Embracing A Digital Detox

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Technology has become such an integral part of life that it may be hard to imagine functioning without it. Beyond work, people depend on technological devices for information, communication, and entertainment. However, constant attachment to these devices can have harmful effects on your mental health. To combat these issues, you may consider a digital detox. The National Institutes of Health defines “digital detox” as a disconnection from devices or social media for a defined duration.

A survey by the American Psychological Association (APA) found that constant digital connectivity is linked to higher stress levels, with nearly 1 in 5 (18%) adults identifying technology use as a major stressor in their lives.

This article explores the effects of heavy technology use on mental health and offers practical tips for effective screen timemanagement with digital detoxing.

The Impact of Technology on Mental Health

Many people are hooked on tech gadgets for a reason. Checking these devices stimulates the brain’s reward system, causing the body to release dopamine, the pleasure hormone. However, these pleasurable activities can become addictive. Excessive screen time has also been linked to mood swings, suicidal tendencies, and increased stress and anxiety.

Studies suggest that excessive use of digital devices can have detrimental effects on mental health. For example, checking social media in bed at night has been found to increase the likelihood of anxiety and insomnia. Research also suggests that frequent technology use can lead to feelings of isolation, difficulty focusing, tech addiction and slower brain development.

Consider unplugging if you’re experiencing any of the following symptoms:

  • Increased anxiety
  • Increased anger or irritability
  • Depression
  • Poor sleep quality
  • Feelings of insecurity
  • Difficulty concentrating
  • Dependence on validation from social media
  • Fear of missing out

Benefits of a Digital Detox

Taking a break from digital devices is crucial to maintain balance and overall well-being. It helps reduce stress and improvessleep quality. When you step away from technology, you become fully present for yourself and for others, allowing for moremeaningful social connections. Furthermore, digital detoxing has significant mental health benefits. Studies show that peoplewho refrained from social media reported lower stress levels and improved self-image. Additionally, taking a technologytimeout allows you to be mindful of your online habits and form healthier routines, ultimately leading to higher productivity.

Simple Strategies for a Digital Detox

The APA survey also revealed that while 65% of Americans agree that occasionally unplugging or taking a digital detox isimportant for mental health, only 28% actually do so. Begin your digital detox by determining which behaviors you’d like toaddress and creating a plan that works for you. Try these strategies for an effective digital detox:

  • Turn off notifications. Notifications are distracting and can hinder productivity. Consider turning off as many as you can to minimize interruptions.
  • Use digital detox tools. Plenty of devices have built-in tools that can silence notifications or disable apps for a certain period. Research shows that those who use digital detox tools (e.g., iOS Screen Time or Google Play’s Digital Wellbeing)are less apt to use their smartphones compulsively and, thus, more likely to avoid the negative effects of social media.
  • Start your day tech-free. Many people pick up their phones and start scrolling when they wake up, but Stanford Lifestyle Medicine Program experts say this behavior activates the fight-or-flight response. This not only creates a sense of anxiety but also conditions the brain to be more hypervigilant. Instead, use the first hour of the day for activities such as exercising, spending time outside or preparing a healthy breakfast. The goal is to create a morning routine that sets a positive tone for the day and supports brain health.
  • Take periodic breaks from technology. Eliminating the use of all digital devices may not be realistic, especially if you use them for work. Instead, set limits for how much time you spend on social media each day or designate certain times for phone use. You can also consider ways to make small changes, such as chatting with someone face-to-face rather than using your phone.
  • Create gadget-free zones. Designate specific areas in your home, such as dining rooms and bedrooms, where gadgets are not allowed. This allows you to be more present and encourages tech-free activities, such as baking, reading, doing crafts, and playing cards or board games.
  • Reach out for support. Family and friends can offer emotional support during your digital detox. They can hold you accountable and keep you motivated when you’re struggling to stick to your goals.

Conclusion

While technological devices aren’t inherently harmful, overuse can negatively affect your physical and mental well-being. Witha digital detox, you can break unhealthy habits and embrace more balanced, healthier alternatives.

Contact a mental health professional for further guidance.

 

5 Forces Driving Commercial Auto Costs

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Over the past decade, auto insurance rates have increased steadily, well exceeding the rate of inflation over the same period. But what’s driving this upward trend? Explore factors that have significantly impacted the rates for commercial auto.

  1. Bodily injury loss costs
    In the five-year period from 2018 to 2022, auto severity has increased a substantial 40% even as frequency has declined.1 Causes include an increase in deadly accidents, rising verdicts in legal cases and medical cost inflation. In fact, the latter is expected to grow 7% in 2024, up from 6.0% in 2023 and 5.5% in 2022.2
  2. Attorney involvement
    With attorneys actively pursuing auto accident business, more claimants now have legal representation. These claims see higher rates of expenditures for medical procedures and treatment.3 A complete fleet management program can help reduce your exposure.
  3. Distractions and impairment
    Distractions behind the wheel, from vehicle infotainment systems and mobile devices to driving under the influence, can lead to significant risks: 30% of companies surveyed reported that they have employees who have been involved in crashes due to mobile phone distraction, and deaths due to preventable crashes are up 18% versus pre-pandemic levels.
  4. Inexperienced drivers
    Resignations and retirements are leading to a shortage of commercial operators, increasing the chance that less experienced replacement drivers are behind the wheel. Operators in new vehicles and covering new routes can also contribute to an increase in accident rates.
  5. Vehicle repair and replacement costs
    Autos have become more expensive to insure and repair. Newer vehicles are outfitted with advanced materials and technology designed to make driving more comfortable and safer. When these vehicles are involved in an accident, costs can be high, and labor shortages and inflation have only exacerbated the issue. In fact, motor vehicle parts and equipment costs have increased almost 24% since September 2019.5 Meanwhile, used car prices are still up almost 47.9% in 2023 compared to the average from 2015 to 2019, despite recent softening.6 This directly impacts the cost of claims in the event of a total loss. Finally, rising auto thefts are further contributing to increased claim costs.

 

Travelers 5 Forces Driving Commercial Auto Insurance Costs

https://www.travelers.com/resources/business-topics/insuring/commercial-auto-risks-that-can-increase-insurance-rates

Sources
1 LexisNexis Risk Solutions Auto Insurance Trends Report2 Health Research Institute3 Attorney Involvement Keeps Claims Soaring (June 2023, The Institutes)
4 Travelers 2023 Risk Index – Distracted Driving
5 Auto Insurance: The Uncertain Road Ahead (2023, APCIA)6 Edmunds Used Vehicle Report (Q3 2023) 

Early Retirement Checklist

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Presented by: Matthew Clayson, Financial Advisor at Commonwealth Financial Group

If you’ve ever yearned for an early retirement, you’re not alone.

A small but growing contingent of working Americans have made it their mission to eliminate paycheck dependency well ahead of the traditional age of retirement.

More than one-third of Gen Zers, millennials, and GenXers said they plan to retire before age 65, according to the most recent research from GOBankingRates. Men were most likely (32 percent) to express confidence in an early exit, versus 25 percent of women.1

The mostly millennial-led FIRE community, which stands for “financial independence, retire early,” is also gaining traction on social media with 26,000 followers on Facebook alone. Many proudly declare that they plan to exit the workforce in their early 40s.

But planning to retire early and following through are two different things.

To start with, you must carefully consider:

  • Your reason for wanting to retire early
  • Health insurance coverage
  • Physical and emotional wellness

Explore your reason

FIRE aficionados should be sure they have a clear vision of what it is they hope to achieve by retiring early. Is it to volunteer more, travel the world, play a more active role in a nonprofit you support? The better defined your plan, the more likely you are to meet your expectations.

If it’s a better work-life balance you seek, try changing employers or using your work experience to shift gears into a more forgiving industry.

Indeed, an early retirement means different things to different people. Some view it as a total departure from the workforce, which requires significant savings depending on the age at which they retire. Others define it as having enough personal savings set aside to quit their day job and start a home-based business, do part-time consulting, or pursue a more meaningful (but lower paying) job.

A retirement plan that builds in flexibility and allows you to supplement your savings as needed can help you sleep easier at night.

How much I need to retire early?


It goes without saying that you can’t quit work until you’ve got enough saved, but just how much do you need? That depends on your expenses, your age, and your health insurance coverage.

It may help to segregate your savings goal into two distinct phases:

  • The money you will need available to cover the bills before you reach the age of Medicare and Social Security eligibility.
  • The money you need saved in your tax-deferred retirement accounts (401(k)s and IRAs) to provide for your needs after you reach age 59-1/2.

Remember, you can’t start claiming Social Security until age 62 at the earliest, and many retirees delay benefits until at least their full retirement age at 67 to permanently augment the size of their monthly benefit.

Similarly, you generally can’t withdraw money from your tax-deferred retirement accounts such as your traditional Individual Retirement Account or 401(k) until age 59-1/2 without incurring taxes, plus a hefty 10 percent penalty.4,5

That means you’ll need enough saved to get you over the hump until your retirement accounts and Social Security become accessible.

Be sure to factor in projected expenses, such as college tuition costs for your kids or a wedding for your child, if you plan to chip in.

A 2020 survey by the AARP and National Alliance for Caregiving found 53 million Americans had provided unpaid care to an adult with health or functional needs.6 The average family caregiver spends roughly $7,2000 per year, or nearly 20 percent of their annual income, on out-of-pocket costs, according to AARP estimates.

Expect the unexpected

An oversized emergency fund of at least a year’s worth of living expenses is a must for early retirees, creating a buffer for years when the stock market may be limping along or a medical expense crops up.

Saving enough money and projecting your living expenses accurately is no easy task. Perhaps that explains why less than half (47 percent) of the higher income respondents to MassMutual’s survey said they were confident in their ability to retire at their intended age.

It helps to work with a trusted professional who understands your financial goals and can help you solve for variables, including whether your house will be paid off, tax efficiency, the effects of inflation (which erode purchasing power), and whether the numbers only work if you move to a more tax-friendly state with a lower cost of living.

Think, too, about your safety net in case your early retirement plan doesn’t work.

Consider, for example, whether you should budget for homeowners or renters insurance, whether you will carry life insurance, and how you will ride out Wall Street’s inevitable bear markets. Will you be able to go back to work, if needed, to generate some supplemental income?

Healthcare coverage

The fly in the ointment for many FIRE fans is healthcare coverage. You aren’t eligible for Medicare federal health insurance until age 65, so unless your spouse plans to continue working and can cover you on his or her health plan, you’ll need to factor the costs of private insurance into your budget.

Depending on the size of your family, private coverage can set you back several thousand dollars a month.

During the accumulation phase, while you are still working, it may help to select a high deductible health plan with a health savings account (HSA) component, if available through your employer.

According to the Fidelity Retiree Health Care Cost Estimate, a 65-year-old individual who is covered by Medicare and retires this year will need roughly $165,000 in today’s dollars for out-of-pocket medical expenses throughout retirement, not including any costs associated with long-term care.

Your physical and emotional well-being

Lastly, spend some time planning for your emotional and physical well-being. Will you miss the social interaction of a work environment? Does your spouse support your goal of an early retirement? Will the workweek feel lonely if most of your friends and family are still doing the 9 to 5 grind?

Making the switch from collecting a paycheck to living off your savings is a challenging task at any age. For those who intend to retire early, however, it’s all the more crucial to plan ahead — and consider all options — so they can make the transition to financial independence with confidence.

 

 

 

Provided by Matthew Clayson, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual). CA Insurance License # 0I01304
©2024 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001 
MM202708-310101

 

About the Author

Matthew Clayson is a Financial Advisor at Commonwealth Financial Group. He is a registered principal of, and offers investment advisory and financial planning services through, MML Investors Services, LLC, Member SIPC (www.sipc.org).  

 

Rising Cost of Homeowners Insurance

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Many people can expect their homeowners insurance rates to go up this year—along with the rising cost of materials and supplies—in this economy.

Several factors are behind the rising costs. Severe weather events continue to cause serious damage and costly insurance claims. The rising cost of building materials, supply chain issues and unfilled jobs are driving up the costs of home repairs.

In this article, we’ll explain some key factors causing home insurance rates to rise and what you can do to help rein in your costs.

What are some key factors driving up home insurance rates?

Extreme weather events and catastrophes

Hurricanes, floods, droughts, wildfires and other severe weather events have become more frequent, destructive and contributing to rising costs. As of October 11, 2022, the United States sustained 15 weather events with losses exceeding $1 billion each.1 As weather-related damages go up, so does the cost of insurance overall. Insurers typically adjust rates on a state-by-state basis based on actual and anticipated weather-related losses.

Rising cost of materials

Another key consideration when pricing homeowners coverage is the cost to repair or rebuild a home in the event of a loss.
Limited supplies and inflated prices for most building materials continue. Consider this sampling of price increases between October 2021 and October 2022:

  • Material goods for new residential construction rose 14.3%.2
  • Lumber and wood products went up 6.2%.3
  • Asphalt roofing materials grew 14.5%.4
  • As building costs go up, so does the cost to repair or replace homes damaged by covered losses.

Skilled labor shortage

The construction industry is facing a skilled labor challenge, which has resulted in added expenses related to wages, supply chain problems and other construction issues.5 This sector had 423,000 job openings as of September 2022,6 more than twice the projected number of annual openings.7

Factors impacting your homeowners rate you may be able to control

Current market conditions that affect the rising cost of your insurance premiums may be out of your control, but there are steps you can take to help keep the cost of your homeowners coverage in check.

  • Install protective devices. To help avoid losses and save money, ask your insurance agent about any savings you might qualify for by taking preventive measures to protect your home. For example, Travelers offers insurance premium discounts for smoke detectors, fire alarms, water sensors, interior sprinkler systems and smart home protection devices.
  • Review your insurance. Ask your agent to review your current coverage to ensure you’re getting the customized protection you need. Make sure all home improvements are accounted for. Cancel or reduce coverage you no longer need.
  • Increase your deductible. A higher deductible will likely reduce your premium. Just remember to have enough savings to cover your deductible should you experience a loss.
  • Bundle your policies. Travelers offers discounts when you purchase more than one policy with them. Home and auto are commonly bundled for a discount, but discounts may also apply to boat, valuables, personal umbrella protection and other specialty coverages. Learn about the multi-policy insurance discounts that Travelers offers.
  • Explore customer retention programs. Travelers offers premium discounts, or credits to long-term customers. For example, the Travelers Decreasing Deductible®* program applies a $100 credit each year toward your deductible. This credit is earned at your annual renewal date even if you have a loss.

*Travelers Decreasing Deductible is not available in all states, including California.

Current market conditions are challenging. Catastrophic weather events are on the rise. Pandemic-era disruptions, including shortages in building materials and skilled labor, are driving rate changes. But there are factors within your control when it comes to the premiums you pay. It’s smart to take advantage of them.

 

Travelers Why Homeowners Insurance Premiums are Rising and What You Can Do

https://www.travelers.com/resources/home/insuring/why-did-my-homeowners-insurance-go-up

Sources

1 https://www.ncdc.noaa.gov/billions/ 
2 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Inputs to Industries: Net Inputs to Residential Construction, Goods, October 2022
3 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Lumber and Wood Products, October 2022
4 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Asphalt Felts and Coatings, October 2022
5 https://www.agc.org/news/2022/08/31/construction-workforce-shortages-risk-undermining-infrastructure-projects-most-contractors-struggle-0
6 U.S. Bureau of Labor Statistics, Job Openings: Construction, September 2022
7 U.S. Bureau of Labor Statistics, Construction Laborers and Helpers, September 2021 

1 https://www.ncdc.noaa.gov/billions/ 
2 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Inputs to Industries: Net Inputs to Residential Construction, Goods, October 2022
3 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Lumber and Wood Products, October 2022
4 U.S. Bureau of Labor Statistics, Producer Price Index by Commodity: Asphalt Felts and Coatings, October 2022
5 https://www.agc.org/news/2022/08/31/construction-workforce-shortages-risk-undermining-infrastructure-projects-most-contractors-struggle-0
6 U.S. Bureau of Labor Statistics, Job Openings: Construction, September 2022
7 U.S. Bureau of Labor Statistics, Construction Laborers and Helpers, September 2021 

Why Are Auto Insurance Rates Rising?

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Increasing auto insurance premiums have been troubling for policyholders and their wallets. According to statistics released in May 2023 by the U.S. Department of Labor, auto insurance premiums increased 17.1% in the previous 12 months. Although the cost of insurance may change each year for various reasons, this infographic can help shed light on current market factors influencing policies across the country right now:

Vehicle inventory—While the availability of new cars has rebounded since the COVID-19 pandemic, inventory levels overall are still below average, and prices for used vehicles remain relatively high. As cars remain more costly, insuring them may be more expensive.

Higher repair costs—Inflation, supply chain issues lingering from the pandemic, high demand at auto shops and a car technician labor shortage have contributed to increased repair costs and the related price of auto insurance claims.

Rising medical bills—As health care costs have risen, auto insurance companies must pay more for medical services from MedPay and personal injury protection (PIP) coverage. Consequently, premiums have also increased.

Increased claims—Car accidents and thefts have become more common in recent years, leading to more claims being filed against auto policies. As the number of claims rises, so too does the cost of insuring against them.

In response to rising auto insurance premiums, policyholders should consider the following ways to save on their rates:

  • Stay safe – Avoid blemishes on your driving record by practicing safe habits behind the wheel.
  • Take courses – Completing driving safety courses may unlock discounted premiums.
  • Bundle coverage – Purchasing multiple types of coverage from the same insurer may reduce overall costs.
  • Maintain good credit – High credit card balances, late payments and other negative effects on a policyholder’s credit score may lead to higher premiums.
  • Reconsider policy details – Adjusting your coverage, such as increasing your deductible, may help limit premiums.
  • Drive less – Insurers may consider how far a policyholder drives annually. By reducing mileage and reporting accordingly, costs may be decreased.

Even among increased rates, auto insurance remains a critical loss control measure for U.S. motorists. Insufficient coverage could lead to legal noncompliance penalties and, in the event of an accident, catastrophic out-of-pocket costs.

Contact us today to learn more about potential auto insurance discounts and other ways to save on your premiums.

Commercial Property: Forces Driving Increases

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The commercial property insurance market continues to be challenging, with several factors contributing to premium increases for commercial property coverage:

1. Catastrophe losses

Hurricanes, floods, wildfires, tornadoes, and winter storms are occurring more frequently and with greater severity, causing annual insured losses of more than $100 billion globally in the last four years. In 2023, global insured losses totaled $118 billion, with severe convective storms (SCS) accounting for 58% of the losses globally, and six of the 10 most expensive events in the U.S. being SCS events.

2. Reinsurance

While reinsurance capacity has improved, the cost of available reinsurance capacity remains high due to the impact of catastrophic events, increasing cost of capital, financial market volatility, and inflation. These costs are passed along to customers.

3. Underinsurance

Due to increased material and labor costs, insured property replacement values continue to lag. Only 43% of business owners have increased their policy limits to accurately reflect what it would take to replace insured property.

4. Property Replacement Costs

Nonresidential construction costs have increased by 37% over the past four years, with a 65% increase in fabricated structural steel and a 37% increase in the price of concrete products. Additionally, machinery and equipment costs have increased by 22% over the same period.

5. Skilled Labor Shortage

Wages and salaries, comprising nearly half of construction costs, have increased by 22% over the past four years. However, 77% of contractors are struggling to find skilled labor. These factors may lead to higher rebuilding costs and longer delays, potentially triggering an increase in business interruption losses.

6. Property Rate Needed

Due to escalating loss trends, carriers are expected to raise rates again this year to close the gap between loss trends and rate increases.

In summary, the commercial property insurance market is facing significant challenges, leading to premium increases for commercial property coverage. The increasing frequency and severity of catastrophic events, along with high reinsurance costs and underinsurance due to rising material and labor costs, are key contributing factors. As a result, property replacement costs have surged, and there is a shortage of skilled labor, which may lead to higher rebuilding costs and longer delays. Carriers are expected to raise rates further this year to address the widening gap between loss trends and rate increases.

 

Read the Travelers Insurance Article: https://www.travelers.com/resources/business-topics/insuring/factors-affect-insurance-costs-commercial-property

 

Surviving the Summer Heat

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Summer brings longer days and plenty of sunshine, but with it comes the challenge of staying cool amidst soaring temperatures. The sweltering summer heat can lead to various heat-related illnesses, some of which can be serious if not addressed promptly. This article explores common heat-related illnesses and offers tips for preventing them.

Heat Syncope

Heat syncope is when someone suddenly faints due to being in a hot environment, especially after standing for a long time or getting up quickly from a sitting or lying down position. Heat syncope occurs as the body tries to cool itself down by widening blood vessels, which, in turn, can cause blood pressure to drop. This can make it hard for enough blood to reach the brain, leading to fainting. Usually, lying down and elevating the legs can help individuals recover quickly. If someone is about to faint from heat syncope, they might feel or exhibit the following symptoms:

  • Dizziness
  • Lightheadedness
  • Nausea
  • Blurry vision
  • Rapid heart rate
  • Sweating

Those not used to the summer heat, older adults, people with heart conditions and those taking medications that affect blood pressure have a higher risk of heat syncope. To prevent heat syncope, drink plenty of water, wear light, loose-fitting clothes, and take regular breaks in cool or shaded areas. Additionally, avoid getting up too quickly from a sitting or lying position to keep your blood pressure steady.

Heat Rash

Heat rash occurs when sweat ducts become blocked and trap sweat beneath the skin. Common in hot, humid environments, it often affects areas where skin folds or where clothing creates friction. Symptoms of heat rash include the following:

  • Small, red bumps on the skin
  • Itchy or prickly sensations
  • Slight swelling

Excessive sweating, tight clothing and prolonged periods of physical activity during summer heat can increase your risk of developing heat rash. You can avoid it by wearing loose-fitting clothes with breathable fabrics, such as cotton or linen. Also, refrain from using thick lotions or creams that may clog your pores, and use fragrance-free soaps that won’t dry or irritate your skin.

Heat Cramps

When you sweat excessively due to heat or physical activity, it can cause an imbalance in electrolytes, which can lead to muscle cramps or spasms. Although heat cramps aren’t typically serious, they are a sign the body is struggling to cope with the heat and that further measures should be taken to prevent more severe heat illnesses from occurring. You might have heat cramps if you’re experiencing:

  • Tight muscles with mild to severe pain
  • Stiff or curled toes
  • Flushed or moist skin

Heat cramps are common for those who work outdoors. Notably, even if you’re mostly indoors for work, your risk of developing heat cramps increases if you have preexisting conditions, are on a low-sodium diet or are taking certain medications (e.g., blood pressure pills, diuretics or antidepressants). If you start feeling heat cramp symptoms, immediately stop any activity and get out of the heat, if possible. Stretch and massage the cramping muscle and apply a cold compress. You may also drink milk, coconut water, sports drinks or an oral rehydration solution to replenish your body’s lost electrolytes.

Heat Exhaustion

Heat exhaustion is a serious condition that occurs when the body loses an excessive amount of water and salt through sweating. Without intervention, heat exhaustion can escalate to heatstroke. The symptoms of heat exhaustion can appear suddenly without warning or develop gradually over time. They include the following:

  • Pale, moist skin
  • Weakness
  • Dizziness
  • Nausea
  • Headache
  • Muscle cramps
  • Fever of 100 F or higher

You are more likely to experience heat exhaustion if you engage in strenuous physical activity in hot, humid environments. People not acclimated to high temperatures (such as those living in cooler climates who suddenly encounter hot weather) are also at higher risk. In general, the elderly, young children and individuals with chronic health conditions like heart disease or diabetes are the most susceptible to heat exhaustion. If someone is experiencing heat exhaustion, move them to a cool place and remove unnecessary clothing like jackets or socks. Offer them cool water to replenish fluids, then use a spray bottle or damp cloth to apply cool water to their skin. Fanning them and placing cold packs on their neck can also help.

Heatstroke

Heat exhaustion, if not treated, can lead to life-threatening heatstroke. Heatstroke happens when the body’s temperature regulation fails and body temperature rises to 104 F or higher. A person experiencing this medical emergency may also exhibit the following symptoms:

  • Disorientation or confusion
  • Loss of consciousness
  • Hot and dry skin
  • Rapid pulse

Heatstroke requires immediate medical attention to prevent permanent damage or death. If you see someone possibly suffering from heatstroke, call 911. Until help arrives, remove excess clothing and drench the skin with cool water. Place ice on the neck, armpits and groin to help cool the body down. If the person is alert, give them cool fluids to drink.

Summary

Summer heat can be more than uncomfortable; it can threaten your health. When left untreated, heat-related illnesses can become life-threatening. If heat-related symptoms don’t improve within an hour, contact a doctor, and seek immediate medical attention if the person has heatstroke.


This article is for informational purposes only and is not intended as medical advice. For further information, please consult a medical professional. © 2024 Zywave, Inc. All rights reserved.

Mitigating the Financial Risks of a Forced Retirement

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Presented by: Matthew Clayson, Financial Advisor at Commonwealth Financial Group

An early retirement is a celebratory event when it happens according to your timeline. But it can also be a financial wrecking ball when you’re forced to retire prematurely — something many Americans experienced during the COVID-19 pandemic.

Indeed, more than 3 million additional workers in the U.S. retired during the pandemic than is typical, according to a Federal Reserve Bank of Saint Louis analysis, which found “a significant number of people who had not planned to retire in 2020 may have retired anyway because of the dangers to their health or due to rising asset values that made retirement feasible.”1

But it’s not just a global health crisis that can induce an early retirement. Injury and illness are among the most common reasons that cause a forced retirement. Some on the cusp of retirement lose their jobs and choose to sit it out for good when their employer downsizes or their skill set becomes obsolete. And others stop working before they intended to care for an ailing loved one.

Indeed, those who are forced into early retirement early need to consider the following potential financial risks:

  • Longevity risk
  • Health insurance coverage
  • Inflation
  • Sequence of returns risk

Taking steps to manage these risks as early as possible is a must. For guidance, many turn to a financial professional.

Longevity risk after a forced retirement

Those who stop working before their normal retirement age are far more vulnerable to longevity risk — the likelihood of outliving their assets — because they must stretch their savings out over a greater number of years. They also have fewer working years to contribute to tax-deferred retirement accounts, so they start off with less in the bank.

As a general rule of thumb, financial professionals often recommend a 3 percent or 4 percent withdrawal rate during the first year of retirement. Retirees can then adjust that amount higher annually to keep pace with inflation.
Assuming their investment portfolio earns more than 4 percent on average per year, that withdrawal rate ensures that they will only ever spend their earnings and leave their principal untouched.

Early retirees, who need their savings to last longer, may need to learn to live on less. They may also need to reduce their expenses by downsizing to a cheaper house or simply return to work (even part time) for a few extra years to bolster their retirement nest egg.

Those who have the means can also potentially delay claiming Social Security benefits a few extra years to permanently increase the size of their future Social Security checks — the best way to give yourself a raise during retirement.

Health insurance coverage after a forced retirement

Many early retirees underestimate the potential cost of paying for private health insurance during the years before they become eligible for Medicare, the federal health insurance program covering those age 65 and older, certain younger people with disabilities, and those with end-stage renal disease.

Premiums for private health insurance, even for a few years, can consume an oversized portion of your savings, which could undermine your ability to make ends meet throughout retirement.

Options for coverage include COBRA, a spouse’s insurance, retiree health insurance benefits, the public marketplace, private health insurance, membership-based group health plans, and Medicaid for those with demonstrated financial need.

Long-term care (LTC) insurance coverage, which picks up where Medicare leaves off, can potentially curb future costs related to assisted living and nursing home care. Some hybrid life insurance policies include LTC coverage.

Before buying an LTC insurance policy, retirees should speak with a financial professional to determine whether such coverage is the right fit for their family.

Inflation

The rising cost of goods and services, otherwise known as inflation, is enemy number one for retirees.

When you no longer produce an income, any increase in consumer prices erodes your purchasing power. And the more years you spend in retirement, the bigger that threat becomes.

Historically speaking, inflation rises from 1 percent to 3 percent per year. Assuming 3 percent annual inflation rate, a 55-year-old making $50,000 per year who retires today would need the equivalent of about $91,000 by age 85 to maintain the same standard of living.

Inflation, of course, doesn’t always remain within the federal government’s target range. In early 2022, the Consumer Price Index soared to 7.5 percent, the biggest spike in consumer prices since 1982.

Retirees typically scale back their level of investment risk because they depend on their retirement savings for income and can’t afford a period of prolonged losses. While that may be age appropriate, it is also a risk to become too conservative with their asset allocation.

Sequence of returns risk

New retirees, regardless of when they leave the workforce, must also be mindful of market performance.

Those who retire into a bear market, or experience losses or low returns in the early years of their retirement, are statistically far more likely to outlive their savings than retirees who experience losses later on.

Indeed, while permanent life insurance policies are primarily designed to provide a death benefit to protect the ones you love, they also build cash value as premiums get paid – and you can borrow from your cash value for any purpose.

For example, retirees can use their cash value to pay the bills when the market is down, giving their investment portfolio time to recover.

Another way to offset sequence of returns risk is to create a traditional emergency fund worth at least 12 months of living expenses in a liquid account, such as a savings or money market account, from which retirees can draw an income during periods of market downturns.

Conclusion

It’s one thing to plan for an early retirement, but quite another to be forced out of the workforce prematurely. With careful planning, professional guidance, and tools to mitigate multiple risk factors, however, it may still be possible for early retirees to live the lifestyle they had envisioned.

 

 

Provided by Matthew Clayson, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual). CA Insurance License # 0I01304


©2023 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001 

MM202611-307408

 

About the Author

Matthew Clayson is a Financial Advisor at Commonwealth Financial Group. He is a registered principal of, and offers investment advisory and financial planning services through, MML Investors Services, LLC, Member SIPC (www.sipc.org).  

7 Ways You Might Be Sabotaging Your Salad

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Salads may not be as American as apple pie, but plenty of people report eating them regularly: four times a week, on average, according to a poll commissioned last year by Fresh Express and conducted by OnePoll. More than half of the 2,000 U.S. adults polled — 62 percent — said that salads are part of their regular diet.

It’s a little puzzling to reconcile those numbers with the staggering rates of obesity in this country, but then, the health value of a salad really depends on quality rather than quantity. While salad — usually conceived as a big bowl of fresh, raw vegetables and leafy greens — has all the makings of a terrific health food, it’s easier than you might imagine to go astray and sabotage your salad. Pouring on the dressing, overdoing the carbs, forgetting about protein, and other common missteps can turn this nutritious meal into a calorie bomb.

Whether you’re ordering out or tossing your own, here are seven common mistakes to avoid.

  • Mistake 1: Forgetting Protein
  • Mistake 2: Drowning in Dressing
  • Mistake 3: Packaged Dressings
  • Mistake 4: Going Crazy on the Croutons
  • Mistake 5: Boring Bowls
  • Mistake 6: Using Light Greens
  • Mistake 7: Not Cleaning Around Your Greens

The Magic Formula for a Winning Salad

Now that you’ve learned what salad mistakes to avoid, here’s how to do it right! Cassetty shares her formula for building a satisfying, substantial, nutrient-dense salad. Combine the following:

  • Two parts veggies, which could be leafy greens; chopped peppers, cucumbers, or tomatoes; or roasted veggies
  • One part carbs, such as quinoa, brown rice, sweet potatoes, butternut squash, or dried or fresh fruit
  • Protein, such as eggs, beans, legumes, or tofu
  • Fat Cassetty encourages plant-based sources of fat such as avocado, olives, or an oil-based dressing. Cheese works well for certain salads — think beets and goat cheese or a Greek salad with feta.
  • Crunchy bits Nuts, seeds, or crunched-up whole-grain chips or crackers
  • Flavoring Along with dressing you can add enhancements like Italian, Greek, or everything-but-the-bagel seasoning.

How much of the protein, fat, and crunchy bits should you add? “The amount that would feel comfortable and enjoyable,” Cassetty says. “Think about the fat source as an accessory — it gives your salad lots of flair, but you don’t want to overdo it,” she says. “And protein is a filling element, so how hungry are you? When we base our decisions like that, we’re tuning into our bodies, and that helps us eat more in line with what our bodies need.”

To read the full article click here

 

By Stephanie Thurrott (March 2023)

7 Things That Ruin a Healthy Salad (everydayhealth.com)

 

 

Income tax diversification defined

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Presented by: Matthew Clayson, Financial Advisor at Commonwealth Financial Group

If you’re saving and investing for retirement, you’re probably familiar with the concept of investment diversification: Combining different types of assets to balance your overall investment risk and return. This same principle can and should be applied to income tax diversification.

Why? Income tax diversification may allow you to structure withdrawals in retirement to potentially increase the amount of after-tax spendable income.

To achieve a diversified tax base, you want financial assets that offer different types of income tax advantages as you:

  • Save for retirement (Contribution).
  • Grow your savings (Accumulation).
  • Use them for retirement income (Distribution).

There are particular income tax advantages offered by different financial instruments at each of these stages.

Choosing options that offer tax advantages during these different stages may help you accumulate more for retirement and reduce your income tax liability during retirement.

Retirement savings plans (pretax contributions, tax-deferred accumulation, taxable withdrawals)

As you earn money, you pay income tax. But certain retirement savings programs — 401(k) plans, IRA’s, and some types of pension and profit-sharing plans allow you to contribute on a pretax basis. This effectively lowers your gross pay and, as a result, the taxes on that income.

Additionally, many employers offering these types of plans offer some kind of match of funds to a certain limit. For example, your employer may contribute 50 cents for every dollar you contribute up to 6 percent of your pay. So, if you contribute 6 percent of your pay, then add your employer’s match, your contribution amount is effectively increased to 9 percent.

The pretax income you invested in these types of qualified retirement accounts grow on a tax-deferred basis, meaning the money doesn’t get taxed until you take it out.

These kinds of plans are typically subject to a 10 percent penalty for distributions prior to age 59½, and may also have annual required minimum distributions (RMDs) starting at age 73. Failure to take full RMDs will result in a penalty tax equal to 50 percent of the shortfall.

Roth plans (after tax, tax deferred, tax advantaged)

Roth IRAs and Roth 401(k)s are built with after-tax dollars. Both earnings and withdrawals are income tax free if the owner is 59½ and has had the account for five years or longer.

Contributions are limited, however. Those making more than a specific income level cannot contribute a Roth IRA. And those do qualify can only contribute a set amount. Roth 401(k)s don’t have income thresholds, but have limits on how much can be contributed.

Roth account values may also pass tax deferred to the account beneficiary at death.

Annuities (tax deferred, tax advantaged)

An annuity is a contract with an insurance company that can protect you from the risk of outliving your savings in retirement. It is purchased in a lump sum or series of payments and guarantees a stream of payments at some time in the future.

There aren’t any statutory limits on how much after-tax money can be used to fund an annuity, although the annuity itself may have contractual limits.

Earnings in annuities accumulate tax-deferred. When you start receiving payments, you’ll be taxed. If the annuity was bought with pretax funds, the payments will be taxed as ordinary income. If purchased with after-tax funds, you would only pay tax on the earnings.

Life insurance (after tax, tax deferred, tax advantaged)

Life insurance provides a death benefit to help your loved ones carry on in the event of your passing, and life insurance death benefit proceeds are generally income tax free.

Some types of life insurance build cash value. This cash value grows on a tax-deferred basis.

The cash value can be accessed on a tax-advantaged basis. Money taken from the cash value of a life insurance policy is not subject to taxes up to the “cost basis.” That’s the amount paid into the policy through out-of-pocket premiums.

Policyowners can withdraw or borrow against their cash value for any need, like paying a college bill or coming up with a down payment on a house. Retirees can use the cash value as a ready reserve of funds for inevitable market pullbacks, allowing time for invested funds to recover.

Municipal bonds

Those looking to diversity their tax base also sometimes look at municipal bonds.

The attraction of municipal bonds is the interest earnings are not subject to federal taxes. They may also avoid state and local taxes if the investor lives in the state that issued the bond.

Conclusion

The kind of income tax diversification mix using the various options will be different from individual to individual, depending on age, income, and other circumstances. Many people turn to a financial professional to help them understand the choices and possible outcomes.

Provided by Matthew Clayson, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual). CA Insurance License # 0I01304


©2023 Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001 

MM202611-307408

 

About the Author

Matthew Clayson is a Financial Advisor at Commonwealth Financial Group. He is a registered principal of, and offers investment advisory and financial planning services through, MML Investors Services, LLC, Member SIPC (www.sipc.org).