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What Is the Social Security Administration?

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Almost all working Americans eventually receive Social Security benefits. These funds are collected and distributed by the Social Security Administration, a federal agency that serves to fight poverty. The SSA’s programs pay benefits to about 70 million people including retirees, children, widows, widowers and those with disabilities. It can be helpful to understand how the agency works and what it offers. Here’s a look at what the Social Security Administration provides and how its major programs work.

What Is the SSA?

The SSA stands for the Social Security Administration, and it was formed in 1935. Taxes are used to fund the agency, and payments are sent out to qualifying Americans. During its initial years, the SSA paid benefits to retired workers. In 1939, the agency added benefits for spouses, minor children and the survivors of deceased workers. Disability benefits began to be distributed in 1956. The agency also plays a role in Medicare enrollment.

Programs the SSA Provides

There are several main types of benefits the SSA pays out to individuals. These include payments to retired workers, those with a disability and survivors. Here’s a closer look at the SSA’s major programs:

Social Security retirement benefits. This program focuses on providing Americans with income after retirement. For those who have paid into the system, SSA issues monthly payments based on their 35 years of highest income. You can choose to take Social Security at your full retirement age, which for many people is age 66. You also have the option of taking it as early as age 62 or as late as age 70. “When to start taking one’s Social Security benefit is one of the biggest decisions most will make in retirement,” says Tim Wood, founder of Safe Money Retirement in Johnson City, Tennessee. The right time to begin benefits could depend on your health, working preferences, earning level and lifestyle choices in retirement.

Social Security disability benefits. Social Security Disability Insurance gives benefits to workers who become disabled and can no longer work. The program also provides for the dependents of disabled workers, and aims to replace some of the income lost because of the disability. There are rules and criteria you need to meet to be eligible for Social Security disability benefits, and you’ll need to show supporting medical evidence for your condition. “Another less known program is the childhood disability benefits, which allows individuals to receive benefits on their parent’s account so long as their disability begins before the age of 22,” says Andrew November, a disability attorney at Liner Legal in Cleveland, Ohio.

Social Security survivor’s benefits. A spouse and other family members of a worker who passed away may be eligible for Social Security survivor benefits. A widow or widower who is at least age 60 (or 50 and above if they have a disability) or a surviving divorced spouse could receive survivor benefits. This program also supports widows and widowers who are raising the deceased’s child, if that child is under age 16 or has a disability, and unmarried surviving children who are age 19 or younger and full-time elementary or secondary students or who have a disability that began before age 22. A stepchild, grandchild, step grandchild, adopted child or dependent parents could be eligible in some instances too. “Survivor benefits are one of the least understood and appreciated benefits,” says Paul Tyler, chief marketing officer at Nassau Financial Group in Hartford, Connecticut. “If your spouse passes away, you can file for survivor benefits that may be higher than your own.” If you were living with a spouse who passed away, you could also be paid a lump-sum death payment of $255.

Medicare. This government program provides health insurance for people ages 65 and older. The Centers for Medicare & Medicaid Services is in charge of the Medicare program, but the Social Security Administration handles enrollment in Medicare Parts A and B, and premiums can be withheld from your Social Security checks. If you sign up for Social Security before age 65, you may even be automatically enrolled in Medicare.

How the SSA Is Funded

Employers and workers pay into the Social Security program through a federal payroll tax called FICA, or the Federal Insurance Contributions Act. The current payroll tax rate requires both companies and employees to contribute 6.2% of wages up to a certain limit, which is $147,000 for 2022. Self-employed individuals pay 12.4% of their earnings into the Social Security program.

How to Contact the SSA

There are several ways to get in touch with the SSA if you have a question or concern about your benefits. Many routine tasks can be accomplished online at You can call 1-800-772-1213 between 8 a.m. and 7 p.m. Monday through Friday to speak to a representative. There are also automated telephone services that you can reach 24 hours a day. In addition, it’s possible to visit a local Social Security office in your area and make an appointment to speak to a representative about your situation.

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Ashley SaundersWhat Is the Social Security Administration?
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Nearly a quarter of Americans are putting off retirement because of inflation, survey finds

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Americans say they’re putting aside their retirement dreams for the moment – at least until the price of consumer goods and inflation settle down.

The BMO Real Financial Progress Index, a quarterly survey conducted by BMO and Ipsos that measures Americans’ opinions about financial confidence, found that nearly 60% of those surveyed think that inflation has adversely impacted their personal finances. Another 25% feel that rising prices have had a “major” effect on their finances.

The survey also showed that 36% of Americans have reduced their rainy day savings, and 21% have cut back on putting money away for retirement. Younger Americans – aged 18 to 34 – are taking the biggest hit, with over 60% of respondents in that demographic saying they have had to reduce contributions to their savings in order to make ends meet.

What people are doing to offset the growing costs of living

Consumers are taking a wide range of steps to keep their financial lives from crashing down around them. Some of them include:

Changing how they shop for groceries. Forty-two percent of survey respondents are opting for cheaper items and avoiding brand names. Instead, they’re buying more store brands and limiting purchases to necessary items.

Dining out less. Forty-six percent of the respondents said they either dine out less frequently or are consciously spending less when they do go out.

Driving less. Thirty-one percent of respondents are driving only when it’s necessary to offset the soaring cost of gas.

Spending less on vacations. Twenty-three percent of consumers said they’ll be cutting back on some of the frills when they go on vacation or canceling their vacation plans altogether.

Cutting back on subscriptions. Twenty-two percent of respondents said they are ending subscriptions to their gym, streaming platforms, and other services to save money.

What financial plan experts suggest as best practices

ConsumerAffairs reached out to retirement planning experts to see what they suggest Americans do to gain some financial balance between their spending habits and rising inflation. Paul Tyler, the Chief Marketing Officer at Nassau Financial Group, said the first thing near-retirees should do is continue to work if they can.

“By continuing to work, near-retirees can continue to bring in a paycheck to cover surprise expenses and let their 401(k) balances grow a little longer,” he told ConsumerAffairs.

He added that cutting back on unnecessary expenses is also a good strategy right now.

“Analyze your credit card bills and see where you can conserve cash. Call your cable provider and request a discount. Tell your cell phone company your thinking of switching carriers and they may offer a discount. Plan errands to maximize your gas dollars.”

Another insight comes from Mark Williams, CEO at Brokers International. He says consumers should try to reduce expenses by cutting out certain “luxury” purchases, but he also notes that credit card spending is also something to keep an eye on.

“If you are noticing money is getting tighter, try not to start using your credit card more often and go into debt,” Williams told ConsumerAffairs.

His suggestions for small changes you can make to your retirement strategy that might help?

  • Reduce the amount you contribute to your retirement accounts by reducing the withdrawal percentage you are contributing to your 401K, IRA, 403B, etc…
  • Reduce the amount of auto-withdrawal (if you have one) that is going to a savings account.
  • Reduce the amount you may be saving for secondary education.
  • Consider using the equity in your home for certain expenses by using a HELOC or other type of equity loan.
  • Consider increasing your deductible(s) on certain insurance policies (homeowners, car, boat, etc…) to reduce the monthly premiums. However, consumers should note that increasing deductibles means paying more out of pocket if there is a claim. If you take this approach, Williams says you should increase your safety net emergency savings account to offset the increase.
  • Consider a review of your life insurance policies and determine if you are overinsured. If you are, you could lower the face amount of the policies to reduce cost. This should be done after speaking to a financial advisor.

“Always seek professional advice when making changes to any retirement strategy and that becomes increasingly more important the closer you are to retirement,” Williams emphasized.

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Ashley SaundersNearly a quarter of Americans are putting off retirement because of inflation, survey finds
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Looking to Curb Your Retirement Savings? That’s a Bad Idea

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By Brian O’Connell

Americans are doing what they can to deal with skyrocketing inflation.

According to a new survey from New York Life, U.S. adults say they’re cutting back on dining out, and are pushing back big-ticket items like vacations, buying a car, or buying a home. That’s understandable, as consumer prices are up 8.5% on a year-to-year basis through April 2022.

Americans are also curbing their emergency fund contributions, partly to keep focusing on long-term retirement savings, which haven’t hit the chopping block — yet. According to New York Life, monthly household savings contributions are falling by $243 (and $289 by millennials), yet 72% of respondents still expect to retire at their desired age.

Keep the Retirement Train Rolling

With so many Americans whittling away at the household budget, should retirement plan contributions be on the chopping block next?

No way, say investment experts.

“Lost good habits take a long time to recreate,” said Paul Tyler, chief marketing officer at Nassau Financial Group in Hartford, Conn. “It’s much better to learn how to live on less now than live with regret later.”

According to Tyler, when you stop contributing to a retirement fund, you lose a valuable money-growing tool — compound interest.

“Depending on the growth rate of your savings in the future, the compound effect – both positive and negative – can be eye-popping over a twenty-year period,” he said. “So even with the occasional downturns, putting money in a 401(k) or an annuity could prove to the best hedge yet against inflation.”

Other money managers say that retirement funding should be deemed as a major household financial priority, just like food, mortgage payments, and health insurance.

“It’s a big concern when I hear people tell me that they should cut back or reduce their retirement contributions,” said Ashley W. Folkes, director of growth at BridgeWorth Wealth Management. “I like to talk to clients about their financial priorities, very similar to a hierarchy of needs pyramid, as funding retirement is very much foundational to their futures.”

Unless you can’t put food on the table and gas in the tank to get to work, Folkes advises looking at the budget to find other ways to reduce costs.

“Cutting our back on retirement contributions may feel like the easier, softer way to reduce cost, but it can be detrimental,” he said. “It’s very similar to trying to time the market. We don’t know how long inflation will stay at these levels.”

“You’re not only missing out on putting money into a bucket to fund your future, you’re also missing out on buying funds when they are cheap,” he added.

If You Have to Cut Retirement Savings, Try This Approach

Preston P. Forman, a certified financial planner with Seasons of Advice Wealth Management in New York, said he has yet to see clients reduce retirement contributions. But if you have to cut long-term savings, take a short-term mindset.

“For most of this century inflation has been an afterthought but I expect some people will trim their 401(k) contribution,” he said. “After the pandemic, no one is in the mood to deprive themselves of anything.”

Forman advises clients to reduce, not eliminate, retirement contributions if necessary and then reevaluate in three months.

“By then often the storm has passed, and it’s a lot easier to increase a contribution from 10-to-12 percent than from 0-to-12 percent,” he said. “The funny thing is that many clients who were going to cut their contributions never get around to doing it. And that’s a good thing, ultimately.”

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Ashley SaundersLooking to Curb Your Retirement Savings? That’s a Bad Idea
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401k Education Without Walls And Beyond Boundaries

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By Christopher Carosa

Finance is hard. It’s harder if you’ve never learned about it. Chances are if you’re an adult you’ve had precious little in terms of financial literacy training. In fact, the most exposure you’ve had might probably be at your regular 401k employee meeting. That likely isn’t the ideal environment to learn.

“In adult learning, we say that adults learn what they want to learn when they want to learn it,” says Jay Zigmont, Founder of Live, Learn, Plan in Water Valley, Mississippi. “The best chance we have to help adults to change is to have resources ready for them when they need them. Adults want to learn when they are going through or preparing for some transition or life event. For example, when they are starting a job there may be an opportunity for them to learn about benefits and the impact on their financial plan.”

Certainly, having new hires sit down and learn about company benefits is standard fare for the company onboarding process. But doesn’t this also represent an opportunity to think outside the box? Because a new job often suggests a major change in one’s life, the onboarding experience can be redesigned to address employee needs beyond the walls of the conference room.

Paul Tyler, CMO at Nassau Financial Group in Hartford, Connecticut, says, “We’re often guilty of creating too much art for ourselves. Unfortunately, many tools and books are written by and for the already-financially literate population. We, as an industry, need to listen harder to the real financial problems faced by those with little knowledge and large needs. And then we must rethink the tools we build that will help deliver relevant solutions for them.”

“Employers and retirement plan sponsors should provide more holistic financial education resources as opposed to content that is singular in focus on retirement planning only,” says Courtney Hale, Chief Hope Dealer at Super Money Kids Co. in Nashville, Tennessee. “It’s really difficult to adequately contribute to retirement when you are buried by student loans and paying for daycare in a city with a high cost of living. Our monthly budget impacts how much we are able to contribute to retirement. Our debt repayment plan impacts our budget which impacts how much we are able to contribute to retirement and so forth. There needs to be more emphasis on how these things can work together for a more prosperous future.”

Still, the very mechanism of delivery may be faulty.

“Employers have the administrator of their company 401k plan provide seminars,” says Havis T. Bardouille of Bardouille Financial and host of the Tuesdays with Terrence Financial Insights Podcast in Lancaster, South Carolina. “But just because they offer them, does not mean their employees understand them fully. They can follow up with ongoing series, workshops, or resource documents. Mailers and social media campaigns are great options too for adults who are more private and may not want to attend a public gathering to alert others that they lack financial knowledge. Adults learning financial literacy need to be taught more strategically and customized for their later stages in life to take away the difficulty of the task. They need long-term tailor-made plans, but also, quick tips that are valuable and strategic, that can reveal results quickly.”

One of the most cost-effective methods for addressing the challenges of employee financial literacy training is video.

“Video gives people the most amount of information in the shortest amount of time,” says Robert Weiss, President of MultiVision Digital in New York City, who has produced over 1,000 videos over the past 11 years, many of them on the subject of money. “When busy people go to learn, they seek video first. Video tells as opposed to having them read and figure things out. Video is easy to rewatch and share versus re-read.”

In addition to offering the advantage of privacy, videos have no bounds of use. It’s been around for a while, but NetFlix et al have made ‘binge-watching’ a social norm. Is this habit about to trickle down into 401k education and financial literacy in general?

“Employees can access the videos on their own time when they’re most able to absorb the information,” says Shawn Plummer, CEO of The Annuity Expert in Atlanta, Georgia. “What’s more, many of the concepts can be hard to grasp at first, but with rewatching, closed captions, and transcripts, the information absorption becomes easier.”

Imagine what you do when you want to learn how to fix something in your house that you’ve never fixed before. You look it up on the internet and read how to do it. After going through a few articles and still not confident you know enough, you through in the towel and play a video that shows you how to do it.

This works for what ever appliance, yard tool, or stingy stain you need answers on. And it’s right there at your figure tips whenever you need it. Wouldn’t it be great to find financial solutions the same way?

“For especially dense topics, videos are a way to make personal finance content more engaging and easier to understand,” says Gabi Slemer, CEO & founder of Finasana in Fort Lauderdale, Florida. “A video library can also be tailored to individuals’ interests and needs so that they can watch only the topics that interest them and therefore are more likely to be fully engaged than during a traditional meeting.”

To be truly effective, 401k plan sponsors can’t rely on just one generic video. You need a fairly comprehensive selection to address the variety of needs out there. You never know when someone has a desire to learn something. An extensive array of short videos covering narrow topics provides an efficient way for employees to gain more satisfaction with the benefits package offered by the company.

“Online video libraries give adults time to process the information,” says Jerry Han, CMO of PrizeRebel in Los Angeles, California. “Assignments and application sessions are highly personal, and many adults don’t have the time to do them immediately. Online video libraries give them time to process the information. The e-learning experience becomes much more effective when adults can set aside a 20-minute session for learning. In-person education meetings are usually given in lecture form, not giving students the time to truly dig into the information. In-person 401k educational meetings don’t give adults preferential times for learning. That usually means adults suffer from fatigue and don’t understand difficult material when given in large doses.”

And going back to that household repair process, where you really take your time before acting, financial videos can give employees the confidence – and the time – to make those important financial decisions.

“401k videos can provide real-life applications and connect to e-learning activities,” says Stewart Dunlop, Founder of LinkBuilder in Edinburgh, Scotland. “Traditional in-person training often doesn’t go into depth. Videos allow for tangents, for moving into directions most in-person training can’t due to time constraints.”

Now that you understand the value of video, you’re probably wondering about some of the more practical aspects of the medium. For example, how long should videos be? Here, you’ll find answers from across the spectrum.

Slemer says, “3 to 5 minutes, consistent with adult learning principles. Shorter videos are better at keeping attention spans and allowing individuals to process one topic at a time and fully grasp it before moving on to the next. Ideally, a library with sequential videos that cover micro topics one at a time.”

Han, on the other hand, says, “20-minute videos are the best length. Humans generally struggle to focus after 25 minutes, so retaining optimal focus during education settings gives them the time to fully devote themselves to learning. Breaking those videos into chapters and sessions is also helpful. If adults only have a short time to learn, they can always refer back to chapters within videos to pick up where they left off.”

In the spirit of not-too-hot/not-too-cold, Plummer says, “Try to stick to the 10-15 minute mark. You’ll notice that most online courses follow this rule of thumb as well. It’s a standard across information genres.”

But Weiss provides the answer you’d expect from a film producer. He says it “depends on the content at hand.  There is no rule aside from ‘never make a video longer than it has to be.’”

The next most important question is how do you arrange the material. Even though videos can be short and focus only on one small topic, that doesn’t mean they can’t be sorted into broader categories.

“When it comes to financial literacy topics,” says Slemer, “there are three basic rules that make up overall financial planning: (1) save money, (2) avoid (or get out of) bad debt, and (3) invest for the future. Of course, each of these topics can be further broken down into greater detail to be fully explained, which is where a video series comes in!”

You’ll probably want to find the right talent for the videos you offer. That doesn’t mean you’ll be making the videos. Someone else will. You just want to know about the folks creating that content. After all, just because you can do an internet search for financial literacy videos doesn’t mean the advice and lessons offered in those videos are sound.

“The challenge right now is that the primary resource people use when they want to learn may be the Internet,” says Zigmont. “The Internet allows you to have information at your fingertips, but without context. The result for many people is that they end up trying to solve each problem with whatever is popular that day, resulting in a financial plan that is disjointed and not heading towards their goals.”

Although it’s good to have some entertainment value in these videos, don’t lose sight of their real purpose.

“Videos need to be relatable enough that users will benefit from them,” says Slemer. “However, relatability is not a substitution for education and knowledge. You should always ask questions about the creators’ background: why are they giving me financial advice, are they qualified to do so (and if so, by whom?), and why should I trust them? If you can’t answer these questions, I would strongly suggest fact-checking the information you get with more reputable sources!”

One obvious/not-so-obvious choice is people who teach for a living.

“Financial educators should make the videos,” says Dunlop. “Professors in finance understand the basics of retirement contribution law. Because most financial educators have experience in online courses (due to COVID), they can provide a solid outline. Professionals within the 401k sphere. They can answer questions regarding fees, the best financial options for 401k support, and how to create your own should you work for yourself.”

How can you be sure your video library is accessible to your employees? Are these videos better delivered on an open platform like YouTube or behind an “employees” company website?

“If you’re making your own videos for a limited audience (employees, namely), then keep them on your own platform,” says Plummer. “YouTube gives you a lot of data on your viewers, which isn’t useful information if you’re not trying to build an audience. You can keep the videos on YouTube unlisted if you need to use their platform.”

It’s generally easier to control how videos are stored on the “library shelf” if you use the company website. Already YouTube does allow for something similar to this, navigating their platform requires a certain level of internet familiarity and intuition. This isn’t something you can count on among every single employee.

“The benefit of an open platform like YouTube is that the content is widely available and accessible to everyone,” says Slemer. “The detriment, however, is that by its very nature the content ends up being viewed as a one-off and not part of a sequence, which can be harmful to overall comprehension and understanding because it then becomes difficult to conceptualize as part of a greater topic.”

Finally, it’s important to remember no single method of delivery is foolproof. They all have shortcomings, including video. The bigger question is how to overcome these shortcomings (if you can).

“When you create mass content via any delivery method (such as videos), you’re generally creating content for the lowest common denominator within your target audience,” says Slemer. “As a huge proponent of eliminating jargon and answering the ‘stupid’ questions that are on everyone’s mind, I find videos to be a huge advantage to help level the playing field. Having said that, this means that the content can be quite generalized, and people may feel that it isn’t specific enough to their situation, which can be mitigated by ancillary offerings, such as 1×1 guidance or Q&A.”

That lack of live talent is the major drawback of videos.

“Videos don’t offer immediate support,” says Han. “If you have questions, teachers can’t immediately answer them. Only 48% of people believe that e-learning is as effective as online learning, mostly because they can’t ask questions. Provide FAQ sections for every section. Assign someone with no experience to go through the video and answer their questions in a FAQ section. The more people you ask, the more in-depth your course becomes.”

Oddly enough, while the lack of a live teacher presents one problem, the lack of a live audience provides another.

“On the other end of the spectrum,” says Slemer, “it’s also incredibly easy to fall prey to the ‘curse of knowledge,’ especially when you don’t have a captive audience giving you live feedback and asking questions. The curse of knowledge is a cognitive bias that occurs when you unknowingly assume that others have the background to understand the information you are conveying (enter: ‘jargon’). You overcome this by creating a community and tailoring your videos to their needs.”

In a few years, employee 401k education meetings might be a thing of the past. In the future, it’ll be all about those weekend 401k education binge parties.

Break out the popcorn!

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6 High-Return, Low-Risk Investments for Retirees

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The Centers for Disease Control and Prevention reports that life expectancy at age 65 for the U.S. population in 2019 was 19.6 years. That fell to 18.8 years in 2020 as the pandemic took hold, but it still means that those who retire at the traditional age should be prepared to fund at least two more decades of living expenses.

Investing wisely can help supplement Social Security benefits. “Given low starting points of traditional bond yields, (retirees should) consider enhancing overall portfolio yields by looking outside of the bond market,” says Christine Armstrong, executive director of wealth management at Morgan Stanley Wealth Management. “Any deterioration in economic prospects, for example, from the Russia-Ukraine conflict, could weigh on riskier assets like oil, and in such a scenario traditional fixed income, especially Treasurys and investment-grade debt, will likely outperform.”

Here are six investments that could help retirees earn a decent return without taking on too much risk in the current environment:

  • Real estate investment trusts.
  • Dividend-paying stocks.
  • Covered calls.
  • Preferred stock.
  • Annuities.
  • Alternative investment funds

Real Estate Investment Trusts

Real estate investment trusts, or REITs, invest in mortgages or direct equity positions in various types of properties.

“For clients in retirement, income becomes important and managing retirement income risk becomes critical,” Armstrong says. “Retirees need to plan for how to provide adequate income while growing and keeping up with inflation as well as how to withdraw in a tax-efficient way.”

REITs are required to distribute 90% of their taxable income as dividends to their investors, and that yield is usually higher than what you can get from stock dividends. The combination of high dividends and the ability to develop properties or sell them and redeploy the money means these investment vehicles “can be a good total return investment for retirees as a portion of their portfolio,” says Michele Lee Fine, CEO of Cornerstone Wealth Advisory.

Dividend-Paying Stocks

Stocks that pay dividends can offer relative stability in the often-tumultuous world of equities. These dividends are often higher than those from safer investments, such as certificates of deposit and U.S. Treasury notes – especially now, as interest rates are inching up but remain historically low.

While you still have to take on the risks associated with stocks, dividend payers also offer the chance to earn money regardless of whether the stock price rises. With the combination of price growth potential and income, these stocks can help you keep ahead of inflation.

“Companies with long track records of dividend payouts to investors every year through the worst market cycles, crashes and more, reflect a commitment to shareholders that can provide retirees greater peace of mind,” Fine says.

You have to be careful when choosing dividend-paying stocks, however. “A lot of times when companies are offering high dividends, they’re doing that to attract investors, and they’re borrowing money to pay that dividend,” says Adam Lampe, CEO and co-founder at Mint Wealth Management. “So you need to be sure they can actually deliver.”

To do this, look for so-called dividend aristocrats, members of the S&P 500 that have raised their dividends for at least 25 consecutive years. These are some of the best dividend-paying stocks, with the kind of solid track record on which retirees can rely. Consumer staples giant Procter & Gamble Co. (PG), for example, has made uninterrupted payouts for more than 60 years.

Covered Calls

One way to lower risk with dividend-paying stocks is to write covered calls on them, says Laurie Itkin, a financial advisor and wealth manager at Coastwise Capital Group.

In the stock options market, a call is the right, but not the obligation, to buy or sell a stock at a specific price during a specified time frame. An investor who holds a stock can sell (also known as write) a call option above the stock’s current price to receive a premium payment. Note that if you write a covered call on stock you own, you may be forced to sell the stock if the holder of the call decides to exercise the option.

A covered-call strategy works best when investors believe that the stock they’re holding won’t see sharply higher or lower prices.

With covered calls on dividend-paying stocks, investors can benefit from the call option premium in addition to capital appreciation and dividend income, Itkin says. “Writing covered calls on dividend-paying stocks is less risky than just purchasing dividend-paying stocks,” she adds.

Preferred Stock

Preferred stock is a stock-bond hybrid that pays a coupon well in excess of government bonds, but with the price volatility of stocks.

In the pecking order of who gets paid if a company goes bankrupt, preferred shareholders have priority before common stockholders but after bondholders. As long as a company stays financially healthy, this extra risk means bigger payouts to holders of preferred stock compared with bondholders.

The high yields that preferred shares can offer for a retiree’s income stream make them “a desirable asset class for retirees seeking passive income,” Fine says. “It’s important to incorporate them into a diversified strategy to ensure it’s part of a suitable portfolio for one’s particular unique goals and objectives, risk tolerance and time horizon.”


Annuities are investment contracts between you and an insurance company. They come in different forms, and usually include a guaranteed return at a stated rate.

In addition to fixed annuities, there are also fixed indexed, variable, immediate and deferred annuities. “You can likely earn higher guaranteed interest rates on your retirement nest egg today in a fixed annuity than you can in a bank CD,” says Paul Tyler, chief marketing officer at Nassau Financial Group, which sells annuities.

Fixed annuities guarantee the principal invested, a minimum interest rate and set payouts for the life of the annuitant. It’s important to pay attention to the fees and commissions an annuity charges, which can be very high. Many annuities also have complicated features, so take the time to fully understand the product, and take a close look at how an annuity will change your tax liability.

Alternative Investment Funds

“The basic premise with an alternative fund is that you want to have investments that are not correlated to the stock market,” Lampe says. This can help “smooth the ride” of your portfolio by keeping all of your investments from moving in the same direction at the same time.

Alternative funds can include options strategies, convertible bonds and merger arbitrage. “Put together, these strategies can have some of the same characteristics as bonds, such as having a low correlation to stocks and having low overall volatility,” says Ryan Johnson, director of portfolio management and research with Buckingham Advisors.

Investing in mutual funds also allows for daily liquidity. Johnson’s firm has recently used the Calamos Market Neutral Income Fund (CMNIX) and the Vivaldi Merger Arbitrage Fund (VARBX).

It’s worth noting that low volatility doesn’t necessarily translate to low risk, however. For instance, CMNIX has relatively low volatility but uses complex trading strategies, such as shorting stocks, which can work great until they don’t, like what happened with GameStop Corp. (GME).

With alternative investments, hiring an experienced, specialized mutual fund manager makes sense, Johnson says. That said, investors should keep in mind that fees for alternative investment funds can be higher than average because of extra administrative, trading or legal research fees, he adds.

Lampe says that as much as he thinks alternatives can “play a role in many portfolios,” most investors should keep alternatives no more than 10% of their portfolio.

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley Saunders6 High-Return, Low-Risk Investments for Retirees
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How Claiming Social Security Early Will Affect Spousal Benefits

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When To Apply for Benefits

At full retirement age, the spousal benefit you’re entitled to is 50% of the benefit of the highest-earning spouse. If the Social Security you earned is $900 and your spouse receives $2,000, you will receive an extra $100 per month in spousal benefit to bring your payment to $1,000 — or 50% that of your spouse. If your own Social Security earnings exceed the 50% amount, you won’t receive a spousal benefit.

The amount of the spousal benefit you receive, however, depends on the age at which you file for Social Security, and there are two benchmarks: age 62 and 67, which is the full retirement age for workers born after 1954.

If you file at age 67, you will get the full 50% of your spouse’s Social Security payment. If you file at age 62, you will receive 32.5% of the spousal benefit. The amount increases on a sliding scale until you reach the 50% amount at age 67. The Social Security Administration has a calculator to provide the percentage you’ll receive by entering your date of birth and the month and year you want to receive benefits.

Retire Comfortably

“It’s easy to take the money and run as soon as you’re eligible, usually when you’re 62,” said Lyle Solomon, a financial expert and consumer bankruptcy attorney in California. “After all, you’ve most certainly paid into the system for your whole working life and are now ready to collect your benefits. It’s also wonderful to have a monthly income guarantee.”

But should you apply for benefits?

“Three main characteristics that can influence when you collect Social Security benefits are your health, longevity and retirement lifestyle,” Solomon said.

The Disadvantages of Applying at Age 62

“Generally, if anyone is in good health and can pay monthly bills, deferring Social Security as long as possible makes the most financial sense,” said Paul Tyler, the chief marketing officer of Nassau Financial Group in Hartford, Conn.

Every month between age 62 and 67 that you can wait increases your eventual benefit.

“One of the best ways to maximize Social Security benefits is to utilize spousal benefits the optimal way,” said Chuck Czajka, a certified Social Security claiming strategist and the founder of Macro Money Concepts in Stuart, Florida.

Easy Things You Can Do to Start Preparing for Retirement Now

Worried About Social Security Not Being Enough?

“Taking early spousal benefits can impact benefits substantially. A spouse can take benefits as early as 62 years old, but this would result in a permanent reduction in benefits forever.”

Additionally, Czajka said, drawing on your benefits decreases the amount of money you can earn. If you’re 62, healthy and still enjoying your job, it pays to wait on your benefits. Your spousal benefits will be reduced if your job pays you more than $19,650 a year before reaching full retirement age.

“One thing to consider is if you are still working at 62, your benefits will be reduced and benefits will be withheld $1 for every $2 you earn over $19,560,” Czajka said. “This could mean thousands of dollars over your lifetime.”

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersHow Claiming Social Security Early Will Affect Spousal Benefits
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The Good, The Bad, And The Ugly On Annuities In 401k Plans

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By Christopher Carosa, CTFA

You may love annuities. You may hate annuities. You may merely say “Meh” about annuities. Whatever the case, the discussion of placing annuities in retirements plans has increased over the last several years. Depending on what surveys you read, people either want the comfort of a “guaranteed” income stream in retirement, or they’re reluctant to risk all their retirement savings on one complicated product.

And, as a practical matter, in order to generate the kind of income that will yield enough money to pay typical retirement living expenses, you need far above the average retirement savings amount.

“Based on someone’s age, an annuity payout can be more or less,” says Erik Sussman, CEO of the Institute of Financial Wellness in Fort Lauderdale, Florida. “The older someone is, the more income the annuity will provide. Generally, you can receive approximately 6% from most annuities at age 65 and beyond, so for 100K it would be 6K a year, 400k it would be 24K a year, and for a million, 60k a year. There are many factors that determine an annuities payout, but this is a good rule of thumb.”

Bear in mind, recent data shows the typical 401k account holds less than $200K at retirement age. Can you live on $12,000 a year?

If the numbers don’t add up for annuities (or anything else, for that matter), where is the demand for these products coming from?

“I believe annuities become more popular in turbulent times, which certainly has been the case the past few years, continuing today with war being waged in Eastern Europe,” says Anthony C. Kure, Managing Director of Northeastern Ohio Market at Principal Wealth Management in Cleveland, Ohio. “The companies that offer annuities capitalize on the fear that comes from uncertain economic times when they roll out advertising for these products. It’s also for those who don’t want to manage their retirement, turning it over to an insurance company.”

Without a clear understanding of the actual income typically produced by annuities for the amount they’ve saved, retirement savers focus on other aspects of the products that sound more attractive.

“The demand for annuities in retirement plans is coming from the increase in life expectancy and the decrease in defined benefit pension plans,” says Sussman. “In essence, an annuity is a way to create your own defined benefit plan.”

In addition, regulators have been trending towards an annuity solution as a way to at least show the appearance of addressing issues important to retirement.

“Right now, policymakers are pushing it as a solution to mounting retirement crisis,” says Paul Tyler, CMO at Nassau Financial Group in Hartford, Connecticut. “As more people start to get income projections with their annual statements, they will increasingly ask for it.”

But can 401k plan participants trust what those “monthly project income” figures tell them?

“There are simply too many variables to accurately predict anyone’s income on a future basis,” says Scott Eichler, Founder of Standing Oak Advisors in Orange County, California. “It would be like asking someone to predict which pitches to a specific batter would result in home runs. You may guess correctly, but chances are low.”

In fact, the danger is these mandatory reporting figures can trick plan participants into thinking things are either too rosy or too dour.

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersThe Good, The Bad, And The Ugly On Annuities In 401k Plans
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5 Simple Habits That Will Help You Save for Retirement

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By Bob Haegele

Saving for retirement can be a struggle. You might have many years left in your career, and it can seem almost impossible to save the necessary hundreds of thousands or even a million dollars. While a million dollars is still a lot of money, there are some simple habits you can start today that will help you save for retirement.

Everyone has different goals, of course, and you may not quite be aiming for a million bucks. Whatever dollar amount you have your sights set on, the basic principles for retirement savings are the same. Put the right systems in place, and you won’t even have to think about it very much.

Let’s dive into five simple, yet effective ways to get started on your retirement savings.

Start Investing at Work

For most of us, the first way to start investing is to do so at work. If your employer offers a retirement plan (or multiple plans), be sure to contribute to those plans monthly. Some employers may opt you in automatically, but double-check to ensure you are contributing. Retirement plans are tax-advantaged, so they will make your money go further.

Richard Tatum, president of retirement services at VestWell, recommends opening an IRA if you don’t have a 401(k) or a similar plan at work. “If your employer doesn’t offer one, ask your financial advisor about opening an IRA (individual retirement account), which is also a tax-advantaged retirement savings account, but it doesn’t require a company to sponsor the account to open one.”

Take Advantage of Employer Matching

Employer-sponsored retirement plans such as the 401(k) often come with employer matching, and that’s something everyone should maximize. No matter what your retirement goals may be, employer matching is one of the easiest ways to increase how much you save.

The way employer matching works is simple: any time you contribute to your retirement plan, your employer matches that contribution. There are usually limits on how much they will match and the percentage may be different in some cases, but you are guaranteed to have extra retirement savings if you take advantage.

“Employers will often match a certain percentage of your retirement plan contributions,” says Tatum. “Make sure you’re putting in enough to at least get the maximum they will contribute — it’s free money!”

Save Money Before Anyone Knows You Have It

Let’s face it: getting paid can be very exciting. You see your paycheck come through and you immediately start thinking about all the things you can buy with it. A new phone, some new clothes, or whatever it is that interests you. But if you never see that money come through, you’ll probably be less tempted to spend it!

“Try bumping up your 401(k) contribution by just $50 to $100 each paycheck,” says Paul Tyler, chief marketing officer at Nassau Financial Group. “If anyone is watching the bank deposits, they probably won’t notice. But you will be surprised even in the first year how much faster your account will grow.”

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley Saunders5 Simple Habits That Will Help You Save for Retirement
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Evaluating an early retirement offer: What to consider before accepting one

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…Your financial situation

While you may end up taking an offer because you’re making the best of a bad situation, you’ll want to consider a number of issues that may arise if you’re not employed. But while you’re taking early retirement from this company, that doesn’t mean you have to retire. You’ll also want to consider how accepting the offer affects your retirement finances such as Social Security.

If working is a lifestyle decision, you’re in an enviable position, but whether working is a choice or not, you’ll still need to assess your financial picture, especially if you’re on the younger side. Chuck Czajka, founder and CEO of Macro Money Concepts in Stuart, Florida cautions that “The younger you are, the more stress will be placed on retirement assets.”

“Do you need to work to pay your bills,” says Tyler. “You may be lucky enough to have earned and saved enough to be financially independent. If you fall into this rare category, congratulations.”

If the offer is generous and you think you’re able to retire, experts recommend that you review your finances thoroughly before making that decision.

You’ll want to ask yourself:

  • Do you have enough to live comfortably in retirement?
  • Are you old enough to access retirement accounts such as a 401(k) or IRA penalty-free?
  • Do you have access to healthcare, and will you be able to afford it?
  • What other sources of retirement income do you have available?
  • Will taking early retirement have a negative impact on your pension (traditional defined benefit plan)?
  • Do you have hobbies or other pursuits that you are passionate about if you retire early and no longer have work to keep you motivated and engaged?

If you retire early, you might be able to get by for a few years until you can access your full retirement funds at age 59 1/2. However, you’ll also want to consider how early retirement affects Social Security, a decision that will impact your monthly benefits for the rest of your life:

  • Calculate your benefits to see how much retiring now will affect your payout later.
  • Have you already worked enough to claim a sufficient benefit?
  • Will you be able to pull through financially until Social Security kicks in?
  • Will you opt for an early benefit rather than your full retirement benefit?

While early retirement sounds attractive, you’ll want to keep these questions in mind and consult with a financial planner and/or tax professional, because you may be giving up more than you anticipated – financially and otherwise – when you first decided to retire. …

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersEvaluating an early retirement offer: What to consider before accepting one
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Annuities And Predicting The Right Time For The Market With Paul Tyler

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Paul Tyler, one of the That Annuity Show hosts and Nassau CMO, was a recent guest on Kevin McCullough Radio! Paul joins Kevin to talk about annuities and market predictions.

Listen to the audio release, here:

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The discussion is not meant to provide any legal, tax, or investment advice with respect to the purchase of an insurance product. A comprehensive evaluation of a consumer’s needs and financial situation should always occur in order to help determine if an insurance product may be appropriate for each unique situation.

Ashley SaundersAnnuities And Predicting The Right Time For The Market With Paul Tyler
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