Nest Egg

NEST EGG A RETIREMENT PLANNING GUIDE

Are you ready

for retirement?

Understanding

Social Security

Page

20 Page

30

Special Advertising Section of the Tampa Bay Times

4 Do I really need a

financial advisor?

WHAT’S

INSIDE

28 Six tips to make your

retirement savings last

good is your 12 How 401(k) plan?

30 Understanding Social Security

you ready 20 Are for retirement?

32 retirement planning with

22

Retirement Planning Glossary

24

The five worst retirement planning mistakes you should avoid

Take the mystery out of

these tips for every decade

34 Working past 65

NEST EGG A RETIREMENT PLANNING GUIDE

MARKETING MANAGER Chris Galbraith DESIGNER Nausheen Syed-Ali WRITERS Marcia Biggs, Gina Vivinetto COPY EDITOR Don Lee

for retirement?

Understanding Social Security

Page

20 Page

30

Special Advertising Section of the Tampa Bay Times

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Nest Egg is produced by the Advertising and Marketing departments of the Tampa Bay Times.

It contains paid advertising and is intended to be a resource for readers. The information contained in this publication may not necessarily reflect the views of Times Publishing Company.

Are you ready

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NEST EGG

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A Retirement Planning Guide

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Do I really need a

Financial Advisor?

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A Retirement Planning Guide

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(From Financial Advisor, page 4)

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What should you do as an individual to protect your nest egg?

For those without a financial advisor, this might be a good time to consider finding one.

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clients someone they can trust to provide sound guidance if something unexpected occurs.”

Advisors can provide valuable guidance at many stages of life, says Holifield. As early as possible, hire an advisor to review your budget, do a retirement

Establishing a relationship with an advisor early will head off a lot of problems and give the clients someone they can trust to provide sound guidance if something unexpected occurs.”

puts your interests first and who can invest adequate time and energy in making sure that you have a solid plan in place and that it is updated as your life changes.

Some advisors are mostly interested in getting assets to manage.

analysis to see how much you should be saving, evaluate your investment strategy to be sure it is in line with your goals and risk tolerance, and make sure you have appropriate insurance and pay enough in taxes.

Others are more focused on planning. Some are holistic, believing that you can’t really separate the planning and the investments.

You need to know your personal goals before you begin shopping for the advisor that you want.

“Think of it as a well-care visit for your finances,” says Holifield.

“When the advisor finishes with you, you should have a good grasp of how well you are doing and what you need to do to improve your financial health. Talking to a planner is particularly important for people who suspect they haven’t saved enough for retirement, who are newly single, who have family members with special needs, or who have experienced a financial setback.”

The most important thing, though, is not to wait. The sooner you can get professional financial help, the better off you’ll be in the long run.

“Many people wait to see a financial planner when they are getting ready to retire or when they run into a problem,” says Rhonda Holifield, certified financial planner with Holifield Huntley Financial Advisers in St. Petersburg. “Those folks lose a lot of opportunities because they wait too long to take the initiative. Establishing a relationship with an advisor early will head off a lot of problems and give the

What’s in a name?

Financial advice comes with many different titles these days: wealth manager, wealth advisor, broker, financial planner, investment consultant, financial advisor. Some are certified, some are not. A report by the AAA Public Policy Institute warns consumers that a salesperson may adopt a “senior designation” to indicate specialized knowledge and quali-

fications to better serve older investors, retirees and those preparing for retirement.

Misleading use of designations such “senior financial specialist” has been associated with so-called “free lunch seminars” and other questionable tactics to market unsuitable financial products to older investors and retirees, the report states.

The good news is that legislation passed in 2015 authorizes grants to states to adopt and enforce rules governing the use in advertising of so-called senior specialist designations. Always ask someone who uses this label what qualifies them for the designation.

An important question to ask when looking for professional planning help is whether the advisor is a “fiduciary.” Seeking out an advisor who will act as

your fiduciary can help to eliminate many of the problems associated with commission-oriented, product-focused salespeople.

Because a fiduciary is required, by law, to give full disclosure of how they are paid as well as any conflicts of interest they may have before you do business with them, you as the consumer are in a better position to make an informed decision.

Broker/dealers selling securities are not regulated under a fiduciary duty because their advice is merely incidental to the sale of their products.

Instead of being obligated to put their customers’ interests ahead of their own, brokers are instead required to deal fairly with their customers. This “suitability doctrine” requires a broker to know a customer’s financial situation well enough to recommend investments that

are considered suitable for that particular client.

When looking for professional help, ask if the advisor is “fee-only.” Fee-only advisors will be fiduciaries and receive compensation only from the client. They don’t get commissions from selling products or referrals. Advisors working for large investment firms traditionally charge an annual fee based on a percentage of the client’s assets. In contrast, fee-only advisors offer a range of services and fees usually ranging from $150 to $300 per hour.

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this could be a life long relationship.

For a successful journey into your later years, you will want to regularly evaluate your saving and spending habits with your advisor, both before and during retirement.

Rick and Nanette O’Hara of Tampa started preparing for retirement as soon as they married nine years ago.

An active mid-life couple who enjoy traveling, they wanted to make certain that they could continue to take vacations and feel secure in their savings.

Prudent planning with a financial planner they trust has allowed the O’Haras to head into retirement with a nest egg and a sound plan. “We each had been managing our own finances, so we wanted to get on track as a couple,� says Rick. “We decided from the start that we wanted to use a certified financial planner, someone who was not trying to sell anything other than advice.�

When Rick lost his job unexpectedly a year and half before he was planning to retire, the financial planner helped to readjust their projected income and provided the couple with budgeting software so they could figure out future income, expenses and savings at home. “We can use the budgeting software to help make decisions and measure the effects of our spending,� says Rick. “And we recently decided to hire the planner to manage our money for a very reasonable fee. Now she monitors our portfolio and we meet with her annually, or when necessary, to make sure we are on track.�

Select information for this article was found in the Retirement and Money Essentials sections at aarp.org

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FOR THE THIRD LEG OF THE RETIREMENT RACE Start the Next Stage Retirement means many things. While it’s a time to break free from the workplace, it isn’t an excuse to ignore your finances. In many ways, life is like a triathlon with three separate stages: swim, bike, run. When we’re young and in school, we’re in the water and we’re swimming. When we join the workforce and launch careers, we hop out of the ocean and jump on to a bike.

When we arrive at retirement, we leave our bikes behind for a long jog. But we’re still moving and we’re still planning. Many of us will still need to manage money carefully for 20, 30, 40 or even 50 years in retirement! Retirement is not the finish line; it’s the next stage in our financial lives.

Test For Stress Most of us want lifelong guaranteed income in retirement. And while many of us focus on wealth building and investing, fewer people consider ways to protect those retirement funds. That kind of invest-only attitude can create a planning gap, and leave people with the familiar feelings of vulnerability and doubt. After decades of saving and sacrifice, it is wise to create a comprehensive financial plan that builds, grows, and protects your assets. A financial expert can help you to identify the key risks in retirement to see if your wealth is adequately protected. If you’re properly prepared and the unexpected happens – bear markets; a chronic healthcare event occurs; taxes and/or inflation rise – you can still be confident in your retirement income.

Find a Balance Many of us have several sources of retirement income, but just because you have multiple resources doesn’t mean that you need to activate all of them on day one of retirement. Why? Because stock market conditions, tax treatment of certain assets, Social Security deferral incentives and more can have a big effect on a person’s retirement funds.

I recently met with two retired clients who have retirement income coming from a Tampa-area small business they own, from Social Security, from a 401(k), and from annuities. After analysis and careful consideration of their financial plan, they didn’t turn on all of these spigots all at once. Instead, we chose to assign responsibility for each source of funding, now and in the future. In doing so, we helped to maximize their retirement funds, protected their wealth from market downturns and undue taxation, and positioned them to create a greater legacy for their beloved daughter and grandson. I urge all retirees to carefully consider how, when, and from where to tap retirement funds.

In high-powered board rooms, at coffee shops and across kitchen tables, I’ve listened to thousands of Tampa professionals with unique questions about retirement. No two people are ever the same. We’re all unique, we all approach life a little differently, and we all have things that keep us up at night.

Reflecting on my years of conversations, the retirement planning question I’m hearing more and more often from my clients isn’t, “How do I save for retirement?” Interestingly, it’s the next question: “How do I spend my retirement savings?”

One of our core fears as people is outliving our life savings. And many professionals approach me because they – wisely – don’t trust the old adage to simply withdraw and live off of 4% of your retirement savings each year. People want advice that’s unique for their life, their family, and their dreams……not financial guidance from a bumper sticker.

In my view, everyone can significantly benefit from meeting with a trusted financial expert to create a custom plan designed to fund a long, happy and confident retirement. But in general, I urge people consider the three ideas to the left.

Saving for retirement is one stage of our lifelong race. When you’re ready for the next stage, consider working with a financial professional to help you build a retirement distribution plan that’s custom-built for you, your family and your retirement dreams.

Curtis H. Parry Jr., CFP®, CLU®, ChFC®, CASL®, RICP® 1511 N. West Shore Blvd. Ste. 500, Tampa, FL 33607 Office (813) 426-1022 Cell (813) 508-1668 Email curtis.parry@nm.com www.curtisparry.com

Article prepared by Curtis H. Parry Jr. CFP®, CLU®, ChFC®, CASL®, RICP® with the cooperation of Northwestern Mutual. Parry is a Wealth Management Advisor with Northwestern Mutual, the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, Wisconsin, and its subsidiaries. Parry is an Insurance agent of NM based in Tampa, FL and a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS) (securities), a subsidiary of NM, registered investment adviser, broker-dealer and member FINRA and SIPC. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNERTM and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. The Chartered Advisor for Senior Living (CASL®) designation is conferred by The American College of Financial Services.

A Retirement Planning Guide

9

5 Steps to finding a Financial Advisor

If you feel like you don’t have the skill, will or time to manage your own investments, then you’ll want to consider hiring a financial advisor.

These tips from the National Association of Personal Financial Advisors (NAPFA) will help you get started:

1 2 3

Before beginning your search, determine what your goals are, such as saving to buy a house or setting up a retirement plan. Knowing your goals will help in finding the right advisor. Also know what type of investor you are. Do you want to take an active role in managing your portfolio or would you rather leave it to a professional? The advisor will want to know this from the start, and your costs will vary accordingly.

Ask trusted friends and colleagues for recommendations to create a short list. Research contacts and profiles through Linkedin.com. NAPFA. org provides listings of fee-only financial advisors. If you prefer larger companies such as Raymond James, T. Rowe Price or Edward Jones, check those websites for links to local offices.

Do some research. Check out websites and do background checking at SEC.gov to dig into disciplinary history. Even if financial advisors have a lot of letters after their names, that doesn’t tell you anything about their experience. Among the variety of designations, a CFP, or certified financial planner, is often considered the most significant.

4

Meet with three advisors in person to discuss your goals and determine their experience and knowledge.

Ask what kind of financial services they offer. Do they start with a basic financial plan or will they provide only an investment plan? Will you have an ongoing relationship with one planner or will you occasionally see a member of a team of advisors?

5

Once you have selected an advisor who fits your personality and goals, continue to communicate on a regular basis. Remember, this is a relationship and communication is key.

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Tips • For many people, it may make sense to consolidate your retirement savings with one or two providers. It can simplify things to view your portfolio on one website or get one statement in the mail. Planning will be easier, too, as it allows you or an advisor to see your full financial picture.

And if you’re retired or getting close, consolidating your assets may help you create a retirement income strategy and manage those minimum required distributions, which you’ll be required to start at age 70½.

• There are several ways to manage your retirement account, from doit-yourself to fully managed. Most websites of larger companies offer research tools and planning and financial advice. Look for worksheets and programs that allow you to input your personal financial information to learn how much savings you have and how much you need for retirement.

Loads of retirement and investment articles can be found at aarp.org.

Terry J. Deeb

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A Retirement Planning Guide

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How good is your

401(k) plan?

Contributions to your workplace savings plans are tax‐deferred, so you may actually lower your current taxable income when you contribute to your plan. Any amount you earn on your savings is reinvested back into your account, where it can produce additional earnings. Many employers offer an employer match on your contribution up to a certain percentage.

“The best time to start a 401(k) is in your 20s,”says Bob Hilton, senior vice president of investments for Mustard Seed Advisors of Raymond James in St. Petersburg.“Make a plan, start early, leave it alone and let it grow. Don’t let the market volatility stop you since you are investing over the long-term. A 401(k)

reduces your tax burden, and most employers will match so you’re getting free money. Meet the match and maximize your contribution as much as possible.”

Some employers are electing to offer a Roth 401(k) plan, whch permits participants to make after-tax salary referrals into a 401(k) plan. Whether you should opt for the pre-tax or after-tax salary deferrals is something you should discuss with a tax or financial advisor.

Participating in a 401(k) and contributing enough to get your full company match is a no-brainer; however, many people don’t realize that all funds that are in

“

A 401(k) reduces your tax burden, and most employers will match so you’re getting free money. Meet the match and maximize your contribution as much as possible.”

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If you’re like many Americans, a 401(k) workplace retirement plan is part of your savings strategy. A 401(k) provides you with two important advantages.

First, all contributions and earnings to your 401(k) are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to your 401(k) account.

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A Retirement Planning Guide

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a 401(k) charge an annual fee. Financial services companies that manage 401(k) plans charge fees for administering and managing those plans. The fees are paid by the employer and/or the employees who participate in the plan.

So how much is a reasonable fee? Many analysts say that fees higher than 1 percent of your assets should raise a red flag.

these fees and expenses. However, it’s still up to the individual to pay attention to fee information and educate himself on the various options offered.

So how much is a reasonable fee? Many analysts say that fees higher than 1 percent of your assets should raise a red flag. Paying even 1 extra percentage point in annual fees could cost you $64,000 over 35 years on an initial $25,000 investment.

The U.S. Department of Labor offers a website that will help in understanding your retirement plan fees: http://www.dol.gov/ebsa/publications/ understandingretirementfees.html.

Fees vary significantly, not only across fund types (0.44 percent for the median return in an index equity fund versus 1.18 percent in an equity value fund) but also within fund types (bond funds range from 0.48 percent to 1.65 percent).

In 2012, the U.S. Department of Labor issued rules intended to provide greater transparency of 401(k) fees. Employers now have a “fiduciary duty” to keep 401(k) fees reasonable and to inform participants of

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• Once you reach age 59½, you may take distributions from a 401(k) without penalty.

You will have to pay taxes on the money as income. At age 70½, you are required to take minimum distributions as determined by the IRS, generally around 3 percent.

• Contribute at least enough to get your employer’s full matching contribution. If possible, max out your 401(k) contribution.

• Pay attention to fees. Look for funds with annual fees below 1 percent. Index funds and target-date funds typically have lower expenses than actively managed mutual funds.

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MOST FINANCIAL COMPANIES ARE INTERESTED IN YOUR MONEY. WE’RE INTERESTED IN YOUR INTERESTS.

Northwestern Mutual realizes that money matters, but what matters more is you. Your goals.

Your interests. And the things you want to accomplish most in life. We’ll be right there with you every step of the way, helping you discover what’s possible and guiding you with a financial plan that turns your biggest goals into your biggest achievements.

Curtis H Parry Jr CFP®, CLU®, ChFC®, CASL®, RICP® Wealth Management Advisor (813) 508-1668 curtis-parry.com

05-4010 © 2016 Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Northwestern Mutual Investment Services, LLC (NMIS) (securities), a subsidiary of NM, broker-dealer, registered investment adviser, and member of FINRA and SIPC. Curtis H Parry Jr, Insurance Agent(s) of NM. Curtis H Parry Jr, Registered Representative(s) of NMIS. Curtis H Parry Jr, Representative(s) of Northwestern Mutual Wealth Management Company®, (NMWMC) Milwaukee, WI, (fiduciary and fee-based planning) subsidiary of NM and a federal savings bank. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. The Chartered Advisor for Senior Living (CASL®) designation is conferred by The American College of Financial Services.

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A Retirement Planning Guide

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16 NEST EGG

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A Retirement Planning Guide

17

Experience you can count on...

OUR FOUNDERS John S. Anderson (left) William F. McQueen (right) Circa 1952

We are honored and privileged to be the oldest and largest family-owned funeral home in the area today. Having served over 60,000 families, we remain committed to the same values of compassion and integrity upon which we were founded.

The Legacy Continues OWNERS John & Nikki McQueen

Choosing the right funeral provider is an important decision.

If you’re considering cremation for yourself or a loved one, here are three important questions you should ask every cremation provider before choosing their firm.

1. Who Owns the Crematory?

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PREPLANNING… it just makes sense!

By planning ahead, you can spare your family, friends and yourself the emotional and financial hardships that can happen when a death occurs.

By planning ahead, not only can you ensure your family is aware of your individual desires, but you can also lock in the cost of the funeral at today’s price – saving your family hundreds or even thousands of dollars in future funeral expenses.

Through the use of the Florida Prepaid Funeral Trust, you can prepay your funeral in full, or you can choose one of our convenient and affordable monthly payment options.

Similar to the Florida Prepaid College Tuition program, you choose the coverage and the payment schedule that’s right for you, and we do the rest.

Anderson-McQueen family tribute centers Tyrone Chapel 7820 – 38th Avenue North St. Petersburg

(727) 347-6636 Regardless of how you contact us, take the necessary steps today to protect your family tomorrow.

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262386-1

Are you ready for Retirement?

LIFESTYLE

Do you know what you want to do in retirement?

(Check all that apply.)

Keep doing what I am doing

The earlier you prepare for retirement, the better off you’ll be.

Review this checklist to determine if you have the income, resources and safety nets in place for a comfortable retirement.

ESTATE

Which essential documents do you have in place?

(Check all that apply.)

Will

Travel

Trust

Start a new career

Guardian

Go back to school

Power of attorney

Work part-time

Executor

Start a new hobby

Living will / medical power of attorney

Volunteer

HEALTH

SPENDING

Do you have a plan for these expenses in retirement?

Do you know how much you’ll need for living expenses when you retire?

My monthly essential expenses will be: $

My monthly extra expenses will be: $

WORKING

Yes

No

INCOME

Where will your monthly retirement income come from?

Do you have a contingency plan if you can’t work as long as you intend to at your current position?

Medicare plan choice

Yes No Supplemental insurance

Yes No Long-term care

Yes No

ASSETS

Work $

Do you know where all of your retirement assets are?

Pensions $

401(k) or other retirement plans $

Social Security $

Brokerage accounts $

Assets $

Checking accounts $

Insurance $

Savings accounts $

Other (inheritance, etc.) $

CDs / money market accounts $

Other assets (business, home, etc.) $

Adapted from a retirement planning worksheet by Raymond James Financial Inc.

20 NEST EGG

Securing Your Future When Long-Term Care Shows Up Are you caring for a spouse or an elderly parent?

Do you wonder where all the money will come from to pay for their care?

Sean W. Scott, Esq., has been helping seniors and their families plan for their future for over 26 years. In that time, he and his staff have qualified over ten thousand clients for Medicaid benefits to help them pay the costs of care in nursing homes, assisted living communities and care in their homes, all while protecting their life savings.

With the average cost of long-term care averaging over $10,000 per month, no one is equipped to meet this financial need without looking toward Medicaid.

When to plan: Often the most challenging question for Sean’s clients is not how to solve the problem of paying for long-term care, but when to begin to plan. This is where the experience of a qualified elder law attorney can be invaluable.

Sean Scott and his staff are well aware of the crisis in which people find themselves when facing long-term care, but more importantly they know how to manage that crisis without financial devastation. In order to succeed in achieving the highest level of care and the highest quality of life, you must become educated in how the Medicaid system works. It takes elder law attorneys years to understand how to counsel their clients and guide them through the long-term care system. Do not make the mistake of thinking that you can do this alone.

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For more information, call 727-539-0181, or visit our website at FLMedicaid.com. The information contained on our site can save tens or hundreds of thousands of dollars, but more than money, it represents what that money can buy quality of care and quality of life.

Share this information so you can help others.

3233 East Bay Dr., Largo, FL 33771 • 727-539-0181 The hiring of a lawyer is an important decision that should not be based solely upon advertisements.

Before you decide, ask us to send you free written information about our qualifications and experienced. Also visit us at FLMedicaid.com

A Retirement Planning Guide

21

Retirement Planning Glossary Active management

Fiduciary duty

Where a person or team, often called the portfolio manager, actively makes investment decisions and initiates buying and selling of securities using analytical research, forecasts and their own judgment and experience. The opposite of active management is called passive management.

Requires an investment advisor, by law, to act in the best interest of the clients, putting the clients’ interests ahead of his own.

“Fee-only” advisors will be fiduciaries and cannot legally accept commissions. Brokers who accept commissions, on the other hand, generally are not bound by fiduciary duty.

Annuity

Guaranteed income

A contract by which an insurance company agrees to make regular payments to someone for life or for a fixed period.

Asset allocation A strategy to match your choice of investments — such as savings in stocks, bonds and cash — to your personal goals.

Earliest eligibility age (EEA) This is the earliest age at which individuals can apply for Social Security benefits. For retirement benefits, the EEA is 62. For non-disabled widows or widowers with no children, the EEA is 60. For disabled widows or widowers with no children, the EEA is 50. For widows or widowers with children under age 16 and for the disabled, there is no EEA.

A partnership focused on you

Investment returns fluctuate, but certain insurance products, including fixed and variable annuities, can provide an income stream and help you prepare for retirement with greater certainty.

Annuities, however, may come with fees and withdrawal penalties that can limit your flexibility should an unexpected need arise.

Health savings account (HSA)

Individual, tax-advantaged savings accounts offered in conjunction with high-deductible health plans (HDHP) to cover qualified medical expenses. Contributions are not subject to federal income tax at the time of deposit, and money rolls over from year to year.

HAVING SECOND THOUGHTS? GET A SECOND OPINION. What worked for your investments six years ago, or even six months ago, may not be working for you today. Investment products change. Markets change. Your financial situation and goals change. That’s why we offer an independent, complimentary review of your financial plan. Our second opinions never create obligations, but they often create insight. Don’t wait, contact us today. LIFE WELL PLANNED.

Gene A. Melamud, MBA, CFP®, CRPS® Senior Vice President, Investments gene.melamud@raymondjames.com

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Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements. Raymond James & Associates, Inc. member New York Stock Exchange/SIPC. LLN32D 2016-000276/01052017

22 NEST EGG

Individual retirement arrangement (IRA)

Savings vehicle that provides tax-advantaged ways to save for retirement. When you contribute to a traditional IRA, you receive an immediate deduction on that year’s taxes, but you will be taxed when you begin withdrawals. With a Roth IRA, contributions are taxed, but withdrawals are tax-free.

401(k) plan

“If one child benefits from the Museum, it will all be worthwhile.”

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An employer-sponsored investment vehicle that allows a worker to save for retirement and defer current income taxes on the saved money and earnings until withdrawal.

Employers may match some or all of the worker’s contributions.

Minimum required distribution (MRD)

Mandatory, minimum yearly withdrawals that generally must be taken starting in the year the account holder turns 70½.

Reverse mortgage

A loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay a loan each month. No matter how the loan is paid out to you, it is typically not paid back until you permanently move out of the home, sell the home or die. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.

Social Security disability insurance (DI) Pays monthly benefits to workers who are no longer able to work due to a significant illness or impairment that is expected to last at least a year or to result in death within a year. To be eligible, a disabled worker must have worked in jobs covered by Social Security.

Spousal benefit

A type of Social Security benefit paid to spouses, as well as former spouses whose marriage lasted at least 10 years.

The amount is up to 50 percent of the worker’s full retirement benefit, when claimed at the spouse’s full retirement age.

Ex-spousal benefit

A type of Social Security benefit paid to a lower-earning divorced spouse. The ex-spouse benefit can be up to 50 percent of the higher-earning spouse’s primary insurance amount, when claimed at full retirement age. The couple must have been married for at least 10 years in order for the lower-earning ex-spouse to be eligible for an ex-spousal benefit.

Target-date fund

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A mutual fund type that automatically reduces the risk within its portfolio by resetting the asset mix among stocks, bonds and cash to be more conservative based on the number of years to a target date.

A Retirement Planning Guide

23

The five worst

RETIREMENT PLANNING mistakes you should avoid The biggest culprits behind poor retirement savings are not a result of a fickle stock market, but mistakes we make ourselves. Here are five big ones to avoid.

1. Y ou’re not saving enough.

Whether they’re financially squeezed or they lack discipline, many people simply don’t save enough for retirement.“In the United States, our savings rate across the broad spectrum is a negative percent,”says David Warman, a financial advisor at Financial Services for Florida in St. Petersburg.

Of course, these days not all workers have access to an employer-sponsored retirement plan like a 401(k), but many who do don’t take advantage of it. A whopping 68 percent of working-age people (25-64) weren’t participating in an employer-sponsored plan, according to a 2015 study by the Schwartz Center for Economic Policy Analysis at the New School.

24 NEST EGG

And that spells trouble in our golden years. Many end up without means to pay for living expenses, let alone healthcare coverage and long-term care.

There is no magic formula for building a healthy retirement fund other than starting young and saving a percentage of every paycheck, says Warman. Even those who aren’t big earners can use time to their advantage.“One of my wealthiest clients never made more than $15,000 a year, but she saved. When she was ready to retire, she had a million dollars,”says Warman.

The woman’s nest egg allowed her to live on more money annually than she ever earned working.

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Morgan Stanley’s Overton helps clients pursue goals

I

f you’re like many Tampa Bay residents who have lived in the area for more than a few years, you’ve probably seen Steve Overton on local network news.

Overton’s award-winning career has included a successful 22-year run in journalism, with 19 of those years working in television. In 1983, he joined NBC-affiliate WFLA-TV 8 in Tampa, where his weekday presentations of “Eight on Your Side” – the popular consumer investigative news feature – catapulted his name and visage to a high profile among Tampa Bay area viewers.

In 2000, Overton began the second phase of his career as a financial advisor.

Four years later, Overton and CERTIFIED FINANCIAL PLANNERTM (CFP®) Gary Englund created Englund & Overton, LLC, which was affiliated with Raymond James Financial Services, Inc. Overton earned his CFP® designation in 2005,and was named to Raymond James’ Executive Council in 2011 through 2013 based on assets under management, education, credentials and fiscal year production.

Overton, Englund and two staff members signed on with multinational financial services corporation Morgan Stanley in fall 2013, forming The Overton & Englund Group at Morgan Stanley. Operating from an office in New Tampa and also meeting clients in Sun City Center, Overton has been named Senior Portfolio Manager and Vice President by Morgan Stanley. He also focuses on cash flow analysis, retirement planning and funding, college funding, insurance and annuities.

“When I meet with clients and prospects, I explore a broad range of topics that are likely to influence their financial futures, from their families and career aspirations to education expenses and retirement,” Overton explained. “What I learn becomes the foundation for a financial and investment strategy based on the individual, not a Wall Street-provided ‘one size fits all’ solution.”

Once Overton has prescribed a carefully considered and suitable solution, he revises the plan over time to reflect new goals and priorities, which helps

Above: CERTIFIED FINANCIAL PLANNERTM (CFP®) Steve Overton, Vice President, Senior Portfolio Manager and Financial Advisor of The Overton & Englund Group at Morgan Stanley.

the plan keep pace with changes in the marketplace as life unfolds.

To schedule a consultation with Steve Overton, call (813) 903-3043. For more information, visit MorganStanleyFA.com/ OvertonAndEnglund.

all investors. Morgan Stanley Smith Barney LLC recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor.

The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Smith Barney LLC offers

This material does not provide

insurance products in conjunction

individually tailored investment

with its licensed insurance agency

advice. It has been prepared without

affiliates. ©2015 Morgan Stanley

regard to the individual financial

Smith Barney LLC. Member

circumstances and objectives of

SIPC. CRC1275937 9/15

persons who receive it. The strategies and or investments discussed in this material may not be suitable for 261706-1

A Retirement Planning Guide

25

2. You don’t understand your investments.

Life teaches us to never put all our eggs in one basket, and that’s true of our retirement portfolio, too. Still, many don’t realize they need a smart asset allocation at every stage of life.

You should have a certain amount of investments in stocks, a certain amount in bonds and some cash to live on, says Warman. Be more aggressive – investing more in stocks – when you’re in your 20s and 30s with time on your side, but more cautious as you get older. The flip side?

Those who invest too conservatively when they’re young are robbing themselves of the healthy returns they need to grow their nest egg.

Also, avoid investing in any mutual fund, ETF, annuity or other financial instrument that you don’t fully understand — including the structure of its management fees and any withdrawal penalties. Don’t overinvest in individual stocks or commodities, and be skeptical of “hot tips’’ from friends, relatives or media pitchmen. Work only with those financial advisors who formally

26 NEST EGG

accept the fiduciary duty to act in your interests, not their own or those of their employers.

3. Y ou panic when the

market takes a nosedive.

Temporary market fluctuations make some investors panic. Has the Dow Jones taken a downturn? It’s a natural part of the economic cycle. If you pull your money out, you’re selling your stocks for less than what you paid for them.

4. You overextend yourself financially.

You may not be able to control what happens on Wall Street, but you can control your own spending and the financial commitments you make. Still, many overextend themselves financially – whether by setting too much money aside for a child’s college fund or taking on too much debt – and that makes it harder to build enough savings for the future.

gradually rises to 67 for those born in 1960 or later. For every year you delay collecting after your full retirement age, your monthly benefit grows by about 8 percent.

Planning to collect early and invest the money? That’s a strategy most financial advisors frown upon, including Walter Updegrave, editor of RealDealRetirement. com. There’s just too much risk involved, says Updegrave, formerly a staff writer at Money magazine.

5. Y ou’re not sure when to collect Social Security.

The age you start collecting Social Security matters – a lot. You can start as early as age 62 and as late as age 70, with your inflation-adjusted benefit shrinking or growing for every year before or after your full retirement age, which is now 66 but

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27

Six tips

to make your

retirement savings last

The big day has finally arrived, and you’re able to say goodbye to the office and hello to a life of fun and fulfillment.

The good news is these days, because men and women are living longer, retirement can last 20, 25 years or more.

The bad news? “Some people run out of money,” says David Warman, a financial advisor at Financial Services for Florida in St. Petersburg.

Yet with a little planning you can safeguard your future. Make your nest egg last with these six expert tips.

1

No.

2

No.

3

No.

HAVE A LONG-TERM FINANCIAL PLAN.

USE THE BUCKET SYSTEM.

BE SMART ABOUT SOCIAL SECURITY.

Get a clear sense of your expenses by separating them into discretionary and non-discretionary expenses, suggests Bray Creech, a financial advisor at Raymond James Financial Services in Asheville, N.C.

Experts recommend arranging your savings into a bucket system: a shortterm bucket with one to two years’ living expenses in cash; a mid-term bucket with several years’ worth of low-risk bonds; and a long-term bucket holding higher-risk investments for growth.

Delaying your Social Security benefits is one sure-fire way to increase them each year. The longer you defer after full retirement age, the more your monthly benefit can increase – about 8 percent each year until age 70. Of course, if you delay, you’ve got to plan on bridging the income gap until you take it. Ideally, you’d be able to get by on income from your 401(k), pension (if you have one) and other assets.

Non-discretionary items are things you can’t forgo, like your mortgage payment (if you still have a mortgage), health care, food and utilities.

Your discretionary expenses include vacation costs, gifts to children and grandchildren, and any other expenses that can be delayed, like a new automobile or a home renovation.

“We see if (clients) have the resources available through sources like Social Security, pensions and retirement plan assets to meet their spending,” says Creech. If they don’t, it’s easier to cut the discretionary items, he says.

“Instead of an international vacation next year, how about a less expensive visit to a national park with the grandkids?”

28 NEST EGG

While retirees should be cautious with their savings, they also need to keep enough money invested to combat inflation, says Rhonda Holifield of Holifield Huntley Financial Advisers in St. Petersburg. “They need to have enough money to pay for that $5 loaf of bread in the future.”

For married couples, it gets more complex. If both spouses are no longer working, they should figure out if it makes sense for both to delay benefits.

Also, with new changes to Social Security implemented this year, they need to consider the ramifications if one partner chooses to take Social Security early, which can affect the long-term future of their spouse.

No.

4

living expenses in a smaller home. If you’ve lived and worked in a high cost of living location, consider stretching your dollars by moving somewhere less expensive.

WORK PART-TIME. Many retirees continue to work parttime, says Warman. Some require the extra income, and some work for personal fulfillment, often doing something far different than what they did during their careers. “Sometimes hobbies turn into small businesses,” says Warman. A growing number, he says, are generating monthly income by buying and renting properties.

5

No.

DOWNSIZE AND/OR RELOCATE. Is the family home too big for your empty nest? Sell it and add the profits to your savings while reducing your

MD

No.

6

PREPARE FOR COSTS RELATED TO HEALTH. Expenses related to health can be unpredictable in our later years, but you can keep them down by purchasing a supplemental policy to Medicare to help fill in gaps that Medicare doesn’t cover.

Remember, too, that even if you’re healthy now, we all get older, and the need for long-term care can wipe out savings. Still, many retirees don’t plan for it, says Holifield. “People need to understand that if they spend too much early on, they’re going to cause themselves problems at the end.”

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A Retirement Planning Guide

29

Understanding

Social Security Understanding the changes to Social Security Anyone navigating Social Security knows it’s a complex system. Now, because of a new a law passed by Congress last year, understanding your benefits just got harder – especially for married couples.

Though lawmakers say the Bipartisan Budget Act of 2015 was meant to close Social Security’s “unintended loopholes,” its effects will devastate some retirees, says Laurence Kotlikoff, a Boston University economist and co-author of Get What’s Yours: The Secrets to Maximizing Your Social Security.

The new legislation takes effect May 1. Two major strategies to be phased out were created by the Senior Citizens Freedom to Work Act of 2000. “These have been in law for 15 years,” says Kotlikoff. “People made plans based on them.”

30 NEST EGG

Say goodbye to these strategies File and suspend Up until now, an individual at full retirement age could file for Social Security and then immediately suspend payment.

Meanwhile, that individual’s spouse could receive his or her portion of the individual’s benefit – about 50 percent – as a spousal benefit.

While in suspension, the individual’s delayed retirement credits increased, boosting his own retirement benefit by about 8 percent each year until age 70, when credits stop accruing.

But not anymore. The new rule? An individual must file for Social Security and actually receive his or her benefits in order for a husband or wife to get a spousal benefit. You can still opt to suspend benefits, says Kotlikoff. “It’s just that you can’t provide anybody else any benefits on your work record.”

However, lawmakers will allow those already receiving such benefits to continue doing so, and will grant them to anyone turning 66 by April 30 of this year.

Restricting an application Until now, an individual between full retirement age and 70 was able to file and restrict his own benefit to a spousal benefit, delaying his own so it could continue to grow. In essence, couples could maximize their payout if the lesserearning partner filed for an individual benefit, while the higher-earning partner filed for spousal benefits at first and switched to an individual benefit at age 70, when it reached its peak amount.

The new law eliminates this option for anyone turning 62 after January 1 of this year. However, if you’re older than that, you’re “grandfathered� in and can restrict an application once you reach your full retirement age.

In the future, those filing for benefits will receive the larger of either their own individual benefit or their spousal benefit.

How the changes are affecting some While the legislation was created to prevent high-income couples from taking advantage of the system, lawmakers didn’t consider the ramifications for everyone when drafting the bill, says Kotlikoff.

For example, the changes could hurt hard-working people like his 64-year-old secretary, Norma. For years, Norma had planned on filing and suspending her retirement benefit at age 66 so her husband, who stays at home caring for the couple’s disabled adult child, could collect a spousal benefit. In the meantime, she planned on continuing to work a few more years, waiting until she was 70 to collect her own retirement benefits.

Now, if Norma opts to file for herself in order to activate a spousal benefit for her husband, she will permanently lower her own retirement benefit.

about the fact that it’s pushing people to take their benefits early, which is exactly the opposite of what you want to do,� says Kotlikoff.

Still ways to maximize your benefits Yet, even with the sweeping changes, there are still plenty of ways to maximize your Social Security payout. The trick? “Be aware of all the benefits you can collect,� says Kotlikoff. “Most people don’t know about the possibility of spousal benefits or childcare benefits or disability benefits or even parents benefits.� “That’s why we wrote the book,� says Kotlikoff. Though published only last year, Get What’s Yours became quickly outdated once the new law passed. An updated version will be available in May, says Kotlikoff. “It went from 50 to 60 secrets and from 25 ‘gotchas’ to 40 ‘gotchas’ in the past year. It got a lot more complicated.�

In the meantime, Kotlikoff suggests folks take advantage of online software he and colleagues developed called Maximize My Social Security (maximizemysocialsecurity.com). “It’s cheap, 40 bucks, and it has all the new provisions in the code, so it’s safe to use.�

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A Retirement Planning Guide

31

Take the mystery out of retirement planning with these tips for every decade Retirement planning doesn’t have to be hard. Here’s a decade-bydecade checklist to help you build wealth for your golden years.

YOUR 20s

As you enter the workforce, it’s time to lay the groundwork for smart money habits to practice for the rest of your life.

Learn to budget.

Discipline yourself to set aside money from each paycheck for needs now and later in life, says Rhonda Holifield of Holifield Huntley Financial Advisers in St. Petersburg.

Invest.

Take advantage of employee-sponsored retirement plans such as a 401(k). Experts recommend contributing 15 percent of your pre-tax income. Can’t hit that number yet? Stash away whatever you can, ideally enough to get the full employer match, if one is offered. “Anything you can put in, you should, even if it’s $25 a week,” says Holifield. “It’s about cultivating the habit of saving something for your future.”

Not to mention, money saved now will multiply thanks to years of compound interest.

For those under 50, the current 401(k) contribution limit is $18,000.

No 401(k) at work? Set up an individual retirement account such as a Roth IRA. With a Roth, you’ll pay taxes on your contribution now, but get the money tax-free later.

Avoid debt.

Staying out of debt is key, says Kyong Peterson, a financial advisor at Morgan Stanley Wealth Management in El Paso, Texas. Cars, clothes and meals can eat up your paycheck – or worse, get you into trouble with credit cards.

“Save instead, and create special accounts for spending purposes,” says Peterson.

32 NEST EGG

Build an emergency fund.

Save money for when life throws you those curveballs. Start by saving up one month’s worth of income and add to it as you can.

YOUR 30s

Your 30s bring new joys and new financial responsibilities. You may be settling down with a partner and having children, which demand tweaks to your budget.

Be realistic about your budget.

Look at your income and your overhead and figure out how to make the numbers work for you, says Holifield. For some, that means not buying a house yet, or forgoing a dream home for one that’s practical.

Boost savings.

Income growing? Get in the habit of systematically increasing your contribution by 1 percent each year, suggests Peterson. “You won’t even feel the difference in your paycheck, but over the years it adds up, and the next thing you know, you’re contributing 20 percent pre-tax to your retirement account.”

YOUR 40s

By now, you may be caring for children and aging parents – and that can get expensive. It may be harder to save for retirement, but it’s a must.

Prioritize your retirement.

Parents are often tempted to set up college funds for their kids, but if you’re not saving for your future first, that’s a mistake,

says Holifield. “There are ways to pay for college, but once you’re in retirement there’s no fallback plan.”

Do the math.

Get a clear picture of how much money you’ll need in retirement factoring in possible health care needs and long-term care. Estimate a conservative return rate on your investments: about 6 percent, says Holifield. Ask yourself how much annual income will you need to pay bills and fund your lifestyle. Next, figure out how much you’ll need to have saved to guarantee that income each year.

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YOUR 50s

Retirement is right around the corner now. It’s all about maximizing and safeguarding your savings.

Supersize your savings.

Once you hit the big 5-0, you can save more in your retirement account, up to $6,000 more in your 401(k) for a total of $24,000. For IRAs, you can contribute an extra $1,000 a year, bringing the total to $6,500.

Understand risk.

Sit down with a financial Advisor and make sure your investments are in sync with your risk tolerance, says Peterson. “Technically, as you near retirement you should be getting somewhat more conservative in your investments.”

YOUR 60s

As the big day approaches, it’s time to put the finishing touches on your retirement plan.

Review your portfolio.

Meet with a financial advisor to look at all your assets, including retirement accounts, pensions, other investments, real estate and personal savings. Learn what Medicare and Social Security benefits are coming your way.

Budget for the long haul.

Some people allocate money in a bucket system, says Holifield, keeping assets in short-term, mid-term and long-term buckets depending on when they need access to it. Money in a long-term bucket, for example, stays invested so it can grow, while a shortterm bucket would contain cash to cover a few years’ worth of expenses in case the market crashes.

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Time your Social Security benefits.

Decide on the best time to apply for Social Security benefits.

You’re eligible at age 62, but your monthly benefit increases if you wait until full retirement age, which is now 66 but gradually rises to 67 for those born in 1960 or later. If you defer even longer, your monthly benefit can increase even more – about 8 percent each year up until age 70.

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Kyong Peterson is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in El Paso, Texas. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors, as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, member SIPC, or its affiliates.

33

Working past 65 Working past retirement age? Here’s how to enjoy your ‘encore act’

by their full retirement age, which is age 65-67, depending on one’s birthdate.

And, 18% said they had no plans to retire ever.

If your retirement plan involves not retiring any time soon, you’re not alone.

Why work beyond retirement age?

A 2015 annual survey of 4,550 full-time and part-time workers by the Transamerica Center for Retirement Studies found that 51 percent planned to keep working, at least part-time, in retirement.

A solid 82 percent of people in their 60s and older said they either had not yet or did not plan to retire

Simply put, many still need the income. Others work to continue building their nest egg or to maintain access to employer-paid health insurance. And a growing number of those 65 and older continue to work because they find satisfaction in it.

34 NEST EGG

Your encore act

That’s the case for Walter Borden of St. Petersburg.

Borden, 66, is the vice president of business development at American Capital Energy, a solar developer in Massachusetts. He plans to keep on working into his 70s because, he says, he’s at the top of his game. “I’m fairly young and viable and I absolutely love what I do,” says Borden.

Staying busy is crucial to our well-being, says Bevan Rogel, founder and president of Encore Tampa Bay (EncoreTampaBay.com), a nonprofit working under the Community Foundation of Tampa Bay. The organization helps people in mid-life and beyond tap into their experience and skill to “live a life of purpose,” says Rogel.

“I’ve had a very interesting career,” he says. “But it’s grown to where it is today. I’m at the height of my productivity and at the height of my career experience. Retiring now would be silly.”

Borden isn’t the first in his family to work later in life. His grandfather was an engineer who retired at 65. After one year, he’d grown so restless he took a full-time job at a small company in his neighborhood – and stayed there for the next 22 years. He quit one year before he died at 91.

That second career contributed to his grandfather’s longevity, Borden says. “He needed his mind to be busy, and that’s true of all of us.”

5 tips

for navigating the workforce

For many, that means continuing to work. Yet for those over 50 – and there are more than 500,000 of them in the Tampa Bay area – it’s not always easy. Encore Tampa Bay helps them to network, find resources and participate in workshops and discussion groups to connect to new career opportunities.

“Once people figure out what they want to do, it’s often about retooling and learning more about technology,” says Rogel. Some tap into a hidden passion, like the accountant who’s now able to “get off the gerbil wheel” and teach art to kids.

Another reason we’re working later is that we’re living longer, says Rogel. “We tell people, you have a bonus dividend of a couple extra decades of life that your parents didn’t have.”

Whether you’re staying in your current position or looking for a new one, experts advise the following.

• Stay healthy. Exercise keeps our bodies and brains in shape.

• Brush up on technology. Most community colleges offer lowcost classes on popular office software like Word, Excel and PowerPoint. Many public libraries in the Tampa Bay area offer free computer classes, as well.

• Network in person (and online!) Let your friends and former colleagues know you’re looking for new opportunities. Also, get active on social media. Engage with others on Facebook, Twitter and the professional networking site LinkedIn, where you can design your own profile highlighting your resume and skills.

• Volunteer or work part-time. Interested in a new industry?

Volunteering for a nonprofit or working part-time is a great way to determine if certain careers are the right fit for you.

• Review your Social Security options. Depending on when you were born, earning a certain amount of income after full retirement age could decrease your benefit. Consult your local Social Security office to learn how you – and your spouse, if you’re married – can best strategize.

A Retirement Planning Guide

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