Will I Have Enough Money to Retire?
Presented by: Matthew A. Clayson
Will I have enough money to retire? It’s a common question and one that has increased in magnitude lately — especially for people in their 40s and 50s.
Indeed, the uncomfortable truth is that only about half of Americans believe they are on track to retire when they want to, according to a recent MassMutual Consumer Sentiment Survey. And more than half worry about running out of money in retirement.
That can generate a feeling of frustration. You’ve been working hard for over 20 years. You’ve been saving as much as you can. Then, the market crashes, and your savings disappear. It’s not too late to bounce back.
Even if you’re 55 years old and decide that today is the day to begin saving in earnest, you still have time to build up income for retirement.
On your mark, set your priorities, go
Determine what you want out of your retirement…what are your priorities? Sit down with a pen and paper and start a list. Empower yourself to make the important decisions today that will set tomorrow in motion:
- When do you want to retire?
- Where do you want to live?
- What kind of lifestyle do you want to lead? How much will you want for spending each month?
These are just some of the questions you should be asking — and answering — yourself about retirement catch-up. So, take the first step and start making some decisions.
Save more, spend less
The most obvious advice still applies: save more, spend less. But there’s more to it than that.
Create a budget to help you stay on track — and actually stick to it every month. Decide where you can trim your expenses. What can you live without now so you can have more later?
If your budget isn’t working, you may want to consider downsizing to a smaller home or a less expensive location to help maintain your standard of living. This may be a difficult exercise, but remember you’re trying to catch up.
Speaking of catching up, if you will be age 50 or older at the end of the calendar year, you can take advantage of retirement catch-up contribution options to accelerate the growth of your retirement accounts. The IRS updates contribution limits periodically; checking for the most recent information can help ensure that you are making the most of the options available to you. The bottom line: make the maximum contributions possible to your employer’s retirement plan, including any available catch-up options.
Think outside the box
There are certain financial products and savings instruments that you may not be familiar with, but that may help you get more out of your money. Many people opt to consult a financial professional to help become aware of retirement catch-up options and lay out a plan.
In addition, there may be opportunities to earn extra income, either by working extra hours or turning hobbies into side businesses, that can be considered to help catch up on retirement savings.
Delay retirement (The beach will wait for you)
People are working longer than ever before. Delaying your retirement by three years from age 62 to 65 can boost your assets significantly — thanks to the combination of making extra contributions to your employer-sponsored retirement plan, not taking withdrawals, and allowing your funds more time to grow.
In addition, if you anticipate receiving Social Security retirement benefits, it’s important to understand that monthly benefits differ substantially based on when you start receiving them and the filing option you choose. For every year you postpone collecting benefits beyond your full retirement age (typically 66 or 67), you can earn an annual delayed retirement credit of up to 8 percent. That’s a big bump in benefits every year up to age 70.
On the flip side, filing for benefits before your full retirement age can permanently reduce your monthly income. Benefits will decrease based on how early you retire. What’s worse, if you begin receiving Social Security benefits early, your surviving spouse may not be able to receive your full Social Security benefit if you pass away.
The bottom line is that there are real steps and strategies you can take today to help secure your future. It’s never too early or too late to evaluate your current retirement savings plan — or create a new one.
Feel free to reach out to us with any questions and if you would like to speak with our retirement planning specialist.
Matt Clayson is a registered representative of and offers securities and investments services through MML Investors Services, LLC. Member SIPC(www.sipc.org). Supervisory Address: 101 Federal Street, Suite 800, Boston, MA 02110. 617.439.4389. CRN202502-1735773
The Coronavirus Pandemic is More Than a Health Crisis
Presented by: Matthew A. Clayson
The coronavirus pandemic is more than a public health crisis. It’s an economic wrecking ball. Since the first reported cases in early 2020, COVID-19 has induced both a global recession and a record setting recovery. It contributed to the highest U.S. unemployment rate since the Great Depression, causing businesses to falter and families to face financial hardship.
Stocks have experienced a wild ride. The pandemic initially wiped out more than $11 trillion of wealth, but Wall Street quickly stabilized as lockdowns lifted and vaccines were introduced, hitting an all-time high in January 2022. But investors now fear a new threat: the surge in “Covid inflation” caused largely by ongoing supply chain disruptions. Against the backdrop of economic uncertainty, it’s not yet clear how long it may take for households hit hardest by the pandemic to get back on their feet financially, but we do know from past experience with economic crises that there are steps families can take today to potentially restore their financial wellness faster.
Those steps include:
Staying calm
If you contribute to a retirement plan or invest in a brokerage account, your future account balance depends on what you do right now. So, avoid making moves based on emotion rather than rational planning.
If you already have a retirement savings program under way, with asset allocation appropriate to your risk profile and long-term goals, you probably want to continue following your plan. Guidance from a trusted financial professional is can also be key.
Paying off credit cards
When the COVID-19 crisis is over and you’re back at work, you’ll need to begin paying down any debt you incurred, which includes credit card bills and retirement account loans.
One way to rid yourself of debt faster is to use any tax refunds you receive to that end. Bonuses and annual raises from your employer may be in short supply this year, but as the economy recovers and your compensation (hopefully) climbs, you may also be able to use that extra income to pare down debt.
More immediately, explore opportunities to trim waste from your budget—including unused gym memberships, premium cell phone plans, dinners out, etc.—and direct those savings to reduce the amount you owe.
Start by paying off the debt that costs you the most. Generally, that means credit cards balances. Many charge interest of 18% or higher, which makes it difficult to dig out and limits your ability to fund other financial goals.
Repaying your retirement account loans
If you took advantage of government leniency and tapped into your retirement savings to help make ends meet, you should also do everything you can to make yourself whole.
Considering a refi
If you’re strapped for cash, you might also consider refinancing your loans to lower your monthly payments.
For example, it might make sense to refinance your mortgage loan if you plan to remain in your home for at least five more years. Depending on your financial picture, however, it could be wise to refi if you can lower your interest rate by even 1 percent, especially if helps you to eliminate paying private mortgage insurance because the equity in your home has reached 20 percent. Be aware, however, that if you turn the clock back on the term of your loan, say, starting it over at 30 years, you will likely pay more in interest over the life of the loan, despite the lower monthly payment.
Insulating yourself for next time
No one knows yet when the COVID-19 crisis with its variants will end, but we can safely assume it will not be the last financial crisis we face.
As you take steps to restore your financial well-being today, don’t forget to insulate your finances for tomorrow.
If you don’t already have one, start putting money away for an emergency fund to pay the bills during bouts with unemployment, or when unexpected expenses crop up such as home repairs and medical bills. Having savings set aside prevents you from having to rely on credit cards or drain your retirement account in a pinch.
Most financial professionals suggest setting aside at least three to six months’ worth of living expenses in a liquid, interest-bearing account.
You should also review your insurance coverage to be sure that your family is protected no matter what. Beyond basic health insurance, you may wish to consider life insurance to protect your loved ones in the event that you should pass away prematurely, and disability income insurance to help replace a portion of your income if you should become injured or too ill to work.
Finally, review your investment portfolio carefully to be sure it’s still on course to meet your financial goals.
You may have discovered, as investors often do during market volatility, that your appetite for risk is not what you once thought. By working closely with a trusted financial professional, you can potentially reallocate your assets as needed to create a portfolio that is diversified enough to help you ride out future storms, but not so conservative that you sacrifice potential growth.
The coronavirus has threatened our health care system and economy like never before, leaving millions of American families struggling to pay the bills. As we continue to practice safe social distancing and make medical progress to combat COVID-19, it helps to know that there are steps we can take today to put our financial house back in order as quickly as possible.
Matt Clayson is a registered representative of and offers securities and investments services through MML Investors Services, LLC. Member SIPC(www.sipc.org). Supervisory Address: 101 Federal Street, Suite 800, Boston, MA 02110. 617.439.4389. CRN202502-1735773
Personal Cyber Coverage Explained
Today’s society has grown increasingly digital in nature, with many individuals leveraging smart devices within their daily lives. Although this technology can offer various benefits, it can also make individuals more susceptible to cybercrime. Such incidents have steadily become more common and costly. In fact, the FBI reported receiving more than 800,000 complaints regarding cybercrimes in the past year, totaling $4.2 billion in overall expenses.
These findings emphasize how critical it is for individuals to safeguard themselves and their families from cyber events. That’s where personal cyber insurance can help. Typically offered as an endorsement to a homeowners policy, this form of coverage can provide financial protection for losses resulting from a range of cyber incidents-including fraud, identity theft and data breaches. Keep reading to learn more about the growing need for this coverage and the key types of personal cyber insurance available.
The Growing Need for Personal Cyber Coverage
Technology has continued to advance in the past decade, playing a larger role in how individuals live, work, and entertain. A variety of online platforms have given individuals the ability to stream content, communicate with others, shop for goods and make electronic payments at the click of a button. Additionally, smart devices have allowed individuals to upgrade a number of household appliances (e.g., thermostats, fridges, doorbells, and security systems). Altogether, this technology has contributed to the growing adoption of the Internet of Things (IoT), which refers to any devices that connect or send information to the internet. Looking ahead, insurance experts anticipate that the average household will possess as many as 50 IoT-capable gadgets by 2023.
While these devices certainly offer several advantages, increased technology utilization also comes with greater cyber vulnerabilities. As technology advances, so do the tactics of cybercriminals-resulting in more frequent and severe cyber events. Individuals may think that they are ok shopping online as they may have installed what they believe to be the best vpn for firefox or they might have added extra security measures to their home network. However, cyber crimes can still occur even with these measures in place. Here are some of the most common cyber incident scenarios that individuals and their families may encounter:
- Bank fraud-This form of fraud entails a cybercriminal gaining unauthorized access to an individual’s electronic bank credentials, allowing them to transfer and steal funds from the individual’s account. According to a recent report from NortonLifeLock, cybercriminals steal over $170 billion each year via bank fraud.
- Identity theft-Such theft refers to a cybercriminal accessing an individual’s personal information (e.g., Social Security number or credit card number) and using it to commit fraud or other crimes under the individual’s name. The Federal Trade Commission confirmed that nearly 1.4 million complaints related to identity theft were filed last year, up 113% from the previous year.
- Data loss-In the event that an individual’s device gets infected with a virus or other malicious software (also called malware), they face the risk of losing any valuable data stored on that device. Viruses and malware can come from numerous avenues, including harmful websites, dangerous email attachments or infected USB flash drives-thus making data loss a major threat.
- Extortion-Ransomware incidents have contributed to a substantial rise in cyber extortion over the last few years. These incidents stem from a cybercriminal using malware to compromise an individual’s device (and any data stored on it) and demanding a ransom payment in exchange for restoration. In some cases, the cybercriminal may even threaten to publicly share the individual’s data if they don’t receive payment. According to cybersecurity experts, ransomware incidents have increased 500% since 2018, with the average ransom payment totaling over $300,000.
- Cyberbullying-While social media platforms allow individuals to connect with others, these platforms can also, unfortunately, be used for negative purposes, such as cyberbullying. This type of bullying includes refers to harassment, threats or other intimidating language that occurs via electronic means. Although anyone can be a victim of cyberbullying, kids and teenagers are particularly vulnerable. The latest data from Pew Research revealed that 59% of teens have experienced cyberbullying.
Considering these risks, it’s clear that individuals can’t afford to ignore cybercrime. In addition to implementing effective cybersecurity practices (e.g., using trusted devices, browsing secure websites, conducting software updates, backing up data, creating unique passwords and knowing how to identify potential scams), having adequate insurance in place is crucial. By investing in personal cyber coverage, individuals can properly protect themselves and their families amid cyber-related losses.
Types of Personal Cyber Coverage
Personal cyber insurance varies between insurers. However, there are a number of key coverage offerings available:
- Online fraud coverage-This coverage can offer reimbursement for financial losses that may result from the various types of online fraud, such as phishing scams, identity theft or unauthorized banking.
- Online shopping coverage-Such coverage can help pay for the cost of any goods that were purchased online but arrived damaged upon delivery or didn’t get delivered whatsoever.
- Identity recovery coverage-This coverage can provide reimbursement for the expenses associated with recovering from an identity theft incident (e.g., rectifying records with banks or other authorities, hiring a consultant to assist with credit restoration and taking unpaid time off from work to recover from the incident).
- Data restoration coverage-Such coverage can help compensate the cost of having an IT specialist recover a device and restore any data stored on it if the device gets infected with a virus or malware.
- Data breach coverage-This coverage can offer reimbursement for the necessary notification and recovery services in the event that private, nonbusiness data entrusted to the policyholder becomes lost, stolen or published.
- Cyber extortion coverage-Such coverage can help pay for the expenses associated with responding to a ransomware event (e.g., consulting an IT specialist to mitigate the extortion attempt and restoring compromised devices or data).
- Cyberbullying coverage-This coverage can provide reimbursement for the costs that come with recovering from a cyberbullying incident resulting in unlawful harassment or defamation of character. These costs may include psychological counseling services, legal advice, temporary relocation expenses and social media monitoring software. This coverage can also offer protection if an individual or their child faces engages in cyberbullying and faces subsequent legal action from the victim.
Because personal cyber insurance is still a relatively new type of coverage, it is usually only available as an add-on to an existing homeowners policy. Further, certain insurers only provide this coverage as an endorsement for high-value homeowners policies. Yet, some insurers may offer standalone personal cyber coverage. Moving forward, insurance experts expect the personal cyber coverage market to continue growing, allowing for more widely available policy options. In any case, individuals should consult trusted insurance professionals to discuss their specific coverage capabilities.
For further risk management resources and insurance solutions, contact us today.