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4 Ways to Get Financially Fit in Your 40s | Maryland Benefit Advisors

Many people in their 40s are facing an uncomfortable fact: They simply aren’t where they’d hoped to be financially. Fortunately, all their life experience can help correct for past mistakes.

“There’s a different trigger moment for everybody,” says Jay Howard, financial advisor and partner at MHD Financial in San Antonio, Texas. “But regardless of when it comes, people find themselves looking down the barrel of a gun as they consider retirement.”

One challenge is that it’s impossible to advise 40-somethings based on tidy “life stage” demographics. Some are just starting families, while others are sending offspring to college. They’re married, single, divorced, and just about everything in between.

But for those still grappling with financial instability, these four principles can help in moving forward with confidence:

1. Acknowledge what you’ve done right.
It could be one great decision sandwiched in between some fails, or just a single good habit that can mitigate the impact of a host of wrongs.

Take the example of Kiera Starboard, a 46-year-old controller at a San Diego software firm. A mom to two adult sons and a teenage stepson, she always made having sufficient life insurance—both term and permanent—a priority, the result of her previous training as a financial advisor. “Even if it was tight, I made the payments,” she says. “It was a priority for my family’s sake, and for my own peace of mind.”

Unlike the 40% of Americans who have no life insurance, Starboard was protected when the unthinkable happened last August. Less than two years into her marriage, her husband, Steve, was killed while riding his motorcycle to work—one month after they purchased a small, additional life insurance policy to supplement his employer coverage.

“To have had to deal with financial stress on top of everything else, it would have been unbearable, incapacitating,” says Starboard. “My stepson and I are certainly in a much better position today than we would have been, had Steve and I not followed the advice I used to give to others.”

2. Take action to shore up the decades ahead.
For many, the hardest part can be learning to put your own long-term future first—sometimes for the first time in your life.

“I see people focusing on their kids’ college savings, and not enough on retirement or an emergency fund for themselves,” says Starboard. Many advisors point out that kids can borrow for college if necessary, but no one can borrow for retirement.

The most important step is clear, says Howard: “You must have a written financial plan, period. Because that plan will dictate what you must do to be successful for the entirely of your life.

“The financial plan is your road map,” he continues. “In it will be your portfolio requirements, your savings goals, and your insurance-related needs.”

Finally, make sure your plan takes inflation into account, commonly estimated at 3% a year. Says Howard, “Inflation is the silent assassin that eats away at your nest egg.”

3. Apply the hard-fought wisdom you’ve gained.
“Treat the numbers determined by your plan—such as monthly savings—as bills that need to be paid,” advises Howard. When money comes in, it’s easy to start thinking of a new kitchen or a trip to Tulum. “Just be patient and keep the bills paid.”

Using that wisdom also applies to the big stuff. As the executor to her husband’s estate, Starboard has held back making any major decisions. “In a prior loss, I committed to real estate transactions and other things prematurely. At the time, it really felt like the right thing to do but my grief clouded my perception. I had a painful, expensive learning lesson.”

4. Focus on your shining future—really.
Forward thinking is an essential part of your financial plan, says Howard. “Get help really envisioning what kind of retirement you want. For each aspect, really drill down. For instance, where do you want to live? Do you want to be near your grandkids? Will you have the money to go see them? How often? It’s not just financial planning, it’s life planning.”

If all that forward thinking feels presumptuous, Howard recalls the eminently quotable Yogi Berra, who once said, “If you don’t know where you’re going, you might not get there.”

And finally, remember the simple refrain: it’s never too late.

By Erica Oh Nataren

Originally posted by www.LifeHappens.org

The Importance of Therapeutic Communication in Healthcare | Maryland Benefit Advisors

The quality of a therapeutic relationship depends on the ability of the healthcare provider to communicate effectively. The term “therapeutic communication” is often used in the field of nursing; however, the process isn’t limited to nursing. Other healthcare professionals, friends and family members of a patient can implement the strategies of communicating in a therapeutic manner. The ideal therapeutic exchange provides the patient with the confidence to play an active role in her care.

Facilitates Client Autonomy

Therapeutic communication techniques, such as active listening, infer autonomy or independence on the patient or client. Rather than making assumptions about the client who is almost a stranger, the healthcare professional facilitates therapeutic expression. The client, ideally, will then become more comfortable sharing potentially difficult information. The role of the healthcare professional is then to use this information to help the client to further investigate his own feelings and options. In the end, the client gains more confidence in making decisions regarding his care.

Creates a Nonjudgmental Environment

Perhaps the most important characteristic of a therapeutic relationship is the development of trust. Trust facilitates constructive communication; it also encourages confidence and autonomy. Being nonjudgmental is necessary in verbal and nonverbal communication. People are acutely adept at identifying nonverbal cues that may communicate something very different from what is said.

Provides The Professional With a Holistic View of Their Client

An individual does not usually exist without a network of family, friends and healthcare professionals. Therapeutic communication emphasizes a holistic view of a person and his network of people who provide support. A person’s individual perspective regarding his health and life is viewed through a lens built from the context of his experiences. Those experiences cannot be ignored when communicating in a way that is therapeutic. Within the therapeutic relationship, the individual is learning the skills of communication with other people in his life, ideally also improving those relationships.

Reduces Risk of Unconscious Influence By The Professional

It’s human nature to want to infer some part of yourself into an interaction; however, in order for therapeutic communication to occur, it’s important to temper your influence. Therapeutic communication requires maintaining an acute awareness of what is being said as well as any nonverbal cues. Communicating that you are open to hearing what a person has to say while folding your arms creates confusion and inconsistency that can mar a healthy interaction. Be aware of your tone of voice and any reactions.

By Maura Banar

Originally posted by www.LiveStrong.com

How to Make the Most Out of Your FSA at Year-End | Maryland Benefit Advisors

As 2017 comes to a close, it’s time to act on the money sitting in your Flexible Spending/Savings Account (FSA). Unlike a Health Savings Account or HSA, pre-taxed funds contributed to an FSA are lost at the end of the year if an employee doesn’t use them, and an employer doesn’t adopt a carryover policy.  It’s to your advantage to review the various ways you can make the most out of your FSA by year-end.

Book Those Appointments

One of the first things you should do is get those remaining appointments booked for the year. Most medical/dental/vision facilities book out a couple of months in advance, so it’s key to get in now to use up those funds.

 

Look for FSA-Approved Everyday Health Care Products

Many drugstores will often advertise FSA-approved products in their pharmacy area, within a flyer, or on their website. These products are usually tagged as “FSA approved”. Many of these products include items that monitor health and wellness – like blood pressure and diabetic monitors – to everyday healthcare products like children’s OTC meds, bandages, contact solution, and certain personal care items. If you need to use the funds up before the end of the year, it’s time to take a trip to your local drugstore and stock up on these items.

Know What’s Considered FSA-Eligible

Over the last several years, the IRS has loosened the guidelines on what is considered eligible under a FSA as more people became concerned about losing the money they put into these plans. There are many items that are considered FSA-eligible as long as a prescription or a doctor’s note is provided or kept on file. Here are a few to consider:

Acupuncture. Those who suffer from chronic neck or back pain, infertility, depression/anxiety, migraines or any other chronic illness or condition, Eastern medicine may be the way to go. Not only are treatments relatively inexpensive, but this 3,000 year old practice is recognized by the U.S. National Institute of Health and is an eligible FSA expense.

Dental/Vision Procedures. Dental treatment can be expensive—think orthodontia and implants. While many employers may offer some coverage, it’s a given there will be out-of-pocket costs you’ll incur. And, eye care plans won’t cover the cost of LASIK, but your FSA will. So, if you’ve been wanting to correct your vision without the aid of glasses or contacts, or your needing to get that child braces, using those FSA funds is the way to go.

Health-boosting Supplements. While you cannot just walk into any health shop and pick up performance-enhancing powder or supplements and pay with your FSA card, your doctor may approve certain supplements and alternative options if they deem it to benefit your health and well-being. A signed doctor’s note will make these an FSA-eligible expense.

Smoking-cessation and Weight-Loss Programs. If your doctor approves you for one of these programs with a doctor’s note deeming it’s medically necessary to maintain your health, certain program costs can be reimbursed under an FSA.

 

Talk to Your HR Department

When the IRS loosened guidelines a few years ago, they also made it possible for participants to carry over $500 to the next year. Ask Human Resources if your employer offers this, or if they provide a grace period (March 15 of the following year) to turn in receipts and use up funds. Employers can only adopt one of these two policies though.

Plan for the Coming Year

Analyze the out-of-pocket expenses you incurred this year and make the necessary adjustments to allocate what you believe you’ll need for the coming year. Take advantage of the slightly higher contribution limit for 2018.  If your company offers a FSA that covers dependent care, familiarize yourself with those eligible expenses and research whether it would be to your advantage to contribute to as well.

 

Flexible Spending/Saving Accounts can be a great employee benefit offering tax advantages for employees that have a high-deductible plan or use a lot of medical. As a participant, using the strategies listed above will help you make the most out of your FSA.

 

IRS Announces 2018 Retirement Plan Contribution Limits | Maryland Benefit Advisors

On October 19, 2017, the Internal Revenue Service (IRS) released Notice 2017-64 announcing cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items. The following is a summary of the limits for tax year 2018.

For 401(k), 403(b), and most 457 plans and the federal government’s Thrift Savings Plans:

  • The elective deferral (contribution) limit increases to $18,500 for 2018 (from $18,000 for 2017).
  • The catch-up contribution limit for employees aged 50 and over who participate in these plans remains at $6,000.

For individual retirement arrangements (IRAs):

  • The limit on annual contributions remains unchanged at $5,500 for 2018.
  • The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000 for 2018.

For simplified employee pension (SEP) IRAs and individual/solo 401(k) plans:

  • Elective deferrals increase to $55,000 for 2018, based on an annual compensation limit of $275,000 (up from the 2017 amounts of $54,000 and $270,000).
  • The minimum compensation that may be required for participation in a SEP remains unchanged at $600 for 2018.

For savings incentive match plan for employees (SIMPLE) IRAs:

  • The contribution limit on SIMPLE IRA retirement accounts remains unchanged at $12,500 for 2018.
  • The SIMPLE catch-up limit remains unchanged at $3,000 for 2018.

For defined benefit plans:

  • The basic limitation on the annual benefits under a defined benefit plan is increased to $220,000 for 2018 (from $215,000 for 2017).

Other changes:

  • Highly-compensated and key employee thresholds:
    • The threshold for determining “highly compensated employees” remains unchanged at $120,000 for 2018.
    • The threshold for officers who are “key employees” in a top-heavy plan remains unchanged at $175,000 for 2018.
  • Social Security cost of living adjustment: In a separate announcement, the Social Security Administration stated that the taxable wage base will increase to $128,700 for 2018, an increase of $1,500 from the 2017 taxable wage base of $127,200. Thus, with respect to higher-income employees, the maximum Social Security tax liability will increase slightly for both the employee and employer.

The chart below summarizes some of the more common adjustments to employer-sponsored retirement plans.

 

 

Originally posted by www.ThinkHR.com

3 Ways Life Insurance Can Benefit a Charity You Love | Maryland Benefit Advisors

Would you like to make a charitable gift to help organizations or people in need; to support a specific cause; for recognition such as a naming opportunity at a school or university? Perhaps you would do it just for the tax incentives. There are any number of reasons, and life insurance can be one of the most efficient tools to achieve these purposes. So the question becomes, how does this work?

Let me list the ways.

1. Make a charity the beneficiary of an existing policy. Perhaps you have a policy you no longer need. Make the charity the beneficiary, and the policy will not be included in your estate at your death. This also allows you to retain control of both the cash value and the named beneficiary. If you want or need to change the charity named as beneficiary, you can.

2. Make a charity both the owner and beneficiary of an existing policy. This gives you both a current tax deduction along with removing the policy from your estate. Once you gift the policy, you no longer have any control over the values.

3. Purchase a new policy on your life. Life insurance is an extremely efficient way to provide a large future legacy to a charity in your name without needing to write the large checks now. The premiums are given directly to the charity which then pays the premiums on the policy. The charity also owns the cash value as an asset. I am using this concept in my own planning.

Many charities would prefer to have their money upfront, but if you cannot write that large check or don’t want to part with your cash today, a gift of life insurance is a most efficient method to leave a large legacy in your name.

By Marvin H. Feldman

Originally posted by www.LifeHappens.org

The Risk of Being Uninsured (and the Hidden Bargain in Addressing It Now) | Maryland Benefit Advisors

With all the expenses of everyday living, it’s tempting to think of insurance as just another cost. What’s harder to see is the potential cost of not buying insurance—or what’s known as “self-insuring”—and the hidden bargain of coverage.

The Important vs. the Urgent
We’ve all experienced it: the tendency to stay focused on putting out fires, while never getting ahead on the things that really matter in the long run. For most people, there are two big things that matter in the long run: their families and their ability to retire. And being properly insured is important to both those concerns.

Life Insurance: a Hidden Bargain?
It’s exceedingly rare, but we all know it can happen: someone’s unexpected death. Life insurance can prevent financial catastrophe for the loved ones left behind, if they depend on you for income or primary care—or both.

The irony is that many people pass on coverage due to perceived cost, when in fact it’s far less expensive that most people think. The 2016 Insurance Barometer Study, by Life Happens and LIMRA showed that 8 in 10 people overestimate the cost of life insurance. For instance, a healthy, 30-year-old man can purchase a 20-year, $250,000 term life insurance policy for $160 a year—about $13 a month.

Enjoy the Benefits of Life Insurance—While You’re Alive
If budget pressures aren’t an issue, consider the living benefits of permanent life insurance—that’s right, benefits you can use during your own lifetime.

Permanent life insurance policies typically have a higher premium than term life insurance policies in the early years. But unlike term insurance, it provides lifelong protection and the ability to accumulate cash value on a tax-deferred basis.

Cash values can be used in the future for any purpose you wish. If you like, you can borrow cash value for a down payment on a home, to help pay for your children’s education or to provide income for your retirement.

When you borrow money from a permanent insurance policy, you’re using the policy’s cash value as collateral and the borrowing rates tend to be relatively low. And unlike loans from most financial institutions, the loan is not dependent on credit checks or other restrictions. You ultimately must repay any loan with interest or your beneficiaries will receive a reduced death benefit and cash-surrender value.

In this way, life insurance can serve as a powerful financial cushion for you and your family throughout your life, in addition to protecting your family from day one.

Disability Insurance: For the Biggest Risk of All
The most overlooked of the major types of insurance coverage is the one that actually covers a far more common risk—the risk of becoming ill or injured and being unable to work and earn your paycheck.

How common is it? While no one knows the exact numbers, it’s estimated that 30% of American workers will become disabled for 90 days or more during their working years. The sad reality is that most American workers also cannot afford such an event. In fact, illness and injury are the top reasons for foreclosures and bankruptcies in the U.S. today. Disability insurance ensures that if you are unable to work because of illness or injury, you will continue to receive an income and make ends meet until you’re able to return to work.

It’s tempting to cross your fingers and hope misfortune skips over you. But when you look at the facts, it’s easy to see: getting proper coverage against life’s risks is not just important, but a bargain in disguise.

By Erica Oh Nataren

Originally posted by www.LifeHappens.org

The Effects of Not Having Health Insurance on Personal Finances | Maryland Benefit Advisors

Insurance has become the method by which most Americans have their health-care costs paid. By paying a regular monthly bill for health insurance, the cost of expected health care events is spread out into even payments and the cost of major unexpected medical incidents is absorbed by insurance. Lack of health insurance can have a profound negative effect on personal finances.

Bankruptcy

Lack of health insurance can come about due to lack of income to pay for it, or when a breadwinner is between jobs that would otherwise provide health insurance as an employment benefit. If a major illness or accident occurs during the time a person is uninsured, it can lead swiftly to bankruptcy, reports the Oregon Public Broadcasting News. Under-insurance, that is, health insurance which is not sufficient to cover the costs of a major health incident, can also lead to bankruptcy. A study published by the American Journal of Medicine in August 2009, reported that well over 60 percent of U.S. bankruptcies filed. in 2007 were due to inability to pay medical costs. Most of these debtors had medical debts over $5,000, which represented a significant portion of their household annual income; three-quarters had health insurance insufficient to cover their bills, and one-quarter had no insurance.

Reduction in Income

Lack of health insurance can lead to a breadwinner's death, further causing the most severe reduction on household income. According to a Harvard Medical School study reported by Reuters news, about 45,000 people in the United States die each year due to lack of health insurance. Thus, people who could otherwise serve as breadwinners or care-givers are removed from being able to do so. The Urban Institute points out that people lacking health insurance create the significant economic impact of reduced personal earnings, because poorer health means less productive work years and more time off work due to illness or injuries during those working years.

Penalties

Beginning January 1, 2014, most people will be required to maintain health insurance, and individuals who do not obtain health insurance will have to pay a penalty under the federal Patient Protection and Affordable Care Act of 2010. The insurance requirement penalty provision exempts people with income below the poverty level, as well as those in jail, members of registered Indian tribes, those whose religious tenets preclude health insurance, and individuals for whom essential health insurance coverage cost for one month would exceed 8 percent of their household gross income for the year. People who do not meet one of these exemptions, but who decline to purchase health insurance, may be penalized up to $95 in 2014, $350 in 2015, $750 in 2016, and $750 plus a cost of living increase for subsequent years. According to SmartMoney, the penalty provision is likely to have the strongest impact on the personal finances of younger, unmarried consumers. Although the statute exempts the poorest people from its provisions, the penalty for failure to have health insurance will negatively impact the personal finances of those to whom it applies.

Originally published by www.livestrong.com

5 Financial Mistakes Millennials Are Making | Maryland Benefit Advisors

Even as the U.S. economy as a whole recovers from the Great Recession, Millennials (those born from the early 1980s through the early 2000s) continue to struggle with student debt and slow job growth. The lackluster economy and student debt aren’t the only things holding back Millennials from attaining financial independence and success.

Let’s take a look at five money mistakes Millennials tend to make—and see how we can correct them.

1. Avoiding a budget.

One of the most basic mistakes—not budgeting—can lead to living beyond your means. This puts pressure on your future financial plans and goals, even if you have a good eye for what things like groceries or car insurance usually cost. Doing the math and knowing if you’re breaking even or able to save more each month is crucial for building a buffer against debt. It can be as easy as starting to use a new online or mobile budgeting tool. You don’t even need to leave your desk.

2. Misusing credit cards.

According to a study by the credit-reporting agency Experian, Millennials are struggling to pay credit card bills on time, while also having one of the highest credit utilization rates of the four generations listed. Credit utilization, also known as the debt-to-credit ratio, accounts for the ratio or rate of your balance (what you owe) compared with your overall credit limit.

From the study, Millennials’ average rate is 37%, which is above the 35% or less that creditors prefer. As a result of these two factors—late payments and high credit utilization—Millennials have the lowest credit scores across all four generations. Consider a credit score as a financial report card, which means you should turn in everything on time and pay the balance in full every month.

 3. Renting forever.

It’s no secret that Millennials are not active homebuyers. Homeownership is important to consider because ultimately it costs more to rent a home than to buy one in many areas. Plus, Millennials do not build equity when they rent indefinitely. Of course, many Millennials still find themselves traveling and exploring without plans to settle down yet, but in the event that a reasonable deal on property comes up down the road, it would be wise to consider purchasing.

 4. Saving little to nothing for retirement.

Surprisingly, two in three Millennials intend to retire by age 65, but approximately 70% have not started saving for retirement, according to a 2013 survey by MainStreet.com and GfK Roper Public Affairs & Corporate Communication. Even more disconcerting is that half of all Millennials plan to draw income from Social Security, even though full payments from reserves are set to cease in 2033.

The journey to retirement begins with a single payment, then another. If you’re lucky to have an employer’s 401(k) matching plan, take full advantage of it and make above-average contributions. If not, build your own IRA, choosing a Roth or traditional IRA, and set aside a percentage of your monthly income toward it.

5. Skipping life insurance. 

Getting insurance in general may seem daunting, but it’s good to consider the various types, even ones you don’t think you need at first. Life insurance is one that might not have come up yet, but there are reasons to consider it.

One of the benefits of getting a life insurance policy early on is that it will likely cost you less now than later—life insurance is cheaper the younger and healthier you are. Plus, you have no idea if your health might change, which could make getting coverage much more expensive or even impossible later on. And remember that co-signers on any financial accounts you have may be liable for your debts should anything happen to you.

From the basic act of budgeting to considering life insurance, these actions can help ground your financial future. Saving for later in life is the foundation for having a debt-free life and securing retirement plans. As a Millennial you may still be finding your way in this economy, but you can help prevent any of these five financial mistakes from adding to your burdens.

By John Kuo
Originally published by www.lifehappens.org