Are You Underinsured?
Are You Underinsured?
For some, insurance is just one more item on their financial checklist. Whether you mortgage a home, buy a car or start a business, some type of insurance is usually required. But what if, despite paying all your premiums on time, your coverage comes up short when you encounter a loss?
There are at least three ways you might be underinsured:
• Not carrying insurance for new risks as your life circumstances change.
• Having a policy with coverage limits that are too low to cover a potential loss.
• Failing to notice policy exclusions that don’t protect all your assets.
To avoid finding yourself in one of these situations, it’s important to understand where your coverage may be insufficient — or lacking altogether.
The Home Valuation Problem
Prices, especially on homes, can rise and fall dramatically. In most cases, the insurer will pay for damage to your home up to the limit set in the policy. But what if that upper limit is no longer enough to replace your home when prices for materials and labor go up due to inflation or other causes?
Some policies include “extended” or “guaranteed” replacement coverage. It’s not uncommon to see materials and labor jump in price following a natural disaster that damages multiple homes. Extended coverage will increase the maximum amount the insurer will pay, adding a percentage — 20%, for example — to the stated policy limit. Guaranteed replacement is just that: You are guaranteed to get enough money to rebuild your home no matter what it costs. Naturally, both options will add to the cost of your premium.
The Value of Valuables
The valuation problem also applies to your possessions. For personal property coverage, you can choose between replacement cost and actual cash value. Replacement value means the insurer pays to replace your belongings with new comparable items up to your policy limits. If you lose your home in a fire and you had an older iMac sitting on your desk, you’ll get enough to purchase a new iMac. However, if you choose the actual cash value option, you’ll get the current cash value of that computer — as determined by the insurer — meaning purchase cost minus depreciation, which is going to be less than the cost of a new comparable model.
Change in Circumstances
If you previously had no one financially dependent on you and then get married or have a child, you may be underinsured as a family if you have no life insurance to replace your income should something happen to you. Or, your children or other family members may develop conditions or needs that your existing coverage is insufficient for. Or perhaps there are now grandchildren you want to include as beneficiaries. Think through all the people in your life who you might want to provide for in the event you’re no longer around.
Get Help From an Expert
As with all things related to insurance, seek out a knowledgeable agent or speak to a financial professional for advice to get the coverage you need at the best price and terms. Be sure to read part two of this discussion, where we’ll examine policy exclusions, protection against lawsuit risk and the importance of understanding your health insurance deductibles.
Understanding Your Social Security Benefits
Understanding Your Social Security Benefits
Have you looked into your Social Security benefits and decided it was just too confusing to deal with right now? You wouldn’t be alone. It involves a lot of numbers and calculations, and not surprisingly there are some pretty detailed rules. But Social Security plays an important part in most people’s retirement plan, so we’ve done a little simplifying to help you understand your options and how it all works.
Accessing your account information online. The amount of the benefit you get each month is determined by a formula based on your work history and how much you’ve contributed to the fund (spousal benefits may be calculated differently). So how do you know what the amount will be? To find your personal benefits, you need to create an account on the Social Security Administration (SSA) website. The SSA has access to your records and can calculate your exact benefit.
What is your full retirement age? While we tend to think of retirement age as 65, what is known as your “full retirement age” according to the U.S. government is different and depends on the year you were born. The SSA website has an informative chart that enables you to easily determine your full retirement age. But as an example, for those born before 1955, full benefits begin when they turn 66 (which would have occurred by 2020). For those born in 1955, that changes to 66 and 2 months, then 66 and 4 months if you were born in 1956 and so on. If you were born in or after 1960, your full retirement age is 67. Keep in mind that, although changes in the full retirement age don’t happen often and are generally phased in gradually, they can occur.
The impact of accelerating vs. delaying benefits. The earliest most people can begin receiving benefits is age 62, but your benefits will be lower if you begin receiving them before your full retirement age (there are different rules for other Social Security benefits, such as those for disability or survivors). Monthly benefits are reduced by a percentage for each month between your actual retirement date and your full retirement date.
If you start receiving benefits at your full retirement age, your monthly benefit will be larger than if you elect to receive benefits earlier. And if you wait beyond full retirement age, the monthly benefits are even higher. Once you reach 70, however, your monthly benefit stays the same, and there are no more increases except for the annual cost of living increases that all recipients get.
To find out how much your payments will be depending on when you elect to start receiving benefits, go to the SSA’s online calculation tool. The calculator will use your date of birth and desired retirement age to show the effect of your retirement choice on the benefit you receive.
A very personal choice. The decision of whether to begin receiving your benefits before or after full retirement age rests on your own individual circumstances. There are some who advocate taking benefits somewhat earlier than full retirement, arguing that — depending on your health history and life expectancy — you could receive more in total benefits by filing for them earlier.
If you expect to live into your late 80s, or 90s, then delaying the payments may make sense. Or, perhaps you have a spouse or other family member who requires special care. What is the value of being able to “throttle back” and devote more time to them as opposed to working to full retirement age or beyond? There is no right answer for everyone when it comes to making this important decision.
For help with Social Security retirement planning, talk with a financial professional who knows the system and the rules. Then do what’s best for you and your family.
Back to school Savings Tips
Back to school Savings Tips
Comparison shop online. A great way to save time and money is to create a school
supply shopping list in advance and check out online deals from the comfort of your
home. Start with big-box retailers and discount chains. Office supply stores may
also offer good deals. Compare your most expensive items first, such as electronics,
and consider making your purchase online instead of in store. If the site
offers free shipping, you’re also saving on gas.
Use online coupons. Groupon and other popular coupon sites are resources frugal families can use to save money on just about anything. Some sites offer savings tips – and even cash back. If you haven’t explored the cyberworld of online coupons, now is a great time to give it a try.
Buy used. Second-hand textbooks and other supplies tend to sell at deep discounts. And as long as they’re in good shape, used items are a terrific money-saving option. You can find used items on Amazon, but also check out thrift stores or even local garage sales for deals.
Public and school libraries. Many assigned novels are available to check out from local and school libraries. If your student doesn’t plan on writing in the book or keeping a personal copy, the library is a definite win. Some larger library systems offer online book reservations with free delivery — just be mindful of the due dates to avoid fees.
Seek back-to-school deals. Most retailers stock up and advertise bargains during back-to-school season. Check their online ads and mailers to keep track of the best local prices for all the items on your list.
Tax holidays. Several states offer a back-to-school tax-free weekend in August, so keep your eyes peeled for those dates if you live in Florida, Connecticut, Iowa, Maryland, Massachusetts, Missouri, New Mexico, New Jersey, Ohio, Oklahoma, South Carolina, Texas, Alabama, Arkansas, Mississippi, Tennessee or Virginia. This list can change from year to year.
Look for student discounts. If you need to purchase your child’s own computer-related software or hardware, companies such as Microsoft, Adobe, Apple, HP and Best Buy often provide student discounts. While many of these are reserved for college students, it’s always worth asking about grades K-12.
With these strategies, you can keep costs to a minimum this back-to-school season. Remember the words of Benjamin Franklin: “An investment in knowledge pays the best interest.”
What Does Financial Freedom Mean to You?
What Does Financial Freedom Mean to You?
The road to financial freedom can sometimes be intimidating when you don’t know where to start, but you don’t have to travel it alone. You can start to make little changes and see a big difference in no time — no winning lottery ticket necessary. Whether your dream is buying your first home, sending your kids to college, starting a business of your own or enjoying your golden years watching sunsets, WellCents has the tools and resources you need to help you turn your dreams into reality. We want to help employees just like you reach a successful and financially secure retirement by helping to improve their financial health.
And the best part? The resources available to you through WellCents are completely free.
From brand-new hires to longtime employees, WellCents can help you budget your household expenses, pay down debt, make more informed investment decisions and plan for retirement with exclusive online and in-person resources, including:
· Educational workshops
· Online resource center
· One-on-one meetings
· Financial goal-setting
· Customized action plans
It’s Easy to Get Started
The first step is completing a quick and easy financial assessment. You’ll answer a few short questions about your financial history to establish a starting point on your financial wellness journey. Once complete, you’ll receive a Financial Wellness Score along with a customized action plan that identifies and targets your personal needs and objectives. With this information, you’ll better understand your financial strengths and areas for improvement so you can actively begin working toward your goals. Individual answers are kept confidential — only trends among employees as a group are given to your employer to help develop educational materials.
Different Strokes for Different Folks
We’ll direct you to educational articles that address your financial priorities. You’ll always have the ability to contact one of our professionals if you have questions along the way. Remember, you’re not going down this road alone.
Attend group educational workshops with colleagues led by a financial professional in person. The topics chosen are based on aggregated areas expressed by employees of your company or organization. Get the professional guidance you need while discovering how others like you have worked to achieve their goals.
Schedule a one-on-one meeting with a financial professional mentor via in-person, webinar or conference call at no cost to you. They’ll work with you to create a customized action plan and help guide you as you work to improve your financial health.
Copilot for the Journey
All of these great resources are available at no cost to you. If your roadmap takes you on a new course due to major life changes, evolving financial conditions or anything else that comes your way, you’ll have the information you need at your fingertips to make more informed financial choices.
We all have dreams, and we all have to do a lot of the same things to achieve them. But with WellCents on your side, you’ll have the resources and support you need to deal with any bumps you encounter on the road to your financial freedom.
The last few months have been a whirlwind for cryptocurrency. Markets have dipped several times, including the drama of mid-2022, which saw the popular cryptocurrency Bitcoin fall in value by 70% from its all-time peak in November 2021. But despite the unsteady markets of late, Bitcoin is making its way into the offerings of some 401(k) plans.
In May of 2022, Fidelity announced it would soon begin allowing participants to allocate up to 20% of their retirement savings to Bitcoin. A much smaller provider, ForUsAll, made a similar announcement in June, and more may follow suit in the months and years to come. While cryptocurrency has been a lucrative investment for some, it’s important for investors to weigh their options carefully and approach crypto with caution if their retirement plan begins offering it.
Volatile Assets Mean Higher Risk Levels
Cryptocurrency is a notoriously volatile asset. This means the values of cryptocurrencies tend to go up and down often, and by large amounts. Significant upswings and downswings in a single day have made frequent headlines. Several economists have noted that cryptocurrency doesn’t tend to behave similarly to other asset classes given similar market conditions, making it increasingly hard to predict how crypto will perform in periods of inflation or recession, for example.
Caution Is Warranted
One of the best ways to make sure you’re making the right decision before you add cryptocurrency to your portfolio is to do your homework. Cryptocurrency is a new asset with different underlying mechanisms than stocks, so it’s important to understand the technology that enables crypto and the factors that influence its value before you invest.
A good rule of thumb is to only invest money in cryptocurrency that you’re prepared to lose. Some investors have lost nearly all of their crypto, whether due to market drops, crypto provider failures or even rare instances of hacking. In addition, cryptocurrency is decentralized, which means that no government or single financial institution backs it, even when it’s included in a highly regulated account like a 401(k). If this is money that you’re depending on, a more stable asset with a strong institutional backing may well be a better choice for you.
Let a Professional Help You
Though some successful investors and celebrities have touted the benefits of cryptocurrency, it’s important not to be swayed by the hype, particularly when you’re saving for retirement. Remember, high-income investors can afford to lose money due to volatility that everyday retirement savers might not be prepared to lose.
Do your research, make sure you understand this asset and be prepared for high volatility. It’s also important to diversify your portfolio and choose a mixture of assets to balance it out. If you’re planning to add cryptocurrency to your retirement fund, it may be useful to talk to a financial professional first who can help you find the right amount of cryptocurrency for your portfolio — which for many might be exactly zero, depending on their personal risk tolerance.