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2022 • Quarter 3 • Issue 3 |
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Robert Dumais
Principal, LBA
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Friends in Labor,
Any team is only as good as its weakest link. When I built the LBA Advisor Team, it was imperative to choose only the best of the best for our clients and accept nothing less.
When looking for advisors, I had to be sure that they:
- Understood their role and just how important of a resource they are to every single client.
- Put the client's best interest first - no exceptions.
- Always find opportunities to learn and improve in an environment that is complex and often changing.
- Anticipate any potential problems, avoid them where possible, and step up to handle them if they occur.
- Are truly committed to helping our clients and are in it for the long haul.
- Work as a team to share ideas, and always bring LBA clients the best advice and solutions.
- Understand and appreciate Organized Labor and the significance they had, and continue to have, in protecting and enhancing the rights of workers.
- Were people I trust and even refer to meet with my own personal family and friends, without hesitation.
Our team meets twice a month with a single goal - to discuss how we can be even better advocates for our clients than we are today.
I’m extremely excited for you to meet the LBA Advisor Team.
Bob
Principal, LBA
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Pictured: Dave Moses, Joe Sylvia, Bob Dumais, John Travers |
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Free Retirement Planning Workshops |
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John recently picked a new PCP (primary care physician). After 2 visits and many different tests, his PCP said he was doing “fairly well” for his age.
A little concerned about the doctor’s comment, John asked, “So Doc, do you think I’ll make it to 80?”
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The doctor responded with some questions:
“Do you drink alcohol?”
“Oh no,” John replied.
“Do you eat a lot of red meat?”
Again, John replied, “No, not much at all.”
“Do you spend a lot of time in the sun? Golfing, boating, bicycling, walking?”
“Oh no, too much sun is not healthy.”
“Do you gamble, drive fast cars, ride motorcycles?”
“No, I don’t do any of those things.”
The doctor chuckled and then responded, “So why do you want to live to be 80?”
There is some inherent risk in everything… make sure you have some fun along the way!
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LBA 911
In the World of Medicare, Not All Plans Get 5 Stars
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Medicare continuously monitors the performance of Medicare Advantage and Medicare Drug plans, and rates them with a “star” rating system. Data from member satisfaction surveys, the health plans themselves and from health care providers is used to award a rating each year from 1 to 5 stars. These ratings are assigned in the Fall for the following calendar year.
On more than one occasion, the LBA advisors have helped rescue someone who, for whatever reason, chose the wrong Medicare plan and needed to make a switch. Most people don’t realize that a Special Enrollment Period is available once per year, between December 8th and November 30th, which allows someone on Medicare to move to a 5-star rated plan if they are in a plan they aren't happy with. This means that outside of the final week of open enrollment, you can make only one change annually, and only to a 5 star plan.
For Rhode Island residents, only BCBSRI’s Medicare Advantage plans have 5-star ratings. For Massachusetts residents, only Tufts’ Medicare Advantage plans have 5-star ratings.
If you have questions about your specific Medicare plan, or if you’re interested in learning about the other plan options available to you in your state, LBA is just a phone call away.
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THE GREAT UNRETIREMENT:
RESETTING ALARM CLOCKS ACROSS AMERICA?
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For the last 40+ years, you’ve hit that alarm clock every morning in a seemingly endless countdown until the day you could ceremoniously throw it away. If you’re like most folks who’ve been working and saving their entire careers, you’re probably feeling ready to finally “sleep in” and spend your time doing what YOU choose. However, have you heard about “The Great Unretirement?” You may not be familiar with the term, but we suspect you will be hearing it much more in the future.
The Great Unretirement is a new buzz term, coined to describe the phenomenon of recent retirees actually leaving retirement and rejoining the workforce, or folks delaying their retirement to some future date. Interestingly, in many cases COVID was the catalyst that hastened folks’ motivation to retire.
Is it a terrible thing? Well, we think it depends on why the individual is “unretiring.”
For some reasons, it might be an exciting time:
- The desire to jump back into the workforce to learn a new skill, combat boredom, or reunite with familiar coworkers
- Curiosity to see what it’s like at a new employer
- Eagerness to try a whole new career, or perhaps turn a hobby into a job
- Aspirations of taking advantage of the new remote work culture
- The desire to take advantage of the abundance of job opportunities and strong salaries
- Longing to get back to a job you enjoyed but left prematurely because of the pandemic
- You are Tom Brady, and unretiring is just what you do!
For others, where unretiring is a necessity and not an option, we’re guessing the mood is likely a bit more solemn… according to the Bureau of Labor Statistics, the cost of living as of March 2022 is up 8.5% from a year ago, and is wreaking havoc on those with fixed incomes. You might not be as thrilled about unretiring, if:
- Record inflation and the potential for a recession is stressing your budget, and your cash flow is coming up negative by larger margins every month
- You’re tired of worrying about if and when your savings will run out, or if you need to start selling possessions to generate cash flow
- You’re choosing to not cut back on holiday and birthday gifts for the family
- You never practiced the art of “age-appropriate investing,” and the stock market decline is eroding your nest egg
- Social Security Cost-Of-Living-Adjustments (COLAs) seem high, but are just not keeping up
- COVID-related medical bills have been accumulating and need to be paid down
We are currently living in unprecedented times, and in some cases choosing to make retirement choices that we never thought we would have to make. Some of these choices might be emotionally driven by triggers such as missing your old career, or fears about COVID. Others may be more financially driven by surging inflation and a rapidly declining stock market. Regardless of the reason, if you’re considering resetting your alarm clock for just a little while longer, you are not alone. If you think you may want to re-tack your plans, the Advisors at LBA are always available to talk and bring a fresh set of eyes and ears to the table.
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When you partner with LBA, you’ve “got a friend in the business,” and an advocate on your side. |
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I Bonds Offer A Little Relief |
If you’ve purchased anything during the last year and a half, you’ve realized that prices are surging. Inflation is hitting record 40-year highs and nothing seems to be exempt. A question we are frequently asked is: where can I put a piece of my nest-egg which may best keep up with inflation? One of those options is I Bonds… but what does that mean? |
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What is an I Bond? – A US federal government savings bond that earns interest based on a combined fixed rate and inflation rate component.
What interest does an I Bond earn? – The interest rate beginning 5/1/22 is 9.62%, which is a combination of a fixed rate that remains unchanged for the life of the bond and an inflation-based rate set twice per year.
Is the interest taxable? – Yes, but only at the federal level. There are no state or local taxes.
Is there a maximum purchase amount? – Yes, $10,000 per year electronically, and $5,000 per year if by paper.
How long must you keep the bond? – An I Bond can earn interest for up to 30 years unless you cash them in beforehand. If you cash them in before 5 years, you will forfeit 3 months interest.
How do I buy an I Bond? – Either online at TreasuryDirect, or by mail when you file your federal taxes.
Is the interest compounded? – Interest is compounded semiannually, with all the interest the bond earns being added to the principal every 6 months.
When are taxes due? – The owner can elect to pay taxes on the interest annually, when the bond matures, when they cash in the bond, or when they relinquish the bond to another owner.
While many feel that the maximum purchase amount is low, I Bonds may be a good place to consider putting a piece of your savings.
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Throughout your working years you saved diligently for retirement. However, now it’s time to flip the switch and reverse the flow to generate a retirement paycheck. The question is, how big should that paycheck be?
For many years, retirees have used “The 4% Rule” as a guide for retirement spending. The rule basically proposes an approach where you withdraw 4% of your savings in the first year after retirement, followed by adjusting that dollar amount in subsequent years to account for inflation. It was said that if you followed this rule over a 30-year retirement, there was a very high probability that you would not outlive your savings.
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Unfortunately, unprecedented inflation is making a lot of experts question the merits of the 4% rule. In fact, Bill Bengen, the financial advisor who first developed the theory back in 1994, is now recommending a much more conservative approach; at least, until we figure out whether the present inflation surge is a long-term development or a short-term blip.
Just like all retirees and their circumstances are different, retirement strategies are not a one-size-fits-all endeavor either. Here are a few high-level factors which should be considered when developing your unique withdrawal / spending strategy:
- How long do you want to plan for? We know it can be uncomfortable, but how long do you truthfully expect to live?
- How will you invest your portfolio? How much risk can you tolerate?
- What confidence level are you looking for? A 90% confidence level might be much more realistic than striving for 100%.
- How flexible can you be? If economic pressures get worse, are you ready to make cutbacks?
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Other, more detailed, factors you may want to consider when planning include:
- If you’re subject to RMDs (required minimum distributions), you should consider those withdrawals as part of the total annual withdrawal.
- Consider all of your income streams, including Social Security, in your total withdrawal.
- Consider a balanced investment portfolio, which might generate capital gains in addition to interest and dividends.
- Break down your spending into categories, such as “must have or must do,” “nice to have or do,” “wish list,” and “my legacy.”
In summary, life is unpredictable… we really don’t know for certain what tomorrow will bring. Do you feel prepared for whatever financial curveball life might throw your way? As we like to say, “Hope for the best but prepare for the worst.”
The LBA advisors have met with many retirees and are non-judgmental, unbiased listeners. Let them help you figure out your best strategy.
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Free Retirement Planning Workshops |
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We host multiple free workshops each month, both virtual and in-person.
Visit our website below to see our calendar with all of our upcoming workshops.
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Click on the date and time that you're interested in, and then click the Eventbrite link to head over to the registration page.
Our workshops are for anyone who is thinking about retirement and wondering where to start, as well as those who may be semi- or fully-retired and need help maximizing their Medicare options, Social Security benefit, retirement income, and investments.
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If you'd like to learn more about the important considerations you should be making to ensure an enjoyable and stable retirement, we'd here to help. |
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LBA consultants are members of OPEIU Local |
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Robert Dumais, Principal
275 West Natick Road
Suite 450
Warwick, RI 02886
401-868-1400 (O)
774-991-3369 (M)
401-737-0330 (F)
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P.S. Add me to your contacts so we can continue to keep you in the "know" and don't hesitate to hit "reply" to contact us. |
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