Tag Archives: financial

Financial Perspectives: How does long term care insurance work?

3-bottom, Citizen Journalism, Community Health, Finances, Health, Local Business, Senior Living

By Dave Stanley
Integrity Financial Service, LLC

(Courtesy, Pxhere.com)

Understanding insurance can sometimes feel like you’re trying to decode a foreign language. But don’t worry! I’m here to help break down one type of insurance that’s important as we or our loved ones age – long term care insurance.

Starting with the basics, long term care insurance is designed to help cover the cost of services that assist with activities of daily living. These activities can include things like bathing, dressing, eating, or even moving around. The need for assistance with these activities could be due to aging, an illness, an accident, or a chronic condition.

It’s important to remember that long term care isn’t just provided in nursing homes. It can also be provided in your own home, in community centers, or assisted living facilities. In fact, a lot of folks prefer to receive care at home or in more home-like settings whenever possible.

Now, let’s get into how the insurance part works. When you purchase a long-term care insurance policy, you’ll pay a premium to the insurance company. This is usually a monthly or annual fee, just like with other types of insurance.

In return, if you need long term care services, the insurance company will pay a set amount towards your care. The amount they’ll pay and the types of services they’ll cover are outlined in your policy. Make sure you understand these details when you buy your policy!

One thing to note is that there is often an “elimination period,” or waiting period, before the insurance company starts to pay for your care. This could be anywhere from a few days to several months, depending on your policy. Think of it as a deductible, but instead of a dollar amount, it’s a period of time.

Also, just like most things in life, long term care insurance comes with limits. There might be a limit on how much the policy will pay per day, or there might be a total limit that the policy will pay over your lifetime. If the cost of your care goes over these limits, you’ll be responsible for paying the difference.

Here are a few tips about finding the right type of policy for your needs. 
Finding the right long-term care insurance policy is a very personal process that depends on many factors, such as your health, age, financial situation, and personal preferences.

  

Begin by evaluating your potential need for long-term care. Consider your current health status and family history. Do chronic or debilitating health conditions run in your family? What is your current lifestyle like? Are you physically active or do you have any habits that could affect your future health, like smoking or excessive drinking?

Next, consider your financial situation. The cost of long-term care insurance can be quite high, especially if you wait until you’re older to purchase a policy. Can you afford the premiums now, and will you be able to afford them in the future if they increase? Also, consider the other resources you might have to pay for long-term care, such as savings, investments, or family support. You may want to consult with a financial advisor to help you evaluate your situation.

Then, think about what kind of care you might want. Would you prefer to receive care at home for as long as possible, or are you open to receiving care in a facility, such as a nursing home or assisted living facility? The type of care you prefer can affect the kind of policy you should look for.

When comparing policies, pay close attention to the policy’s benefit triggers, which are the conditions that must be met for you to receive benefits. Most policies use a certain number of activities of daily living (ADLs) as a benefit trigger. The six ADLs are eating, bathing, getting dressed, toileting, transferring, and continence. Typically, if you need help with at least two ADLs, you qualify for benefits.

  

Finally, don’t rush your decision. Take your time to understand all the details of the policies you’re considering. And don’t be afraid to ask for help. A good insurance agent or broker who specializes in long-term care insurance can be a valuable resource in finding the right policy for you.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

How does an insurance company invest your premiums?

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By Dave Stanley
Integrity Financial Service, LLC

(Courtesy, Pxhere.com)

Insurance companies play a crucial role in our society, providing individuals and businesses with financial protection against unexpected losses. To do this, insurance companies collect premiums from policyholders. But what happens to your premium once it is paid to the insurance company?

Insurance companies don’t just store your premiums in a giant safe until they’re needed to pay claims. Instead, they put these funds to work by investing them. This practice is vital to insurance companies for several reasons.

Let’s break it down. When you pay a premium for an insurance policy, the insurance company pools your premium together with those paid by other policyholders. The pooling of premiums is the first step that allows the insurance company to spread out the risk of potential claims among many policyholders.

Now, these pooled premiums form a large amount of money known as a reserve. This reserve is there to ensure that the insurance company has enough money to pay out if a policyholder files a claim. But while this money is sitting in the reserve, the insurance company doesn’t just let it idle. They invest this money to generate income and to increase the value of the reserve.

Investment income helps to keep the insurance premiums lower than they would be otherwise. Without the income from investments, insurance companies would need to charge much higher premiums to maintain their financial stability and be able to pay claims.

So, how does an insurance company invest your premiums? They typically follow a conservative investment strategy because it’s essential to maintain the ability to pay claims even in unfavorable market conditions.

The investments of insurance companies are usually in the form of bonds, especially government and high-quality corporate bonds. Bonds are chosen because they are relatively safe compared to other types of investments and provide a steady income in the form of interest. Some part of their investments might also be in real estate, mortgages, and stocks, but these usually represent a smaller portion of the investment portfolio because they come with higher risk.

The specific rules and regulations about how insurance companies can invest their funds vary from state to state and are overseen by the state’s department of insurance in which the company is domiciled. These regulations are in place to ensure that insurance companies are not taking excessive risks with the premiums they have collected.

Insurance premiums are not just used to pay claims. Instead, they are carefully invested to earn income, helping the insurance company to remain financially stable and to keep premiums affordable. This prudent financial management is essential to ensure that the insurance company can honor its commitment to policyholders even in the face of large or unexpected claims.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

BHSH System and GVSU join forces to offer new nursing scholar program

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By WKTV Staff
joanne@wktv.org

Grand Valley State University and BCSH Systems, which includes Spectrum Health, have partner to offer a Nurse Scholar program. (Supplied)

Two of Michigan’s largest institutions have created what they hope will be a model for the nation in addressing the severe talent shortage in nursing. Leaders from BHSH System and Grand Valley State University have announced a partnership with the creation of the BHSH Spectrum Health West Michigan Nurse Scholar program. The partnership is designed to increase the nursing talent pipeline by taking away financial barriers to college and smoothing the educational path to employment at BHSH Spectrum Health West Michigan.

 

The health system is investing more than $19 million to provide infrastructure, start-up costs and resources for increased clinical placements, training and other support for students in the program. This includes grant dollars for all BHSH Spectrum Health West Michigan Nurse Scholars. Grand Valley will increase infrastructure support for students in the areas of financial aid, curriculum enhancements, technology and equipment, student support services, simulation enhancements and clinical experiences.

The BHSH Spectrum Health West Michigan Nurse Scholar partnership will create an opportunity for nearly 500 additional students to pursue a career in nursing over the next six years. The university will assume all future infrastructure costs and maintain a permanent increase in the number of students admitted to its Kirkhof College of Nursing, creating a lasting impact for our community, state and region. More than 92 percent of all GVSU graduates within the health professions stay in Michigan.

              

A federal workforce analysis shows Michigan currently has a nursing shortage for its population, and that shortage has been exacerbated by the burnout and stress caused by the pandemic. Leaders at BHSH System and GVSU say the creative solution they’ve designed will build a stronger talent pipeline, and the partnership can serve as a model and inspiration to enterprises, universities, communities and governments to solve the nation’s talent shortages.

“We challenged ourselves to be bold: What can we do, together with GVSU, to permanently increase access to education, strengthen nursing education programs and invest in talented, compassionate people who want to become nurses?” said Tina Freese Decker, president and CEO, BHSH System (formerly Beaumont Health and Spectrum Health). “Our teams delivered a joint, innovative proposal that expands opportunities for up to 500 future nurses and can be the model for others to emulate. We are incredibly excited about the nurse scholar program and the impact this will have in health care, for individual learners and for future generations.”

Grand Valley President Philomena V. Mantella said the agreement is a perfect example of how educational institutions and enterprises can partner quickly and efficiently to address talent shortages.

“These talent gaps hold us back or put us at risk,” said Mantella. “We have many dedicated and talented students who want to pursue nursing, but we needed the creativity and support of our partners at BHSH System to make the expansion of nursing possible and affordable for more talented and diverse students. This program is a huge leap forward and a model for other high need fields. I applaud the ingenuity and willingness of our teams to bring it to fruition.”

                                                                                                      

After all approvals and accreditation, the BHSH Spectrum Health West Michigan Nurse Scholar program will be in place by January 2023. 

Perspective: US Treasuries are the safest possible place to invest your money

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By Dave Stanley
Integrity Financial Service, LLC

“Everyone at some time in their life will run to safety.”  Dave Stanley

Treasury bonds are issued and backed by the federal government, the full faith and credit of the United States Government. The advantage is safety; the disadvantage is the yield you may earn can be lower than other investment options. The question to ask is simple, is the lesser yield still sufficient for your needs?

US Treasuries are issued in four different categories: Bills, Notes, TIPS, and Bonds.

Treasury Bills (T-Bills) have a maturity date of 1 year or less, and they are short-term by nature. Four options exist for a time duration of investment, 4 weeks, 13 weeks, 26 weeks, and 52 weeks maturity. Treasury Bills do not pay interest. Instead, they are sold at a discount and in denominations of $100. For example, a $1000 T-Bill with a maturity of 52 weeks might sell for $975. At the end of maturity (52 weeks), the owner of the T-Bill would receive $1,000.

Treasury Notes (T-Notes) A T-Note has a more extended maturity time period than T-Bills, 1 year to 10 years. Notes are issued in denominations of $1,000 with interest paid every 6 months. T-Notes are issued with the full face value of the note and not as a discounted face value.

Treasury Bonds (T-Bonds) T-Bonds are issued for a more extended period than T-Notes, 10 years to 30 years to maturity. Bonds are issued at face value, and interest is paid every 6 months. The most popular time period is 30 years.

Treasury Inflation-Protected Securities (TIPS) are US Treasuries issued with an added benefit; they are designed to help offset inflation. Treasury Inflation-Protected Securities are issued with 5, 10, and 30-year maturity dates. Interest is paid every 6 months and is a set rate, but additional interest can be paid at maturity based on inflation history.

Regardless of which US Treasury you choose, the safety of the principal is always the underlying benefit.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

Perspectives: When Harry and Sally met their 401(k)

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By Dave Stanley
Integrity Financial Service, LLC

“Harry and Sally White are regular people.” Dave Stanley

Harry and Sally happen to work for the same company; actually, that is where they met 30 years ago. Harry runs a forklift in the warehouse on day shift, and Sally works in accounting. They are just regular people working at regular jobs, saving for retirement using their company’s 401(k) as the chosen vehicle. The company they work for is not huge; about 600 employees in several offices scattered around the state. Their company is generous with company contributions to their employee’s 401 (k) retirement account, adding about $2,000 annually to plan participants.

Time to consider retirement has finally arrived, and Harry and Sally asked me to help them roll over their 401(k) to their own self-directed IRA and use an annuity for the income stream. I had known them for several years and was delighted to help while at the same time acquiring a quality client.

Harry had $426,000 accumulated in his 401 (k) and Sally just under $200,000. In previous meetings, I had suggested they begin to make small changes to their asset allocations to help reduce the exposure to risk since retirement was on the horizon.

I was curious about the fees being charged to them for the administration and management of their accounts. The question had been raised at a company employee meeting, and the group was assured by the plan administrator that there were no fees other than the annual $50. Of course, he didn’t happen to mention the expenses charged by the guys managing the money — the mutual fund managers.

Harry had always assured me that there were no fees other than the annual $50 administration fee needed to prepare IRS reports. Of course, I knew there had to be additional fees, but I decided not to press it since I had no actual connection to the 401 (k).

An excellent software piece came to the market a few years back called Brightscope  https://www.brightscope.com/ This database tracks 401 (k) plans. It discloses actual fees being charged by the investment management of the individual 401 (k) plans around the country. Now I had the tool I needed to take an in-depth look at Harry and Sally’s 401(k) fund management expenses. I confess I could have looked the other way and never said a thing; I acquired a nice client with the rollover. Why not just be quiet and go along?

I couldn’t keep my big mouth closed and gave Harry and Sally the report on their 401 (k) annual expenses being charged to manage their funds. These expenses were in addition to the $50 per year administration fees and were tied to the actual account value of the funds in the 401 (k). 1.27% was the average expense being paid to the fund managers for Harry and Sally to have the privilege of investing their hard-earned money with them. 1.27% per year of their full investment account value.

Just last year alone, these insane expenses were over $8,000. $8,000 out of Harry and Sally’s pocket and into the pocket of these Wall Street bandits.

Now consider how many years these fees had been charged. The total amount paid could easily be greater than the entire 401(k) account belonging to Sally.

The Securities and Exchange Commission (SEC) fought long and hard to have these fees disclosed in a more open forum for all 401 (k) investors but to no avail. The Department of Labor has ruled in the financial industries side, and as of now, fees will remain as they always have been buried deep in paperwork none of us can even understand. (prospectus) Harry is a great forklift driver, but he has no chance against this level of thievery.

Simple math can certainly indicate the annual amount of expenses being paid to the money managers at the 401 (k) companies: multiply Harry’s annual expense times the number of employees (600).

Usury and disgusting.

Just think how much more money Harry and Sally would have for their retirement years; now it has gone to increase some Wall Street firm profits, which is probably paying some lobbyist to keep disclosure hidden away. Harry is in an odd way funding his demise — the demise of his account value.


It is time to put an end to these outrageous fees and expenses.

The long-term loss of value hidden behind a 401(k) plan provided to hard-working employees is considerable. Plus, the fund managers still get paid regardless of whether they make or lose money. Their commissions based on total account value.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

Perspectives: Inflation can be a terrible retirement partner

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By Dave Stanley
Integrity Financial Service, LLC

“Warren Buffet once pointed out that when you do the math, it is obvious that inflation is far more destructive to wealth than any tax levied on us by the government.” Dave Stanley

It probably hasn’t escaped your notice that consumer prices have gone rogue in 2021. Prices for goods and services are surging at the fastest pace in over ten years, threatening to squeeze households and squelch a potential post-COVID economic recovery. Economists, bankers, and pundits insist that inflation rates reflect pandemic-induced trends and are only temporary. However, many retirees, pre-retirees, and investors are concerned that prices will keep going up, stalling economic growth and causing stocks to plummet. If you are a certain age, you might remember the double-digit inflation of the 1960s and 70s, which reached its’ apex during the Jimmy Carter Administration. Like all inflation, the price hikes were due to several factors, including an oil crisis in the Middle East, excessive government spending, and a slow-acting Federal Reserve.

Inflation is the silent thief of retiree wealth.

Unfortunately, it is impossible to know if our current rising prices are temporary or a sign of things to come. Yet, many economists believe that the diversified, globally integrated US economy is big enough and robust enough to avoid the hyperinflation found in countries such as Zimbabwe.

Still, if you are about to retire, you should maintain vigilance when it comes to inflation. Even if increased inflation lasts only a few years, it can wipe out a significant part of your retirement savings. An annual inflation rate of just 3% seems insignificant. However, at a 3% rate, if you currently have monthly expenses of $4,000, they will be $5,000 a month in just ten years. For this reason, it is critical for those within ten years of retirement to review their plans and adjust for worst-case scenario inflation levels.

Many people fail to realize just how significant the impact of inflation is on their savings. For example, if you own an asset that is bringing in 4% returns with no income tax, and the annual inflation rate is also 4%, that scenario is equivalent to a 100% tax in a time where inflation is at ZERO! If the inflation rate were to go to 5%, and your asset will still making only 4%, you would be paying a tax equivalent to 125%.

Bake inflation protection into your financial blueprint

Inflation is a stealth tax that, although it doesn’t go entirely unnoticed, is not as in-your-face as government-levied taxes. Government tax increases, such as those on income or property, are more readily identified and felt. On the other hand, inflation is like bleeding to death from a thousand tiny pinpricks rather than one gaping wound. Inflation expresses itself as a few cents more for a loaf of bread, a five-cent price increase on coffee, and so forth. Inflation leaves you scratching your head, wondering how your paycheck could vanish so rapidly.

Retirees and those leaving the workforce must partner with their advisors to put some armor around their wealth in a few years. Your savings must be protected as much as possible, or you risk running out of money when you need it most. Your advisor or advisory team may recommend various strategies using things such as certain types of annuities, cash-flowing investments, or even precious metals or cyber currencies.

Depending on your goals and risk tolerance, alternate investment strategies can form a protective barrier against erosive elements, including inflation, sequence of returns risk, and other attacks on your wealth.

The bottom line is: Like an unwelcome house guest, it’s bound to show up when you least expect it, and it will outstay its welcome nearly every time.

Don’t forget to plan for inflation.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

Perspectives: Here is a guaranteed way to become a millionaire

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By Dave Stanley
Integrity Financial Services, LLC

“Using inflation as a tool, governments can confiscate, secretly and unobserved, an important part of the wealth of their retirees.”  Dave Stanley

You can almost imagine the unrestrained joy politicians felt upon reading John Maynard Keynes‘ words back in the early 1920s. Finally, they had discovered an easy way to finance the government’s wild spending sprees and pork-barrel projects without raising taxes (and losing votes!) Inflation gave governments a powerful yet discrete method of taxation, requiring no approval from the voters. The icing on the cake was that inflation’s consequences were much less detrimental to political careers than making unpopular budget cuts or increasing tax rates. Thus began the era of addiction to the printing press, unrestrained deficit spending, and an increasingly intrusive government.

Where are we today?

The “easy money” inflation genie rocketed out of the bottle with the force of a cork exiting a champagne bottle. No amount of pressure or commonsense economics could push it back inside. Even the Great Depression, funded partly by easy money economics, could not reverse a course of uncontrolled government spending and money printing.

Inflation is a misunderstood concept that threatens your wealth.

Inflation is one of the most misunderstood economic ideas and the source for much of the evaporation of middle-class wealth in the United States. In simple terms, inflation is a measure that determines the rate of rising prices in an economy.

Catalysts of inflation can include

  • Increases in the costs of raw materials
  • Wage increases
  • Poor fiscal management by the government.

Specific government actions are undertaken to jumpstart a lackluster economy, such as the so-called “quantitative easing” pursued by the Federal Reserve a few years ago, which also contributes significantly to rising inflation.

Inflation is the “silent” tax.

Sometimes referred to as the “stealth tax,” inflation is a more significant threat to your financial future than state or local income taxes. Inflation has proven to be particularly problematic for seniors who are retired. That’s because retirees live mainly off the income generated by their retirement accounts, along with Social Security. So, when money loses its purchasing power, the price of necessities increases. Such increases mean that seniors will use up their savings faster, perhaps putting themselves in the position of running out of money early in retirement.

Could we see “billion-dollar” currency denominations?

Disastrous monetary policies such as shameless deficit printing and currency devaluation have existed for the greater part of human history. Unfortunately, though, the United States has taken fiscal irresponsibility to new heights, becoming the most indebted country in world history. Currency turmoil is almost always the outcome of reckless fiscal policy. For example, inflation in the country of Zimbabwe was so high for so long that their entire economic system crashed. This hyper-inflation arose when Zimbabwe’s government responded to the out-of-control national debt, political corruption, and a weak economy by increasing the money supply.

Zimbabwe’s government caused some of the highest inflation in human history. At one point, it took 1.2 QUADRILLION Zimbabwean dollars to equal $4,000 U.S. dollars! Some scholars suggest that if the U.S. continues on its present course, we could experience similar issues.

The bottom line: Inflation is just one of the erosive factors that can undo your best-laid retirement plans and cause you to experience stress and worry when you no longer work. Inflation may be the greatest threat of all because it is little understood and anticipated. If you have a retirement plan in place, now is an excellent time to review that plan with your advisor to ensure you have included provisions to see you through in the event of hyperinflation.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

Perspectives: Have bonds earned a place in your portfolio?

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By Dave Stanley
Integrity Financial Service, LLC

Beginning in 2020, the Federal Reserve cut interest rates to multi-decade lows, dropping the rate on 10-year Treasuries from a robust 2% to 0.5%. This steep decline was a blow to savers, especially those who traditionally look to bonds as safety anchors for their retirement portfolios. Since Treasury 10-year rates determine approximately half the yield of corporate bonds, convertibles also feel the sting of near-negative interest rates.

Discouraged by a cooled-off bond market, many who count on bonds for retirement income are looking into convertible bonds as an alternative. Corporate bonds that can be swapped for common stock in the issuing company, convertible bonds can lower the coupon rate on debt, thus saving a company interest.

Convertibles allow a holder to exchange them for a predetermined number of regular shares in the issuing company. For the most part, convertibles function just like traditional corporate bonds but with somewhat lower interest rates.

Since convertibles may be changed into stock and benefit if the underlying stock price rises, companies offer lower yields. If the underlying stock does not perform well, there is no conversion, and the investor is stuck with the bond’s sub-par returns.

How do convertible bonds work?

Convertibles operate according to what is known as the “conversion ratio.” This formula determines how many shares will convert from each bond. The conversion ratio expresses as either a ratio or as the conversion price.

For example, if the conversion ratio is 40:1, with a par value of $1,000, shareholders may exchange the bond for 40 shares of the issuing company’s stock.

The price of convertible bonds starts to rise as the company stock price nears the conversion price. When this happens, your convertible bond performs somewhat like a stock option. If the corporate stock experiences volatility, so will your bond.

Why would anyone consider adding convertible bonds to their portfolio? 

Investors add convertible bonds to their investment mix because convertibles offer guaranteed income with built-in downside protection. Provided an investor does not convert before maturity, they get their initial investment back, plus earned interest. There is also the potential for higher returns than traditional bonds.

What are some convertible bond pitfalls? 

The “forced conversion” element of a convertible bond is one of these instruments’ most significant downsides. The bond issuing company retains the right to force investors to convert the bonds into stock. Such conversion typically occurs when the stock price becomes higher than the amount would be if the bond were redeemed.

A specific type of convertible bond, known as a reverse convertible bond (RCB), lets the issuing company decide to convert the bonds to shares or keep them as fixed-income investments until maturity. RCB’s, unlike common stocks, can cap the bond’s capital appreciation. Such caps mean that these bonds’ principle protection element may not be as worthwhile as it first appears.

Summing it up: Convertible bonds are somewhat complicated instruments designed to create guaranteed income while protecting against market losses. Companies usually issue convertible bonds with less-than-exceptional credit ratings but expectations of high growth. Convertibles allow these companies to get money to expand at much lower costs than those of conventional bonds.

If you are considering purchasing a convertible bond, you need to understand the basics of how they work and all the associated risks.

Always consult an authorized and licensed financial professional to map out convertibles’ pros and cons relative to your situation and risk tolerance. Your advisor may suggest other products, such as Fixed Indexed Annuities, that also guarantee principle with growth potential.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management.

Financial Perspective: Common Money Myths

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Dave Stanley
Integrity Financial Service, LLC

It is said: “If you repeat a lie often enough, it becomes the truth.”

Even in 21st Century America, you can find folks who believe that the Earth is flat, that George Washington had wooden teeth, or that a penny dropped from the top of the Empire State Building can kill someone.

 

It’s not surprising, then, that many money-related myths refuse to die, no matter how hard well-meaning financial advisors and educators try to drive a stake in them. Unfortunately, these myths and misconceptions can cause you to make serious mistakes with your wealth that could wind up costing you thousands in retirement dollars.

 

In the spirit of helping, you make better decisions with your cash, let’s debunk a few uncommonly bad pieces of money “wisdom.”

 

It’s always better to buy a home if you can. “You must always own your home” is one gem of wisdom that won’t go away. The reason this myth has stuck around for so long is in part because homeownership is considered necessary to achieve the American dream. However, if you are young and just starting your career, owning a home could be an albatross that keeps you staying in one place or with one employer too long. Maintenance, taxes, and other costs of homeownership can eat into your disposable income and savings.

But, if you’re dead set against renting, an alternative might be to purchase a duplex or small apartment building, live in one of the units, and rent the others out.

 

It’s not worth saving if you can only save a little. This is just not true, particularly if you start young. If you only managed to save 15-20% of your paycheck, and your employer matches your 401k, you could save enough to ensure a pleasant retirement. Plus, putting even a small amount away each month helps you develop a better money mindset and habits that will come in handy as you get older.

 

I need to put at least 60% of my money into stocks and 40% into bonds. There was a time when the “60/40 rule of investing had some merit. The idea was to invest 60% of your savings into securities and 40% into bonds. However, these days bond yields are anemic. Other safe money vehicles may give you better returns, along with flexibility and safety. Also, if you are within five years or less of retiring, having 60% of your money in the market is not recommended because any loss might be difficult to make up in such a short time.

 

You should never have credit card debt. Proving that you can use credit responsibly is necessary if you want a healthy credit score. A good credit score comes in handy later when you wish to purchase a home, rental property, or a new car. If you make an effort to pay off your balance in full every month, it’s perfectly acceptable to use credit cards. Be careful, though, to carefully track your spending and avoid emotional purchases. As most of us realize, it can be difficult and stressful to dig oneself out from under a mound of debt.

An emergency fund is unnecessary if you have credit cards If recent disasters such as the economic fallout from COVID-19 have taught us anything, it’s that having emergency funds set aside is essential. Even before COVID, it took people an average of four months to find new jobs after a lay-off. If you try and live on credit for that many months, you will have a considerable amount of debt that might prove difficult to pay off. That’s why experts say that everyone should have six months of emergency cash saved up.

 

Many other money myths could impact your ability to make sound financial decisions. It’s always a good idea to sit down with an experienced, trusted advisor and get a second opinion before making crucial money decisions.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management

Financial Perspective: Where can you find the money to build a safe, predictable retirement?

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Dave Stanley
Integrity Financial Service, LLC

“You are likely to be retired much longer than you think. A recent study suggests that 50% of those born now will live beyond 100.”   Dave Stanley

For how long do you think you will live? Do you believe you’ll live into your late 70s? Are you confident you’ll follow in the path of your parents, who were alive and well into their mid to late 80s?

The average joint life expectancy (men and women together) is approximately 88 years for more than 49% of the population. A full 20% of Americans live to age 95!

Depending on your unique perspective, that’s either good news or bad news. It is good because many people want to live for as long as possible, provided they are in decent physical and mental health. However, a long life can be bad news when it puts you at risk of outliving your money in retirement.

Something else to consider is that these numbers are averages. There are many exceptions to the rule, especially if you are the beneficiary of excellent genes, have tried to stay fit and healthy, and have managed stress properly. More people are hitting triple digits, and you could very well be one of them.

Longevity is a possibility. Therefore, creating a portfolio to help you maintain your current standard of living in 30 plus years of retirement is challenging. Having less money in retirement is a concern for retirees and pre-retirees. Nearly all seniors know someone who has beaten the odds and has lived for a longer time than they planned.

Many retirees and pre-retirees had had someone in their own families who went through hardship and deprivation because they ran out of many at a time when they needed it the most.

The logical solution to not having enough money for retirement is to start earlier and save more. That is not always easy to do, however. Many people are barely making ends meet and do not have much discretionary money to create retirement income. You may fall into that category and worry that you will not have any money to build a retirement account.

How do you find money to finance a retirement plan?

Developing a saving and income-planning mindset is valuable at any age.

Understandably, you might have a tight budget due to where you are in your career track. Or, you might have family, medical, or debt issues that make saving a tough proposition.

Fortunately, there are some ways you can free up cash or find the money you never knew you had, to fund a retirement plan. Here are three things you can do right now to free up money for retirement.

1. Debt restructuring. Take a look at all your debt, including student loans and consumer debt. Perhaps you can negotiate lower rates or pay debt off more slowly. For example, instead of paying more than the minimum due on a debt, take that money and put into something like a dividend-paying whole life insurance policy, annuity (depending on your age), or dividend-paying stocks. When you pay your debt off TOO fast, you lose the opportunity to grow that money.

2. IRA or 401(k) Use every advantage to contribute the maximum amount of money allowed.  As you age, begin to move a higher percentage to assets that are not as volatile, such as annuities. Ask your financial expert and tax advisor to see if you might transfer your 401(k) funds to a self-directed IRA and purchase an income annuity.  Always consider this with the big picture in mind, make sure you seek licensed and authorized professional advisors.

  

3. Live a simpler lifestyle. Making your car, major appliances, and other big-ticket items last longer can add up to thousands of dollars you can use to fund your post-career life. Eat out less often, never pay full retail, and look for every bargain you can find.

No matter your current financial situation, you can and should set aside money for a time when you will no longer get a paycheck. Starting early and being consistent, along with small lifestyle changes, will help you avoid common mistakes and achieve a better retirement lifestyle.

Here is a word to the wise.  Before making any decisions about where and how you invest your retirement money, always consult a licensed and authorized professional.

Dave Stanley is the host of Safe Money Radio WOOD1300 AM, 106.9 FM and a Financial Advisor and Writer at Integrity Financial Service, LLC, Grandville, MI 49418, Telephone 616-719-1979 or  Register for Dave’s FREE Newsletter at 888-998-3463  or click this link:  Dave Stanley Newsletter – Annuity.com  Dave is a member of Syndicated Columnists, a national organization committed to a fully transparent approach to money management