• Insurance,  Retirement Planning,  The Market: 101

    CFP – Certified Financial Planner

    On an upcoming podcast, to be released on Friday, July 19th, we will cover a few new terms! In preparation for this podcast, we wanted to link a quick article that explains what a CFP, or Certified Financial Professional is. You’ll hear our guest, John Redmaster, explain why it’s important to work with a CFP in planning out your long-term goals.

    Click here to go to Investopedia’s definition of a CFP!

    Here is a link for you to check out a CFP that you are considering working with: CFP Verification

    Happy reading and don’t forget to tune in on Friday, July 19th for a new podcast!

  • Podcast,  Retirement Planning

    Face The Fear Podcast – Father’s Day Chat with Darrell and Allison Perry

    On this special Father’s Day episode, we chat with Darrell and Allison Perry, a father-daughter duo! We hear from Darrell, the father of Allison on how he raised his two kids, advice he has given them in regards to finances and how that influenced Allison so far in her life. You won’t want to miss what they have to say!

    And if you like us, don’t forget to subscribe and leave a review! XOXO

    Face The Fear Website: https://www.facethefearfw.com

    Contact Us: facethefearfw@gmail.com

  • Insurance,  Retirement Planning

    The Bills and The Fees: How to Talk to Your Parents About Money (Without Making It Awkward)

    If the thought of talking to your parents about money makes you cringe, you’re not alone. In fact, the majority of Americans would rather talk about “the birds and the bees” than “the bills and the fees” of finances with their own family. When given the choice, we would prefer to talk about our own DEATH than asking our parents about their will or estate. (Now, that is just ridiculous). There’s no question that money is a taboo topic that makes you want to run 100 mph in the other direction anytime you hear the words “budget” or “debt.”

    But, why is it so uncomfortable to talk about cash money with our family? And does it even really matter? After all, you’ve made it this far without diving into the depths of financial awkwardness with your parents. What’s the worst that could happen?

    Well, here’s a few stats for ya:

    • 52% of people turning 65 will need some form of Long-Term Care
    • 64% of people with Long-Term Care needs rely exclusively on friends and family for care
    • 25% of all caregivers are Millennials
    • Average annual cost of caregiving ranges from $18,000 (Adult Day Care) to $91,00 (Private Room in Nursing Home)
    • 55% of Americans have no will or plan to transfer assets at death
    • Only 35% of Baby Boomers are confident that they are financially prepared for retirement

    To summarize these lovely statistics: the odds that your parents may eventually require some form of Long-Term Care (assisted living, nursing home, etc.) during their lifetime is 1 in 2 (a coin flip). The chances that you will need to help pay for some of these costs are also quite high, especially if your parents don’t have any kind of long-term care insurance coverage or other savings in place. AND, if your parents are in the minority of those who have already established a will, congratulations! But, even if they do have a will, are you sure it’s up-to-date? You’d hate for your mother’s ex-husband’s cousin’s half-brother to end up inheriting money that was meant for you, right?

    (Yikes, talk about awkward!)

    With that said, yes. Having a conversation about finances with your parents is obviously very important. So, what are you waiting for?? Go ahead and throw those taboos to the wind and dive right in! OK, easier said than done, right? Let’s look at three simple conversation starters that will make the money talk a little less awko-taco.

    1. You’ve taken good care of me, so I want to take good care of you.

    When I was visiting my parents over the holidays, I asked them if we could set aside some time to talk about money. Specifically, I wanted my parents to know that, if anything should ever happen to them, I would be adequately prepared take care of them and their finances. Just as my parents have spent years caring for me and preparing me for my future, I want to be able to return the love by taking care of them when the need arises. We discussed what kinds of insurance policies, investments, and savings they have in place, where they keep financial records, and who they use as a trusted financial advisor. I didn’t ask to see any financial statements or specific policy information (because that’s usually where the awko-meter starts to rise) — only where this information is kept, so I know where to look if I need to access it at some point in the future. By emphasizing that my purpose behind the conversation was love and care for my parent’s wellbeing, we were able to talk open and honestly — without any hurt feelings or awkward outcomes.  

    YESSSSSSSS

    2. I’m interested in visiting a financial advisor, but I’m not sure where to start. Would you mind introducing me to yours?

    This is a win-win conversation starter. Not only does it provide you an opportunity to visit a financial advisor for the first time (without spending lots of money), but it also provides an ideal environment to discuss difficult financial topics with your parents. Their advisor can guide the conversation and act as a third-party mediator if needed. While meeting with the advisor, you may want to discuss your parent’s current retirement plan, including protection against long-term care events, and to review any beneficiaries on your parent’s insurance policies to ensure they are up-to-date. (You’d be shocked how often an ex-wife, ex-husband, or estranged family member ends up receiving a death benefit, simply because policy information was not current). AND, while you’re in the office, you might as well glean some insight from the advisor on your own financial plan. Most likely, the advisor will be more than willing to assist you, as they see you as a potential future client. (If the advisor doesn’t see your value, you may want to look for another advisor).

    Even if your parents don’t already have a trusted financial advisor, this is the perfect time to find a reputable professional together. It will be an opportunity to bond as a family, while also tackling your finances in an efficient and holistic manner.

    3. Do you have a legacy plan? AKA: If you die tomorrow, what kind of legacy to do you want to leave and how do you want it accomplished?

    Most people don’t like to think about dying until a death actually occurs. Can’t blame you. Death isn’t the first topic that comes to my mind when I think of “fun conversation starters.” BUT, the problem we create when we avoid talking about death is that we miss out on the opportunity to plan for a legacy — until it’s already too late. While your parents may want to leave their house behind to the family, donate their art collection to a local museum, and divide the rest of their assets equally among you and your siblings– if they don’t have these wishes expressly written in a will, they’re not likely to happen. When someone dies without a will (called intestate in legalese), your state will then determine how your assets should be dispersed. This could be okay, except that your state has no idea that you don’t even really like your spouse, you’re estranged from your son, and your daughter is a compulsive shopper who blows every penny she has on lottery tickets. But, the state doesn’t really care about your family issues. It will still divide up your assets among each of these individuals anyway. (Sorry ‘bout your luck).

    This is exactly why a will is important.

    Contrary to popular belief, establishing a will (and keeping it current) is not as much of a headache as many people think. For a simple estate (think: relatively small and not paying estate taxes), it may only cost around $100-$150 for an attorney to draft a will. (If you’re looking for a lawyer, start here). Or, you can also write your own will by using a reputable online software program or following a template. HOWEVER, if you complete your will on your own, you are doing so at your own risk, as each state has different regulations surrounding what is required to validate a will and, if done incorrectly, it may not hold up in court.

    I’ve only scratched the surface on the importance of writing a will (both you and your parents). And I haven’t even started to explain all of the incredible information that can be contained in a will, such as designating power of attorney or establishing a living trust. But, I realize I’ve already bored you to tears, so I’ll save these enthralling topics for a different time. (Psst: stay tuned for an upcoming Face The Fear Podcast episode on Estate Planning 101, coming soon!)

    In summary, you know you should probably strike up a conversation with your parents about money. It’s on your to-do list, right below “Clip grandma’s toenails” and “Watch paint dry.” At least now you’ve got a few conversation starters in your back pocket to break the ice. I promise, it won’t be as bad as you think. (Or, maybe it will be. In that case, I don’t know you). Either way, challenge yourself to start a conversation with your family about finances this week. Even simply cracking the door open today could provide fruitful opportunities for future discussions and prevent a flood of heartache, confusion, and financial strain later in life. Friend, it’s time to #FaceTheFear!

    Written By: Kaitlyn Duchien

    Contact Us: facethefearfw@gmail.com

  • Retirement Planning

    Power of Attorney

    “What is a POA?” This is a question I heard while at work recently. Prisoner of Azkaban? (Where are my Harry Potter fans at?!) Pledge of Allegiance? Plan of Attack? These could all be used for the abbreviation of POA but in the insurance world, POA generally stands for Power of Attorney.

    So, what the heck is a Power of Attorney?

    Translation: This means that someone can give another person power over their assets both legally and financially. The person that you name as your Power of Attorney can act on your behalf to handle business such as financial transactions like  buying life insurance, making gifts of money, making health care decisions, etc. The Power of Attorney can either be set up for specific financial or healthcare matters or it can be set up to cover everything.

    Because we care (awww), we want to add in a little note to advise the importance of choosing your POA. Please make sure that when you are thinking of who you want to be your Power of Attorney, you are giving this decision a lot of care and consideration. Take your time with this selection, as this needs to be someone that you completely trust as they could have access to both your physical and financial needs and you want to make sure that they will always act in your best interest.

    Side note: A Power of Attorney cannot change a person’s will. A will is a separate document that can be set up to legally state who obtains what parts of your estate at the time of your death.

    To name someone as your Power of Attorney, you must be of sound mind and mentally competent. This document must be signed and notarized  by a notary.  Fun fact: Attorneys are unnecessary to place a Power of Attorney in execution. (This is highly recommended though!) A Power of Attorney is typically put in to execution in advance of someone being incapacitated. The Power of Attorney can be revoked at any time (this means that even though you have something written down, if you are mentally competent and want to make changes, you can do so.)

    So, why is it important for younger people (as well as older) to have a Power of Attorney?

    1. Healthcare decisions – Having a trusted Power of Attorney means that you can lay out what your wishes are when it comes to medical care. What you do and do not want if you were not able to make your own decisions. (You can even specify who can make the decisions on who bathes you, what you eat, etc.)
    2. Financial Matters – If it were needed, a financial POA would be able to file your taxes, collect your debts, pay your bills, access your bank accounts, manage any property that you own, help apply for government benefits like Medicaid/veterans’ benefits, and make future investment decisions.
    3. Religion or Culture – If your religion or cultural dictates portions of your life, this can be considered. Say that you need to make sure all your food is Kosher or you have specific brands of products that you might use, your Power of Attorney can make sure that this happens.
    4. Reproductive Material – Let’s say that you have either your eggs or sperm stored. Naming someone as your personal care Power of Attorney would give them the right to access these items if something were to happen to you.
    5. Pets – We all LOVE our pets, right?! (Shout out to my cats Jasmine and Sophia! Mama loves you!) Having a Power of Attorney in place ensures that your pets will be taken care of in the way that you wish.

    There are many, many more reasons to consider obtaining and creating a Power of Attorney, these are just a few reasons!

    In the future, we will be covering conservatorship, how and when these take place and why they are important. (Hint: Britney Spears and Stan Lee.)

    Until then, face the fear!

    **Disclaimer: I am not a financial professional. Please seek the advice of a financial professional when planning for your retirement and own financial situation. **

    Written By: Nicole Ellsworth (@lacelemonslove)

    Contact Us: facethefearfw@gmail.com

  • Retirement Planning,  The Market: 101

    403B

    In the article that Heidi wrote, we learned about what a 401(k) plan is and how it works. So, what is a 403(b) plan and who is eligible for one?

    A 403(b) plan is a type of retirement plan for tax exempt organizations, specific employees of public schools (teachers, school administrator, professors), certain ministers, nurses, doctors, or librarians. A 403(b)-retirement plan is like a 401(k) in how it is funded through employee contributions. There are three types of accounts for 403(b) plans: annuity contracts with insurance companies, custodial accounts made of mutual funds – called a 403(b)(7), and retirement income accounts for church employees, typically invested in mutual funds and annuities – called a 403(b)(9). An employee usually can choose among several investments to build his or her portfolio, and design the account based on risk tolerance, such as conservative, balanced or aggressive. (As discussed in the podcast with Erin Martin, make sure to check the fees when choosing where to direct your funds.)

    Like a 401(k) plan, your employer may choose to do a matching program. For instance, this means that if you put in 3 percent of your salary into a 403(b), your company could put in the same amount if they do 100% matching. Other companies may do a 50% matching rate. This means that if you put in 6%, they will match up to 3%. (Free money!!) Make sure to check with your HR department on if and how your company matching program works when setting up your 403(b) so that you can take full advantage of the program

    Like a 401(k), a 403(b) has a contribution threshold. For the year of 2019 the contribution amount is: $19,000. If you are age 50 and older, you can contribute an additional $6,000 a year. Also,  if permitted by the employer, a 403(b) plan may allow for an additional catch-up if an employee has worked for fifteen years or more. You may be able to stack these additional contributions, although there are limits and it is a bit confusing, which is why it is important to seek the advice of a financial advisor to navigate these additional contributions.

    Another way that a 403(b) plan is like a 401(k) is that you will be penalized if you withdraw funds before the age of 59 ½ at a rate of 10 percent. (Yikes!)

    One caveat is that there are certain circumstances that funds can be withdrawn without penalty such as separating from an employer when a person reaches age 55, a qualified medical expense, death of the employee or disability.

    Phew!!

    So, what happens if you change employers?  Well, potentially there are four possibilities: roll the funds into an IRA, keep in the current plan, transfer to a new employer plan or cash out the account. Not all of these options may be available to you, so this is where speaking with your financial advisor and human resources department before leaving your current employer is very important.

    As a reminder: I am not a financial professional and urge you to seek the advice of a financial advisor when making your own financial decisions.

    Until next time, face your financial fear! 😉

    Written By: Nicole Ellsworth (@lacelemonslove)

    Contact Us: facethefearfw@gmail.com



  • Retirement Planning

    Traditional vs. Roth: HALP!

    These days, it’s becoming more common for employers to not only offer 401(k) options, but also offer two “buckets” so to speak, in which your money can grow. The traditional (or pretax) bucket, and the Roth bucket. Put simply, the traditional/pretax bucket receives tax-free contributions, which see tax-free growth until the day you take your money out. At that time, it’s taxed at the current tax rate.

    With a Roth account, you make contributions that have already been taxed, but then as the money grows and compounds, none of the gains are taxed. (The catch: the first contribution to the Roth has to be at least five years old to be truly tax free.) So on the day you’re ready to withdraw, it’s all yours for the taking. No taxes. (Woohoo!)

    So, why wouldn’t you put contributions toward the Roth? That’s a good question. Most people might find that the Roth provides greater benefits for them in the long run. However, depending on your personal situation, both buckets can provide advantages. This may be worth discussing with an retirement account representative for personal navigation. It’s also important to note that your employer’s contributions will always go into the traditional or pretax bucket, per IRS regulations.

    So how much should be going into these accounts? (Asking for a friend….)

    As you probably know, a good place to start is to understand how much your employer is willing to match, and if you can, contribute at least that percentage. For example, if your employer matches up to 3 percent, you should strive to contribute at least 3 percent. Some employers might match 50 percent of, say 6 Percent. So, for every whole percentage you give, your employer will match half of that up to 6 Percent (which mathematically really is 3% once you contribute 6% of your salary). If you’re not sure, ask your account representative, or HR.

    Now again, if you’re like me, you might be comfortably sitting at the same percent, with your employer matching, and not thinking about it any further. But as I started to consider the balance in my 401(k), I couldn’t help but wonder … “What will my balance look like in 30-40 years? Will it be enough to retire or should I be contributing even more? How do I even know?!”

    So here is where it gets real. As you get comfortable with your take-home pay, challenge yourself to increase your 401(k) contributions by 1 percent each year – it may seem small,but with all the time ahead of you until retirement, small and gradual increases will start to compound (think: snowball), and overtime, you’ll see great effects. If it’s not too scary, you might even consider putting away 10 percent and see just how impactful  that could be! (But DISCLAIMER: this is where you’ll want to seek the counsel of your retirement plan account representative to determine what is best for your personal situation.)

    My own account representative advised me to consider this: Use your current annual salary as a measuring tool. By the time you turn 30, do you have your current annual salary in your 401(k) account? By the time you turn 40, do you have three times your current (40-year-old) salary in your account? How about this … by the time you turn 67, do you think you could have 10 times your (then) salary in your 401(k) account?

    This got me thinking (and, quite honestly, made me feel a little embarrassed.) But not to worry – if you are behind, that’s certainly no reason to brush it off or feel defeated. Remember, time is on your side! It’s simply a reference point or a goal to work toward. Even if you can get closer to where you want to be, you won’t be losing out.

    I know, it might seem like retirement planning isn’t even on your radar. You’re just trying to manage your grocery bills and house payments or rent, right? But there are a lot of tools and retirement calculators out there that are easy to use, like this one. Start using them, and you might just find that you actually enjoy planning for your own retirement. Too far? OK.

    And lastly, a little disclaimer (because we like those). I am not a financial advisor, so please make sure to consult with one of those amazing, qualified professionals to determine your own unique retirement plan. 

    Article Contributed By: Heidi Lengacher

    Contact Us: facethefearfw@gmail.com

  • Retirement Planning

    401(k): HALP!

    If you’re like me, you’ve probably sat through a 20-minute session or two on setting up your 401(k) account. And if you’re like me, you walked out nodding like you heard some really great advice, but it sounded more like a foreign language. You might have checked the boxes for the “most recommended” allocations for your age group and called that “good enough.” You may not even know how much is going toward your 401(k) each paycheck, or what the balance is currently, or if that’s “good” or “bad” … or…. OK, how much does it matter? HALP!

    While it’s sometimes difficult to imagine retirement or know how to plan for it so early, I couldn’t help but wonder about my own future.

    For most of us, our employer offers us a 401(k) account – but we’re in charge of contributing. So, let’s consider how those contributions actually impact the outcome (account balance) and, more importantly, the value on the day we are ready to cash out.

    The 401(k)

    A 401(k) account is a tool employers offer as an incentive for their employees to save and plan for their retirement. It’s a type of savings/investment account that allows your money to grow tax deferred.

    Part of the incentive could be your employer’s match. Not all employers provide a match. (*cough, cough* This is something you should look into if you don’t know.) Anyway, for every “X amount” you contribute, your employer will also contribute or match “Y amount.” As a rule of thumb, you’ll want to take advantage of this match, so you’re not walking away from the money they’re willing to offer you. (It’s basically free money, people!) Beyond that, you can save as much as you’d like each year, up to the contribution limit, which is determined by the government annually. (P.S. The pretax contribution limit for 2019 is $19,000. You’re welcome).

    One major difference between a 401(k) and a traditional savings account is that you really shouldn’t withdraw your 401(k) money until you reach retirement age (which the government has decided is 59 ½ years old). If you do withdraw funds before then, you will pay a hefty 10% penalty. Yikes. While that 10% penalty may seem unfair, think of this as part of a sweet deal that you and the government have shaken hands on. You need to save money as quickly as possible for retirement, right? And you’d rather not pay taxes on that money now, so it will reap the full advantage of compound interest (aka grow faster). The government says, “OK, I won’t take taxes on that money now, because I would like you to have money to retire eventually. BUT, the one condition is that you can’t use that money to buy a new Ferrari prior to 59 ½ (unless you wanna pay a 10% penalty).” Remember, the government wasn’t born yesterday.    

    OK, so you’re putting this money in regularly – what happens to it after it hits your account? Remember that “most recommended” option you checked after you glanced over the pie chart? That allocation option determines a mixture of stock and bond mutual funds where your money goes to grow. The company holding your account (such as Fidelity, MassMutual,etc.), will keep track of all this for you (*takes deep sigh of relief*).

    While there may be predetermined blends of “conservative” or “aggressive” allocations, you can customize your selections — if you so choose — and those selections can be changed at any time. For some people, taking advantage of aggressive models might seem scary – to diversify, and put large amounts of valuable (vulnerable) money out there. But it’s good to keep in mind that time is on our side here.

    So, if you start to watch your account, you might see the balance fluctuate day to day; but just because the market may take a dip or seem “low” does not necessarily mean that you’ve lost a lot. It could actually be a good time to buy in, as the more time you have ahead, the more time the market has to correct itself and grow – to your benefit.

    And lastly, a little disclaimer (because we like those). I am not a financial advisor, so please make sure to consult with one of those amazing, qualified professionals to determine your own unique retirement plan. 

    Stay tuned for Part 2 of this article coming Thursday!

    Article Contributed By: Heidi Lengacher

    Contact Us: facethefearfw@gmail.com