are saving yourself from disorganization and headaches in the future.
 
What should go in the vault, cabinet or folder(s)? Crucial financial information and more. You will want to include:

  • Those quarterly/annual statements. Recent performance paperwork for IRAs, 401(k)s, funds, brokerage accounts and so forth. Include the statements from the latest quarter and the statements from the end of the previous calendar year (that is, the last Q4 statement you received). You no longer get paper statements? Print out the equivalent, or if you really want to minimize clutter, just print out the links to the online statements. (Someone is going to need your passwords, of course.) These documents can also become handy in figuring out a retirement income distribution strategy.

  • Healthcare benefit info. Are you enrolled in Medicare or a Medicare Advantage plan? Are you in a group health plan? Do you pay for your own health coverage? Own a long-term care policy? Gather the policies together in your new retirement command center and include related literature so you can study their benefit summaries, coverage options, and rules and regulations. Contact info for insurers, HMOs, your doctor(s) and the insurance agent who sold you a particular policy should also go in here.

  • Life insurance info. Do you have a straight term insurance policy with no potential for cash value whatsoever? Keep a record of when the level premiums end. If you have a whole life policy, you need paperwork communicating the death benefit, the present cash value in the policy and the required monthly premiums.

  • Beneficiary designation forms. Few pre-retirees realize that beneficiary designations often take priority over requests made in a will when it comes to 401(k)s, 403(b)s and IRAs. Hopefully, you have retained copies of these forms. If not, you can request them from the account custodians and review the choices you have made. Are they choices you would still make today? By reviewing them in the company of a retirement planner or an attorney, you can gauge the tax efficiency of the eventual transfer of assets.1

  • Social Security basics. If you have not claimed benefits yet, put your Social Security card, your W-2 form from last year, certified copies of your birth certificate, marriage license or divorce papers in one place, and military discharge paperwork and a copy of your W-2 form for last year (or Schedule SE and Schedule C plus 1040 form, if you work for yourself), and military discharge papers or proof of citizenship, if applicable. Take a look at your Social Security statement that tracks your accrued benefits (online or hard copy) and make a screengrab of it or print it out.2

  • Pension matters. Will you receive a bona fide pension in retirement? If so, you want to collect any special letters or bulletins from your employer. You want your Individual Benefit Statement telling you about the benefits you have earned and for which you may become eligible; you also want the Summary Plan Description and contact info for someone at the employee benefits department where you worked.

  • Real estate documents. Gather up your deed, mortgage docs, property tax statements and homeowner insurance policy. Also, make a list of the contents of your home and their estimated value – you may be away from your home more in retirement, so those items may be more vulnerable as a consequence.

  • Estate planning paperwork. Put copies of your estate plan and any trust paperwork within the collection, and of course a will. In case of a crisis of mind or body, your loved ones may need to find a durable power of attorney or health care directive, so include those documents if you have them and let them know where to find them.

  • Tax returns. Should you only keep your 1040 and state return from the previous year? How about those for the past seven years? Or have you kept every one since 1982 or 1974? At the very least, you should have a copy of returns from the prior year in this collection.

  • A list of your digital assets. We all have them now, and they are far from trivial—the contents of a cloud, a photo library, or a Facebook page may be vital to your image or your business. Passwords must be compiled too, of course. 

This will take a little work, but you will be glad you did it someday. Consider this a Saturday morning or weekend project. It may lead to some discoveries and possibly prompt some alterations to your financial picture as you prepare for retirement.

Come talk to the Wealth Management Advisors at Kirtland Financial Services for a retirement check-up and make sure you’re on track!


MAKE AN APPOINTMENT
 
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations:
1 - fpanet.org/ToolsResources/ArticlesBooksChecklists/Articles/Retirement/10EssentialDocumentsforRetirement/ [9/12/11]
2 - cbsnews.com/news/planning-for-retirement-take-inventory/ [3/18/13] )

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