X

Archive for financial management

Purpose, Priorities & Return on Life

Purpose, Priorities and Return on Life
by our very own Mark Olson

Throughout our flawed and complex world, there is a consistent downward drift away from the elements in our lives that matter most. Slowly, over time our best intentions often become distorted by a wide range of influences that include the urgent, our culture and our own predispositions.  Most of us yearn for excellence, alignment and fulfilment but often find ourselves being complacent, confused and frustrated because we fall short of all we can be.

One dominant illusion created by our world of finance is that we will be fulfilled and content if we maximize our income, portfolio returns and net worth.  While industries spend massive amounts of time, money and energy promoting those outcomes, deep in our hearts we know those portrayals just aren’t true. 

I’m hopeful the following two recommendations will spur you on as you fight against the downward forces in your circumstances and maximize the return on your life . While both may be simple and familiar, they represent missing links in most of our lives.

Clarify your purpose

Author Rick Warren has highlighted that “personal fulfilment, satisfaction and meaning can only be found when we realize that it’s not about us and we discover our purpose by figuring out what on earth we are here for.”  

Helping people find hope after loss, loving God and loving others, or teaching and inspiring students to be more than they thought they could be, are some examples of a compelling purpose.   

Determine what life priorities matter most to you

It’s amazing how even the most intelligent and gifted individuals often go through life without slowing down long enough to define the life priorities that matter the most to them.  They are not alone as mathematician and theologian Blaise Pascal stated, “The last thing one knows is what to put first.”

Honoring God, leading your family and caring for others are examples of meaningful life priorities.

When life priorities that matter most are defined, they provide guidance at every fork in the road, which increases the probability that what matters most is accomplished.  Without those priorities in place, critical decisions are often based upon urgent, shifting, less important factors which can lead to regrets about “what might have been.”  

Commit to clarifying your purpose and determining what life priorities matter most. If you do, it will direct your actions, counter the downward drift and maximize the return on your life.

TIPS FOR HOMEOWNERS TO SAVE THIS SUMMER

The tail end of winter in 2019 was among the coldest in recent history, bringing temperatures not seen in most locations for over 20 years and even setting some record lows. With the “polar vortex” now well in the rearview, consumers are gearing up for the summer season to kick off. This is an opportune time for many homeowners to tackle different remodeling projects around the house. Before the season officially begins on June 21, here are some tips for saving on these new additions.

Use longer light hours for landscaping needs

Graduation parties, barbecues, and holidays add up to a higher likelihood of hosting family and friends in the summer months. Early summer is a great time to get a head start on landscaping projects that will bring your yard to life. Although retail sales may be tough to find, opting to complete yard work on your own can bring sizable savings compared to hiring a landscaping company.

According to improvenet.com, the median cost for yard maintenance services in the U.S. is $226 per month but can cost up to $700 per month on the top end.

Exterior painting on a budget

With college students home for the summer, homeowners may look to student-run painting services for exterior paint jobs. While the quality might not reach the level of expensive professionals, serious savings can be had for a decent paint job.

Homeadvisor.com reports that the average homeowner spends between $1,714 and $3,682 to paint their house. Student-run services will often be in the lower price range and able to beat other professional quotes.

Rack up savings on an early-summer roof replacement

According to Angie’s List, late summer and early fall are the busiest times of the year for roofing contractors, giving homeowners an opportunity to rack up savings by scheduling their project for early summer. Unpredictable spring weather in the previous months makes June an ideal time to contact a roofing company and get the project underway.

Expect to pay between $3 and $7 per square foot, with the average total cost ranging from $4,900 to $14,100.

Save by strengthening home security

Though many summer projects can include a great deal of labor, one way to save without breaking a sweat is installing a home security system. The cost of installation can vary, with a DIY project ranging from $50 to $300, while a professional system can range $300 to $1,500.

Savings then come via reductions in your home insurance rates, with some insurance providers offering reductions of up to 25 percent for those with installed security systems. Before moving forward and counting on these savings, check with your current insurance provider on the discount offered and if only specific systems qualify.

Hot deals on cold weather needs

Products that are intended for winter use can have substantial savings in the summer months. One of the best areas for savings is in furnace inspections and replacement. By scheduling a furnace inspection in the summer, you will ensure that everything is running properly and may be able to score a discount on the inspection cost with lower seasonal demand for technicians. 

In the event that a replacement is needed, many installation companies will have unsold inventory from the previous winter available at a fraction of the price. According to Angie’s List, inspections cost as little as $60 to $85 while a new replacement gas furnace ranges from $2,250 to $3,800.

Also, look to score a deal on a snowblower in the coming months. While most consumers are shopping at the local power equipment store for lawn mowers and weedwhackers, you can often pick up last year’s models on sale. Already in recent weeks, both Home Depot and Walmart have run sales of 30 percent off or more and expect these discounts to pop up throughout the summer.

BY THE NUMBERS

Spending During Retirement
Planning for retirement can be stressful, with a number of unpredictable costs in the mix. In fact, a 2018 survey from TD Ameritrade found that 3 out of 5 Americans do not know how much they will need to save to fund their lifestyles beyond age 65.

While spending during retirement can vary widely depending on health and location factors, it is important to project what your costs may be during retirement sooner rather than later. Consider this breakdown of average monthly spending by retirement-age U.S. households from the Bureau of Labor Statistics a good place to start.

Housing: $1,322

Largely dependent on your location, housing costs can make up the largest portion of your spending during retirement. Even if your mortgage is paid off, do not underestimate costs in taxes, insurance, utilities, and repairs.

Transportation: $567

An area that has shown to be cheaper during retirement, transportation costs will remain 
a factor with car payments, gas, insurance, and travel.

Health care: $499

By far the category which will vary the widest, health care costs are shown to increase as you age. When projecting your medical expenses, take into consideration Medicare and your employer’s offerings.

Food: $483

Similar to transportation, food costs decrease on average with age. Still, it remains a top expense during retirement and can fluctuate by location.

Entertainment: $197

Though a primarily controllable category, retirees can often underestimate their expenses for entertainment.

Financial & Estate Planning

By our own Scott Blakemore
for Jackson Magazine

What is your dream sports car? Corvette, Mustang, Porche, Ferrari?

Now, imagine you own it and decide to give it to your son or daughter … but they don’t know how to drive … because you never taught them. You just hand them the keys and say, “Good Luck!”  

I think we can agree this strategy is a little crazy and unwise.  However, when you and your spouse are deceased, and your heirs inherit your estate without understanding how it was managed and for what purpose – it is the equivalent of handing a sportscar to an untrained driver.    

I speak with clients daily about retirement cash flows, portfolio allocations, distribution timing, and taxes.  And while those things need to be understood and managed for a successful retirement, planning for the transition of an estate is equally crucial – especially if you’re concerned your heirs may not be ready to manage it or worse, you fear it might destroy them.

I know talking about death can be uncomfortable, and kids rarely want to discuss a future where their parents are gone.  But that day will come whether we like it or not. Talking about death with your children is like talking about sex – always a bit awkward, but the earlier the better.

So how do you prepare to talk to your children about your estate?  Here are several simple ideas to get the conversation started and a few that dig a little deeper.

First, the easier items to implement:

  • Talk about your funeral.  Write down your wishes and share them with your family.
  • Keep your bank, investment account(s) and insurance beneficiaries up to date.
  • Introduce your family to your Financial Advisor, CPA and/or Attorney.
  • Use Estate planning tools.  Let the family know if you have a Will or Trust as well as Durable and Health Care Power of Attorney (POA) documents.  Make sure your designated representative is willing to serve, understands your wishes, and knows where your documents are located.

Second, the more involved items to consider:

  • Have an annual family meeting to discuss any changes you have made to your financial or estate plan.  Be sure to allow time for questions.
  • Bring heirs into the conversation with organizations where you volunteer or provide financial support.
  • Create a family foundation or donor advised fund to give together during your lifetime. This is a great teaching tool.  

These items will obviously require some work.  However, with your heirs being part of the discussion, and doing the work alongside you, you can be confident they not only hear and see your values but participate in them as well.  They will experience the legacy you are trying to create while learning valuable lessons about managing the resources that will one day be under their stewardship.  

Remember, learning to drive isn’t accomplished through watching a YouTube video, and neither should learning how to manage an inheritance. I encourage you to work through the fear and discomfort and invite your children into the conversation to create a legacy impacting them and our world for good.  

 

 

Retirement Planning for Small Businesses

By our own Caitllin Koppelman
for Jackson Magazine

Planning for retirement as a small business owner is important for you and your employees. Small businesses have unique needs. Thankfully, you have various options when it comes to retirement plans and a little bit of exploration can help you find a solution that best fits the needs of you and your employees. 

Some of your retirement plan options include:  

  • SEP IRAs
  • SIMPLE IRAs
  • Traditional or Safe Harbor 401(k)s
  • Profit-sharing plans

Simplified Employee Pension (SEP) IRA is funded by employer contributions. Benefits for all employees must be uniform (ie: the same percentage of compensation). Contributions are limited to the lesser of either 25% of the employee’s compensation or $55,000 per year. SEP IRAs allow you a relatively low-maintenance way to contribute to your employees’ retirement, and contributions are deductible by the employer for income tax purposes. 

Savings Incentive Match Plan for Employees (SIMPLE) IRA allows for both employer and employee contributions. Employee contributions are limited to $12,500 per year, and employers have to either match up to 3% of employee contributions or contribute 2% of the employee’s salary. 

Like a SIMPLE IRA, 401(k) Plans allow employees to save money in a tax-deferred account for retirement. Traditional 401k plans hold “pre-tax” money, so the money will be taxed when it’s withdrawn from the account for retirement expenses. 401k plans can be set up to allow Roth (or “after-tax”) contributions as well. Employees can contribute a regular amount into the account, straight out of their paycheck. 401k contribution limits are significantly higher than Traditional IRA limits. An employee could defer $18,500 for 2018, plus an additional $6000 if he/she is age 50 or over. Employers can choose to match funds contributed by employees. Keep in mind that 401k plans require a bit more administrative work and legal documentation. A Safe Harbor 401k plan mandates employer contributions. 

Profit-sharing Plan gives employees a portion of company profits. Employers have a great deal of latitude when it comes to contributions: employers can give as much as they want (up to the annual contribution limit, which is the lesser of $55,000 per year or 100% of the employee’s compensation) or none at all, depending on the year’s profits. Contributions do have to be distributed proportionately to the employees. The administration of a profit-sharing plan can be burdensome for some employers, depending on the number of participants in the plan. 

There are two major things to consider when selecting a plan: contributions and administration. If you’re considering starting a plan for yourself and your employees, you should discuss your options in detail with your GuideStream financial advisor and your CPA.  

 

*information adapted from an article written by Advicent Solutions, an entity unrelated to GuideStream Financial. 

Planning Your Estate

by Scott Blakemore
for Jackson Magazine

What is your dream sportscar? Corvette, Mustang, Porsche, Ferrari, Lamborghini, Bugatti, McLaren? Now, imagine you own it and decide to give it to your son or daughter … but they don’t know how to drive … because you never taught them. You just hand them the keys and say, “Good Luck!”  

I think we can agree this strategy is a little crazy and unwise.  However, when you and your spouse are deceased, and your heirs inherit your estate without understanding how it was managed and for what purpose – it is the equivalent of handing a sportscar to an untrained driver.    

I speak with clients daily about retirement cash flows, portfolio allocations, distribution timing, and taxes.  And while those things need to be understood and managed for a successful retirement, planning for the transition of an estate is equally crucial – especially if you’re concerned your heirs may not be ready to manage it or worse, you fear it might destroy them.

I know talking about death can be uncomfortable, and kids rarely want to discuss a future where their parents are gone.  But that day will come whether we like it or not. Talking about death with your children is like talking about sex – always a bit awkward, but the earlier the better.

So how do you prepare to talk to your children about your estate?  Here are several simple ideas to get the conversation started and a few that dig a little deeper.

First, the easier items to implement:

  • Talk about your funeral.  Write down your wishes and share them with your family.
  • Keep your bank, investment account(s) and insurance beneficiaries up to date.
  • Introduce your family to your Financial Advisor, CPA and/or Attorney.
  • Use Estate planning tools.  Let the family know if you have a Will or Trust as well as Durable and Health Care Power of Attorney (POA) documents.  Make sure your designated representative is willing to serve, understands your wishes, and knows where your documents are located.

Second, the more involved items to consider:

  • Have an annual family meeting to discuss any changes you have made to your financial or estate plan.  Be sure to allow time for questions.
  • Bring heirs into the conversation with organizations where you volunteer or provide financial support.
  • Create a family foundation or donor advised fund to give together during your lifetime. This is a great teaching tool.  

These items will obviously require some work.  However, with your heirs being part of the discussion, and doing the work alongside you, you can be confident they not only hear and see your values but participate in them as well.  They will experience the legacy you are trying to create while learning valuable lessons about managing the resources that will one day be under their stewardship.  

Remember, learning to drive isn’t accomplished through watching a YouTube video, and neither should learning how to manage an inheritance. I encourage you to work through the fear and discomfort and invite your children into the conversation to create a legacy impacting them and our world for good.  

 

 

Life Insurance: Term, Whole & Universal

Buying life insurance is a way for an individual to protect their dependents from unpaid liabilities and uncovered expenses in the event of their own death. The benefits of a life insurance policy can be unclear and may lead to challenges when trying to determine which policy is the best for different situations. In this article, we will examine each of the types of life insurance, what they cover, and when individuals typically use them.

Term vs. Permanent
All life insurance falls under one of two categories: term and permanent. Term life insurance only covers a pre-set amount of time, whereas permanent life insurance can cover the duration of the insured’s life. 

Term Life Insurance
Term life insurance is a policy that lasts for a relatively short period of time—usually 10-20 years—and comes with a death benefit.  Once the term ends, policies can typically be renewed, though usually at a higher cost (because the policyholder is older and inherently comes with higher health risks). Applicants usually need to pass a medical examination to qualify for term life insurance.

Term life insurance is typically the most affordable type of life insurance because it has a limited duration and no cash value that can be accessed. If the policyholder dies within the term, then beneficiaries will get a payment that they can use to cover lost income or to protect themselves from liabilities, such as a mortgage or outstanding personal debt. While this makes term life policies an efficient way to mitigate the biggest financial problems caused by early death, their temporary nature prevents them from being used in most long-term estate plans. 

Whole Life Insurance
Whole life insurance is a type of permanent life insurance that guarantees a death benefit for the duration of the policyholder’s lifetime, provided that all premium payments are made. Due to the lifelong coverage period, this policy is better equipped for estate planning and charitable giving strategies than term life insurance. While most whole life policies feature fixed premiums that will not increase over time, their premiums are much higher than those for term life. This is because whole life insurance both provides a death benefit and accumulates a useable cash value. 

A whole life policy’s cash value can be used to produce dividends for its policyholder (typically at a predetermined rate) or can be borrowed against if the policyholder is in financial need. It is important to note that insurers put restrictions on borrowing against a policy and that any withdrawals will decrease the policy’s cash value.

Universal Life Insurance
Universal life insurance is another type of permanent life insurance that typically acts as a more flexible version of whole life. You are able to choose the length of guaranteed protection and the schedule for premium payments in advance. Both are guaranteed to remain unchanged (unless you choose to change them) so long as the premiums are paid on time and in full. As with whole life insurance, universal life provides both coverage and a cash value, so its premiums will tend to be higher than those for term life. However, universal life insurance policies typically offer more control over their cash value than whole life policies. Universal life insurance policyholders can increase their premiums to boost the policy’s cash value or can use their accumulated value to cover premium payments. To qualify for most universal life insurance plans, individuals must pass a medical exam. 

Variable Life Insurance
Variable life insurance, which is a variation of either whole or universal life insurance, permanently offers a death benefit to a beneficiary in the event of the policyholder’s death. However, variable life insurance offers the ability to change premiums to adjust the amount of coverage. Like other forms of permanent life insurance, variable universal life insurance takes a portion of the premiums and invests them in a tax-deferred account. The investments are allocated in mutual-fund-type accounts and are therefore subject to market volatility, which will likely affect the total cash value of the account.

Insurance can be an important part of a comprehensive financial plan. However, different individuals have varying needs, and no single policy will be most appropriate for everyone. Ask your trusted advisor at GuideStream Financial how a life insurance policy can best be integrated into your financial planning.  

Cost & Timing of Home Remodeling

As with many large purchases, timing matters when remodeling a home. Each season holds advantages for different types of projects based on price and availability.  Consider these tips to take advantage of potential savings:

Fall: Pools, kitchens, and appliances
Though pools and summer are tightly linked, waiting until fall for installation can bring worthwhile savings. With the average cost of installing an in-ground pool at $49,224, those savings may be worth the wait.

Kitchen remodeling is among the most popular renovation projects and can be done at any time of the year. Scheduling this project for the fall capitalizes on a slower season for contractors, which can result in lower labor prices. Also, in terms of convenience, tearing apart the kitchen might be easier once children are back in school. While some kitchen renovations can fall in the $10,000 to $15,000 range, expect closer to the average of $22,530.

Fall can also be an ideal time for purchasing new appliances. In preparation for the holiday shopping season, most manufacturers will introduce their new models in the fall, resulting in sales on previous models. 

Winter: Decks, bathrooms, and air conditioning
Ideally, you’ll want a new deck ready to go once the weather warms up but winter is actually the best time to schedule the preliminary planning and design process. This is a dead season for deck contractors and allows your project to be their top priority once the ground softens in the spring. While the cost of building a new deck varies with size, expect anywhere from $2,000 to $7,000.

Competing with the kitchen for the most popular home renovation is the bathroom. Again, indoor work such as this can be completed at any time of the year, but lower rates are more likely during contractors’ slow winters. This should make it easier to schedule the contractor and may lead to a quicker completion. Homeowners tend to spend an average of $10,167 on a new-look bathroom.

While air conditioning is likely the last thought on most consumers’ minds during the winter, this is the time for big savings on both repairs and replacements. Once spring and summer heatwaves kick in, rates will jump back up. The average cost for an A/C repair is $342, while a replacement is $5,465.

Spring: Windows and flooring
Window replacements become common in summer once homeowners start running the A/C, but getting ahead of the curve will help score a deal on installation. Be on the lookout for window companies offering sales to kick off the season and ideally schedule installation once it warms up to over 50 degrees. Prices vary widely based on home size, amount of windows, and type of windows. The average cost for a single-story home with 10 windows is between $3,000 and $7,000.

Late spring is also a great time to pull the trigger on flooring. Early spring can be busy for flooring companies as homeowners begin spending their tax returns, causing tighter scheduling. May is the sweet spot, being right in between this tax-return season and summer’s peak home buying season. Hardwood flooring averages between eight and $10 per square foot with installation while carpeting averages around $3.50 per square foot with installation.

Summer: Paint, landscaping, and furnaces
Demand for almost every renovation project increases during the summer, but there are still deals to be scored. As high school and college students take a break from the classroom, many of them will look towards the popular student painting services for employment. Student-operated painting crews boast substantial savings compared to the labor of professional crews, which should help trim down the $4,000 average cost of an exterior paint job.

Additionally, landscaping and yard work make the most sense to be completed during the summer when the work will be most visible. Though it may be tough to find any deals with the high demand, long summer days allow for more DIY opportunities to cut costs.

Lastly, like air conditioning in the winter, savings can be found on furnace repair and replacement in the summer. Average furnace repair costs are a little less than A/C, coming in at $287, while replacement costs an average of $4,237.

Jackson:  A Prime Location to Build a Life Around What Matters Most
by Mark Olson

Imagine the benefits if we committed to slowing down long enough to identify what matters the most to us in this lifetime.  

While we are all different, there is a high probability that thoughts related to faith, family and friends would rise to the surface.

The Organization for Economic Cooperation and Development (OECD) has surveyed 100,000 people around the globe since 2011 and asked, “What matters most?”  Significant responses in the developed world emphasized health and work / life balance.   

The Full Frame Initiative is a social change organization that also provides perspectives on what matters most.  Two important elements they highlight are social connectedness and meaningful access to relevant resources.  

Those inputs provide the following cross section of what many of us might include on our list of what matters most.

  • Faith
  • Family 
  • Friends
  • Health
  • Work / life balance
  • Social connectedness
  • Meaningful access to relevant resources

When all these factors are considered, I hope there is a dawning awareness that Jackson County, Michigan, provides a prime location for building a life around what matters most.  The combination of qualities we find here in Jackson County are rare and significant:

  • Uncongested- Did you ever consider putting a value on the daily time you save just getting around Jackson versus any major city?
  • Natural beauty- You can drive two miles to the country and find abundant trees, water and farmland.  Did you know that Jackson County sits on one of the largest aquifers in North America and that there are 133 lakes and 200 miles of river waterways inside our county?  These are ideal places to rise above the urgent and focus on the important!  
  • Diverse faith communities-  There are 162 different congregations ministering throughout the county.
  • Low cost of living- According to demographic expert Bert Sperling’s Best Places database, our total cost of living index is 16% lower than the Michigan average and 26% lower than the national average.  Our median home costs are less than 50% of the national average!
  • Growing business community–  In January, Crain’s Communications featured thriving businesses and highlighted Jackson based Commonwealth Associates, Peak Manufacturing Local Logic Media and TransPharm Preclinical Solutions.
  • Assorted recreational opportunities-  Something for everyone! Did you know that Golf Digest ranked Jackson as the fourth-best area to play golf in the nation? 
  • Ample learning opportunities-  To enhance learning at every stage of life our county has a wide range of excellent public and private educational institutions, including two colleges and one university.
  • Innovative community health- We are fortunate to be served by Henry Ford Allegiance Health and it’s continually advancing capabilities.  Did you know that Allegiance Health founded the Health Improvement Organization (HIO) that connects 30 local agencies in championing a culture of health in our community?  These pioneering efforts are receiving national attention. 

Jackson County also excels in the “meaningful access to relevant resources” category:

  • 45 minutes to all the retail, restaurant, academic and athletic options in Ann Arbor and Lansing.
  • 60 minutes to one of the finest airport terminals in the country with nonstop links to major cities and destinations around the world.
  • 1.3 hours to all the urban, cultural, marine and sporting opportunities in Detroit.
  • 1.8 hours to Lake Michigan.
  • 3.3 hours to Chicago, the nation’s 3rdlargest city.

We would be wise to pause in gratitude and recommit ourselves to leveraging these often-overlooked benefits.  Jackson County is a prime location to build a life around what matters most.

How Americans Are Saving For Retirement

 

Recent estimates indicate that the Social Security Trust Fund will run out of its surplus in 2034. Once this occurs, program payouts are expected to be worth only about 77 percent of current benefits. Unfortunately, one-third of retirees rely on social security payments for at least 90 percent of their retirement income. With social security payouts likely headed for significant reduction, contributing to self-directed retirement accounts is more crucial than ever. Just how are Americans doing when it comes to saving for their future?

How America saves
According to a TransAmerica Center survey, the typical American expects to retire at 67 but actually ends up retiring five years earlier than anticipated. A shortened career means less time for earning and saving, as well as more time spent withdrawing from accounts. This further emphasizes how saving for retirement is even more crucial than some Americans might assume.

To understand how America saves for retirement, let's examine savings patterns by various cohorts. The following information is taken from "The State of American Retirement" report by the Economic Policy Institute. 

 

1 2 3 4 5 6

Contact us

We look forward to connecting with you

Keep in touch with us

Please use the following information to contact us. For security reasons, please do NOT send sensitive information such as account numbers, social security numbers, balances etc. through the website. 

Name: GuideStream Financial, Inc.
Phone: 800-325-8975
Fax: 517-750-2752
Address: 8050 Spring Arbor Rd., PO Box 580, Spring Arbor, Michigan 49283