2016 Retirement Focus by Port Townsend Leader

Thinking about retirement

Planning ahead is key for Jefferson County residents What you pay into Social Security buys you three things: retirement income, survivor income and disability income. The size of the benefit is determined by your earnings and the number of years you earned. Thinking ahead is the key to planning, and living, a reasonable retirement. The sooner you start this planning, the greater your ability to get where you want to go. Even if you are on the cusp of retirement, or have already passed that threshold, it’s late but not too late to make a difference in the years ahead. Here are key questions you need to answer for retirement planning, according to most financial planners: • What are the true costs of retirement? • How much do you need to set aside to retire comfortably? • How should you invest or manage your resources for the long term? • What role will Social Security play? • What are your goals for retirement? • When do you start? FRUITS OF YOUR LABOR People in their 50s and 60s have been in the workforce for 30-40 years. The average life expectancy is about 84, so retiring at 60 or 65 leaves 20-25 more years to enjoy the fruits of your labors. Retirement is a question of balancing your expenses and your savings, retirement earnings and other income. Expenses can rise after retirement through travel and other deferred wishes; those things cost money. Some expenses go down upon retirement. No more FICA taxes; no more diversions to retirement plans; probably lower tax rates. One rule of thumb: To maintain your preretirement standard of living, you’ll need 70 percent to 80 percent of your preretirement income. The ideal retirement income would be that which equals your gross income today, minus savings and federal income taxes. Inflation plays a role. Running at 2 percent to 3 percent annually, it eats into a fixed nest egg over time. It will make sure that the $50,000 a year you’re living on comfortably today will buy much less in 10 or 20 years. Your investment earnings may or may not keep up with inflation.

help reduce your tax bill, because they don’t count against your taxable income for the year. Most 401(k) plans use medium-performing mutual funds as their investment of choice. You should always look for ways to put your retirement savings in tax-advantaged accounts and plan to keep them there. Remember: Retirement savings are for retirement! Don’t use them for anything else. Tax-advantaged options include an employer plan with a match, a Roth IRA (you don’t pay taxes on the earnings when you begin withdrawals), an employer plan without a match (this gives a tax deduction by contributing pretax money), a traditional IRA and an annuity. Advisers tell you to study annuities closely; they can be expensive and may restrict your investment choices. They may make sense for people who have contributed the maximum to other plans, will keep the annuity for 1520 years, are in a high tax bracket today that will be drop in retirement, and desire a “guaranteed” income for life in retirement.

WHAT GOES WHERE? It was once a rule of thumb that the proper investment mix was to subtract your age from 100, and devote that portion to stocks. A 40-year-old would invest 60 percent in stocks; a 70-year-old would have 30 percent stocks. But people are living longer, and the number INCOME SOURCES moved up to 110, allowing for more If you’re still employed, now is growth potential. But each person the time to study retirement plans must decide for themselves how or tax-deferred income options much of his or her nest egg should from your employer. be subject to the ups and downs of Most companies offer some kind the stock market. Here is a comof plan. mon practice: In a “defined benefit plan” or 1. Money you need next year a “company pension,” employers should be in cash or immediately may offer substantial funding or convertible. share the cost with employees. The 2. Money you need in the next plan tells you how long you have two to five years should be in a to be on the job until the money conservative, fixed-income investis 100 percent yours, called vestment, such as bonds or certificates ing, and what the penalties are if of deposit. They will grow very you withdraw the retirement fund little, but they will be immediately early. available. Contributions to a 401(k) plan 3. Money you don’t need for five

People in their 50s and 60s have been in the workforce for 30-40 years. The average life expectancy is about 84, so retiring at 60 or 65 leaves 20-25 more years to enjoy the fruits of your labors. But expenses must be balanced with your post-retirement income. Courtesy photo

during which you earned. For wage earners, FICA (Federal Insurance Contributions Act) takes a 7.65 percent bite out of every paycheck. Self-employed workers hand over twice that amount. Although they are called contributions, these amounts are really taxes that go to Social Security (6.2 percent) and Medicare (1.45 percent). You can file for benefits on or after age 62, or you can wait until age 70. The longer you wait, the higher the monthly income will be once it starts to flow. The monthly benefit increases by as much as 8 percent each year you wait. If you die or become disabled, Social Security may provide a survivor’s benefit to your spouse or children. Take a look at your annual The Dow Jones Industrial Average over the past 10 years – from 2006 to 2015 Social Security statement. It gives – shows the dip of the “Great Recession” and the rebound since then. Past the level of benefit you can expect, performance is no indication of future performance, but most financial in- and then you’ll also know the gap vestors still say the stock market historically offers the best returns for long- between that and your actual term investors. Chart by Leader Grafix retirement-living needs. That gap represents the additional level of income you’ll need. to 10 years should be more heavily about every 14-24 years. Hence To figure a Social Security beninvested in the stock market. the need for growth. efit, the government looks at your That way you’ll have cash toBonds and cash add stabilentire working life and uses as its day, money needed in a few years ity and ready access to cash. But basis the 35 years of your highest and investments that should beat for long-term growth, stocks still earnings, adjusted for inflation. inflation. make sense for most. If there are a lot of zero-income Plan carefully, because the years in those 35 years (including SOCIAL SECURITY money you are saving for retirethrough early retirement), it will Many people younger than the ment should be safe from immedireduce the benefit. Resuming work age of 50 think Social Security ate needs. fills in those zero-income years won’t be around for them. We’ll Most investment advisers besee, but the dates for changes keep and increases the benefit. lieve the higher average returns Questions? Visit ssa.gov. of stocks make them superior over getting pushed back for the obvious reason that, as the population the long term. The market shifts YOUR NEXT JOB? ages, so does the voter base, and daily, and it cycles up and down. Some people retire and then elected officials are loath to ignore But over the course of a decade start a second career. This may be them. Most agree that Social Seor two, the historical evidence is clear. A broad range of stocks (usu- curity may not pay as much in the because they’re bored. It may be because they realize their retirefuture as it does today. ally lumped together in mutual ment income won’t be enough. It It helps to know how the sysfunds or index funds) outperform may be that they are in pursuit of tem works today. other options. a company-offered health insurWhat you pay into Social SeRetirement investing is a longance plan. curity buys you three things: reterm goal, so you’ll want to shoot Much depends on the age at for the best investment growth you tirement income, survivor income which work is resumed. If you’re and disability income. The size of can get. If inflation is running at younger than 62, a job increases the benefit is determined by your from 3 percent to 5 percent annually, the cost of all we buy doubles earnings and the number of years See PLANNING, Page 4▼

Medicare Solutions Made Simple Call for YOUR appointment today! Linda Lopeman-Licensed Jennifer Jenkins-LicensedProducer Producer

•

“I just found a new website— www.seniorsrising.com right here in Port Townsend.” offers a directory of information and resources specifically for age 60 and older in Port Townsend and East Jefferson County. Find topics like arts and entertainment, education, food, health, transportation, housing and more.

• •

Kristin Manwaring - Licensed Producer

360-385-4400

•

www.kristinmanwaring.com

C 2 • Wednesday, April 13, 2016

Port Townsend & Jefferson County Leader

After 37 years at PT Paper, Starkey explores her options By Viviann Kuehl Contributor Yvonne Starkey retired from the Port Townsend Paper Corp. in November 2015, after 37 years at the mill. “It goes by in the blink of an eye. It’s just unbelievable to think about,” Starkey said. She is an engineer by education, but fell into different roles at PT Paper over the years. “I spent most of my career in purchasing, but I did some supervision and other things,” she said. She was completely absorbed in her work until the time came for retirement. “I had some milestones in place, and it was time,” Starkey said of the decision to retire. “I saved money all my life. I was a saver, so I could retire.” Her husband, Niles, is selfemployed, running a business that finds, restores and sells genuine antique and vintage fixtures and furnishings, especially lighting fixtures. The couple has an adult son. Since retirement, Starkey has been exploring options and adjusting to retired life. “I just wanted to do something,” she said. “Creative

is not the right word, but to branch out. At ﬁrst, I was going overboard on the travel stuff.” She has taken trips to Denver and Iceland, and will go to Hawaii and to Africa in May; take a 10-day bike ride to Vancouver, British Columbia, in June; travel to Paris and Morocco in September; and go on a weeklong cruise on the Columbia River with her parents in October. But she plans to ease up on the travel. “Maybe Mexico and one other something,” Starkey said. “It has been fun and it will continue to be fun, but I want to do other things.” There are aspects of the working world that she misses. “I miss the social interaction of work, and being a part of contributing to the success of something that requires a lot of focus – being a part of something bigger than myself,” she said. Starkey has joined the Community Chorus of Port Townsend and East Jefferson County. “I have been enjoying that. It’s probably something I could have done when still

“I miss the social interaction of work, and being a part of contributing to the success of something that requires a lot of focus – being a part of something bigger than myself.” Yvonne Starkey

Since retirement, Yvonne Starkey of Port Townsend has been traveling the world, exploring her options and adjusting to retired life. Photo by Scott Wilson

working – I registered when I worked – but retirement certainly makes it much more enjoyable.” She describes herself as a minor player in the chorus. “I’m not that particularly good of a singer; they don’t require auditions,” she said. “I can contribute, but I’m cer-

tainly not a mainstay.” Starkey also helps people with income taxes, something she wanted to do in retirement and a service that she enjoys providing. Still, that work is seasonal. She continues to search for something to do with purpose and meaning, perhaps volun-

teering for English as a Second Language (ESL) classes. The search for connection aside, retirement has been great, said Starkey. “When you work, you have all your work hours and all the personal stuff that you have to do, whether it’s cooking, cleaning or whatever, you always

have to be really efﬁcient with your time. Now, you don’t have any of that. “I have good health. I’m lucky in that regard. Now I go to the gym every morning, and do the things I want or should do. Now I can have the luxury of doing whatever I want. I can go to late-night movies on Tuesday and not think about getting up at 5 the next morning to go to work.” She looks forward to what’s to come – whatever it is.

How to make your investments less ‘taxing’ Tax Freedom Day, which typically occurs in late April, according to the Tax Foundation, is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year. So you may want to use this opportunity to determine if you can liberate yourself from some investment-related taxes in the future. Actually, Tax Freedom Day is something of a ﬁction in practical terms. Most people pay their taxes throughout the year via payroll deductions. Also, you may not mind paying your share of taxes, because your tax dollars are used in many ways – such as for law en-

rates range from 10 percent to 39.6 percent.) But if you hold the investment for longer than one year, your proﬁt will be taxed at the long-term capital gains rate, which, for most taxpayers, will be just 15 percent. If at all possible, then, hold your investments at least long enough to qualify for the lower capital gains rate.

forcement, food safety, road maintenance, public education and so on. Taken together, that has a big impact on the quality of life in this country. Still, you may want to look for ways to reduce those taxes associated with your investments, leaving more money available to meet your important goals, such as a comfortable retirement. So, what moves can you make to become more of a “tax-smart” investor? Consider the following:

LOOK FOR THE DIVIDENDS Similar to long-term capital gains, most stock dividends are taxed at 15 percent is considered a short-term for most taxpayers. Thus, KNOW WHEN TO HOLD ’EM capital gain, and it will be dividend-paying stocks can If you sell an investment taxed at the same rate as provide you with an additionthat you’ve held for less than your ordinary income. (For al source of income at a tax one year, any proﬁt you earn 2016, ordinary income tax rate that’s likely going to be lower than the rate on your

Victoria Place Senior Living

ordinary earned income. As an added beneﬁt, many dividend-paying stocks also offer growth potential. With some research, you can ﬁnd stocks that have paid, and even increased, their dividends over a period of many years. (Be aware, though, that companies are not obligated to pay dividends and can reduce or discontinue them at their discretion.) USE THOSE TAXADVANTAGED ACCOUNTS Virtually all retirement accounts available to you, whether you’ve set them up yourself or they’re made available by your employer, offer some type of tax advantage. With a traditional IRA,

or a 401(k) or similar employer-sponsored retirement plan, your contributions are typically tax deductible and your earnings can grow, tax deferred. Contributions to a Roth IRA, or a Roth 401(k), are never deductible, but earnings can grow, tax free, provided you meet certain conditions. The bottom line? Contribute as much as you can afford to the tax-advantaged plans to which you have access. Tax Freedom Day is here and then it’s gone. But by making some tax-smart investment decisions, you might reap some beneﬁts for years to come. (Article content provided by Edward Jones.)

Investment Services

A n En l i va n t C o m m unit y

• Fine Dining • Wellness Programs • Social Outings • On Site Beauty & Barber Shop • Housekeeping & Laundry Services • Scheduled Transportation • 24-Hour Nursing Care Available • Daily Tours for Visitors

AT FIRST FEDERAL INVESTMENT SERVICES, WE KNOW THAT THE SAVINGS AND INVESTMENT DECISIONS THAT YOU MAKE TODAY WILL IMPACT YOUR FINANCIAL FUTURE

Serving Port Townsend for 20 Years!

Come home to Victoria Place. 491 Discovery Road, Port Townsend 360-379-8223 www.Enlivant.com

Mutual Funds • Annuities • Stocks • Bonds • IRAs • Retirement Planning Wealth Management • Insurance: Life, Disability and Long-Term Care College Savings • Retirement Plans for Businesses Call Halina today to learn more about First Federal Investment products and services

PERSONALIZED SHORT-TERM THERAPY

Halina D’Urso

Investment Representative 360.681.7681 halina.d’urso@ourfirstfed.com

Learn More > ourfirstfed.com > 360.417.3204 360.385.3555

Securities are offered through Essex National Securities, LLC., member FINRA/SIPC. Insurance products are offered through Essex National Insurance Agency, Inc. Neither are affiliated with First Federal.

Jo int Co mmissio n accred i t e d

71048

751 Kearney St. • Port Townsend, WA LifeCareCenterOfPortTownsend.com

Port Townsend & Jefferson County Leader

Wednesday, April 13, 2016 • C 3

Jim Pearson, with his wife, Mollie, retired from county government and has filled in the time with civic projects such as assisting with young bikers at the Recyclery. Jim also has returned to a parttime role with the county, helping with a Public Works backlog. Photo by Scott Wilson

Chimacum’s Pearsons like freedom of retirement By Viviann Kuehl Contributor Retirement brings a new orientation to life, with some surprises, some challenges and some rewards. Retirement brought joy, variety and no big surprises to Jim and Molly Pearson of Port Hadlock. Both worked for Jefferson County and have been retired for two and a half years. “I was lucky enough to be in a place like this,” said Jim, who started work with Jefferson County at age 37, put in his 25 years and was eligible for retirement at age 64. With their Chimacum Creek house paid off, and their cars fully owned, the couple was most deﬁnitely looking forward to being retired at their home base in Jefferson County. “We want to grow old in place,” afﬁrmed Molly. Still, travel is part of the new freedom. They have enjoyed winter trips to little islands in the Caribbean, and used their camper van to visit places in the western U.S., much of that time spent in Arizona, where their daughter and granddaughter live. “Some of these areas

are so close, but we hadn’t had a chance to see them in years,” said Jim. “We did a two-and-a-half-week trip down the Oregon coast to redwoods that was really nice, and we’ve done a lot of small little trips to eastern Washington and northern Oregon.” Visiting their daughter in Phoenix has been a highlight for the Pearsons. “Being retired has allowed us to drive down there for a month in the winter. I used to look down my nose at snowbirds, but now I am one,” said Jim. “And I think it’s a wonderful idea.” Volunteering has also been fun, he said. “I do a lot of planting and monitoring and chum and coho salmon surveys on Chimacum Creek, which is near our house, for the North Olympic Salmon Coalition, an organization very near to my heart,” Jim said. Molly volunteers with Dove House Advocacy Services. Jim is also helping at The ReCyclery in Port Townsend and is an assistant coach with Blue Heron School’s mountain bike team, riding with the team

for a couple of hours weekly. He helps teach bike safety classes to middle school students in Chimacum and Port Townsend through the Recyclery. “I want to stay involved and give back,” said Jim. “I know that there are people who volunteer during their working life, but what happens when you retire is suddenly, you have lots of time, and the other thing is people know you have time.” Another activity that recently took up quite a bit of time for Jim, a self-described longtime Democrat, was organizing local caucuses for the recent primary caucus vote. “When you are working, particularly for the local

“I want to stay involved and give back. I know that there are people who volunteer during their working life, but what happens when you retire is suddenly, you have lots of time, and the other thing is people know you have time.” Jim Pearson Chimacum

government, you need to be careful, because some people might think you’re supporting one side or another, and that’s reasonable,” he said. “But recently, Bruce Cowan [chair of the county Democrats and himself a retired teacher] thought I would like to get more involved with the Democratic Party.

“I went to an organizational meeting a year ago, thinking I would just stick my toe in,” he said. “A guy I’d never seen before nominated me for a position on the Democrat executive committee, and I accepted. I was planning to stick my toe in, and I got thrown into the pool.” Organizing the 13 Chimacum caucuses last month, Jim said he was fretting more than he wanted to. Each precinct needs a chair, a secretary and a vote counter, but also needed are greeters and people to manage registration, he explained. “About ﬁve precincts had people to take care of that, but eight didn’t, so I had to round up people,” said Jim. That organizing resulted in a huge success. At the caucus, 1,379 people came to Chimacum High School, he reported, and a line stretched from the gym to the roadway. The Pearsons then took a trip out to the Hoh Rain Forest, using the ﬂexibility of retirement to time a three-day trip with good weather forecasts. Longer trips will wait until their trip fund is built up again.

Back in February, Jim started back at Jefferson County Public Works on a part-time basis, helping with a backlog by reviewing developments and stormwater management plans. According to his contract, he can’t work more than 69 hours a month. Last month, he put in 13.5 hours. “It’s not a big imposition on my time,” he said. “I’m doing things I know, and I know the people at Public Works and I like them. It’s a nice little diversion, and I can rebuild the trip fund.” The couple has found a nice balance in retirement. “I’m lazy enough of the time, I get out and ride bikes and kayak and I get to travel, and I’m doing a little work,” said Jim. Retirement has worked well, he said. “We’re very happy and fortunate in the retirement, enjoying and ﬁnding lots of options. We’re both happy that we had great jobs with Jefferson County, and we’re lucky to be retired here,” said Jim. “I’m a lucky guy, and I have a sweet redheaded wife to share it with, and I’d say that even if she wasn’t right here.”

suitable for a sale, but this ﬁnal tip applies to everyone. While working, lower your lifestyle expenses enough so that your business profits can reduce any family debt. This ensures the sale price of your business, and Social Security and retirement funds can be used to support you in retirement instead of paying off debts. You can see why it takes from three to ﬁve years in planning your exit to

get the best results. From funding retirement plans to building business value, it is key to apply a thoughtful approach and make use of the time you have. Careful planning allows you to enjoy the success of sending post-retirement tax returns from exotic locales come tax season! (The Business Guides, founded in 1991, works exclusively with businesses and their owners.)

Retirement tips for small-business owners By Charley Kanieski, CPA, and Sarah Hadlock, CPA The Business Guides

We’ve worked with hundreds of small-business owners on their transitions into retirement. What have we learned? Simply put, if you plan ahead, your small business can be a great retirement vehicle. Start implementing an exit strategy at least five years before your desired retirement date and follow the tips we share here. You’ll boost your retirement cash flow, be able to plan for the possibility of selling your business and feel much closer to financial freedom. FUND TAX-DEFERRED RETIREMENT PLANS The IRS lets small-business owners aggressively fund retirement plans and save on taxes while doing so. When you fund a retirement account, you delay the tax on those funds until they are withdrawn. For most retirees, this will be at a lower tax bracket than their current tax rate. Depending on the plan, you could contribute up to nearly $200,000 per year and may be able to fund plans for your spouse and/or your employees as well. BE STRATEGIC WITH SOCIAL SECURITY If your small business is an S corporation, you have some flexibility in setting

repeatable and consistent results. Make use of the years leading up to your retirement to improve systems, develop staff and deﬁne the processes that make your business a success. You’ll improve current proﬁtability and increase the value of your business for an eventual sale. PAY DOWN ANY DEBT Not every business is

Thinking about selling your business to retire? One tip is to improve business systems, develop staff and define the processes that make your business a success. You’ll improve profitability and increase the value of your business. Courtesy photo

the salary you receive each year. Wages must be “reasonable” to satisfy IRS requirements, but within that definition you can purposefully increase your future Social Security benefits. Any planner can help you figure out how much you are going to receive in Social Security, but as the owner of an S corporation, you have the unique opportunity to change that number. Small changes now can have a significant impact for you and your spouse for the rest of your lives. BUY YOUR BUILDING If you rent a space to operate your business, consider purchasing the real estate you use. The many advantages to owning your business property include: • The rent payments can go directly to the mortgage, building equity rather than

paying a landlord each month. • You control the look and feel of your business and its location. • The property is likely to appreciate over time. • You have the ability to help a future buyer of your business with lower rents in the beginning years, so that person can ﬁnance the purchase more easily. BUILD YOUR BUSINESS VALUE One of the main reasons to start and run your own business is to build value for a future sale. In valuing a business for a sale, there are two main factors: the annual proﬁts of the business adjusted by a replacement salary for the buyer, and the ability of the business to be turn-key, meaning that systems are in place to allow a buyer to get

I a m not w h a t h a p p e n e d to m e, I a m w h a t I c h o o s e to b e c o m e.

No waiting lists.

360-385-1035 1215 Lawrence Street • Port Townsend

C 4 • Wednesday, April 13, 2016

Port Townsend & Jefferson County Leader

Planning: Review your will ▼Continued from page 1

the ultimate Social Security benefit you will receive when you take Social Security. WHAT ABOUT YOUR HOME? Your home is not just a place to live. If you own all or most of it, it’s a key financial tool to leverage other things. Most folks entering retirement own their homes with little or no debt to the mortgage company. That opens up a lot of options for them. Many retirement-age people are selling their homes because they want to downsize or they want to consider assisted living. Sometimes, it’s the adult children of an older person who are initiating a move for reasons of safety or to bring a parent closer to them. The financial question about a home is what to do with its cash value. All homes are worth quite a bit

of money; most are appreciating. Can you build value more by keeping the home or by selling it and investing the cash in some other place? A person who decides to sell and rent must be sure to forecast rent increases through the years. Rent often increases every 12 months or so. Maybe keep the home? No mortgage, no rent. But there will also be no additional cash for other uses, unless you look into a home equity loan line of credit or reverse mortgage. Study either option carefully; they have pitfalls. LEGAL AFFAIRS It’s now, while you are of sound mind and body, that you consider what you should do for your loved ones and heirs who are left behind when you are gone. Everybody needs a will. If you don’t have a will, some anonymous court ofﬁcial from the great state

of Washington will decide what happens to your assets and property. A will keeps you in charge of what goes where for what purpose. It’s smart to invest in good legal advice. Website or print-out forms could be inadequate and not comply with state laws. There are several attorneys in Jefferson County who spend most of their time working with clients on wills, trusts and other forms of estate planning. If you have a will, review it every ﬁve years to verify its validity, update provisions and ensure that it continues to conform to state law. An “estate asset” is everything you own, including the face value of life insurance policies, the current value of all your retirement plans, your home and any other real estate, and your personal property. You may pass an estate of unlimited value to your spouse at death with no unfavorable

tax consequences. When that spouse dies, however, your children could face substantial taxes. What if you become mentally or physically incapacitated, and are unable to make decisions for yourself or others? Look into a durable power of attorney granted to someone you trust, such as your spouse or an adult child. Jefferson Healthcare promotes the study and use of “advance directives,” which primarily include a directive to physicians (also called a living will) and a durable power of attorney for health care decisions. These lay out your wishes on how you want a future difﬁcult decision to be handled, such as if you suffer a stroke or some other medical emergency that makes it impossible for you to express your wishes. At what point do you give your permission for medical staff to end the efforts to artiﬁcially sustain life if there won’t be a meaningful recovery? How much intervention do you want? Your conclusions in these documents can also be presented through a physician orders for life-sustaining

treatment (POLST) form, according to Jefferson Healthcare. This document is kept handy at home, in your doctor’s ofﬁce and at the hospital for future reference. Without that paperwork, the medical profession is obligated to do all it can for as long as it can to sustain your life artiﬁcially. Your family could be forced to go to court to have someone appointed as your guardian to make those decisions. Save them the work by preparing the proper documents now. ROLE OF INSURANCE Your post-retirement policies should be designed to help pay for unexpected expenses on autos, homes, medical costs, lost income, disability, death and other unfortunate circumstances. Here are some to consider: Life insurance: At retirement, life insurance usually becomes far less important than while we were working full-time. The kids are grown, and only the spouse is at home; if you’ve planned well for retirement, he or she is probably OK as is. If not? Consider life insurance. Life policies can serve to protect your pension and take care of your spouse and

We guide business owners to financial freedom • Tax Planning & Compliance • Retirement & Social Security Planning • Financial Life Plans • Business Owner Exit Planning • Financing Strategies

We’ll Get You There.

Schedule a FREE One-Hour Consultation Today! 360-385-6961 www.thebusinessguides.com

your children. Disability insurance: Many working people carry disability insurance to make sure the bills get paid if work is lost due to sickness or injury. When we retire, we have no job income to protect. Our options for private disability insurance evaporate, leaving only Social Security. Health insurance: Many employees have health insurance through an employer. Leave the job and, by law, you can continue that coverage for 18 months at your own expense. Except in the case of disabilities, Medicare coverage does not begin until age 65. If you retire earlier, you’ll still need medical coverage, yet an individual policy will be enormously expensive. This is where you need extensive research and probably the help of a broker. Health insurance for younger retirees is a huge problem and could dictate a longer working career than you had hoped. Even at 65, when Medicare coverage kicks in, it won’t cover everything. You may need supplemental insurance to make up the difference. Do some comparison shopping for policies to select the one that best fits you. Again, a broker can help. Long-term care insurance: There are a variety of policies. They are not cheap, and you must read the fine print. Cheap is a relative term in the long-term care world. The policy premiums may be large, but not nearly as large as the expense of a stay in a hospital or nursing home for an extended period. Costs can top $100,000 a year. And what about the fine print? Carefully read what the policy covers and what it does not. Challenge and define the terms. Does it only apply to certain agencies in your county? Does it contain a lengthy “exclusion period,” meaning the insurance does not kick in for 60 or 90 days? Does it allow you to receive care in your home or are you forced to move to a facility? Know what to expect when the policy is needed. Also know that premiums can and will rise over time. Auto insurance: Here’s some good news: Retirees can often get a good break on their auto insurance. Retirees tend to be careful drivers. As noted at the beginning of this summary, thinking ahead is the key to enjoying retirement. Whether you’re 40, 50, 60 or 70, the opportunity to take steps to smooth your retirement path is waiting for you.

Raising heart health awareness in Jefferson County Each February marks American Heart Month and the first Friday in February is National Go Red For Women. Jefferson Healthcare Foundation and Jefferson Healthcare launched WellHearts, an educational event focusing on improving women’s heart health as well as an educational series on heart health. Women make up more than half of Jefferson County’s population, but did you know that 1 in 3 women die of heart disease and stroke each year? For women and men, it’s never too early, or too late to take action to prevent and control the risk factors for heart disease. Although significant progress has been made in increasing awareness among women that heart disease is their No.1 killer, most women fail to make the connection between heart disease risk factors and their personal risk of developing the disease. Studies show that only 1 in 5 women believes heart disease is her greatest health threat. This disease is largely preventable, but kills more

The Emergency and Specialty Services building will open in September 2016 with expanded cardiology services. Cardiology services will be housed on the second floor and have been specifically designed to support preventative cardiology, cardiac procedures, and most importantly our heart patients. Jefferson County has a large population of heart patients and so planning to address this increased need has been critical to not just treating our heart patients, but focusing on preventing heart disease. Jefferson Healthcare Cardiac Services Main Floor 834 Sheridan Port Townsend WA 98368 360-385-2200

women than all forms of cancer combined. These are the facts that can be changed through effective prevention programs and education on healthy eating, exercise and other lifestyle changes. Current evidence supports a range of strategies to improve cardiovascular health including healthcare systems approaches, which encourage, facilitate and reward efforts by providers to improve health behaviors and health factors. “In addition to expanding cardiology services, we

When was your last check up?

Cardiology Services All Done - In House

P P P P P P

Stress Testing Echo EKG Ambulatory Monitoring Cardiac Rehab Anti-Coagulation Services

Talk to your Jefferson Healthcare provider to schedule your appointment. Jefferson Healthcare Cardiac Services 834 Sheridan Port Townsend WA 98368 JeffersonHealthcare.org

feel it is important for Jefferson Healthcare to offer health education programs that can give our community the knowledge and tools to improve their heart health,” said Mike Glenn, CEO, Jefferson Healthcare.

Port Townsend & Jefferson County Leader

Wednesday, April 13, 2016 • C 5

Debt-slapped! Student debt can hurt retirees Legal aid attorneys with the Northwest Justice Project (NJP) in Port Angeles are running into another ﬁnancial battlefront facing low- and middle-income people, or people looking at retirement. Although the statewide, publicly funded legal aid program is accustomed to representing people in cases involving basic needs – family safety and security, housing preservation, protection of income, access to health care and education – these days it's student loan difﬁculties that are piling up on their list. “We're experiencing a high rate of clients calling in with student loan defaults and they (along with their parents or grandparents

who are co-signers) are now caught up in debt collection lawsuits and wages being garnished,” Ariel Speser, an NJP attorney, explained, “and this is causing all sorts of other legal problems.” In an attempt to address the trend, Speser has joined a task force with the state Attorney General’s ofﬁce that is working to educate students and their co-signers about risks associated with student loans and credit cards, before mistakes are made. Targeting high school students and their parents is one part of the ground game. “Having a lot of debt is like starting a race, and shooting yourself in the foot at the start. One out

Yoga for Backs

Reduce your pain, increase flexibility and improve your posture. Strengthen and support your back to keep moving comfortably and safely. For All Levels, Mondays & Fridays, 8:15-9:15 am at Madrona MindBody, Fort Worden. Taught by Registered Yoga Therapist Renee Klein, RYT 500.

www.satyayogatherapy.com

of 10 undergraduates will “Debt$lapped,” a studentnot graduate because of friendly, student-produced credit card debt,” according video. to a ﬁnancial counselor in For anyone getting ready

to sign or co-sign for student To reach the NJP ofloans or credit cards, visit ﬁces in Port Angeles to debtslapped.org for more learn more, contact Speser, information. 360-452-9137.

When home is no longer the best option, we provide... • 24-Hour Staffing • Secured Community Designed for Freedom of Movement and Choice • Appealing & Nutritious Meals • Engaging Daily Activities • Respite & Daycare Services Call now for a

personalized tour!

ALZHEIMER’S & DEMENTIA CARE COMMUNITY

112 Castellano Way • Port Townsend • 360 344-3114

Retirement planning: Simplify, diversify By Randall Maag

when a financial product is initiated. Whether you choose a investment advisor or a financial advisor you should have a clear picture of exactly what the costs and fees are. It’s important to understand what you investing in and what it will do for you. Does the investment fit the need of the client - or the advisor?

Financial Advisor ProEquities, Inc.

In my wallet I carry a note to myself that I read every day to remind me of my mission with my clients. Here’s one of its tenets. “Simplify everything. Life is complex. Our business shouldn’t be. Tear down the walks of complexity. Relentlessly use common sense. Communicate clearly, streamline, clarify and simplify everything we do.” This is especially important for my older clients. Because I specialize in financial options for retirees, my job is to clarify the complicated web of services so they all fit together for financial security. It’s important to include all the pieces of retirement including: Social Security, Medicare and Medicare supplements, long term care insurance and life insurance. Communication with your tax specialist and attorney are also very important elements to building your retirement portfolio. Every client I meet with has a unique set of circumstances and it’s my job

Randall Maag

to create an approach that fits the client’s needs. Most clients have a current financial advisor or investment advisor. I believe something as important as your retirement is worth a second opinion. Advising differences It helps to understand the difference between a financial advisor and an investment advisor. An investment advisor is paid through ongoing fees often based on the total value of the portfolio. A fee-based advisor can make sense if he or she is doing a lot of active work with the portfolio on the client’s behalf. Instead, a financial advisor like me is paid

Diversify Here is a key principle. Asset location is more important than asset allocation. This means your portfolio needs to fit your overall financial objectives. You must have the proper amount of safe money vs invested money to cover emergencies, medical issues and life’s many challenges. You need enough of your portfolio invested to stay ahead of inflation and to refill your short term need requirements. I believe the most important element when pulling money from an investment portfolio is to have a fixed bucket of money from which to draw. This allows your aggressive portion of your portfolio to ride out the downturns of the market and not require selling in a down market. Planning with Social Security, Medicare, insurance

and advice from a good tax professional can make the difference in not out-living your money. Poor planning and unexpected medical costs are huge risks to our financial security. Proper planning can help with taxes and legacy gifts to your family.

You deserve a secure retirement

I can help

It’s a good time to look I believe the best time to make adjustments to your portfolio is when things are going well in the market. We have had really nice returns in the market the last five years. Do you have a plan in place for the next market downturn? We know the market moves in cycles and nobody knows for sure when that will be. Murphy’s Law says the market correction will come just when you need money from your portfolio. Do you understand the goals of your money? Is it currently set up to meet those goals? Isn’t something as important as your retirement worth a second opinion?

Call for a free consultation randall.maag@pesmail.com

360-301-9921

Randall Maag

Financial Adviser ProEquities, Inc.

3560 Bridgeport Way West, Ste 3E University Place, WA 98466

Phone: 253-564-8521, Ext. 107 • Cell: 360-301-9921 randall.maag@pesmail.com

For information contact Securities offered through ProEquities, Inc. a Registered Broker/Dealer and Randall Maag Member FINRA & SIPC. Insurance Products are offered by and insurance are contracted with Bankers Life and Casualty Company (BLC). Quarter agents Page Magazine(4.25”x5.5”) 360-301-9921 BLC is independent of ProEquities, Inc. randall.maag@pesmail.com

FINANCIAL FOCUS: Should you retire in ‘Stages’? Social Security – You can start collecting Social Security as early as age 62, but your monthly payments will only be about 75% of what you’d get if you wait until you reach 66 (assuming that 66 is your “full” retirement age). And the payments get larger from there, until they “max out” at 70. So, if you had planned to retire at 62 but instead retired in stages, you could possibly afford to delay taking Social Security until your checks were bigger. You could work and receive Social Security, but if your earnings exceed a certain amount, some of your benefits may be withheld, at least until you reach full retirement age – after which you can earn as much as you want with no withholding of benefits. However, your Social Security could still be taxed based on your income. Required minimum distributions – During your working years, you

may well have contributed to tax-deferred retirement accounts, such as a traditional IRA and a 401(k) or similar employersponsored plan. But once you turn 70½, you must start taking withdrawals (“required minimum distributions,” or RMDs) from these accounts. You can’t delay taking these payments, which are taxable. But if you did retire in stages and continued to work part-time, past when you expected to completely retire, you may be able to stick with the required minimum withdrawals at least for a while, rather than taking out larger amounts immediately. In this way, you could potentially keep more of your retirement funds growing in your taxdeferred accounts. Investment mix – If you planned to retire at a certain date, you might have created a specific mix of investments designed to provide you with sufficient

income to last your lifetime. But if you continue to work, you may not have to rely so heavily on your portfolio – that is, your IRA, 401(k) and all investments held outside these retirement accounts – to help you meet your income needs. Consequently, during these extra years of work, you may be able to withdraw less from your portfolio, thus potentially having more assets to provide for your income needs down the road. As you can see, a “phased-in” retirement could help provide you with options in making a variety of financial decisions. So, plan carefully before you exit the workforce – a gradual departure may be a good way to say “goodbye.”

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Social Security can be one of your most valuable retirement assets. The decision of when you start taking your benefit impacts how much you’ll receive.

Call or visit today, and learn how your decision impacts your overall retirement income strategy. Final decisions about Social Security filing strategies always rest with you and should always be based on your specific needs and health considerations. For more information, visit the Social Security Administration website at www.socialsecurity.gov.

Larry G Wiener, AAMS®, CRPC® Financial Advisor

www.edwardjones.com Member SIPC

9526 Oak Bay Rd Suite 300 Port Ludlow, WA 98365 360-437-5113 Russ Hoover Al Bowman Financial Advisor Financial Advisor Port Townsend Port Townsend 385-6710 379-2528

IRT-7557B-A

or many people, the concept of retirement can be scary, both emotionally and financially. If you, too, feel somewhat anxious about what awaits you, you might feel more comfortable in knowing that, depending on where you work, you might be able to retire in stages. As its name suggests, retiring in stages typically involves reducing one’s work hours from full-time to part-time, and then, eventually, to complete retirement. If you enjoy the social relationships of work, and you define part of your identity with what you do at your job, this type of gradual transition may be easier for you to accommodate than the abrupt transition from “worker” to “retiree.” As for the financial aspects of such a move, you will want to plan ahead. A “phased-in” retirement can affect your investment and income strategies in several areas, such as these:

Timing counts when it comes to your social security benefit

Larry Wiener, AAMS®, CRPC® Financial Advisor Port Ludlow 437-5113

IRT-1845A-A

Stephen Sklar Financial Advisor Port Townsend 385-2243

Shelli Cates Financial Advisor Port Hadlock 379-0170

Member SIPC

C 6 • Wednesday, April 13, 2016

Port Townsend & Jefferson County Leader

measure You can

the

difference 3

Discover Our Premier

Senior Living Suites at Seaport Landing by Bonaventure Featuring: 

Professional and Caring Staff



Activities Scheduled Every Day



Up to 955 Sq. Ft. Suites



Full Size Refrigerators



Large Walk-in Closets



9 Ft. Ceilings and Spacious Rooms



Covered Patios and Balconies



Solid Wood Cabinetry



Expansive Windows for Natural Light

Patio

Experience the Bonaventure Difference We don’t rent you an apartment, we provide you with a home. With unmatched amenities, first-rate chef-prepared meals and a variety of spacious, beautifully designed suites to choose from, there’s never been a better time to move to Bonaventure. If you thought you couldn’t afford a quality senior community, now is the time to learn about the unparalleled value and affordability found at Seaport Landing by Bonaventure.

Experience Retirement Perfected.

Tour Today to ﬁnd your Perfect Suite

Enter toWin 55” TV *

1201 Hancock St. Port Townsend, WA 98368

360-450-3865