It’s the second month of a new year, which means it’s time for everyone to make predictions about what’s in store over the next 10 months. Clearly, it’s impossible to predict the future. However, that doesn’t stop analysts and so-called experts from making their best guess.
 
As you can imagine, the economic predictions for 2020 are all over the map. Below is a sampling:

• An analyst on TheStreet.com predicted that there would be more volatility, but the major indexes would still be up approximately 5%.1
• An analyst on nasdaq.com predicted that the indexes would decline in 2020.2
• Goldman Sachs predicts that economic growth will accelerate in 2020 and that the risk of a recession will drop.3
• The Federal Reserve predicts the economy will grow in 2020, but at a slower rate than in 2019.4

 
That’s just a small selection of “expert” predictions. As you can see, they’re all over the map. What do you do with such conflicting information? How do you prepare for the future if you don’t know what the future will be?
 
The simple answer is you don’t. You can’t base your strategy or your decisions off short-term predictions because many of those predictions will prove to be incorrect. Of course, that doesn’t mean you shouldn’t plan either. It’s always wise to reassess your strategy and make changes as needed. Below are some tips on how to do that in 2020:

Focus on the long-term. 

It’s natural to feel anxious because of negative predictions or volatile financial news. However, it’s always important to remember that downturns are temporary.
 
There are two types of market downturns: a correction and a bear market. Corrections are downturns with losses of 10% or more. Bear markets are downturns with losses of 20% or more.
 
The average correction has a loss of 13% and lasts only 4 months. On average the market recovers from a correction after 4 months. Bear markets generally last longer and have steeper declines. They have an average loss of 30% and last for 13.2 months. However, the market usually does recover, and does so on average in about 22 months.5
 
We can’t predict when a bear market will begin or end. That also means we can’t predict when the recovery from a bear market will start. If you take impulsive action because there’s a prediction that the market may trend down, you could miss the bear market, but also the recovery. Or the prediction could be wrong, and you could miss out on continued growth. Instead, focus on the long-term and avoid emotional decisions based on short-term predictions.

Reduce your exposure to risk.

If you’re like many people nearing retirement, you’re not as comfortable with risk as you once were. Many people become more risk-averse as they approach retirement. After all, you don’t have as much time as you once did to recover from a market loss.
 
While no one can predict when a downturn may occur, you can take steps to make your strategy aligned with your more conservative risk tolerance. For example, you could shift your strategy to more conservative assets that have less exposure to risk and volatility. You could also utilize retirement income vehicles that offer growth potential without the chance of downside loss. A financial professional can help you identify strategies that can reduce your risk exposure.

Guarantee* your retirement income. 

Are you approaching retirement? If so, you could take steps today to protect your income from short-term volatility and market downturns. One way to do this is by creating guaranteed* income from your retirement savings. There is an insurance product available that you can use to convert a portion of your retirement savings into income that is guaranteed* for life, regardless of what happens in the market or how long you live.
 
Ready to develop your 2020 investing strategy? Let’s talk about it. Contact us today at Cornerstone Wealth Management. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
 
1https://www.thestreet.com/markets/2020-stock-market-predictions
2https://www.nasdaq.com/articles/5-bold-predictions-for-the-stock-market-in-2020-2019-12-09
3https://markets.businessinsider.com/news/stocks/goldman-sachs-us-economy-2020-predictions-growth-jobs-recession-risk-2019-11-1028724040#the-risk-of-a-recession-is-set-to-drop4
4https://www.cnbc.com/2019/09/18/fed-ups-its-gdp-forecast-for-2019-slightly-to-2point2percent.html
5https://www.cnbc.com/2018/12/24/whats-a-bear-market-and-how-long-do-they-usually-last-.html
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19537 - 2019/12/10

The government passed a year-end spending bill in December, and it included one piece of legislation that could have a big impact on retirees. It’s called the SECURE Act. The bill’s name is an acronym for Setting Every Community Up for Retirement Enhancement.
 
The legislation is aimed at helping Americans save more for retirement. While many of the changes will certainly be helpful, they may also require you to revisit your retirement strategy. The SECURE Act affects many different areas, from your 401(k) plan to your IRA to even how you take withdrawals in the later stages of retirement.

Below are some of the biggest changes in the SECURE Act:
 
Elimination of” Stretch” IRA 

The biggest change in the SECURE Act may not impact you but rather your IRA beneficiaries. The SECURE Act eliminates the ability to “stretch” an IRA, which was a strategy commonly used by non-spousal beneficiaries to reduce their tax burden and continue to grow the account.

Under a stretch IRA concept, your non-spousal beneficiary, like a grown child for example, could simply withdraw your RMDs on annual basis from the IRA after you pass away. Because they are taking the minimum amount from the IRA, they reduce their annual tax obligation. They also leave assets in the IRA to continue growing on a tax-deferred basis.
 
The stretch IRA is no longer an option, however. Under the SECURE Act, all non-spousal beneficiaries must take the full IRA balance within 10 years. The only exceptions are minor children and handicapped individuals. If you plan on leaving your IRA to someone other than a spouse, you may want to review their options.
 
RMD Age 

Most qualified accounts like IRAs and 401(k) plans have something called required minimum distributions, or RMDs. These are withdrawals that you are required to take each year once you hit a certain age.
 
Traditionally, RMDs have started at age 70½. However, the SECURE Act pushes the RMD start age back to 72. That means you’ll have eighteen additional months of tax-deferred growth in your 401(k) or IRA before you have to start taking taxable withdrawals.1

Traditional IRA Contributions 

RMDs aren’t the only reason why 70½ has historically been an important age. That’s also the age at which point you could no longer make contributions to a traditional IRA. Until now.
 
The SECURE Act eliminates the age limit on traditional IRA contributions. That means you can continue making contributions well past 70½. That could be especially helpful if you plan on working in retirement and want to continue to bolster your savings.1

401(k) Plans for Part-Time Employees and Small Businesses 

The SECURE Act has also made 401(k) plans more accessible for part-time employees and employees at small businesses. In the past, 401(k) plans were usually reserved for full-time employees. However, under the SECURE Act, companies are required to offer 401(k) eligibility to any employee who works 1,000 hours in one year or 500 hours in three consecutive years.1

It’s also been difficult for many small businesses to offer 401(k) plans. These plans often have high startup and administrative costs that can be burdensome for small businesses with a tight budget.
 
The SECURE Act aims to resolve that problem. The new law offers up to $5,000 in tax credits to offset 401(k) plan startup costs for small businesses. It also allows small businesses to pool together to offer 401(k) plans to their employees.

401(k) Plan Income Strategies 

The SECURE Act also focuses on how 401(k) plans can generate income for participants. Plans must now deliver “lifetime income disclosure statements” each year. This document will show you exactly how much income your plan could generate for life if you used the balance to purchase an annuity.
 
The law has also made it easier for 401(k) plan participants to access annuities with guaranteed lifetime income features. The SECURE Act eliminated some regulatory issues that had prevented annuities from being common strategy options in 401(k) plans. With those issues resolved, participants can now use their 401(k) funds to create guaranteed lifetime income through the use of an annuity.
 
What Should I Do? 

These are some of the biggest changes to retirement plans in decades and it would be wise to re-evaluate your retirement plan. By meeting with a financial professional, we can help you evaluate your current plan and how you may want to adjust based on these recent changes. There are certain things you may want to look at differently, including some sophisticated tax planning opportunities, that only a professional can truly help you understand.
 
Ready to review your retirement strategy to see how it is impacted by the SECURE Act? Let’s talk about it. Contact us at Cornerstone Wealth Management today so we can help you analyze your current plan and develop a winning strategy. Don’t wait, the sooner we can help you evaluate your needs, the sooner you can feel confident about the plan you have in place. Let’s connect soon and start the conversation!
 
1https://www.fidelity.com/learning-center/personal-finance/retirement/understanding-the-secure-act-and-retirement
 
Licensed Insurance Professional.  We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. 
19636 - 2020/1/13

It’s that time of year again. Time to buy gifts for spouses, children, and all the other friends and family who play a meaningful role in your life. Have you finished your Christmas shopping?
 
If you’re approaching retirement, you may want to give yourself a gift this year. No, not an expensive gadget or vacation. Rather, use this holiday season to give yourself the gift of a financially stable retirement.
 
The new year will be here before you know it. Take some time now to review your retirement strategy so you can take action and start 2020 on the right foot. Below are a few tips to get you started:
Increase your retirement contributions. 
Do you make retirement contributions to a 401(k), IRA, or another qualified retirement plan? These types of accounts are powerful retirement savings tools because of their tax-deferred status. You don’t pay taxes on growth as long as the funds stay inside the account. That may help your qualified savings compound at a faster rate than they would in a taxable account.
 
Consider increasing your contributions to your 401(k) or IRA in 2020. You can contribute up to $19,500 to a 401(k) in 2020. That number increases to $25,500 if you are age 50 or older. You can also contribute up to $6,000 to an IRA, or up to $7,000 if you are 50 or older.1
 
Of course, it may not possible for you to increase your contribution to the maximum level without busting your budget. Any increase in contributions is helpful. One effective strategy is to gradually increase your contributions over time. For example, you could set up your 401(k) contribution to increase 1% every year or even every six months.
Reduce your exposure to risk.If you’re like many people nearing retirement, you’re not as comfortable with risk as you once were. That’s natural. Many people become more risk-averse as they approach retirement. After all, you don’t have as much time as you once did to recover from a market loss.
 
There are a few steps you can take to reduce your exposure to risk. One is to review your allocation and risk tolerance and make sure they’re aligned. Your risk tolerance is your specific comfort level with market volatility. It’s based on your unique needs, goals, and time horizon.
 
As you get older, your risk tolerance may change, so it’s important that your strategy changes along with it. You could shift your strategy to more conservative assets that have less exposure to risk and volatility. You could also utilize financial vehicles that offer growth potential without the chance of downside loss. A financial professional can help you identify strategies that can reduce your risk exposure.
Guarantee* your retirement income. 
Are you approaching retirement? If so, this may be the time to start thinking about your retirement income. You’ll likely receive income from Social Security. Maybe you’ll even receive a defined benefit pension. However, you also may need to take distributions from your 401(k), IRA, or other retirement savings.
 
Often those withdrawals aren’t guaranteed. A market downturn could limit your ability to take retirement income. Or if you withdraw too much in the early years of retirement, you may not have assets left in the later years.
 
Fortunately, you minimize these risks by creating guaranteed* income from your retirement savings. There is a wide range of retirement vehicles available that you can use to convert a portion of your retirement savings into income that is guaranteed* for life, regardless of what happens in the market or how long you live.
 
Ready to give yourself the gift of financial stability? Let’s talk about it. Contact us today at Cornerstone Wealth Management. We can help you implement a strategy. Let’s connect soon and start the conversation.
 
1https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19500-for-2020-catch-up-limit-rises-to-6500
 
*Guarantees provided by annuities, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19524 - 2019/12/3

Another year is in the books. It’s almost time to turn the calendar to 2020. For many investors, this is the time to look back on the past year and make adjustments for the upcoming year.
 
The performance of your portfolio in 2019 depends on your allocation and your specific investments. However, generally speaking, investors enjoyed positive returns in 2019. Through November 22, the top market indexes had the following returns:
 
S&P 500: 24.60%1
DJIA: 19.88%2
NASDAQ: 29.41%3
 
Those positive returns haven’t come without a few bumps in the road though. The markets experienced a few sharp downturns in 2019, especially through the summer. Issues like the trade war between the United States and China have created uncertainty among some investors. 4 However, other developments, like interest rate cuts and strong corporate earnings, have helped extend the longest bull market in history.4
 
What’s in store for 2020? When it comes to investing, it’s impossible to predict the future, especially in the short-term. However, if you are concerned about market volatility, there are steps you can take to minimize your exposure to risk. Below are a few action items to consider as we head into the new year:

Review your risk tolerance. 

Is your allocation aligned with your risk tolerance? If you’re like many investors, you may not actually know what your risk tolerance is. Risk tolerance is your specific ability to withstand volatility in your investments. Risk tolerance is unique for each person and is based on a wide range of factors, including your time horizon, your comfort level with risk, and your financial goals and needs.
 
Risk tolerance also changes over time. If you’re approaching retirement, you may not have the same tolerance you had when you were younger. Often, people who have decades until retirement have significantly more tolerance for risk because they have more time to recover from a loss. If you’re a few years away from retirement, you may be much more sensitive to a market downturn.
 
Now is a good time to review your risk tolerance and make sure your allocation is appropriate. A financial professional can use a variety of tools and methods to accurately gauge your tolerance for risk. He or she can then recommend specific allocation changes that may be more appropriate than your current investment approach.

Use risk protection tools. 

Changing your allocation is one way to reduce your potential risk levels. It’s not the only option though. You could also incorporate into your strategy retirement vehicles like fixed indexed annuities that reduce or eliminate market risk.
 
For example, there are a wide range of vehicles that allow for growth and interest accumulation based on market index returns, but without exposure to downside risk. You could use this option to eliminate risk on a portion of your allocation, thus reducing your overall risk and volatility exposure.
 
 
Ready to develop your 2020 investing strategy? Let’s talk about it. Contact us today at Cornerstone Wealth Management. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.marketwatch.com/investing/index/spx
2https://www.marketwatch.com/investing/index/djia
3https://www.marketwatch.com/investing/index/comp
4https://www.cnbc.com/2019/12/02/in-2019-almost-every-investment-worked.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19523 - 2019/12/3

What are you thankful for this holiday season? Family and friends? A few days off work? Perhaps your health? Good fortune in your career? You may have many blessings for which you’re thankful.
 
Many of our blessings and fortunate circumstances are determined by choices we made earlier in life. Your good health may be a result of your healthy lifestyle. Your financial stability is likely a result of your career choices and your savings habits.
 
What decisions can you make today that you will be thankful for in the future? Below are three actions your retired self may appreciate. If you’re approaching retirement and haven’t taken these steps, now may be the time to do so.

Adjust your allocation and minimize risk. 

Are you feeling less comfortable with market volatility as you approach retirement? That’s normal. Most people become more risk-averse as they get older. When you’re young, you have a long time horizon. You have plenty of time to recover from a loss in the market, so you can afford to take some risk.
 
However, as you get closer to retirement, your time horizon shortens. You don’t have as much time to recover from a loss, so a market downturn may cause more anxiety and stress than it did in the past.
 
This may be a good time to review your overall allocation and possibly adjust to a more conservative strategy. Look for ways to pursue growth without exposure to high levels of risk. In addition to adjusting your allocation, you may want to explore retirement vehicles that offer growth potential without market risk. Your risk tolerance changes over time, so your allocation should change as well.

Maximizing tax-deferred savings. 

If you’re like most Americans, you probably use some kind of tax-deferred vehicle to save for retirement. Accounts like IRAs and 401(k) plans are tax-deferred. You contribute money and then allocate your funds according to your goals.
 
In a tax-deferred account, you don’t pay taxes on your growth as long as the funds stay inside the account. Depending on which account you’re using, you may pay taxes on distributions in the future. However, the deferral of taxes inside the account may help your assets compound at a faster rate than they would in a comparable taxable account.
 
In 2019, you can contribute up to $19,000 to a 401(k), plus another $6,000 if you are age 50 or old. You can also contribute up to $6,000 to an IRA, with an additional $1,000 if you are 50 or older.1 Look for ways to trim your budget so you can put more money in your retirement accounts. Your future self will thank you.

Work with a professional. 

Have you resisted using a financial professional for retirement income advice? Now may be the time to change your thinking, especially if you’re nearing retirement. A financial professional can help you adjust your allocations, plan your retirement income, develop a savings strategy, and even implement a personalized plan so you stay on track to hit your retirement goals. If you haven’t consulted with a financial professional about your retirement, now may be the right time to do so.
 
Ready to nail down your retirement strategy and make decisions you’ll be thankful for in the future? Let’s talk about it. Contact us today at Cornerstone Wealth Management. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
 
1https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000
 
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research, a Registered Investment Adviser. Cornerstone Wealth Management Group and Cambridge are not affiliated.
 
Diversification and asset allocation strategies do not assure profit or protect against loss. Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
19446 - 2019/10/30

Volatility and risk. When it comes to investing, those two terms mean the same thing, right? Not exactly. While volatility and risk can both refer to market downturns, they don’t have the exact same meaning. Understanding the difference between volatility and risk can help you make more informed investment decisions and implement the right long-term strategy for your needs and goals.

What is volatility? 

Volatility is a statistical measure of the dispersion of returns for a given security or market index.1 In simpler terms, it’s range of returns that could be expected for a stock, bond, mutual fund, or other investment.
 
Volatility is often measured by something called standard deviation, which is the variance of returns for a specific investment. For instance, assume a stock has a historical average return of 8% annually with a standard deviation of 10. The average return is 8%, but you could expect returns in any given year as low as 10% below the average or 10% above the average. So the annual returns will usually fall somewhere between -2% and 18%.
 
Now consider a stock that has an average annual return of 6% with a standard deviation of 4. In this example, the annual returns will usually fall somewhere between 2% and 10%. Clearly, this stock is less volatile than the previous example.
 
Volatility refers to the potential downside, but it also refers to the potential upside as well. Volatility is a natural part of investing. Securities increase in value some days and decrease other days. It’s difficult to avoid volatility, but you can manage it by knowing your own comfort level and choosing investments that align with your tolerance.

What is risk? 

Risk is different than volatility in that risk refers specifically to loss. It’s generally the possibility of loss. There are a few measurements that can be used to estimate your investment risk, like standard deviation, but there isn’t one objective way to measure your level of risk exposure.
 
Instead, the best way to measure and manage risk is often through careful, regular analysis. Your tolerance for risk is unique and subjective. The amount of risk that is too much for you may be perfectly fine for another individual. Only you can truly know what level of risk is appropriate for your strategy.
 
However, a financial professional can help you determine your risk tolerance and analyze your current exposure to market risk. It’s possible that a more conservative allocation could be appropriate. Or you might benefit from financial vehicles that don’t have any market risk exposure. Since risk is such a subjective term, it often takes regular monitoring, review, and adjustment to find the right strategy.
 
Are you ready to minimize the risk and volatility in your investment strategy? Let’s talk about it. Contact us today at Cornerstone Wealth Management. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.investopedia.com/terms/v/volatility.asp
 
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research, a Registered Investment Adviser. Cornerstone Wealth Management Group and Cambridge are not affiliated.
 
Examples are hypothetical and for illustrative purposes only. The rates of return do not represent any actual investment and cannot be guaranteed. Any investment involves potential loss of principal.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19441 - 2019/10/30

It’s hard to believe the year is almost over, but October is already upon us. Soon the holidays will be here and then we will flip the calendar to 2020.
 
These last few months are also your last opportunity to make important financial decisions before the end of the year. It’s a great time to review your strategy and make adjustments as you head into 2020.
 
Below are a few items to include on your end-of-year planning checklist:

Review your tax strategy. 

The deadline for filing your 2019 taxes may be in April 2020, but that doesn’t mean you can’t get started on your planning today. In fact, by starting your planning now, you can take advantage of deductions and other opportunities.
 
For example, there may be deductions that you haven’t fully used. You could make a contribution to your favorite charity before the end of the year to take advantage of the charitable deduction. You could make contributions to tax-deductible retirement accounts, like an IRA. Do you have any outstanding medical bills? You may be able to deduct those costs if you pay them before the end of the year.
 
Also, consider whether you can defer income until next year. Perhaps you’re due a sizable bonus or other compensation. Perhaps you could defer that income until after January 1 so it’s not included in your 2019 return. If you’re considering selling appreciated assets, like stocks, you may want to wait until after the beginning of the year to delay the capital gains. A financial and tax professional can help you identify these opportunities and make informed decisions.

Increase your contributions. 

Will you maximize your contributions to your 401(k) and IRA this year? If not, you still have time to do so. In 2019, you can contribute up to $19,000 to a 401(k), or up to $25,000 if you are age 50 or older. You can contribute up to $6,000 to an IRA, or up $7,000 if you are 50 or older.1
 
This also may be a good time to consider your contributions for 2020. The IRS has not yet announced the 2020 contribution limits. However, increasing your contribution rate could help you accumulate more assets. Even a moderate increase of a percentage point could compound to significant savings over time. Think about increasing your retirement savings as you head into 2020.

Check your benefits. 

The fall is usually open enrollment season for many employers. This is a good time to review your health coverage and other benefits to see if they still fit your needs. If you’re nearing retirement and have access to an HSA through your employer, you may want to consider making contributions. An HSA can be a tax-efficient funding source for healthcare costs and you can take the assets with you into retirement.

Adjust your allocation. 

Finally, this may be the right time to review your allocation. Your needs and risk tolerance could change over time. It’s common for people to become more risk-averse as they approach retirement. It’s important that your allocation changes along with your tolerance for risk.
 
A fixed indexed annuity (FIA) could help you take some of the risk out of your strategy. FIAs offer the potential to earn interest based on the performance of a market index. If the index performs well over a certain time period, you may earn more interest, up to a limit. However, if it performs poorly, you could earn zero interest; however you don’t lose money due to market declines.
 
Ready to start on your fourth-quarter financial checklist? Contact us at Cornerstone Wealth Management. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation
 
1https://www.irs.gov/newsroom/401k-contribution-limit-increases-to-19000-for-2019-ira-limit-increases-to-6000
 
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research, a Registered Investment Adviser. Cornerstone Wealth Management Group and Cambridge are not affiliated
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.19305 - 20

It’s that time of year again. Halloween is here. It’s time to stock up on candy, carve your pumpkin, and find the perfect costume. Soon, scary movies will be on television and you’ll have little ghouls and goblins showing up at your door for trick-or-treating.
 
This may be the scariest time of the year, but it only lasts a month. The truth is there could be gaps in your retirement strategy that could come back to haunt you for years or even decades. Below are a few common retirement planning mistakes that can have frightening long-term consequences. If any of these sounds familiar, it may be time to meet with a financial professional.

Having the wrong allocation. 

Asset allocation is an important part of any retirement strategy. Your allocation influences your risk exposure and your potential return. Generally, risk and return go hand-in-hand. Assets that offer greater potential return usually also have higher levels of risk. You can use asset allocation to find the right mix of assets for your retirement income goals and risk tolerance.
 
Having the wrong allocation can be problematic. For example, many people have less tolerance for risk as they approach retirement. As you get closer to retirement, you have less time to recover from a loss and thus less tolerance for risk. However, if you don’t adjust your allocation, you could have more risk exposure than is appropriate. A downturn could substantially impact the amount of income you have set aside for retirement.
 
One way to protect your assets and reduce your risk exposure is to use a fixed indexed annuity (FIA) for part of your allocation. FIAs offer potential interest that is tied to the performance of an external market index, like the S&P 500. If the market performs well, you may earn more interest, up to a maximum amount set by the insurance company.
 
However, if the index performs poorly over a given period, you won’t lose any premium. Most FIAs have a principal guarantee* which means you won’t lose money due to market loss. You may earn zero interest, but your  contract value won’t go down.

Not guaranteeing* your income. 

Income is the name of the game in retirement. One key to a successful retirement is having income that meets or exceeds your expenses. However, much of your income may be unpredictable. While Social Security income is guaranteed, your income from your personal savings may not be. It can be difficult to plan your retirement when you don’t know how much income you will have or how long it needs to last.
 
Again, an FIA can help you manage this risk. Many FIAs offer optional benefits called guaranteed* withdrawal riders. With these features, you’re allowed to withdraw a certain amount each year. As long as you stay within the allowed withdrawal amount, the income is guaranteed* for life, no matter how long you live or what happens in the financial markets. This predictable income can help you make more informed financial decisions and live comfortably in retirement.

Not working with a financial professional. 

Are you more of the DIY type? That’s an understandable approach, but it could also create some frightening risks. For instance, you may not see potential risks, like gaps in your asset allocation. Or you may not fully estimate your income need for a long retirement.
 
A financial professional can use their knowledge, experience, and resources to develop a customized strategy for you. They can identify gaps in your plan and recommend appropriate strategies, such as FIAs or other financial vehicles. Sometimes an outside opinion can help you identify risks that you didn’t see yourself.
 
Ready to take the terror out of your retirement strategy? Let’s talk about it. Contact us at Cornerstone Wealth Management. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer, member FINRA/SIPC. Advisory services offered through Cambridge Investment Research, a Registered Investment Adviser. Cornerstone Wealth Management Group and Cambridge are not affiliated.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19301 - 2019/9/24

Are you preparing to retire? If so, this is probably an exciting time. You’ve worked and saved your entire career to get to this point. Very soon, you’ll be able to spend your time as you wish, without the constraints of career and work.
 
While retirement is a major accomplishment and an important milestone, it’s not always a joyous occasion. Some retirees struggle to make the transition. In fact, a recent study in the Journal of Population Ageing found that retirees are twice as likely to experience symptoms of depression than those who are still working. ¹
 
What could be depressing about not working anymore? Everyone’s situation is unique, so there aren’t universal answers to that question. However, there are a few common challenges that many retirees face, especially in their first year of retirement. You can make the transition easier by planning ahead. Below are a few issues you may want to consider as you finalize your retirement strategy:

Lack of Purpose 

If you’re like many people, you’ve worked in some form or another for several decades. In fact, you’ve probably spent more of your adult life working than with any other activity. Even before you started your career, much of your time was probably focused on school or extracurricular activities.
 
For many, retirement marks the first time in their life where there isn’t a primary mandatory activity. You don’t have to wake up at a certain time to be at work. There aren't any tasks to complete or meetings to attend. Your time is yours to manage as you please.
 
While the freedom of retirement might be appealing, you may feel like you don’t have any purpose. You may want to think about how you will spend your time in retirement. What is important to you? What does your ideal day look like? Do you want to travel? Or perhaps learn a new hobby? Think about what your purpose will be and what activities will make you happy.

Loneliness 

For many adults, work isn’t just a source of income. It’s also their primary place to socialize with other adults. Think of your network of associates and friends. How many of those relationships were formed during work-related activities?
 
Once you retire, you won’t have an office or workplace to go to. That means you may not have a natural opportunity to socialize with others. Think about ways in which you can get out of the house and interact with other adults. For example, you could join a golf league, or a club related to a favorite hobby. You could volunteer for a local charity. Some retirees even take low-pressure part-time jobs just so they can spend time around other people.

Overspending 

Once you retire, you’ll have more free time available than you’ve likely ever had in your life. You also may have more money available than you’ve ever had, between your retirement assets, defined benefit pension income, and Social Security.
 
Many retirees fill their free time with costly activities, like travel, shopping, and dining out. It’s natural to want to enjoy your retirement. However, be careful not to overspend during the early years of retirement. You could put yourself in a difficult financial situation in the later years. A financial professional can help you develop a budget and implement an income strategy.
 
Ready to plan your upcoming retirement? Let’s talk about it. Contact us today at Cornerstone Wealth Management. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1 | https://www.usatoday.com/story/money/2019/06/11/depression-during-retirement-how-cope-and-prepare/1416091001/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19149 - 2019/8/19

Fall is here. Ok, it’s not actually official until September 22. However, the unofficial start of fall arrived in late August. Starbucks added pumpkin spice drinks to their menu. For many, that’s a surefire sign that cooler weather, football, and fall bonfires are right around the corner.
 
While fall may be a favorite time of year for many people, it hasn’t historically been a great season for investors. In fact, September is historically the worst month for stock market returns. Going back to 1950, the Dow Jones Industrial Average (DJIA) has a -0.8% average return in September while the S&P 500 has a -0.5% average return.1 Those averages are worse than the average return for any other month.
 
September isn’t down every year, but it happens frequently enough that the phenomenon has generated a nickname - the September Effect. What’s the cause of the September Effect? And how can you prepare? Below are some tips and guidance to help you plan.

Why does the September Effect happen? 

There’s no clear answer why the September Effect happens. Or even if it’s a real phenomenon at all. Some people think it’s related to tax planning. People sell down positions before the fourth quarter in order to harvest potential tax losses. The widespread selling causes a downturn in the market.
 
Others suspect that the phenomenon is related to the end of summer. People think about their portfolio and investments over the summer, but don’t take action because they’re busy with vacations and other activities. After summer is over, they sell positions and make adjustments and, again, the widespread selling causes a slight downturn.
 
Of course, there’s also the possibility that there is no actual cause. It’s possible that the phenomenon is completely coincidental. It doesn’t happen every year. In fact, over the past 25 years, the median return in September for the S&P 500 has been positive.1 It’s possible that there is no actual September effect and the historical returns are a matter of circumstance.

How do you prepare for the September effect? 

you may be curious about how you should prepare for the September effect, or if you should at all. The short answer is that it usually isn’t wise to plan your retirement strategy based on short-term expectations.

While September may have a history of being negative, that doesn’t mean it always is. Also, it’s incredibly difficult to predict the market’s movement in the short-term, if not impossible. You could make changes to your strategy in expectation of a downturn and the market could do the exact opposite.
 
Instead, focus on your long-term strategy. Your retirement planning approach should be based on your unique goals, needs, and risks. That strategy shouldn’t change just because one month may have poor returns.
 
If you don’t have a long-term retirement strategy, now may be the time to develop one. Let’s talk about it. Contact us at Cornerstone Wealth Management. We can help you analyze your needs and implement a strategy. We can help you analyze your goals and possible risks and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.investopedia.com/ask/answers/06/septworstmonth.asp
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
19184 - 2019/8/23