Life Insurance Awareness Month

People tend to think about life insurance in simple terms - you buy it because, well, you are going to die one day, and just in case that day comes sooner than you'd like, you should be prepared.

As a result, people often relate life insurance to a death benefit, but as we in the industry know, it can be much more. Today, life insurance can do more than ever to help preserve the lifestyles of both policyholders and beneficiaries, with death benefit and living benefit options that can address a variety of financial needs, including: Income replacement

• Paying college tuition
• Providing tax-advantaged retirement income
• Offering financial protection in the case of a disability or critical illness
• Diversifying investment portfolios
• Transferring wealth efficiently, and in a way that is tax-advantaged
• Planning for business continuation

"Clearly Americans see the importance of life insurance, yet it's often viewed as a longer term safety net, and therefore not always considered on the list of day-to-day financial priorities," said Mark Konen, president, Insurance and Retirement Solutions, Lincoln Financial Group. "But the reality is, life insurance is an important component of a sound financial plan as it can help people achieve specific financial goals for today or tomorrow."

Are You Saving Enough?

Individuals confronted with the cold, hard truth that they are not saving enough for retirement often comfort themselves by assuming that they will simply work a few more years beyond the normal retirement age.

Postponing retirement by continuing to work kills two birds - if not three - with one stone: employed people continue to earn income and have a longer time frame to build their nest egg; also, during the time they are working, they are not drawing down funds from that nest egg as they would if they were retired.

The third advantage comes if they decide to delay collecting Social Security benefits. An individual who waits until age 70, for example, collects an extra 32% in benefits compared with someone claiming Social Security at their normal retirement age of 66.

On paper, it looks like a good idea. The problem is that for many people, life doesn't work out according to plan.

HEALTH PROBLEMS

Two new surveys bear this out. The first, from the Employee Benefit Research Institute, found that 50% of retirees in its 2014 survey stopped working earlier than they had anticipated. Of those, 60% cited health problems or disability, 27% pointed to changes at their company and 22% said they had to retire to care for a family member.

The other survey, conducted on behalf of the New York Life Insurance Co., found that 51% of the retirees it polled wished they had retired sooner. On average, they would have wanted to retire four years before they actually did.

TAKING A CHANCE

Retirement can be difficult under the best of circumstances. With escalating health care costs and people living longer than ever, it seems the savings target for a secure retirement is moving beyond the reach of many Americans.

No one likes to plan for the worst - in this case not being able to work as long as one would like - but at the same time, people have to be realistic.

WMC - Higher Interest Rates?

 

September 14, 2015

The Markets

The market is as streaky as a slice of bacon. U.S. stock markets have been sliding higher. They've been sliding lower. Barron's reported the Standard & Poor's 500 Index has tumbled from gains to losses and back again for 10 weeks in a row. The Dow Jones Industrial Index has tagged along with nine weeks of flip-flops. You'd almost think they were running for office. There are market optimists. There are market pessimists. The American Association of Individual Investors (AAII) weekly survey of investor sentiment reported 34.6 percent of respondents were bullish. That's up from the previous week. Thirty-five percent of respondents were bearish. That's also up from last week. What's down? Neutral sentiment. More people are forming opinions about the possible direction of the market. There are questions that need to be answered. Will the Federal Reserve begin to raise rates this week? Some say yes. Some say no. Barron's said it's too close to call. There is no clear consensus, Fed officials have given mixed signals, and the bond market has not priced in a rate hike. If the Fed does raise rates, experts cited by Barron's said markets could get ugly for a little while or they could remain calm. A lot depends on the wording of the Fed's statement. Have Chinese markets stabilized? MarketWatch reported the Shanghai Composite Index finished last week higher. It was the first positive weekly outcome in a month. Chinese authorities, once again, are taking steps to stabilize markets. The Economist offered this thought, "As China's financial markets develop, its stock market will become less bumpy. For now, investors must remember that many things are bigger in China, including the daily ups and down of its stock market." Will the U.S. government shut down again? It's in the hands of our elected officials. ARE WE SEEING THE BIG PICTURE? It's safe to say many people are worried about whether economic growth - in the United States and abroad - will be stifled by changing monetary policy in the United States. As a result, all eyes have been on the Federal Reserve, which is expected to begin raising the Fed funds rates sometime soon. However, the Federal Reserve's monetary policy isn't the only game in town. Fiscal policy - the actions taken by our government - can also have a profound effect on economic growth. A July Brookings' blog post 'Fiscal Headwinds are Abating,' reported: "Tight fiscal policy by local, state, and federal governments held down economic growth for more than four years, but that restraint finally appears to be over... Fiscal policy is no longer a source of contraction for the economy, but neither is it a source of strength." The blog post discusses the reasons that government spending has held back economic growth. At the federal level, contraction was attributed to "...tight caps on annually appropriated spending and the automatic spending cuts known as sequestration." The organization's Federal Impact Measure (FIM), which estimates the effect of federal, state, and local spending (and taxes) on gross domestic product growth, suggests federal spending caused economic growth to be 0.35 percentage points lower per year, on average, between 2011 and 2013. There is talk of a government shutdown at the end of September. If it happens, it could have an effect on economic growth. The last time the government shut down was in 2013. Experts cited by the BBC reported the 2013 shutdown cost the U.S. economy about $24 billion and reduced quarterly economic growth by 0.6 percent. That shutdown lasted 16 days. It is possible economic growth may slow for some period of time. It's also possible monetary policy, fiscal policy, and other factors may be responsible. Weekly Focus - Think About It "My best friend is the man who in wishing me well wishes it for my sake." --Aristotle, Greek philosopher

The End of the Swipe-and-Sign Credit Card

Beginning later next year, you will stop swiping the credit card. Instead, you will insert your card into a slot, where the machine will read a microchip, not a magnetic stripe. You'll still be signing for the time being, but the new system also enables the use of PIN numbers, if card issuers decide to add them to their cards

Here are some frequently asked questions and answers

1. Why do we need to change to chip cards?

Here's a crazy statistic: Almost half of the world's credit card fraud now happens in the United States-even though only a quarter of all credit card transactions happen here. The banks want to rein this in ASAP by moving away from magnetic-stripe cards, which are much easier to counterfeit.

2. Is this completely new technology?

Nope. Most of the world, including Europe, has been using chip cards for years. The United States is actually the last major market still using magnetic-stripe-only cards.

3. So how exactly will this affect businesses?

For starters, they'll need a new processing device to read the information in the chip cards. And come October 2015, businesses that don't have an EMV processing device could be on the hook for fraudulent chip card transactions (This is sometimes referred to as the liability shift.

Chip Cards by the Number

1.2 Billion: Estimated number of credit and debit cards that have to be ugraded to chip cards.	12 million: Estimated number of point-of-sale terminals that have to be upgraded to accept chip cards.	59%: Percentage of retail locations that will be EMV-compliant by the end of 2015.	181,000: Current number of EMV chip-activated merchant locations.
41%: Percentage of US. debit cards that will be issued as EMV cards by the end of 2015.	70%: Percentage of U.S. credit cards that will be issued as EMV cards by the end of 2015.	$3.50: Average cost for issuing a new EMV card.	$500-$1,000: Average cost of an EMV-compliant point-of-sale terminal.

Western Fires

Thank you to all the brave firefighters and police officers who are going above and beyond to keep our community safe . We appreciate your extraordinary commitment, courage and selflessness through the fire seasons.

Courage is not the absence of fear, but rather the judgement that something else is more important than fear. ~Ambrose Redmoon

Bad Money Habits

Failing to budget

If you don't have a budget, it makes it harder to stave off financial disasters. A budget helps you decrease or prevent debt; it also helps you build savings in case of emergency.

In order to build a successful budget, first spend some time tracking your spending.  Understanding how much money you have coming in as well as going out is the first step to truly keeping a successful spending plan.

Spending more than you earn

Symptoms include charging necessities, carrying balances, and -- as the condition progresses -- transferring balances. This is often followed by running up balances on those credit cards again.

If you have to reach for plastic to make it through the month, that's a huge red flag.

Treat credit cards as a payment method, not found money. If you're low on funds, put the cards away.

Ignoring your credit report

Credit reports (and the scores that result from them) are commonly used to qualify you for credit cards and loans. And they're increasingly being used for non-credit situations, such as screenings for insurance policies, bank accounts and jobs. Here are a few things to check:

• Is the information about your account correct
   (balances, limits, name and address)?
• Are there accounts listed that aren't yours or that
•  you didn't open? If so, that could be an indication of identity theft, says Dosher.
• Are mistakes, such as late payments, charge-offs, collections, bankruptcies or foreclosures, removed on time (often after seven years)?
• Are you running up balances? Even if you pay off bills monthly, it's smart to keep your balances under 30% of your maximum credit.

Paying late

It's a classic chicken-or-egg scenario.

If you have no money troubles but pay your bills late, your credit score will drop. That means current creditors can raise your rates or cut your credit lines, and future creditors can offer higher rates or deny you.
So even if financial problems didn't cause your late payments, those late payments could trigger financial problems, especially when late-payment fees kick in.