Certain Uncertainties in Retirement
Weekly Educational Update - February 13, 2019
The financial uncertainties we face in retirement may risk reducing our sense of confidence, potentially undermining our outlook during those years.
Indeed, according to the 2018 Retirement Confidence Survey by the Employee Benefits Research Institute, only 17% of pre-retirees said they are “very confident” about having enough assets to live comfortably in retirement. In addition, just 32% of retirees were “very confident” in their prospects for doing so.[i]
Today, retirees face two overarching uncertainties. While each one can lead even the best-laid strategies awry, it is important to remember that remaining flexible and responsive to changes in the financial landscape may help you meet the challenges posed by uncertainty in the years ahead.
An Uncertain Tax Structure
A mounting national debt and the growing liabilities of Social Security and Medicare are straining federal finances. How these challenges will be resolved remains unknown, but higher taxes – along with means-testing for Social Security and Medicare – are obvious possibilities for policymakers.
Whatever tax rates may be in the future, taxes can be a drag on your savings and may adversely impact your retirement security. Moreover, any reduction of Social Security or Medicare benefits has the potential to increase financial strain during your retirement.
Consequently, you will need to be ever mindful of a changing tax landscape and strategies to manage the impact of whatever changes occur.
If you know someone who retired (or wanted to retire) in 2008, you know what market uncertainty can do to a retirement blueprint.
The uncertainties have not gone away. Are we at the cusp of a bond market bubble bursting? Will the eurozone find its footing? Will U.S. debt be a drag on our economic vitality?
Over a 30-year period, uncertainties may evaporate or resolve themselves, but new ones may also emerge. Solutions for one set of financial or economic circumstances may not be appropriate for a new set of circumstances.
Scottish philosopher Thomas Carlyle said, "He who could foresee affairs three days in advance would be rich for thousands of years.” Preparing for uncertainties is less about knowing what the future holds as it is being able to respond to changes as they unfold.[ii]
“The greatest happiness of life is the conviction that we are loved; loved for ourselves, or rather, loved in spite of ourselves."
– Victor Hugo
1½ cups all-purpose flour, plus more for pans
1½ cups granulated sugar
¾ cup cocoa powder
½ Tbsp. baking soda
¾ tsp. baking powder
¾ tsp. salt
2 large eggs
¾ cup buttermilk
¼ cup + 1 Tbsp. canola oil
1½ tsp. vanilla extract
⅔ cup boiling water
1½ cups unsalted butter (room temperature)
4½ cups confectioners’ sugar
½ cup fresh, ripe strawberries, washed, stemmed, and hulled
1½ tsp. vanilla extract
- Preheat oven to 350°F. First, butter three 9", round cake pans and dust with flour, tapping out excess.
- Sift flour, sugar, cocoa, baking soda, baking powder, and salt into the bowl of a mixer and beat on low speed. Increase speed to medium and add eggs, buttermilk, oil, and vanilla, then beat about 3 minutes. Turn off the mixer and add boiling water. Beat on high for approximately 1 minute.
- Pour batter evenly among the pans. Bake for 30 to 35 minutes or until an inserted toothpick comes out clean. Allow cakes to cool completely before frosting.
- To make the frosting, purée the strawberries in a food processor and set aside. Using the paddle attachment, cream the room-temperature butter in the bowl of a stand mixer. Gradually add confectioners’ sugar until the mixture is smooth. Combine with the strawberry purée and add the vanilla. Beat until light and fluffy (approximately 3 to 5 minutes).
- Frost and stack the cakes; decorate with fresh strawberries. Try adding a dollop of fresh, whipped cream upon serving.
Recipe adapted from Cake ‘n Knife[iii]
Married Couples in Business
Under the provision of the Small Business and Work Opportunity Tax Act of 2007, a qualified joint venture by a married couple filing a joint return is not treated as a partnership for federal tax purposes. Income, gains, losses, deductions, and credits are divided between the spouses, depending on their interest in the business. Each spouse accounts for their share of these items as a sole proprietor.
A qualified joint venture involves the conduct of a trade or business if:
- The only members of the joint venture are a married couple who file a joint tax return
- Both spouses materially participate in the trade or business
- Both spouses elect to have the provision apply, and the business is co-owned by both spouses
- The business isn't held in the name of a state law entity, such as a partnership or limited liability company (LLC)
If one spouse is employed by the other (as an employee – not an equal business partner), then you’ll probably need to pay Social Security and Medicare taxes for them.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[iv]
Control Your Breathing
You might not know it, but golf can create so much stress that it triggers the “fight or flight” response in your body. Your heart beats faster, your blood pressure increases, and your mind begins to race. These are all things that make it harder to focus and stay in the moment. Here is a simple breathing exercise you can do on the course to calm down and relax:
1. Inhale very slowly through your nose.
2. Exhale just as slowly through your mouth.
After doing this for a brief period of time, your body will start to get the message, and you will send a signal to your nervous system to activate calming hormones, which will slow down your heart rate and relax your muscles.
Tip courtesy of Jon Sherman | practical-golf.com[v]
Find Your Soulmate with Positive Thinking
Among countless dead-end connections from potential prospects on dating sites, speed dating, and blind date suggestions from well-meaning friends, your frame of mind could be your biggest obstacle to finding your soulmate. In addition to your dating “game,” consider working on your mental game too. By putting the power of positive thought toward attracting your desires, you can eliminate what you don’t want and focus on the good stuff. Try defining your ideal relationship starting with a list:
- Draw a line down the middle of a page, and on one side, write “what I don’t want.” On the other side, write “what I do want.” Just writing this list will get you more focused.
- Cross off the “don’t want” side off your list. Not needed!
- Give your attention and energy to the “what you do want” list.
This exercise is great for thinking about and attracting your dreams, goals, and desires you want in your life. Give it a try and see what comes your way!
Tip adapted from jackcanfield.com[vi]
Egg-Citing News About Chickens
Backyard chickens boast benefits beyond the barnyard. With concerns about our food sources, fresh eggs may be higher quality, better tasting, and more nutritious. Some other benefits of chicken ownership:
Pest control. Chickens eat small bugs and worms. They hunt and peck for little critters and insects.
Compost. The waste from your coop can be used in the garden as compost, which nourishes the soil as natural, environmentally friendly fertilizer.
Less food waste. Chickens eat scraps, so you can add scraps of bread, fruit, or veggies to their feed. Be sure to feed scraps in moderation and to check guidelines on what they can and can’t eat before sharing your leftovers.
Companionship. Tending chickens can help you to destress, unwind, and get outdoors.
Check to see if your city supports backyard chickens before you build your coop. Many communities allow chickens, but not roosters.
Tip adapted from USA Today[vii]
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The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative,
Broker dealer or Investment Advisor and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
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