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Reduction in Social Security Benefits

June 6, 2011 | Filed Under Finance, Retirement Savings, Tax Articles | Comments Off

Social Security has been a heavy burden upon the government for some time.  The number of baby boomers reaching retirement will flood the Social Security roll call to an unsustainable level.  The government has borrowed against Social Security, leaving it highly susceptible to collapse.

In an effort to solve the Social Security dilemma, if at least for political gain, proposals are being offered to reform the program to shore up it’s financial coffers.

One of the proposals suggests changing the formula used to calculate the Cost-of-Living-Adjustment(COLA).  Automatic annual increases to benefits occur to offset the rising cost of living…inflation. The modification would reduce the increase by three tenths of one percent(0.3%).  The adjustment for inflation is a valuable aspect of Social Security, one not often found in pension benefit programs.   A reduction in the adjustment, however slight, will erode further the retirees’ ability to survive financially.

As it stands today, an estimated 29% of Americans in the second-highest income bracket will run short of money after 20 years in retirement and approximately 40% in the lowest pre-retirement bracket will run short in just 10 years, according to projections by the Employee Benefit Research Institute(EBRI)’s 2010 Retirement Readiness Rating ™.

A 0.3% reduction may not sound like much,  but the impact will have a compounding effect on the benefits one receives and is predicted to be almost immediate with no grandfathering in of current recipients to the old rates.   Compounding interest is great when it is in your favor, but it will eat away at your buying power when it is against you.

The National Academy of Social Insurance(NASI) estimates a 3.3% reduction in the COLA will cut lifetime benefits by about 9% for someone reaching the age of 92.

Here are 5 Tips to counter measures proposed to reduce one’s overall Social Security benefits:

  • Save as much as you can now.  A rule of thumb is 10% of your income.
  • File for Social Security benefits later rather than earlier.  The longer you wait to draw on Social Security, the greater the benefits you may receive over your lifetime.  For example, someone starting to take benefits at age 62, will likely receive 25% less in benefits then someone who waits until the age of 66.   If you wait until age 70, your benefits could increase by as much as 32%!
  • Keep working.  Not a prospect most of us are looking forward to, but the longer you work, the more you can contribute to your 401(k) with hopefully company matches.  You’ll also delay onset of receiving
  • your SS benefits.
  • Reduce  your fixed costs, in particular, your mortgage.
  • Stay ahead of inflation with investments that outperform or at least keep pace with inflation.

Some reform measures look to raise the retirement age(this is just a forced delay in taking your Social Security benefits…one that profits the government and not you), or raising Social Security taxes.  These ideas I think will merely benefit the politicians and hurt the rest of us.  Reducing the Cost-of-Living-Adjustment would keep a little more in the Social Security storehouse, and will seem less of a threat to many retirees lifestyle, that it may just pass.  This however, is seen by some experts to be a bigger threat to retirees future financial security.

Affording Retirement

May 18, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

Are you among the 40% of working Americans that feel you will never be able
to afford to retire? A Harris Interactive survey of 1005 American workers,
reported figures to the American Institute of Certified Public Accountants,
that reveal the pessimistic outlook many Americans have regarding their
future days in the sun.  The study also showed that 55% of workers don’t
know how much they’ll need to retire.  Those who have some figure in mind,
are likely to underestimate how much they’ll need in savings.

The current state of the economy has left a hefty 56% of Americans who say
they can’t afford to save, and almost a third who feel they are financially
worse off now then they were a year ago.

“These statistics suggest we are on the verge of a retirement crisis in
America,” said Jordin Amin, chairman of the National CPA Financial Literacy
Commission(AICPA).  “Americans don’t know how to prepare for their twilight
years, and many have put off figuring it out because they’re struggling to
make ends meet now.”  Concerns over rising gas and food prices have 60% of
Americans interviewed by the AICPA Commission making adjustments to their
financial planning.  Worries over retirement however, are still looming over
90% of those interviewed, outranking concerns over uninsured medical
expenses, gas prices, and expanding educational costs.

The American Institute of CPA’s is trying help Americans gain financial
health through free educational programs and tools, and a task force of
volunteer CPA’s.

Despite the cloudy outlook, it is encouraging to find that nearly 60% of the
survey participants see savings as part of their lifestyle, regardless of
their current means to provide for it.

“Here’s  the best advice I can give for retirement planning: Start!”, Amin
said, “Set aside a $1 a day for an IRA, or $100 a quarter for a 401(k).
Small change adds up.”

In addition, the Commission offers these tips in establishing a financial retirement

  • Track your expenses for three to six months. Then think about how those expense                                                might change in your retirement years.
  • Create a concrete plan, determining how much you’ll need to save.
  • Develop a transition plan.  Many Americans reaching age 65, discover that their working                                           years still lie ahead.  Consider doing part-time or consulting work to supplement                                                      your  savings in order to transition into full retirement.

For more personal counsel about retirement planning, contact Shari Mattingly-Bevan
& Associates to help get you on track  for retirement.  864-283-6906 or

Medical Bill Forum

April 26, 2011 | Filed Under Finance, Insurance | Comments Off

I found a unique online forum on questions and solutions to medical billing issues, I’d like to share.   The forum was created in response to a new book,  The Medical Bill Survival Guide: Easy, Effective Strategies for People Experiencing Financial Hardship by Nicholas Newsad M.H.S.. Mr. Newsad states that “he hopes the forum will serve as a repository of knowledge for those that have overcome medical bill problems to share their stories and advise those needing help with medical bills.”  It’s my wish you don’t ever need it, but in case you do, take at look at

I have definitely bookmarked this resource!

Planning for Retirement

April 19, 2011 | Filed Under Finance, Insurance, Investment, Retirement Savings | Comments Off

The National Retirement Planning Coalition, a group of prominent financial industry, educational and advocacy organizations, is working to raise public awareness of the need for comprehensive retirement planning.    The members of the Coalition believe it is still possible to “Retire on Your Terms” if comprehensive retirement plans are properly developed and managed. This week the Coalition sponsored the National Retirement Planning Week to help raise awareness and educate Americans.

Cathy Weatherford, CEO and President for the Insured Retirement Institute (IRI), which heads the Coalition, said, “ Planning for retirement can be a daunting task, especially given the recent economic climate. And while by most accounts the financial forecast appears to be improving, millions of Americans have yet to begin preparing for their retirement.  Wanting to spend their later years content, secure and financially sound is the goal of anyone thinking about retirement.”  The IRI has developed a consumer guide to aid in planning for one’s retirement.  Their “Top 10 Ways to Prepare for Retirement” are useful tips to map out a course for a secure financial future.

Top 10 Ways to Prepare for Retirement:

  • Select a target date for when you want to retire.
  • Calculate how much money you need to accumulate by the time you want to retire.
  • Find out how to maximize your Social Security benefits.
  • Take full advantage of tax-advantaged plans such as employer retirement plans, individual retirement accounts and annuities.
  • If you employer doesn’t have a pension or retirement plan, ask that one be started.
  • Don’t touch our savings for anything but retirement.
  • Diversify your assets and be sure to include guaranteed income for life.
  • Ask questions.  Get help.  Seek the assistance of a professional financial advisor.
  • Start now, set goals.
  • Do a retirement plan and monitor your progress.

Just a few short years ago millions of Americans relied up their employer sponsored retirement plan to achieve their future financial goals.  But with more than 2.4 million active 401(k) participants affected by employers suspending their savings match at the beginning of the market decline, along with so many others who have lost jobs or have had their employer benefits reduced, it is even more vital now that people meet with an ethical, and competent financial advisor to start a retirement plan today.

Please contact Shari Mattingly-Bevan & Associates for additional information on retirement planning solutions at 864-283-6906.

Financial Wisdom from Benjamin Franklin

April 14, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

“Buy what thou hast no need of and ere long thou shalt sell thy necessities.”

Quote-Benjamin Franklin lived from 1706 until 1790. He was one of the most well-known Founding Fathers of the United States, an author, printer, scientist, politician, publisher, inventor, philosopher, civic activist, and diplomat.

Fixed Indexed Annuities Ideal in Today’s Market

April 8, 2011 | Filed Under Finance, Investment, Retirement Savings | Comments Off

Between 2007 and early 2009, variable and traditional fixed annuities have been the leaders in the annuity market.  Since mid 2009, however, fixed indexed annuities have led the way.  An indexed annuity is a product that allows the owner to have the advantages of gains linked to the stock market without the risk of loss to principal.

Why the shift, what does fixed indexed annuities have over the traditional or variable annuity? According to Joseph Montminy, assistant vice-president and head of annuity research at the Windsor, Conn.-based insurance industry group LIMRA, is that, “Equity market volatility and the ability of Fixed Indexed Annuities to partially shield policyholders from that volatility, while also affording them a measure of upside participation, is a major selling point.”

Insurance companies are also working to simplify and fortify their Fixed Indexed Annuity products to attract more clients.  Products with shorter surrender periods, and optional guaranteed lifetime withdrawal benefits, similar to those available with variable annuities, make fixed indexed annuities highly competitive with their counterparts.

Time for a Financial Check-Up

April 1, 2011 | Filed Under Finance, Insurance, Investment, Retirement Savings | Comments Off

We’re coming to the end of the first quarter of 2011, and if you haven’t taken time to examine your financial plans, now is a perfect time to take a fresh look at where you are heading financially.

I encourage you to meet with your qualified planner or contact our office to assess the current state of your finances.  Your advisor should help you to re-evaluate your financial plans and show you how to make any necessary changes that move you closer to your goals.

Here are some things to consider:

  • Are your plans still providing comfort, confidence and security?
  • Are they keeping track to fund your retirement or do you see yourself outliving your money?
  • Is your desire to leave a financial legacy behind for your loved ones still possible?
  • Be sure that you are living within your means.
  • Communicate your plans with loved ones so they can follow through with your wishes in the event of the unexpected.

The future is as uncertain today as it was last year, or 80 years ago.  Reviewing your financial plans every year with a trusted financial advisor, will help you face the challenges in the future.

“Change is only painful if you lack knowledge about how to prepare for its consequences.”  [1]

[1] Van Mueller, LUTCF

Long-Term Care Insurance Costs

March 29, 2011 | Filed Under Finance, Insurance | Comments Off

An analysis of more than 200,000 purchasers of partnership qualified Long-Term Care Insurance policies showed a misunderstanding among consumers on the actual cost of Long Term Care coverage.   There is a perception that the cost of coverage is a bit higher than the actual price.  The reason for this is that premium costs are reported often using averages. These averages include large numbers of older buyers and other factors that result in higher costs.

The American Association for Long-Term Care Insurance(AALTCI) reported that during the first half of 2010  “one-fourth, or 27.8 percent of individuals purchasing long-term care insurance who were under age 61 pay less than $1000 a year.”  In addition, 19.4% or nearly one in five who were under age 61 pay between $20 and $30 a week for new policies.  More than 28.9 percent in this age group pay between $1500 and $2500 a year with the remainder paying more.  Less than 6.8% pay $4000 or over.

Jesse Slome, the executive director of AALTCI, says, “Studies that report average premium costs regrettably mislead the public into the perception that long-term care insurance is expensive.”

In reality, it is far more expensive to self insure if a long term care situation arises.  Long term care planning is a critical component to a solid financial plan during retirement.

Good Performance Not Necessary for Federal Employees’ Pay Increases

March 26, 2011 | Filed Under Finance | Comments Off

Wouldn’t it be nice if you received a pay increase every year whether you performed well or not?  That is what approximately 20% of the federal workforce can expect.

Earlier this month, the Office of Personnel Management (“OPM”) gave their approval of continued automatic pay increases for federal employees. At a hearing on federal pay the Office of Personnel Management Director John Berry denied a request by Rep. Darrell Issa, R-Calif to temporarily halt the General Schedule employee step increase.  If approved, the request would save the government (aka taxpayers) $500 million by the end of the year, according to Representative Issa.

Although the OPM’s director believes that pay reform needs to happen within the federal system, he was unwilling at this time, to grant approval of the proposal to reduce spending. He argued that “within-grade step increases are important because they allow federal employees to advance in their careers, and help the government retain vital employees.”  However, just .06 percent of eligible federal workers were denied within-grade pay increases in fiscal 2009, according to OPM data.  Can we surmise then that 99.94% of eligible employees are vital to the functioning of our government?

Colleen M. Kelley, president of the National Treasury Employees Union, spoke against Rep. Issa’s amendment to the House budget bill. She stated that the amendment was unfairly targeting federal employees, would have little impact upon the deficit and would greatly limit the government’s ability to recruit and retain skilled workers.

Analysts at the Heritage Foundation estimate that federal employees ” earn 22% more on average than their private sector counterparts”.  In addition, poor performers are not held accountable, and thus are “rewarded” with automatic increases in their salary.

It is true that $500 million would not make much of an impact upon our federal debit, however while the private sector is seeing a decrease in employment and in pay, should government employees get pay raises?  Sounds a lot like what the government castigates Wall Street for when it raises salaries of corporate CEO’s, during a time of financial bailouts.

Annuities – Good For Your Portfolio

March 16, 2011 | Filed Under Finance, Insurance, Investment, Retirement Savings | Comments Off

“Retirees may get more financial security by combining insurance products and mutual funds, some analysts say”

This week in the Wall Street Journal, an article appeared entitled, “Making the Case to Buy an Annuity”.  The article addresses the importance of adding  annuities with lifetime-income guarantees to your retirement portfolio.

When the stock market makes a downturn during the early years of your retirement, you may face running out of money, if you are  invested in the markets.  Annuities with lifetime-income guarantees can offset that risk.

The importance of annuities and income riders was highlighted by Chief Investment Officer of Morningstar, who said, “”The longer we live, the greater stress that puts on our ability to pay for our retirement-income goal, an income stream that lasts as long as we do.  We need to go beyond the universe of mutual funds and ETFs and consider longevity-risk products.”

According to a researcher, “a typical 65-year old should have as much as 50% of their money in annuities, and the typical 75-year old should have about 65% invested through annuites. ”

There are two main types of annuites, variable and immediate, or indexed.   One important disadvantage to variable annuities is the typical high fees compared to the lower fees of an indexed annuity. Both, however, can provide life-time income.

For additional information on this topic, please contact me at Shari Mattingly-Bevan & Associates at (864) 283-6906.

To read the full article, go to

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