Search Results

There are many questions on the minds of pre-retirees. One of the main ones is simple: when? When is the best time to retire? When should I dip into my savings? When should I claim Social Security? For most of your working life, 12.4% of each paycheck has gone toward Social Security. Once you have entered retirement, you are tasked with deciding when to start claiming your social security benefit. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. The answer is not a simple one, rather one that changes with your personal situation. For average income earners, about 40% of pre-retirement income comes in the form of social security benefits. But, if you earn considerably more than “average income”, social security may replace far less than 40% of your income. Even so, it is a good idea to maximize the overall benefit you can receive. Expert financial analysts and actuaries have their theories and I’d like to lay out the three main options you have: claiming early, at your full retirement age, or claiming late. There are both positive and negative points to each one, but it is important to know that what is right for one person may not be right for another. You’ll want to take a close look at your financial profile including the full scope of your assets, income needs, liabilities, health, and desired livelihood to help inform your choice. Before The Clock Strikes - Social Security at Age 62 The earliest age you can begin taking Social Security is 62, and many people do elect for this option. Depending on your financial and health situation, claiming early may be your best bet. Theoretically, Social Security benefits are meant to pay the same amount of money over the span of your life no matter when you elect to enroll. However, there are distinct advantages and disadvantages to claiming your benefit early. Let’s take a look. Positive You will receive more monthly checks over the course of your lifetime. The money can help supplement cost of living. You can enjoy the time to travel and experience new things while your health is still good. If you are married and have earned less money than your spouse, claiming at 62 while your partner waits until 70 will help maximize your overall earnings as a couple. You can keep more money in growth-oriented investments for longer. Negative Your monthly checks will be significantly lower. If born 1960 or later you will receive a 30% decrease in overall benefit by claiming early. If you are still working, not yet at full retirement age, and taking benefits you could face a large tax penalty. In 2016 that penalty was $1 for every $2 earned over $15,720. Sound Of The Alarm - Social Security at Full Retirement Age Waiting until your full retirement age to claim Social Security is another popular option. Full retirement age is not the same for each person. The IRS has created a table indicating that age based on the year you were born. For those both in 1960 or later, it is 67. Here are some reasons why claiming at full retirement age may be the right move for you. Positive You will get 100% of your earned the benefit. You are able to be flexible in your saving and investment strategy. You can continue working and claiming without enduring a penalty. There is minimal risk with this option. Negative Health concerns may require you to claim early If Social Security is a necessary income generator, you may not be able to wait. Hitting Snooze - Social Security at age 70 The snooze button has quite a bad reputation, but in terms of claiming Social Security, hitting the snooze button may just be the best financial decision for your retirement lifestyle. The latest you can wait to claim your Social Security benefit is age 70 (if you wait longer, you won’t get any additional benefit). Each year you wait to claim after your full retirement age, you will see an increase of about 8% of your benefit. Let’s see how waiting may be the right choice for you. Positive Your monthly checks will be significantly higher, about 124% more. This strategy is tax-friendly since most of the benefit will not be subject to income tax. Minimal risk. You will have more money to be able to fully enjoy retirement and if your health prevails still get to go on new adventures. Negative Health concerns may not allow you to wait. Financial need may not allow you to wait due to heavy drawdown of existing assets for income. Married couples may not benefit from both spouses waiting to claim. Conclusion As you can see, there are many factors to consider when deciding when to claim Social Security. Whether you decide to claim early at 62, wait until your full retirement age, or delay until 70, you have to stay true to you and make the most sound decision for you and your family. We want your retirement to be a happy one and would love to talk with you about any questions you have about claiming benefits. Together, we can help guide you in the direction you want to go. 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.

One of the most common workplace benefits that employees often take for granted is their retirement plans or any other savings accounts they have available to them. These accounts often take a backseat in our financial lives, largely because we automate how we use them. Automating our contributions often feels like a “set it and forget it” task that we can check off our financial to-do list. This is a double-edged sword. On one side, automating retirement savings - or any savings, for that matter - is a fantastic way to ensure that it gets done. When we have to manually save each month, we’re less likely to follow through. However, on the other side, automation often lulls us into complacency. We often get so accustomed to saving the same way: we have the same amount taken out of each paycheck to fund workplace savings accounts, even if we can (and should) be saving more. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. For example, did you know that if you’re over the age of 50, you’re eligible to contribute more to several workplace savings accounts each year? Many people have heard of catch-up contributions, but only 16% of eligible plan participants take advantage of them. Whether you’re enrolled in a 401(k), 403(b), or 457 plan - or you have access to a Health Savings Account or a SIMPLE IRA - you could be taking advantage of an increased contribution limit. These contributions, known as “catch-up” contributions, are structured by the IRS to help people nearing retirement give their savings a little extra boost. What Are Catch-Up Contributions, and Why Should You Use Them? Catch-up contributions, offered by the IRS, are intended to help people age 50+ put more toward their retirement savings. This added benefit is twofold: You’re able to sock more away before retirement. This is a benefit whether you’ve been saving over the course of a long career, or got started a little bit late. Having a few extra thousand dollars lining your retirement nest egg is never a bad thing. You lower your taxable income even more. While this may or may not push you into a lower income tax bracket, it will save you some money on taxes during your next filing season. Additionally, many employers offer a 401(k) catch-up match. Most 401(k) plans offer catch-up contributions, and of them, a full 36% of employers sponsoring the plan match those contributions. This could mean by not participating in catch-up contributions, you end up leaving money on the table. What Accounts Offer Catch-Up Contributions? Several savings accounts (retirement or otherwise) offer a catch-up contribution. The I RS’s official list includes: 401(k) 403(b) 457(b) SARSEP SIMPLE IRA SIMPLE 401(k) Traditional IRA Roth IRA HSA (Health Savings Account) What Limits Should You Be Aware Of? Each type of account has a different contribution limit associated with it. These limits can change year-to-year, so it’s important to check in periodically to see if you can potentially contribute more than you could in previous years. For example, in 2019, you can make the following catch-up contributions. 401(k), 403(b), SARSEP, 457(b) : $6,000 in addition to your annual limit of $19,000 SIMPLE IRA, SIMPLE 401(k) : $3,000, salary reduction contributions aren’t treated as catch-up contributions until they exceed $13,000. Traditional IRA, Roth IRA : $1,000 in addition to your annual limit of $5,500 HSA : $1,000 in addition to your annual limit of $3,500 (single) or $7,000 (family) All told, taking advantage of catch-up contributions across multiple health or retirement savings accounts could help you grow your retirement savings by several thousand dollars each year - and that’s nothing to sneeze at! The Untold Benefit of Catch-Up Contributions The benefits of catch-up contributions may seem obvious. You get to save more for retirement and reduce your annual taxes - what more could you possibly ask for? The truth is, there’s another benefit of catch-up contributions that nobody’s talking about: catch-up contributions force you to do a pre-retirement financial pulse check. You may think you know your financial situation inside and out. Maybe you’ve been saving dutifully for years, and know exactly what your “magic number” is for retirement savings. Unfortunately, more often than not, we view retirement savings as a static path. There’s one end goal, and we work toward it kind of mindlessly. There’s one thing we consistently forget to take into account: life changes. Our goals change. Our investments change. Our job security as we near retirement can shift. There are thousands of unknown variables that make retirement savings a full-contact sport. Automation is a fantastic way to ensure you get somewhere in the right savings zone by the time you retire, but checking in and reevaluating your goals as you get closer to the end-date of your career is non-negotiable. Checking in on your savings progress is an excellent first step. From there you can start to consider how you want to spend your days as a retiree, build a retirement budget, and start making financial and lifestyle changes that will help you achieve the retirement you’ve always envisioned. Want help? Contact us today . We’d love to help you evaluate your eligibility for catch-up contributions and kick off your retirement planning journey. 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.

U.S. stocks have been rising ever since the Great Recession ended. Along the way, there have been multiple times when companies have suffered bouts of decreased prices. We just experienced one of the bouts of volatility in October when the U.S. stock market declined approximately 10% from a recent high. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. Many pundits have been quick to assign blame to rising interest rates, the lengthening trade negotiations, the weakening impact of tax stimulus, and even mid-term elections, and, in some cases, all of the above! The truth is that we don’t know, and we likely will never know, what caused stock prices to fall. What we do know is that stock market price swings are normal and expected. In fact, since 1945 to September 2018, there has been 55 times that the stock market has declined by 10% or more! That means investors are faced with a decline of 10% or more every 16 to 17 months. We also know that investors are typically rewarded for tolerating market uncertainty. So, the ups and downs we experience from time to time is the price we pay for the returns we have received, and expect to receive, from our stock investments. A quick example will help make this point. Over the past 20 years ending September 30, 2018, the return on safe 30-day Treasury bills was an annualized 1.8%, but the return on S&P 500 Index was an annualized 7.4%. In dollar terms, $1 invested on October 1, 1998, would have grown to $1.42 in short-term U.S. Treasury Bills, while that same dollar would have doubled more than twice to $4.19 if invested in stocks. It absolutely was a rocky ride for stocks over the past 20 years (recall that we experienced two major bear markets), but investors were rewarded for being willing to ride through many market ups and downs. Given that stock prices do swing and that they don’t move in a straight-line, we diversify our investments among multiple asset classes. We continue to be invested in large and small companies, non-U.S. stocks from developing and emerging countries, real estate, and bonds. While we don’t expect all of these investments to deliver diversification benefits at the same time, we feel we use enough to have one or two of them provide some benefit. Depending on your asset allocation, you may have a portion of your investments in short-term, high-quality bonds. Short-term bonds are not as sensitive to the rising interests we see in the market and they are now offering a much better yield than they were just three years ago. These investments can help provide stability when our stocks are volatile. While market volatility makes some investors nervous, we take comfort in knowing that we’ve seen this before and that we’ve historically been rewards for staying the course. Given this, we don’t foresee the need to make any changes to our approach at this time, unless your tolerance for risk has changed. If you have any questions, please feel free to reach out. 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: All expressions of opinion are subject to change. This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.Diversification does not eliminate the risk of market loss. Investment risks include loss of principal and fluctuating value. There is no guarantee an investing strategy will be successful.Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Registration of an investment advisor does not imply a certain level of skill or training.

Did you know that October 15th, 2018 through December 7th, 2018 is the annual open enrollment for Medicare Part D coverage for 2019? If you have a Medicare Part D prescription drug plan, or if you intend on enrolling in a plan, now is a great time to start thinking about how to reduce the costs of your prescription drugs. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. What is Medicare part D prescription drug coverage? Medicare Part D (drug coverage) was instituted in 2006 as part of the Medicare Modernization Act of 2003 . As a Medicare beneficiary, Medicare Part D prescription drug coverage is an optional insurance coverage to help you cover the costs of prescription drugs. It can be a valuable component of reducing your costs in retirement if you take prescription medications. Unfortunately, if you don’t sign up for Medicare Part D Coverage when you’re first eligible at the age of 65, a late-enrollment penalty may be imposed if you decide to enroll later. Many people are automatically enrolled in Original Medicare, Part A and Part B , when they reach 65 years of age. But, did you know that Original Medicare doesn’t cover most of your prescription medications (except those you may receive at a hospital inpatient or, in some cases, outpatient)? Medicare Part B covers certain prescription drugs that you get in an outpatient setting, like a doctor’s office. However, these medications are typically ones that a doctor needs to administer. If you want help with most other prescription medication costs, you’ll need to sign up for Medicare Part D coverage. Your Medicare Part D Coverage May Be Costing You Money In the past, there has been a lot of confusion as to who needed Medicare Part D, what plans were “the best”, and how penalties would work if you did not sign up when eligible around you 65th birthday. As a result, most people who did not have other “creditable” drug coverage , either through work or a retiree benefit, made their decision based on a company they were familiar with or medicare part D premium cost. Sadly, many people who enrolled for medicare part D didn't choose the best plan for their personal situation. Those plans are often kept over time without any review of the plan, even though there are many plans available. For example, in 2018, there are 24 Medicare Part D plans available in the marketplace. Each coverage plan has a different combination of costs based on premium, co-pay structure, deductibles, and how their drugs are treated in the “donut hole.” Additionally, some plans cover certain prescription drugs, while others do not. Every Medicare Part D prescription drug plan changes one or more cost variables every year. Additionally, your drug needs may change from year to year. As a result, the Medicare Part D prescription drug plan you had last year, may not be the best plan for you this year! The only way to properly analyze which plan meets your individual needs and has the lowest total annual cost (the only number that counts) is to run the comparison program available on the Medicare website and/or get expert advice on your medicare part D options. However, running the medicare comparison program on your own can be time consuming and often confusing. As a result, you may avoid doing it and risk paying higher out of pocket costs for you and your family. Reduce Your Prescription Drug Costs with Medicare Part D Consulting Our team at Covenant Wealth Advisors has seen how valuable it can be to analyze your Medicare Part D options. After all, every dollar counts. To help you better manage your Medicare Part D prescription drug costs, we are partnering with Margaret Mondul of Household Document Organization . Margaret is an expert when it comes to understanding medicare. She has been instrumental in helping many of our clients analyze their personal Medicare Part D insurance coverage. As a result, she has been able to reduce out-of-pocket prescription drug costs for many of our clients. Margaret typically offers her Medicare Part D prescription drug plan comparison analysis for $75.00 per person . However, due to our great relationship with Margaret, we have partnered together to offer her service at $50.00 per person. If you would like to schedule a meeting with Margaret to analyze your Medicare Part D prescription drug coverage for 2019, please email us at info@mycwa.com. We will be holding Medicare Part D consulting with Margaret on Tuesday, October 16th and Thursday, October 18th. There is limited availability to please contact us as soon as possible to reserve your spot. Margaret is a great resource and we encourage those clients who are currently on a Medicare Part D plan to see how your current plan compares with other 2019 plans. 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: All expressions of opinion are subject to change. This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Diversification does not eliminate the risk of market loss. Investment risks include loss of principal and fluctuating value. There is no guarantee an investing strategy will be successful. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Registration of an investment advisor does not imply a certain level of skill or training.

With school back in session in most of the country, many grandparents and parents are thinking about how to prepare for their grandchildren's or children’s future college expenses. Now is a good time to sharpen one’s pencil for a few important lessons before heading back into the investing classroom to tackle the issue. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. AVERAGE COLLEGE TUITION COSTS IN 2017 According to recent data published by the College Board, the average annual cost of attending college in the US in 2017–2018 was $20,770 at public schools, plus an additional $15,650 if one is attending from out of state. At private schools, average college tuition costs and fees were $46,950. It is important to note that these figures are averages, meaning actual costs will be higher at certain schools and lower at others. Additionally, these figures do not include the separate cost of books and supplies or the potential benefit of scholarships and other types of financial aid. As a result, actual education costs can vary considerably from family to family AVERAGE COLLEGE TUITION COSTS IN 18 YEARS To complicate matters further, college costs have historically increased every year. This increase is due to inflation. Inflation makes the amount of goods and services $1 can purchase decline over time. One measure of inflation looks at changes in the price level of a basket of goods and services purchased by households, known as the Consumer Price Index (CPI). Tuition, fees, books, food, and rent are among the goods and services included in the CPI basket. In the US over the past 50 years, inflation measured by this index has averaged around 4% per year . With 4% inflation over 18 years, the purchasing power of $1 would decline by about 50%. Said another way, the amount of goods that $1 will purchase today, will only purchase $0.50 worth of goods in 18 years! However, the cost of college tuition has historically risen faster than average inflation. In fact, over the past 5 years, college tuition costs have risen 5% per year. What does this mean? Well, if you plan on funding your grandchildren's or children's education, you might be in for a shock. Based on data from CollegeBoard.org , at a 5% inflation rate, the total cost to attend just one year at a public, in-state college including room, board, tuition, and fees will increase from $20,770 to $49,985! This is per year. If you want to pay for 4 years of college, total costs may rise to $215,444 in just 18-years as seen in the chart below. Going forward, we do not know what the cost of attending college will be. But again, we should expect that education costs will likely be higher in the future than they are today. So, what can grandparents and parents do to prepare for the costs of a college education? How can they plan for and make progress toward affording those costs? BEST WAYS TO SAVE FOR COLLEGE To help reduce the expected costs of funding future college expenses, grandparents and parents have several options. Invest in a 529 College Savings Plan. A 529 plan is a college savings plan that offers tax and financial aid benefits. 529 plans may also be used to save and invest for K-12 tuition in addition to college costs. Investment earnings in a 529 plan are not subject to federal capital gains tax and generally not taxed by state governments when used for the qualified education expenses. Additionally, some states, like Virginia, allow a state tax deduction up to $4,000 per account. There are two types of 529 plans: college savings plans and prepaid tuition plans. Almost every state has at least one 529 plan. Using a tax-deferred savings vehicle, such as a Virginia 529 plan or other state sponsored 529 plan, parents may not pay taxes on the growth of their savings, which can help lower the cost of funding future college expenses. Invest in assets expected to grow faster than inflation. First, you can invest in assets that are expected to grow their savings at a rate of return that outpaces inflation. By doing this, college expenses may ultimately be funded with fewer dollars saved. Because these higher rates of return come with the risk of capital loss, this approach should make use of an adequate investment management strategy to balance the returns you need with the amount of risk you are willing to experience. While inflation has averaged about 4% annually over the past 50 years, stocks (as measured by the S&P 500 Index) have returned around 10% annually during the same period. Therefore, the “real” (inflation-adjusted) growth rate for stocks has been around 6% per annum. The real rate of return is simply the return of your investment minus inflation during the same time frame.Looked at another way, $10,000 of purchasing power invested at a 6% real rate of return over the course of 18 years would result in over $28,000 of purchasing power later on. We can expect the real rate of return on stocks to grow the purchasing power of an investor’s savings over time. We can also expect that the longer the horizon, the greater the expected growth. By investing in stocks, and by starting to save many years before children are college age, parents can expect to afford more college expenses with fewer savings. It is important to recognize, however, that investing in stocks also comes with investment risks. Like teenage students, investing can be volatile, full of surprises, and, if one is not careful, expensive. While sometimes easy to forget during periods of increased uncertainty in capital markets, volatility is a normal part of investing. Tuning out short-term noise is often difficult to do, but historically, investors who have maintained a disciplined approach over time have been rewarded for doing so. A key part of maintaining this discipline throughout the investing process is starting with a well-defined investment goal. This allows for investment instruments to be selected that can reduce uncertainty with respect to that goal. When saving for college, risk management assets (e.g., bonds) can help reduce the uncertainty of the level of college expenses a portfolio can support by enrollment time. These types of investments can help one tune out short‑term noise and bring more clarity to the overall investment process. As kids get closer to college age, the right balance of assets is likely to shift from high expected return growth assets to risk management assets. Diversification is also a key part of an overall risk management strategy for education planning. Nobel laureate Merton Miller used to say, “Diversification is your buddy.” Combined with a long-term approach, broad diversification is essential for risk management. By diversifying an investment portfolio, investors can help reduce the impact of any one company or market segment negatively impacting their wealth. Additionally, diversification helps take the guesswork out of investing. Trying to pick the best performing investment every year is a guessing game. We believe that by holding a broadly diversified portfolio, investors are better positioned to capture returns wherever those returns occur. Partner with your financial advisor. Working with a trusted financial planner who has a transparent approach based on sound investment principles, consistency, and trust can help investors identify an appropriate college savings strategy. Such an approach may limit unpleasant (and often costly) surprises and ultimately may contribute to provide you and your family more money long-term. The money you save may be reallocated toward retirement, giving to your favorite charity, or improving your lifestyle. CONCLUSION Higher education may come with a high and increasing price tag, so it makes sense to plan well in advance. There are many unknowns involved in college education planning, and no “one-size-fits-all” approach can solve the problem. By having a disciplined financial planning approach toward saving and investing, however, parents can remove some of the uncertainty from the process. A trusted advisor can help grandparents and parents craft a plan to address their family’s higher education goals. 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: All expressions of opinion are subject to change. This information is intended for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services. Diversification does not eliminate the risk of market loss. Investment risks include loss of principal and fluctuating value. There is no guarantee an investing strategy will be successful. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Registration of an investment advisor does not imply a certain level of skill or training.

Retirement is a milestone that most people look forward to, but it can also be a source of stress and uncertainty. One of the most important decisions you'll make as you approach retirement is choosing a financial planner. A good financial planner can help you navigate the complexities of retirement planning, create a retirement plan tailored to your needs, and ensure that you have enough money to live comfortably throughout your retirement. In this article, we'll explore how to pick a financial planner for retirement, and provide you with the information you need to make an informed decision. Many Americans haven't contacted a financial planner simply because they don't know where to look or how to assess their expertise and cost. To address this, we've designed a free quiz to connect you with a credible, competent, and experienced financial advisor. This quiz gauges your needs and pairs you with a financial advisor who specializes in retirement income planning. You can then consider working with the advisor based on his/her specialties, pricing, and other factors. Plus, each match comes with a free consultation , empowering you to make an informed decision when choosing a financial advisor. Choosing a financial planner for retirement is not a decision to be taken lightly. Your financial planner will be responsible for managing your retirement savings, helping you invest your money, and making sure you have enough income to support yourself throughout your retirement. With so much at stake, it's important to take the time to find the right financial planner for you. To do so, you'll need to start by determining your retirement goals. What do you want your retirement to look like? Do you plan to travel extensively, or do you plan to spend most of your time at home? Do you have any specific financial goals, such as paying off debt or leaving money to your heirs? Once you have a clear idea of what you want to achieve in retirement, you can start looking for a financial planner who can help you reach those goals. Here's how to pick a financial planner for retirement. Determine Your Retirement Goals The first step in picking a financial planner for retirement is to determine your retirement goals. Retirement looks different for everyone, and it's important to have a clear idea of what you want your retirement to look like. Ask yourself some key questions, such as: When do you want to retire? What kind of lifestyle do you want in retirement? Do you have any specific financial goals for retirement? Do you want to leave money to your heirs? What kind of retirement savings do you currently have? Your answers to these questions will help you determine what kind of financial planner you need. For example, if you want to retire early and travel extensively, you may need a financial planner who specializes in retirement planning for people who want to travel. Alternatively, if you have specific financial goals, such as paying off debt or saving for a child's college education, you may need a financial planner who can help you achieve those goals. It's important to be as specific as possible when determining your retirement goals. The more specific you are, the easier it will be to find a financial planner who can help you achieve those goals. Once you have a clear idea of what you want to achieve in retirement, you can start looking for a financial planner who can help you create a retirement plan that is tailored to your needs. Research Potential Financial Planners Once you've determined your retirement goals, the next step is to research potential financial planners who can help you achieve those goals. There are several ways to find financial planners, including: Referrals from friends or family members Online search engines or directories Professional organizations, such as the Financial Planning Association or the National Association of Personal Financial Advisors Social media platforms, such as LinkedIn Once you have a list of potential financial planners, it's important to research them thoroughly. Look for information on their website or social media profiles, and read reviews from previous clients. You can also check their credentials by looking up their name on the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) websites. When researching potential financial planners, pay attention to their experience, credentials, and areas of specialization. Look for financial planners who have experience working with clients in a similar financial situation as yours, and who have a track record of helping clients achieve their retirement goals. Finally, look for financial planners who specialize in retirement planning like we do here at Covenant Wealth Advisors, as they will have the knowledge and expertise necessary to help you create a retirement plan that is tailored to your needs. Check Credentials Once you've narrowed down your list of potential financial planners, it's important to check their credentials to ensure they are qualified to provide financial advice. Checking credentials is an important step in the process of picking a financial planner, as it helps you avoid scams and ensures that the financial planner you choose has the necessary education, experience, and certifications to provide you with sound financial advice. When checking a financial planner's credentials, there are several things to look for: Licenses: Financial planners must be licensed to provide financial advice in their state. Check with your state's securities regulator to make sure the financial planner you're considering is properly licensed. Certifications: Financial planners may also hold certifications from professional organizations, such as the Certified Financial Planner (CFP) Board or the Chartered Financial Analyst (CFA) Institute. These certifications indicate that the financial planner has met certain education and experience requirements. Regulatory Actions: Check the financial planner's disciplinary record with the SEC, FINRA, or your state's securities regulator to see if they have any regulatory actions against them. Complaints: Look up the financial planner's record with the Better Business Bureau and other consumer protection organizations to see if they have any complaints against them. Checking a financial planner's credentials can be time-consuming, but it's an important step in ensuring that you choose a financial planner who is qualified to provide you with sound financial advice. By verifying their licenses, certifications, and disciplinary record, you can ensure that the financial planner you choose is trustworthy and has the necessary skills and experience to help you achieve your retirement goals. Ask for Referrals and Read Reviews Another important step in picking a financial planner for retirement is to ask for referrals and read reviews from previous clients. Referrals from friends, family members, and other trusted sources can be a valuable resource when choosing a financial planner, as they can provide insight into the financial planner's communication style, expertise, and overall performance. Reading reviews from previous clients can also help you get a better sense of what it's like to work with the financial planner. When asking for referrals, be sure to ask people who are in a similar financial situation as you, and who have similar retirement goals. This will help ensure that the financial planner you choose has experience working with clients like you, and has the expertise necessary to help you achieve your retirement goals. When reading reviews, look for patterns in the feedback. Are there consistent complaints about the financial planner's communication style, fees, or performance? Or are the reviews overwhelmingly positive? Use the reviews as a tool to help you make an informed decision about the financial planner you're considering. It's important to keep in mind that not all referrals and reviews are created equal. Be wary of referrals from financial planners themselves, as they may have a conflict of interest. Similarly, be wary of reviews on the financial planner's website, as they may be selectively chosen to present a positive image. By asking for referrals and reading reviews from previous clients, you can gain valuable insight into the financial planner's performance and overall approach to retirement planning. Use this information to help you narrow down your list of potential financial planners, and move on to the next step: interviewing potential financial planners. Interview Potential Financial Planners Once you've narrowed down your list of potential financial planners, it's time to start interviewing them. This is an important step in picking a financial planner, as it allows you to get a better sense of their communication style, expertise, and overall approach to retirement planning. When interviewing potential financial planners, be sure to ask plenty of questions. Some questions you may want to ask include: What is your approach to retirement planning? How do you ensure that my retirement plan is tailored to my specific needs? What kind of investment strategies do you recommend? What is your fee structure? How often will we meet to review my retirement plan? How do you stay up-to-date on changes in the financial industry? Can you provide references from previous clients? Pay attention to the financial planner's communication style during the interview. Do they explain complex financial concepts in a way that's easy to understand? Do they take the time to answer your questions thoroughly? A good financial planner should be patient, knowledgeable, and able to explain financial concepts in a way that's easy to understand. It's also important to consider the financial planner's experience and expertise. Look for a financial planner who has experience working with clients in a similar financial situation as yours, and who has a track record of helping clients achieve their retirement goals. Consider the financial planner's investment philosophy and approach to risk management, and make sure it aligns with your own goals and risk tolerance. By interviewing potential financial planners, you can get a better sense of their communication style, expertise, and overall approach to retirement planning. Use this information to help you make an informed decision about the financial planner you choose to work with. Consider Their Approach and Expertise When picking a financial planner for retirement, it's important to consider their approach and expertise. Different financial planners have different approaches to retirement planning, and it's important to find one whose approach aligns with your own goals and values. Consider the financial planner's investment philosophy and approach to risk management. Do they take a conservative or aggressive approach to investing? Are they experienced in managing risk? Make sure their approach aligns with your own goals and risk tolerance. It's also important to consider the financial planner's areas of expertise. Look for a financial planner who specializes in retirement planning, as they will have the knowledge and expertise necessary to help you create a retirement plan that is tailored to your needs. Consider their experience working with clients in a similar financial situation as yours, and their track record of helping clients achieve their retirement goals. Finally, consider the financial planner's fee structure. Some financial planners charge a flat fee for their services, while others charge a percentage of assets under management. Make sure you understand the financial planner's fee structure, and that it aligns with your own financial goals and budget. By considering the financial planner's approach and expertise, you can ensure that you choose a financial planner who has the knowledge, experience, and approach necessary to help you achieve your retirement goals. Compare and Make a Decision Once you've interviewed potential financial planners and considered their approach and expertise, it's time to compare them and make a decision. This can be a difficult decision, as you want to choose a financial planner who is trustworthy, knowledgeable, and experienced. Consider the financial planner's track record of helping clients achieve their retirement goals. Look for a financial planner who has a track record of success, and who has helped clients achieve similar retirement goals as your own. Consider their communication style and responsiveness, as it's important to choose a financial planner who you feel comfortable communicating with. Compare the financial planner's fee structure and make sure it aligns with your own budget and financial goals. Look for a financial planner who charges a fair and transparent fee for their services, and who is upfront about any potential fees or charges. Finally, consider your own intuition and gut feeling. After interviewing potential financial planners and considering their approach and expertise, you should have a good sense of which financial planner is the best fit for you. Trust your instincts and choose the financial planner who you feel is the best fit for your retirement goals and financial situation. By comparing potential financial planners and making a decision based on their track record, fee structure, and your own intuition, you can ensure that you choose a financial planner who is trustworthy, knowledgeable, and experienced, and who can help you achieve your retirement goals. Establish a Relationship with Your Financial Planner Once you've chosen a financial planner for your retirement, it's important to establish a strong working relationship with them. This means communicating your retirement goals and expectations clearly, and working with your financial planner to create a retirement plan that is tailored to your needs. Establishing a strong working relationship with your financial planner also means staying engaged in the retirement planning process. Schedule regular meetings with your financial planner to review your retirement plan and make any necessary adjustments. Keep them informed of any changes in your financial situation or retirement goals, and ask questions if you don't understand something. It's also important to be transparent with your financial planner about your financial situation. Provide them with accurate information about your income, expenses, and retirement savings, so that they can create a retirement plan that is tailored to your specific needs. Finally, make sure you are comfortable with your financial planner's approach to risk management and investment strategies. If you have concerns or questions, don't hesitate to ask your financial planner for clarification. By establishing a strong working relationship with your financial planner, you can ensure that you have a retirement plan that is tailored to your needs and goals, and that you have a trusted advisor who can help you navigate the complexities of retirement planning. Conclusion Picking a financial planner for retirement is an important decision that can have a significant impact on your financial future. By taking the time to determine your retirement goals, research potential financial planners, check their credentials, ask for referrals and read reviews, interview potential financial planners, and compare and make a decision, you can ensure that you choose a financial planner who is knowledgeable, experienced, and trustworthy. Establishing a strong working relationship with your financial planner is also crucial. Be transparent about your financial situation, stay engaged in the retirement planning process, and make sure you are comfortable with your financial planner's approach to risk management and investment strategies. Ultimately, a good financial planner can help you create a retirement plan that is tailored to your specific needs and goals, and provide you with the guidance and support you need to achieve financial security in retirement. By following the steps outlined in this article, you can make an informed decision about the financial planner you choose to work with, and set yourself on the path to a comfortable and secure retirement. Are you interested in picking a financial planner for retirement? We specialize in retirement income planning, investing, and tax planning leading up to and through retirement for individuals age 50+ who have over $1 million in investments. Contact us today for a free consultation. Disclosures: 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.

Social Security may seem complicated, and there are certainly a myriad of rules to consider. However, you don’t have to be a mathematician or economist to make the most of your Social Security benefits. Let’s look at the answers to some of retirees' most critical Social Security questions. How Do Social Security Benefits Work? Social Security provides retirees with a consistent income stream once they retire and claim their benefits. In general, your Social Security income is estimated to replace about 40% of your pre-retirement income, but that number could vary significantly from person to person. To qualify for Social Security benefits, you need to earn a minimum number of credits over your working years. You receive a credit by earning a certain amount of income from covered employment within a year. For 2021, you earn a credit for every $1,470 in income, up to 4 credits per year. To qualify for a retirement benefit, you need to earn 40 credits. For disability benefits, you need 20 credits. Social Security benefits are funded through payroll taxes of 12.4%. If you are employed through a company, then your employer pays half of that amount for you. If you are self-employed, you pay the full 12.4%. You do get a little break come tax-time as you can deduct your half of the tax. Ultimately, you’ll only owe 12.4% on 92.35% of your income. The amount of your income that is subject to the payroll (FICA) tax is capped by a limit set by the IRS each year. For 2021, that cap is $142,800. Social Security benefits are one of the only types of retirement income that considers inflation. Each year, the Social Security Administration announces a cost-of-living adjustment (COLA). In 2021, benefits are set to increase by 1.3%. With the modest rise in Medicare premiums, beneficiaries will actually see an increase in their monthly checks. Can You Calculate Your Benefit? Qualifying for Social Security and determining the amount of your benefit are two different situations. In addition to ensuring that you earn enough credits to earn eligibility, you also need to track your benefit amount. Social security benefits are based on lifetime earnings. The Social Security Administration calculates your benefits by indexing your highest 35 earning years against a formula to come up with your primary insurance amount. Your primary insurance amount is the value you’d get for claiming at your full retirement age—in other words, for filing “on time”. Because your lifetime earnings directly affect the size of your Social Security benefit, we recommend that you check your earnings record often. If you do and notice a problem, you have time to correct it. You can check your earnings history on the Social Security website by creating an online account. You can also check out your local Social Security office for other questions or other benefit enrollment questions. While it may seem like there isn’t much planning opportunity with your earnings record, there is a particularly key item we think you should pay attention to—your total number of earning years. Work The Full 35 Years Since Social Security benefits are calculated from your highest 35 years of earnings, it makes sense to make sure you at least have 35. If you don’t, say you only have 29 years, then the SSA inputs a 0 in their formula for every year under 35, in this case, 6. Those zeros could have a significant impact on your monthly benefit. It’s often wise to work a few extra years to replace some of those zeros and boost your future benefit. If you are in your peak earning years, then those zeros could be replaced with above-average earnings. In the grand scheme of things, those extra earnings can make a big difference in your total Social security retirement benefit. There is a maximum benefit depending on when you file, regardless of your earnings. For 2021, those maximums are: Start at age 70 - $3,895/month ($46,740/year) Start at FRA (full retirement age) - $3,113/month ($37,356/year) Start at age 62 - $2,324/month ($27,888/year) When Should You Enroll? The decision of when to claim your benefit is perhaps the most debated question about Social Security. It may also be the most important. Your enrollment plays a major role in your future benefits. If you claim at your full retirement age, you will receive your primary insurance amount as described above also known as your full benefits. However, you have two other choices. You can increase that benefit by accruing delayed retirement credits (up until you turn 70) or you can claim your benefit as early as 62 in exchange for a reduced benefit. Claiming early can reduce your benefit by up to 30%, while delaying can increase it by up to 32%. The common way of thinking about this decision is to consider when you would “break-even”. We tend to see that most clients that delay break even around the time they turn 78. After this, the clients that delay are better off for receiving the higher benefit. By today’s standards, 78 is still quite young. However, like most financial planning decisions, this needs to be tailored to your circumstances. If you're planning an early retirement or have a medical condition or family history that suggests it is very unlikely you will live past 78, then it could be better to file early. There are also special considerations for married couples . If you pass, then the benefit you leave to a surviving spouse depends on your own benefit, so it’s critical to consider how that decision affects them. There might also be other family members or dependents that rely on your income. Be sure to consider those circumstances as well. Are Your Social Security Benefits Taxed? Taxation is a key planning consideration in retirement . One of the reasons that Social Security benefits factor into your tax analysis is because they are taxed, and taxed uniquely. How will Social Security taxes factor into your benefit? First, not all of your Social Security benefit is taxed. The amount of your benefit that is subject to income tax depends on a special measure of income called combined income. Your combined income is basically your gross income (not including Social Security) plus any tax-exempt interest such as the interest you receive from municipal bonds and one-half of your Social Security benefit. Depending on your combined income, either none of your Social Security benefits is taxable, 50% is, or 85% is. For individuals, the income thresholds for these taxation levels are: Under $25,000 is 0% $25,000-$34,000 is 50% Over $34,000 is 85% Some states also tax your Social Security benefits, but not all do. Fortunately, Virginia is a state that doesn’t! How Does Working Impact Your Benefits? Many people that claim their benefit early choose to continue working full-time or part-time. If you decide to start taking your benefit before you reach full retirement age and continue to work, then you may see your benefit temporarily reduced due to the earnings test. There is a limit to how much you can earn while receiving Social Security benefits before your full retirement age. For 2021, that amount is $18,960. For every $2 you earn above that limit, your Social Security benefit is reduced by $1. However, in the calendar year you reach full retirement age, that earnings limit is increased to $50,520, and the reduction is reduced to $1 for every $3 you earn above the limit. The bright side? You don’t lose this money for good. In addition to receiving your normal benefit amount, the amount you were penalized will be added back to your monthly benefit once you reach full retirement age. Is Your Spouse Eligible? Spousal benefits are the area where Social Security planning can become more complicated. It is especially helpful to work with an experienced financial advisor to evaluate the best options for you and your spouse. Some of the available scenarios can be quite complex. For example, special rules allow a surviving widow/widower to receive a benefit as early as age 60 and continue to delay their personal benefit up to age 70. Spouses are generally eligible to collect up to 50% of the primary earner’s benefit should they both collect at FRA. The lower-earning spouse should usually choose the higher of their own benefit or the spousal benefit of 50% of the primary wage earners benefit. A common misconception is that the spousal benefit reduces the primary earner’s benefit, but that is not the case. Divorced spouses are also eligible for benefits provided they are at least 62, the marriage lasted 10 years, they haven't remarried (doesn't matter if the ex-spouse remarried or not), and the spousal benefit would be higher than their own. You may have heard about a popular filing strategy called "File and suspend," which allowed the highest-earning spouse to delay their benefit while taking spousal benefits from their spouse to help maximize their total lifetime income from Social Security. Unfortunately, that has now been eliminated by Congress through the Bipartisan Budget Act of 2015. Couples do, however, still have the option for the highest earner to delay until age 70, while other spouse takes their benefit. When the higher earner files and the spousal benefit is unlocked, the lower earner can then claim the higher spousal benefit. Keep in mind that the lower-earning spouse would have to wait until their FRA to start their benefit to get the full spousal amount as well. Let’s Make Social Security Simple Together. There is much more to Social Security than deciding when to start your benefits. The rules can be complex and Social Security decisions need to be made in the context of a broader financial plan. We can help you navigate Social Security with our training and experience. We also have access to software that helps us effectively analyze a client's Social Security scenario, and blend it in with their overall financial plan to help them make the best choices for their retirement. Let’s discover how to maximize your Social Security benefits together. Talk to one of our financial advisors and get a free retirement assessment. Scott is a Wealth Manager for Covenant Wealth Advisors and is a CERTIFIED FINANCIAL PLANNER™ (CFP © ) practitioner and a Certified Public Accountant (CPA). Scott has over 16 years of experience in the financial services industry in the areas of financial planning and investment management. Disclosures: 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.

Investing in retirement can be stressful. Even with a retirement cheat sheet to help guide your decisions, it's often hard to know if you are doing what you should to preserve your nest egg. That's why it's important to create an investment strategy tailored to your goals. But, there is a lot of information out there which can make it hard to know what information you should trust. A strategy that is great for your neighbor or colleague may be terrible for you. The good news is that there are four key considerations everyone should consider when transitioning to and through retirement. Take your retirement investing up a notch. Here are four ways to help you invest better in retirement. 1. Know Your New Risk Tolerance Do you feel like your mood fluctuates with the amount of money in your account? Are you up when your account is growing and down when you see your balance fall? That’s normal, but to a large extent, those feelings can be managed with proper investment planning. Temporary Decline or Permanent Loss? Often, It’s Up To You. The first thing retirees should realize is that there is a consequential difference between a temporary decline and a permanent loss. Your behavior drives much of this distinction. Many people conflate and confuse investing and gambling. Without a plan tailored to your goals, risk, asset allocations, time horizon, and more, you may think that you’re investing, when you’re simply gambling with the stock market. As a result, your approach puts you at an increased risk for permanent loss. For example, if you concentrate too much of your savings on one investment (say a popular individual stock), you could see more significant swings in your portfolio. If those fluctuations cause you too much stress, you could end up selling in a panic— turning what could have been a temporary decline into a permanent loss. Strong investment decisions take a more balanced and strategic approach. Knowing your risk tolerance and taking prudent risks for your situation can help. Spread your investments across many different companies, economic sectors, markets, and securities (a.k.a diversification) so that you only expose yourself to the risk that’s appropriate for your needs. We can work with you to determine the right mix of allocations that suit your risk appetite. It’s our goal to help you balance getting a good night’s sleep and putting yourself in the position to generate the best potential long-term returns. What’s The Right Amount of Risk for Your Portfolio? To determine the right mix for you, it’s helpful to think about your risk comfort level in terms of hard dollars. Say you have a $1,500,000 investment portfolio. Think about a decline that would make you pretty uncomfortable. You might be alright with a temporary decline of $250,000 but not $300,000. Those numbers give us an even better idea of how to balance your investments. This number will fluctuate over time, too. As you get closer to retirement and your focus shifts from accumulating savings to withdrawing, then the risks, and your risk appetite, both change. It’s important to update your portfolio to match. Want to see if your portfolio is up to snuff? Check out our free portfolio check-up resource . This resource will help you determine the right mix of investments for your unique situation. 2. Be Cognizant of Inflation Inflation is a constant but somewhat silent risk to retirement. It’s like the kryptonite of retirement investing. Some of your retirement income may provide automatic inflation protection such as the Social Security inflation adjustment, but not all sources do. Even so, sometimes the increase in elements like Medicare premiums may overshadow the increase in Social Security. But, you can protect yourself from inflation risk with your investment plan by seeking investment options that consider inflation. It’s important to design a portfolio that protects you from inflation and rising interest rates because you rely on it for income. A few specific ways you can do that include: Your choice of bonds and other fixed-income securities. For example, the value of long-term bonds will fall significantly when rates rise. You can either hold individual bonds until maturity or invest in shorter-term bonds. Diversify asset allocations across borders as well as asset classes. If inflation is worse in the US than in other parts of the world, then the US dollar may decline in value relative to other currencies. Holding international stocks can help offset the decline in the dollar. Diversification is always critical, but it's especially important for your retirement nest egg. Create an intentional investment portfolio with a range of securities—mutual funds, exchange-traded funds (ETFs), index funds, real estate investment trusts (REITs), cash, and more. Our team can help you create an intentional portfolio designed with your needs in mind. Your portfolio should be designed to weather most market environments including rising interest rates and inflation. Building an intentional portfolio that offsets risk better insulates your retirement savings for the future. Inflation is an important risk to understand and plan for in retirement. We can help you take inflation and interest rates into account with your investment plan. 3. Create A Strong Tax Plan It's no secret that we love tax planning here at Covenant Wealth . It's one of the foremost ways to insulate your retirement nest egg, preserve the longevity of your retirement accounts, and increase the income you can take for your savings. It’s also one of the least risky. Key tax considerations include: Medicare Income-related monthly adjusted amount (IRMAA) Long-term capital gains Federal tax bracket management Lowering your taxable income to qualify for subsidies that pay for healthcare in retirement. You'll also need to get clear on where your money is held—individual retirement account, brokerage account, savings account, etc.— to make the most of every dollar. Another powerful strategy that you can use pre and post-retirement are Roth conversions . Roth conversions allow you to take advantage of lower tax years to create a tax-free bucket that you can withdraw from in higher tax years. It converts funds from your traditional IRA to a Roth IRA. This strategy is inherently a multi-year strategy, so we need to think past a single year’s tax return. 4. Set Intentional Investment Goals Investing should be about achieving a purpose rather than chasing aimless gains. Your investment plan should be grounded in your retirement goals, values, and priorities. Set intentional goals. Ask yourself, What are your retirement goals? Will you spend more on vacation in the early years and less in the later years as you age? Do you want to buy a retirement house on the beach? Is investing in your grandchild's education important? Are you funding a trust? Do you want to pass down a Roth IRA? What about charitable giving? Your goals are critical for several concrete reasons. Without a clear view of your goals, it’s impossible to set your risk tolerance and investment objectives. You’ll also never know if you are doing things right. You can’t hit a target that isn’t there! You should use your retirement money in ways that further your plan. Bonus: Work With A Financial Advisor for Your Retirement Plan It's important to work with an advisor who has specific experience with your needs. Not all advisors are the same or have the same expertise. Regardless of the type of advisor you need, we recommend working with a fee-only fiduciary that has demonstrated experience working with people just like you. Financial planning can give you confidence and security in your golden years. At Covenant Wealth Advisors, we're passionate about retirement planning. Our team has particular expertise to help clients who are 50+ and transitioning into retirement reduce their taxes and ensure that they retire without stressing about their money. If that describes you, we would be happy to talk and see if we can work together to create a tax-efficient and worry-free retirement for you. About Mark Fonville, CFP® Mark is the President of Covenant Wealth Advisors and a Certified Financial Planner ™ professional specializing in retirement income planning, tax planning, and investment management. He has been featured in the New York Times, Barron's, Kiplinger Magazine, and the Chicago Tribune. Learn more Disclosures: 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.

Significant advances were seen in the main stock market indices in the first six months of the year. These advances were driven by factors such as moderated inflation, a slowdown in Fed rate increases, the absence of a recession, stability in the banking sector, and a robust upswing in technology stocks. The S&P 500 saw a substantial rise of 16.9% when considering reinvested dividends this year through June 30, 2023, while the Nasdaq and Dow have reported returns of 32.3% and 4.9% respectively. The markets have effectively regained much of the losses suffered last year, with the S&P 500 now just 7% short of its historic peak. A financial advisor with investment expertise may be able to help you create a plan to navigate future economic uncertainty. Next Steps: Planning for Retirement can be overwhelming. We recommend speaking with a financial advisor at Covenant Wealth Advisors. This tool will match you with a fiduciary financial advisor with over 20 years of experience. Here's how it works: Answer these few easy questions , so we can find a match. Our tool matches you with a credentialed financial advisor who can help you on the path toward achieving your financial goals. It only takes a few minutes. Check out the advisors' profiles, have an introductory call on the phone or introduction in person, and choose who to work with in the future. Here's how markets have rebounded through July 3rd, 2023. Similarly, interest rates have remained stable after last year's dramatic increase, with the 10-year Treasury yield settling around 3.8%, which has contributed to a rebound in bond prices. What should investors keep in mind to understand this recent market progress as we transition into the second half of the year? In light of the remarkable performance so far this year, a question many investors might be grappling with is whether this signifies the onset of a new bull market or if it's merely a rally within a bear market. This contrasts with the initial apprehensions at the year's outset when investors and economists were mainly preoccupied with bear markets and recessions. Several reasons exist as to why the previous six months have only further emphasized the investment strategies that long-term investors ought to adhere to in order to realize their financial objectives Investor Sentiment Can Shift Unexpectedly Firstly, the market performance witnessed this year reinforces the idea that investor sentiment can shift unexpectedly and rapidly. Historical patterns of bear markets and brief corrections indicate that markets can bounce back at the most unforeseen times, particularly when investor outlook is at its gloomiest. This was indeed the case at the year's onset when a recovery seemed almost implausible to most, just as it was during times like April 2020, March 2009, and the tech crash of 2000-2002. Every market slump is triggered by a substantial event, such as an inflation surge, the pandemic, the U.S. debt downgrade, the global financial crisis, or even the infamous Black Monday in 1987. Despite that, in each scenario, the common thread was that investors anticipated the situation to keep deteriorating, oblivious to the fact that fundamentals and valuations were subtly improving. Hence, it's frequently more advantageous for regular investors to remain faithful to their meticulously planned financial strategies. By the time a consensus is reached that a recovery is underway, considerable profits are often left unrealized. Download FREE: Get the Same Checklists We Use to Help Our Clients Retire [New for 2023] This is not to undermine the distress caused by market downturns or suggest that markets only witness an upward trend. Instead, historical patterns indicate that it's generally more beneficial to maintain one's investments in a suitably structured portfolio. In the most unfortunate scenario, investors who attempt to outguess the market and overly concentrate on short-term incidents might entirely miss out on the subsequent market rebounds. Market Fundamentals Drive Stock Market Rallies Secondly, forecasting the course of the market is as challenging as determining the longevity of a specific rally while it's in progress. Therefore, it's usually more beneficial for long-term investors to concentrate on the core fundamentals propelling the rally. Despite the fact that markets can oscillate in any direction within days, weeks, or months, it's the stable economic expansion and enhancing corporate profits that usually steer markets to higher ground over quarters, years, and even decades Therefore, the necessity for maintaining a robust economy is imperative. Just a year ago, many deemed the idea of the Federal Reserve successfully orchestrating a 'soft landing,' meaning that inflation would be mitigated without a recession, as highly improbable. Although the challenge of core inflation still persists, the positive trend of overall consumer prices improving while unemployment rates stay at historically low levels bodes well for the markets. If corporate earnings start to show an upward trajectory, the attractiveness of market valuations could potentially increase over time. Economic Uncertainties Remain Lastly, it's not uncommon to view the situation pessimistically, given the numerous uncertainties that continue to cast a shadow. In the present scenario, even with improved stability in the financial system, challenges persist, most significantly those stemming from the earlier bank failures this year, particularly in the commercial real estate sector. The upcoming wave of refinancing could pose a test to the system's stability as high interest rates persist and lending activities become more stringent. Moreover, although a debt ceiling crisis was successfully dodged, the issue has only been deferred to the start of 2025. Concurrently, geopolitics remains a source of concern with U.S. ties with China and Russia still under strain. The upcoming presidential election in the following year is also poised to take center stage as markets evaluate these multifaceted risks. Download FREE: Get the Same Checklists We Use to Help Our Clients Retire [New for 2023] Nonetheless, seasoned investors, who maintain a comprehensive view of the markets, understand that there are always risks to counterbalance against long-term returns. Such risks frequently seem overwhelming when being experienced in real-time. However, once these risks are in the past, the focus of investor worries typically shifts to the sustainability of recoveries. These alternating patterns in investor sentiment are a standard and inherent feature of markets, underlining why long-term investors can enhance their chances of success by emphasizing more on the underlying trends. In keeping with this, here are seven crucial insights drawn from the first half of the year that will likely hold equal importance in the second half. 1. Unexpectedly Robust Returns Over the Last Three Quarters Have Left Many Investors Astonished The S&P 500 has now recorded three straight quarters of robust returns, commencing from the fourth quarter of 2022. This is a drastic reversal from the bear market returns observed during the initial three quarters of the preceding year, and this turnaround is taking place amidst a prevailing negative sentiment. Although there's no assurance that markets will persist with this vigorous upward trend, it emphasizes the notion that markets can shift their course unpredictably. 2. Limited Market Breadth as Giant-Cap Stocks Spearhead the Surge Although the market surge has been advantageous to many investors, the gains haven't been evenly distributed among all stocks. Predominantly, the mega-cap stocks have taken the lead. The related graph reveals that the biggest stocks within the S&P 500 have surpassed the broader index this year. Furthermore, an equal-weighted index, which assigns greater weight to smaller stocks compared to a market-weighted index, has trailed even further behind. 3. Returns of Sectors Have Varied Across the Stock Market Vs. 2022 Hence, a concern among investors is whether this year's returns have been 'skewed' by the tech sector's performance. Regrettably, it's true that the biggest stocks have steadily risen in significance over the past decade, attributed to the escalating economies of scale due to technology's impact on the economy. In recent times, the surging enthusiasm for artificial intelligence has further propelled gains in these sectors. However, the current year's gains in these areas aren't solely a result of these trends. The returns observed among these companies also signify a recovery from the previous year, a period when these stocks were most severely impacted due to escalating interest rates and an increasingly gloomy future outlook. When considered together with last year's performance, the returns, though still oversized, appear much more rational. 4. Positive Trends in Inflation Despite Persistent Core Measures One of the reasons for the pivot from last year's scenario is the discernible signs of improvement in inflation. The main Consumer Price Index has decreased from a high of 9.1% a year ago to 4% presently, primarily attributed to deflation in energy costs and other sectors such as used automobiles. However, the core inflation remains persistent, primarily driven by housing costs. The Federal Reserve and other economists are of the belief that these prices will exhibit a positive trend as rent prices achieve stability and new leases get initiated. Investors should also keep their expectations in check regarding further advancements in inflation. Optimistically, both headline and core inflation are likely to remain elevated throughout a significant part of 2024. In the interim, there's a possibility that year-over-year inflation data may show deterioration due to comparisons with the previous year's levels. 5. Pace of Federal Reserve Rate Hikes Has Slowed When inflation improves in conjunction with a robust economy, it offers the Federal Reserve an opportunity to decelerate its frequency of rate hikes. The Federal Reserve has consecutively elevated rates 10 times, moving from zero to 5%. The magnitude of each increment has gradually decreased over the past year, falling from a zenith of 75 basis points (0.75%) per meeting to a possible 25 basis points every alternate meeting. The Federal Reserve has explicitly signaled its dedication to bringing inflation back to their 2% benchmark by sustaining elevated rates over an extended period. There has been a shift in market-based expectations this year, with consensus moving away from anticipating a rate cut later in the year, to now agreeing that there could be a further rise in rates. 6. Commercial Real Estate and Other Rate Sensitive Industries Face Problems Among the various sectors affected by escalating rates and financial uncertainty, commercial real estate is perceived as the most significant risk by investors. This perception is not solely because commercial real estate has grappled with the aftereffects of the pandemic, including shifts in office usage and occupancy, but also due to the trillions of dollars in loans that will need refinancing in the near future. Increasing interest rates and stringent lending standards could potentially complicate this process, resulting in liquidity and solvency challenges for commercial real estate companies. Fortunately, the increased stability observed in the banking system over recent months, coupled with support from the Federal Reserve and the government, have alleviated some of these risks. However, market stakeholders will continue to keep a keen eye on this sector in the upcoming months. 7. Smart Investors Create a Financial Plan for Retirement Especially During Times of Uncertainty Investors, particularly those nearing retirement, might be pondering about the implications of market volatility on their portfolio. The well-established 4% rule outlines a "safe" withdrawal rate during retirement, founded on the historical performance of a hypothetical portfolio made up of 60% stocks and 40% bonds, as illustrated in the attached chart. This accounts for both prosperous and challenging market phases since 1900. The chart, however, also reveals that safe withdrawal rates can significantly vary, with the average approximating 7%. Hence, while investors must reduce the danger of depleting their resources, it is equally essential for them to optimally utilize their retirement period, especially given increasing life expectancies. Rather than merely adhering to a general guideline, investors should comprehend their individual situations to more accurately estimate their safe withdrawal rates. This strategy can aid long-term investors in achieving their financial objectives, particularly during uncertain market times such as the present. To sum it up, the markets have made a comeback in the first half of the year, catching numerous investors by surprise. Although markets don't ascend linearly, investors who concentrate on long-term fundamentals and steer clear of market timing will probably be better equipped to exploit market opportunities in the latter half of the year. As you get closer to retirement, you tend to save more and invest conservatively. So knowing how your retirement savings is properly tied to your life plan is important. A financial advisor at Covenant Wealth Advisors can help you manage your retirement savings and plan for the future. Author: Mark Fonville, CFP® Mark is a fiduciary, fee-only financial advisor at Covenant Wealth Advisors specializing in helping individuals aged 50 plus plan, invest, and enjoy retirement without the stress of money. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule your free retirement assessment today 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.

Retirement planning is more important than ever, but also more challenging. With high inflation rates over the past two years, most retirees worry about outliving their savings. This risk is very real and requires careful consideration to ensure a comfortable retirement. The unpredictability of markets and the economy makes it impossible to time events like daily market fluctuations or the start of retirement during a bull or bear market. Nevertheless, we can regulate our own behavior and stay focused by being disciplined. Thus, a reliable financial plan that can adapt to unforeseen circumstances, coupled with expert financial advice, has been proven to be the most effective approach in reducing retirement risks. Though there is no guaranteed success, historical data supports this approach. How can retirees continue to maintain peace of mind and their quality of life in today's environment? Download FREE: Get the Same Checklists We Use to Help Our Clients Retire [New for 2023] Retirement and investment planning can be complex, but two key concepts worth understanding are the "4% rule" and "sequence of returns risk." The 4% rule is a tool that aims to answer the question of how much money you can withdraw annually from your retirement portfolio without depleting your savings. Its creator, William Bengen, found that a 4% withdrawal rate historically served as a safe threshold for retirees to sustain their portfolios for a 30-year span, accounting for inflation. For this reason, this is also sometimes referred to as the "SAFEMAX rate." Maximum Withdrawal Rates in Retirement Are Different Throughout History You may be wondering if the 4% withdrawal rule is still viable today. Our accompanying chart above shows safe withdrawal rates based on historical 30-year periods and inflation rates for a 60/40 stock/bond portfolio, as well as estimates for recent years. The calculations reveal that the maximum withdrawal rate fell to 4% only once in the 1960s. In hindsight and on average, retirees were able to withdraw 6.9% annually without depleting funds. Keep in mind that the safe withdrawal rate can vary significantly yearly due to market returns fluctuations. Overall, these findings give retirees confidence in steady withdrawal rates. When it comes to investing and the 4% rule, it's important to keep a few things in mind. If you want to make the most of your investments over the long-term, you need to stick to your investment plan. Avoid overreacting to short-term market fluctuations, as this can negatively impact your retirement withdrawal rates later on. It's essential to consider your individual risk tolerance and portfolio construction, which can vary greatly between retirees. For many people, a 60/40 portfolio may be too aggressive, particularly in later life. Sequence of Return Risk Can Change The Value of Your Portfolio in Retirement Ultimately, investing is about more than just market events – it's also about our own behavior and approach to risk. Using simple rules of thumb for retirement savings may not fully account for the timing of bear and bull markets, which can significantly impact the value of your portfolio and withdrawals. For instance, withdrawing funds early in retirement when the market is down amounts to "selling low," leaving investors with fewer opportunities to benefit from future bull markets and compound interest. Download FREE: Get the Same Checklists We Use to Help Our Clients Retire [New for 2023] Conversely, withdrawing when the market is up ("selling high") enables your portfolio to maintain a higher value and compound faster, providing a safety net during inevitable downturns. As such, it’s important to tread carefully with any general retirement saving guidelines. Investors cannot pick their starting position in a bull or bear market. Instead, they must adapt to the cards they are dealt. Although the 4% rule is a decent starting point, it may not be enough to effectively manage spending and risks in retirement. To balance these factors, retirees should seek financial guidance and develop a plan that adapts to their changing needs and circumstances. It's essential to consider various factors when determining withdrawal rates, and having a sensitive financial plan is crucial for successful retirement planning. Withdrawal Rates and Life Expectancy Did you know that simple financial rules of thumb don't take into account increasing life expectancies? For example, a 40-year-old man today has a life expectancy of 79 years, while the 90th percentile could live beyond their 90s. For those who are 65, the average life expectancy for men and women is 83 and 86, respectively. However, the 90th percentile could live to 94 and 97. This difference of a decade or more can have a significant impact on investment portfolios and financial plans, emphasizing the need to prepare for a retirement that could last 20 to 40 years. Longevity risk is the possibility of living longer than anticipated, and it's a significant concern for most people. The risk is particularly harsh because it's worse to run out of money than to leave some behind for loved ones, charities, and others. Therefore, life expectancy is a critical factor in financial planning. Professional financial advice can help people manage their longevity risk, making it even more critical for everyone. Conclusion Although the 4% rule is a helpful tool for retirees, it does not provide a complete solution. To achieve financial security in today's volatile market, investors must adhere to a long-term investment strategy and financial plan. It is essential to stay focused and committed to your goals in order to overcome the obstacles presented by today's economic climate. Do you want a personalized plan for retirement to help make your money last? Contact us today for a free retirement assessment! Disclosures: 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.