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Initial public offerings (IPOs) often attract initial public interest—especially when familiar brands become broadly available to investors for the first time. In recent months, investors have had the opportunity to buy shares of ride‑hailing networks Uber and Lyft, workplace productivity services Zoom and Slack, and other high-profile businesses ranging from Pinterest to Beyond Meat. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. News outlets contribute to the frenzy, building anticipation, tracking the early hours of trading, and casting judgment on the IPO’s success. Investors, perhaps lured by tales of outsized returns, try to get in on the action early. New Dimensional research reveals the fundamental challenges IPO investors face. They may not be able to trade during the early hours, when the biggest price movements frequently occur. Lockup periods also often restrict when shares held by early investors can be resold on secondary markets, which can meaningfully limit the available liquidity in the first six to 12 months after an IPO. And medium‑term IPO performance is often underwhelming. Dimensional’s Research team studied the first-year performance of more than 6,000 US IPOs from 1991 to 2018 and found they generally underperformed industry benchmarks. The researchers also found that known drivers of expected returns largely explain that underperformance. SHORT-TERM IPO RETURNS IPOs are commonly associated with outsized stock returns on the first day shares become available, although these returns may not be attainable by all investors due to the allocation process. Researchers have shown that initial trading prices typically exceed the IPO offering price. However, accessing these first-day returns requires an allocation from the underwriting banks. Studies have documented an adverse selection problem associated with IPO share allocations and find that allocations to IPOs having poor first-day returns have generally been easier to obtain, while allocations to IPOs with good first‑day returns have usually been reserved for certain clients of the underwriting banks. MEDIUM-TERM IPO RETURNS Given that many investors may not be able to access these initial returns, Dimensional focused on the performance of IPOs in the secondary market. How do IPOs perform in their first year? The sample for Dimensional’s study consists of 6,362 US IPOs that occurred from January 1991 to December 2018 and for which data is available. Exhibit 1 shows the annual frequency and market cap distribution of IPOs among firm size groups. The period from 1991 to 2000 is characterized by a relatively high IPO frequency rate of 420 per year and is followed by a less active 18-year period during which the rate falls to 120 IPOs on average per year. Although the number of IPOs has declined, the average IPO offering size is almost three times larger over the most recent period, as compared to the initial 10 years in the sample. Most IPOs fall into the small cap size group, defined as firms that fall below the largest 1,000 US‑domiciled common stocks at the most recent month‑end. Large cap and mid cap IPOs represent 24% and 19%, respectively, of total capital raised through IPOs over the sample period. IPO PERFORMANCE Dimensional evaluated IPO returns by forming a hypothetical market cap-weighted portfolio consisting of IPOs issued over the preceding 12-month period, rebalanced monthly. [1] This methodology excludes the initial first-day returns by design to alleviate the adverse selection problem inherent in the IPO allocation process. Exhibit 2 compares the returns of the IPOs to the returns of the Russell 2000 and 3000 indices over the full sample period as well as two subperiods covering 1992–2000 and 2001–2018. IPOs underperform the Russell 3000 Index in both the overall period and sub-sample periods. For example, IPOs generate an annualized compound return of 6.93%, 13.63%, and 3.74% over the full, initial nine-year and final 18-year sample periods, respectively, as compared to 9.13%, 15.70%, and 5.98% for the Russell 3000 index over the same time horizons. In comparison to the Russell 2000 Index, the hypothetical portfolio of IPOs underperform in the overall period (6.93% vs. 9.02%) and the 2001–2018 (3.74% vs. 7.29%) subperiod and outperform (13.63% vs. 12.56%) over the period from 1992 to 2000. Known drivers of returns largely explain the underperformance of IPOs. IPOs have underperformed the market because, as a group, they have behaved like small growth, low profitability, high investment stocks, which have had lower expected returns than the market. SUMMARY Investors considering IPOs should be aware of potential adverse selection and post-offering activities, such as the expiration of insider lockup periods. Investors should also understand that IPOs have generally underperformed broader market benchmarks in recent decades and that their fundamental characteristics suggest lower expected returns. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Source: Dimensional Fund Advisors Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

If you are nearing retirement or currently retired, you know that making your money last is a major financial concern. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. But, it can be difficult to remain a disciplined investor when there are so many tempting investment opportunities in the first place. These investment "distractions" can be hard to ignore. Mark Fonville talks about the challenge of overcoming these investment distractions in this New York Times article by Peter Finch. To read more click here. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

Life isn't always predictable. Sometimes retirement comes early based on factors out of your control. A company wide downsize or a sudden health condition may impact your plans forcing you to retire early. So, what should you do? Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Eileen Abrose quotes Mark Fonville in this insightful article: What to Do if You Have to Retire Early. To read more click here. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

Finding the right financial advisor is hard. So, what questions should you ask before hiring a great financial advisor for you and your family? Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Advisors Magazine reached out to Mark Fonville of Covenant Wealth Advisors to get his perspective. Learn how to find a great financial advisor is this article from Advisors Magazine: The Ultimate Guide to Selecting a Financial Advisor. Read more by clicking here . Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

Understanding how much risk you are taking with your investment is important. The problem is that many investors may perceive risk differently depending upon how the risk is positioned. That's why is so important to have a financial advisor who knows how to communicate investment risk in a way you understand. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Katherine Fonville talks about how she frames the risk conversation with clients in this article from Financial Advisor IQ: When Framing Risk, Talk Dollars, Not Percentages . Read more by clicking here. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

The average stock market return for US stocks has been around 10% since 1926. That's historical fact. So, should you expect 10% returns in your portfolio if you are invested in 100% US stocks? Unfortunately, the answer is a big, no! Get your Retirement Checklist of over 30 things that you need to think about for your retirement. While average stock market returns over the long-term reveal a rosy picture, short-term results may vary. In any given period stock returns can be positive, negative, or flat. In fact, even long periods of time can produce disappointing results. When setting expectations for yourself, it’s helpful to see the range of outcomes experienced by investors historically. For example, how often have the stock market’s annual returns actually aligned with its long-term average? Let's find out. Average Stock Market Returns Through 2018 In Exhibit 1 below, you'll notice calendar year returns for the S&P 500 Index since 1926. The shaded band marks the historical average of 10%, plus or minus 2 percentage points. Shockingly, the S&P 500 Index had a return within this range in only six of the past 93 calendar years ! In most years, the index’s return was outside of the range—often above or below by a wide margin—with no obvious pattern. For investors, the data highlight the importance of looking beyond average returns and being aware of the range of potential outcomes. How Often Do We See Positive Returns with the S&P 500? Despite the year-to-year volatility, investors can potentially increase their chances of having a positive outcome by maintaining a long-term focus. Exhibit 2 documents the historical frequency of positive returns over rolling periods of one, five, and 10 years in the US market. The data show that, while positive performance is never assured, investors’ odds improve over longer time horizons. Even so, you'll notice that over 5% of the time, the S&P 500 produced negative returns over 10 year periods. This is very important to understand and accept as an investor. The potential for low or negative returns in the S&P 500 (or any market) is a major reason we recommend diversifying your portfolio beyond US stocks. If you don't accept this as an investor, you simply shouldn't invest in stocks in the first place. CONCLUSION While some investors might find it easy to stay the course in years with above average stock market returns, periods of disappointing results may test an investor’s faith in equity markets. Being aware of the range of potential outcomes can help investors remain disciplined, which in the long term can increase the odds of a successful investment experience. What can help you endure the ups and downs? While there is no silver bullet, understanding how markets work and trusting market prices are good starting points. An asset allocation that aligns with personal risk tolerances and investment goals is also valuable. By thoughtfully considering these and other issues, investors may be better prepared to stay focused on their long-term goals during different market environments. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark [1]. As measured by the S&P 500 Index from 1926–2018. Source: Dimensional Fund Advisors LP. There is no guarantee investment strategies will be successful. Investing involves risks, including possible loss of principal. Diversification does not eliminate the risk of market loss. All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

When I was 10 years old, my father gave me a book that would forever change the direction of my life. The book was Reminiscences of a Stock Operator by Edwin LeFevre. In the novel, LeFevre brilliantly describes the life and times of the book’s protagonist, Larry Livingston, a pseudonym for Jesse Livermore, one of history’s most famous and successful traders on Wall Street. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. The story was my first introduction to the stock market and was the initial seed that fed my interest in investing. After reading it, my father and I quickly developed a unique relationship based on our shared interest in markets. Encouraged by my enthusiasm and insatiable hunger to learn, Dad graciously gave me a few thousand dollars to “invest”.  For me, my initial interest in investing was the start to a decade of success, a growing ego and, ultimately, unfulfilled expectations. For the better part of the 1990s, I made hundreds of trades in and out of stocks. I vividly recount the hours spent with my father, reading valuation sheets from the equity research company, Value Line, and scouring through the early morning delivery of The Wall Street Journal. Some of my best memories as a child were spending time with my dad, researching the next hot stock, and chatting about our next “trade.” Back then, and now, I saw my father as a hero, not so much because he was knowledgeable about investing, but because he took the time to have an interest in me.  Passion Turns to Addiction By working together, our research gave us an inside edge on identifying winning investments, or so I thought. By the late 1990s, the tech boom had started and I transitioned my investment research from Value Line to the internet. In 1996 I enrolled at Virginia Tech and received early acceptance into the business school where I began studying toward a degree in finance. My studies didn’t slow down my interest in investing, however. In fact, it only accelerated it. By 1999, I had amassed a small fortune of nearly $100,000 in my brokerage account. Unlike many of my college friends who were happy to have a few extra dollars in their pocket, I had money. With increased success, my interest in trading stocks became a passion. It didn’t take long for my passion to become an obsession, and my obsession to become an addiction. As my account grew daily by the thousands, it became more and more difficult to maintain the dopamine rush to which I had become so accustomed. Trading, and the subsequent returns that came with it, became a drug. And like all highs, the crash was soon to come. The Crash History tells the rest of the story. The tech bubble burst, and with it, so did my fortune. In a matter of months, I managed to turn nearly $100,000 into less than a few thousand dollars. Nearly every stock I owned either went bankrupt or declined so much in value that my holdings were nearly worthless. I remember sitting in my apartment wondering:  How could I make such a catastrophic mistake? After all, I'd been studying investing for most of my life! Never Let a Crisis Go to Waste I once heard that only fools let a crisis go to waste. The truth is that I felt like a fool at the time. But, I was smart enough to know that I had to learn from my experience. So, with a shattered ego and enormous regret, I decided that I would never let that experience happen to me again. My goal going forward would be to learn everything I could about creating financial security for me, my family, and those who were willing to listen. History Often Hides the Best Lessons Often we find that the most memorable side of history fails to shed light on the total story. As it turns out, the famous trader, Jesse Livermore, made millions playing the stock and commodity markets seeking great returns. He became famous and remembered for his ability to identify winners and amassed over $100 million during the crash of 1929. In life, I've found that people like to talk about the great investment decisions they made. Yet, they seldom mention the investments that didn't work out. After all, strong egos don't like to reveal weakness. As it turns out, the book  Reminisces of Stock Operator  followed the same story line. The truth is that in 1940, just six years after Livermore amassed his enormous fortune, he was found dead in the bathroom of the Sherry Netherland Hotel in Manhattan. That small fact fact never made the book. They say Livermore had taken his own life after falling into depression. Some speculate it was because he had lost his entire fortune earned just a few years earlier. Others say he died of a broken heart. In the end, Livermore died penniless because he was a speculator, not an investor. And a speculator who dies rich is a speculator who dies before his time. Speculation may provide for a great story line just as it did in the book I read as a boy, but it rarely ends up making people wealthier. ​ What I didn't realize as a young man that I do realize now, is that there is a big difference between speculating and investing. Unfortunately, most people speculate when they think they are investing. As as a result, they often end up with failed expectations at best. At worst, they destroy their own financial security and are never able to recoup. Why I Do What I Do My personal experience is why I do what I do. I've spent the last 20 years helping families avoid the mistakes I made early in life. I know that educating others on how to prudently invest can have a meaningful and lasting impact. Today, I feel good knowing that the investment principles we teach and implement for our clients at Covenant are verifiable, prudent, and defendable. We don't base decisions on speculation and we don't implement investment strategy that isn't backed by verifiable academic evidence. Some investors are turned off by our approach to investing because it's not glitzy or full of "water cooler" hyperbole. But, I'm okay with that. The truth is that prudent investing should be more like watching paint dry than playing the slots in Las Vegas. Ultimately, this is my passion. When my career is over, I hope the clients we serve will feel we've made a difference. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosure: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice. Registration of an investment advisor does not imply a certain level of skill or training.

The benefits of retirement planning aren’t always obvious. But, if you’re worried about retirement, it’s imperative that you know how retirement planning can help you. Half of Americans believe it’s impossible to accurately plan for expenses in retirement. Even worse, did you know that 63% of Americans fear running out of money in retirement even more than they fear death? Get your Retirement Checklist of over 30 things that you need to think about for your retirement. With this in mind, it’s only natural to be thinking about the benefits of retirement planning in the first place. SPECIAL NOTE FOR INDIVIDUALS AGED 50+ WITH OVER $1 MILLION: Tying your $1 million+ portfolio to your retirement and tax plan can be hard. If you are interested in learning how we can help fully integrate taxes, investments, and retirement income planning, click here for a free retirement assessment . Get more ideas than you thought were possible. The good news is that a handful of retirees are doing a good job living on their retirement savings. A study from Blackrock looked at retirees two decades into retirement. Across all wealth levels, more than half of all retirees still had most of their pre-retirement savings. That’s certainly good news for people currently retired. The Benefits of Retirement Planning Are More Important Now, Than Ever Before Unfortunately, the economic landscape has changed significantly since the Silent Generation retired. Of the current generation of retirees, roughly half stepped into retirement with a defined benefit retirement plan. This type of pension is a guaranteed monthly income payment for life provided by an employer. Those nearing retirement? Not so much. Employers have switched almost unanimously to savings-based retirement plans; just 15% of those born after 1945 will retire with any type of pension at all! Health care costs further complicate the picture. A couple retiring this year will spend nearly $300,000 on health care in retirement according to a study by Fidelity. That’s up 70% from their 2002 figure of just over $200,000. Medicare and prescription drug plan premiums account for about 35% of that figure. The remainder comes from deductibles, copayments, coinsurance, and uncovered expenses. Four in 10 retirees said their health care expenses were much higher than they expected. The landscape has changed. So, it’s not surprising that the fear of running out of money in retirement is a top concern. If you are in your 50s or 60s, you have a right to be worried. The good news is it’s never too late to reap the benefits of retirement planning to achieve financial security. 1. Know how much you need to retire A recent financial survey showed that 61% of adults have “no idea” how much they’ll need to retire. Estimates range from $500,000 to 25 times one’s annual salary in the year of retirement. Despite the lack of certainty, however, only one in four survey respondents sought advice from a professional financial advisor. One of the main benefits of retirement planning is knowing how much savings you need the day you leave work. You’ll also want to know how much you need to save and invest each year to get you there. SPECIAL NOTE FOR INDIVIDUALS AGED 50+ WITH OVER $1 MILLION: Tying your $1 million+ portfolio to your retirement and tax plan can be hard. If you are interested in learning how we can help fully integrate taxes, investments, and retirement income planning, click here for a free retirement assessment . Get more ideas than you thought were possible. But, retirement calculations can be complex and are highly personal. If you need help, a certified financial planner can assist. He will look at your current assets and savings, income streams after retirement, and projected living expense. Together, you can develop the best approach to retirement based on your goals and risk tolerance. 2. Peace of Mind Between one-third and one-half of working-age Americans report anxiety as a result of financial stress. Of that group, nearly 60% are most concerned about their financial future as opposed to current money troubles. Financial stress robs people of sleep, productivity, and even good health. A retirement plan helps remove one of the major contributors to financial stress. This can be a big benefit! When you have a plan for retirement, you’ll have more emotional energy to focus on things that matter most to you. 3. Make smarter decisions Most financial decisions have long-term impact. But, the more complex your life becomes, the more decisions you have to make. Often those decisions don’t have a black and white answer. For example, you may want an answer to questions like: Does it make financial sense to change jobs? How can I maximize my employer benefits? When should I take social security? How can I reduce taxes? Should I purchase that vacation home? But the fact is, every pebble causes ripples in your financial pond. The more decisions you have, the more anxiety you may have about your future. When you know where you are in relation to achieving your goals, you’ll have the information you need to make wise choices. That’s a big benefit to retirement planning today. 4. Reduce your tax burden Most people don’t mind paying the taxes they actually owe—but no one wants to pay more than she has to . Tax planning for retirement is a complicated issue: What will your tax bracket be after you retire? Should you invest in a Roth or traditional IRA, or a combination of both? How will future tax law changes affect your retirement spending? Planning for tax efficiency is one of the benefits of retirement planning, especially for those approaching retirement age. The best fee-only financial planners are paid to stay abreast of changes in tax policy. You’ll also receive advice for tax-efficient spending. As a result, you’ll have more money to fund the retirement you envision. 5. Have a unified vision for retirement There’s a good possibility you and your spouse have very different ideas about what retirement will look like. You may envision a grandchildren-friendly house with a big yard strategically located between your kids’ homes. On the other hand, your spouse may envision a maintenance-free condo on a golf course in Florida. Differing opinions between spouses happens more often than you think. Planning for retirement forces those uncomfortable conversations about where you’ll live and the lifestyle you’d like to have in retirement. Even better, you’ll benefit from an objective outsider who isn’t tied to the emotion of your relationship! SPECIAL NOTE FOR INDIVIDUALS AGED 50+ WITH OVER $1 MILLION: Tying your $1 million+ portfolio to your retirement and tax plan can be hard. If you are interested in learning how we can help fully integrate taxes, investments, and retirement income planning, click here for a free retirement assessment . Get more ideas than you thought were possible. Once you’re in agreement, it’s so much easier to work together to achieve your goals . 6. Prepare for healthcare expenses It’s a sobering fact that 58% of women and 47% of men will need long-term care. The average end-of-life stay is about two years and 15% will need five or more years of long-term care. This is according to a study by the AARP . It’s no surprise that the sale of long-term care insurance is growing exponentially. Just as with life insurance, long-term care premiums are lower the earlier you buy coverage. Historically, they’ve increased at a smaller amount each year, when you purchase early. For example, if you buy a policy in your 50s, premiums go up an average of 2% to 4% per year. If you’re in your 60s, the average increase is between 6% and 8% per year. If a new home is part of your unified vision for retirement, buying at today’s prices will set you up with built-in equity when you’re ready to retire. We’ve found that home equity can be a great resource for the tail end of retirement. As it turns out, you may end up living in a continuing care retirement community and that can be expensive. The equity in your home can help pay for your future healthcare needs. When you have a retirement plan in place, you’re positioned to save now on the things you know you’ll want or need in the future. Preparing for healthcare costs can big an important benefit to planning for retirement. 7. Retire on your own terms Eight in 10 workers want to retire before age 65. The reality is that fewer than half of them will be financially prepared when they’re ready to quit working. Here are a number of reasons that retirement could be delayed: Delayed Social Security eligibility Increased health care costs Stock market declines and corrections Lower levels of savings All of these obstacles will keep many people in their jobs much longer than they’d like. Retiring on your own terms is one of the major benefits of retirement planning. When you know you’re financially prepared, you can leave your job when you’re ready. But, don’t think you have to leave altogether. Many retirees choose to pursue charitable part-time or unpaid work instead. 8. Leave a meaningful legacy The fact is, everyone leaves a legacy; the question is what kind of legacy you leave behind? For many people, a life well lived, filled with family, friends, and the financial security to enjoy them is more than enough. Others want to provide education for their grandchildren or give to a charity such as their church. The benefits of retirement planning aren’t limited to just your money today. A good plan will also include estate planning. Proper estate planning can help you leave a legacy that has meaning for you and your loved ones. Conclusion Retirement planning isn’t just for workers just starting out; it’s especially helpful when you’re ready to re-evaluate your plans as you prepare to retire. The truth is that great advice can be priceless. You’ve spent most of your life working hard and raising a family. You owe it to yourself to realize the many benefits of retirement planning. At Covenant Wealth Advisors , we specialize in retirement, tax, and estate planning for those looking to retire within the next 10 years. We’re happy to review your financial situation and retirement goals to help you develop a retirement plan that ensures you achieve them. Talk to one of our experienced CERTIFIED FINANCIAL PLANNER professionals today. Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free retirement assessment Disclosures: Covenant Wealth Advisors is a registered investment advisor . Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like accounting, tax or legal advice, you should consult with your own accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Registration of an investment advisor does not imply a certain level of skill or training.

You may be familiar with the phrase “what’s yours is mine and what’s mine is yours.” A motto many married people live by, it is the understanding that two people come together to share one life. They give themselves to each other and vow to work together until death do they part. Sweet, huh? Now is a great time to look at Social Security spousal benefits: how they work and when they make the most sense for you and your sweetheart. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Like a Rose Robert Burns, a Romantic-era poet, gives us the image of love as a red, red rose. One that is sweetly sprung in June. The opening of the flower represents the opening of the two hearts and the invitation into the other’s lives. That invitation to share one’s life with another includes many things that aren’t inherently thought of as romantic. One of those things is your finances. Spousal Social Security benefits are designed to help you and your spouse with your financial management in retirement. Let’s take a look at the ins and outs of this benefit to see when it will work for you. Spousal Benefits Explained Social Security Spousal Benefits can be claimed under three different circumstances: Current spouse Widowed spouses Ex-spouse - If married for over 10 years and not remarried prior to age 60 A rose by any other name. No matter the name, the benefit still smells as sweet. This might not be quite what Shakespeare had in mind when he thought up this phrase, but it certainly works with social security spousal benefits. Current Spouse Social Security Benefits Spousal benefits are maximized when your spouse has contributed a maximum of 40 credits (10 years of earnings years) into the social security system. The amount of your benefit is dependent upon the earnings of your spouse. The more your spouse paid into social security, the higher your benefits will be. Even if you never worked or contributed to social security on your own, you can still qualify for benefits. Spousal Benefit Eligibility Requirements: You must be at least 62 years old Your spouse must be receiving social security retirement or disability benefits Spousal benefits grant the spouse 50% of their spouse’s benefit once they reach full retirement age. If your own benefit is higher than 50% of your spouses, you will continue receiving your own benefit. Example 1: One earner in family John and Mary are a married couple and John is the primary earner in their family. John’s Social Security check is $1300 per month at full retirement age. Mary’s spousal benefit at her full retirement age is ½ of John’s benefit, even though she did not work. The most Mary can receive is $650. This benefit is often the most helpful for couples who had one person as the primary earner. But what if both people have a work record? Your Social Security benefits are calculated first, and any spousal benefits will be added to your earned benefit. If your benefit is less than half of your partner’s benefit, your spousal benefit will kick in to make up the difference. Example 2: Two earners in the family John and Mary are a married couple and both John and married work. John receives a benefit of $1300 per month at full retirement age. Mary, who worked for the first 10 years of their marriage, is eligible for $500 per month based on her own work record. Since Mary’s benefit of $500 is less than half of John’s benefit ($650), Mary will receive a spousal benefit of $150 to make up the difference. Remember, this only works if the lower-earner benefit is less than 50% of the higher-earner. For example, if the higher earner benefit remained at $1300 and the lower earners were $850, no spousal benefit would be granted since the $850 is more than half of $1300. The key here is that you both begin claiming the benefit at full retirement age. If you and your spouse wait to claim Social Security until your full retirement age, you will be eligible to receive the full benefit. If one spouse claims early, the overall benefit will be permanently reduced, which could negatively impact your retirement funds. Coordinating with your partner when each of you will begin claiming benefits will dramatically increase your retirement income. Spousal Benefits Strategy: Were you born before January 2, 1954? If so, you may choose to file for restricted application. This occurs when you file to receive your spouse’s benefit upon reaching your full retirement age. Doing so allows your own benefit to grow until you reach age 70. Upon reaching age 70, you can file for your own benefit which can be substantially higher than the spousal benefit. This advanced strategy has the potential to increase your lifetime benefits by tens to sometimes hundreds of thousands of dollars. But, it doesn’t work for everyone so be sure to get expert advice. Survivor Benefits for Widows Death can be a difficult conversation for many of us. But, when it comes to losing your spouse, it may be a bit more comforting to know that social security provides survivor benefits. To maximize your survivor benefit, delay filing for benefits until your full retirement age. If you were born between 1945-1956, then age 66 is your full retirement age. Thereafter, full retirement age increases to age 67. However, you are able to receive reduced benefits as early as age 60. The amount of income you receive from social security will depend on the lifetime earnings of you and your spouse. In general, if you are a surviving spouse and you are at full retirement age or older, you will receive 100% of your spouse’s benefit amount or your own benefit, whichever is higher. If you are a surviving spouse and you are between 60 to full retirement age, then your benefit will be 71 ½% to 99% of your spouse's benefit. If you are disabled and aged 50 to 59, then you will receive 71 ½% of your spouse’s benefit. If you have dependent children, you may receive additional survivor benefits based upon your age and situation. A Thorn in the Rose - Ex Spouse Benefits Sometimes, marriage ends in divorce. As time goes on, you may find yourself in love with a new life partner. When this happens, the decision to remarry can raise discussions around personal finances. I’d like to bring in a quote from Mr. James Joyce, a famous Irish author, to give us a different take on combining finances. He is quoted as saying “what’s yours is mine and what’s mine is mine.” Not the romantic type, I guess. But he does bring up an interesting point: how much do you have to give up in order to remarry after divorce? If you’ve finalized a divorce and if your marriage lasted 10 years or more, you may be entitled to surviving divorced spouse benefits. To qualify for benefits, you must be age 60 or older. Even better news, your former spouse won’t lose benefits just because you receive benefits based on his or her work record. This can help avoid the potential for awkward conversations with your former spouse. How much are benefits? Your benefits will be calculated based on your former spouse’s earnings record and your own. It’s possible that getting remarried can have a positive or negative impact on your social security benefits. While we’d never condone avoiding marriage based on finances alone, be sure to talk to the social security administration before you tie the knot. Grow Your Own Garden Spousal Social Security benefits are often misunderstood by many Americans. They are put in place in order to help married couples with their retirement income. But as you can see from above, the concept of maximizing social security spousal benefits is much more complicated than meets the eye. It is important to have open, honest, and transparent conversations with your spouse or partner about what arrangement makes you most comfortable and how you will make your finances bloom for years to come. Need help with starting these conversations, or want a mediator there to help facilitate them? Contact us today ! We’d love to help you start an open conversation with your spouse or partner about social security benefits and estate planning. Get in Touch With Us Mark Fonville, CFP® Mark has over 18 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free intro call with Mark Disclosures: Covenant Wealth Advisors is a registered investment advisor . Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like accounting, tax or legal advice, you should consult with your own accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Registration of an investment advisor does not imply a certain level of skill or training.