HSAs on the Rise, but Employees Need to Know More About Them

Are your employees aware of the many benefits and features associated with HSAs? Check out this great article by Marlene Y. Satter from Benefits Pro on why it is important employees are knowledgeable about HSAs, so they can prepare for their health care expenses while planning for retirement.

According to Fidelity Investments, health savings accounts — and the assets within them — are rising quickly, as both employers and employees try to find ways to pay for health care. Still, a number of the features of HSAs are still underutilized.

While Fidelity says that assets in its HSAs rose 50 percent in the past year, now topping $2 billion, and the number of individual account holders rose 46 percent during the same period to 657,000, it points out more work still needs to be done on showing employees the advantages of such accounts.

Since it’s estimated that couples retiring today could need $260,000 — perhaps even more — to cover their health care costs during retirement, the need for a way to save just for health care expenses, aside from other retirement expenses, is becoming more urgent.

HSAs offer a tax-advantaged way to set aside more money than a retirement account alone provides — and people who have both tend to save more overall, with 2016 statistics indicating that people who had both defined contribution and HSA accounts saved on average 10.7 percent of their annual income in the retirement account. Those with just a DC account saved on average 8.2 percent in it.

People are mostly satisfied with HSAs — 80 percent say they are, while 76 percent are satisfied with the ease of using it HSA for medical expenses, 77 percent with the quality of their health care coverage and 77 percent with how the plan helps them manage their health care costs.

But that doesn’t mean they’ve got all the ins and outs figured out yet; 39 percent mistakenly believe that they’ll lose unspent HSA contributions at the end of the year. Yet unlike contributions to health flexible spending accounts (FSA), unspent contributions to HSAs roll over from year to year.

Still, employees are learning that HSAs can provide them a means of saving that’s not restricted to cash. While it’s still not common, more people are putting HSA money into investments that can then grow toward covering longer-term health expenses, but employers, says Fidelity, can do more to educate workers on such an option. Nationally, only 15 percent of all HSA assets are invested outside of cash.

See the original article Here.

Source:

Satter M. (2017 May 26). HSAs on the rise, but employees need to know more about them [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/05/26/hsas-on-the-rise-but-employees-need-to-know-more-a?ref=hp-news


Traditional IRA, Roth IRA, 401(k), 403(b): What’s the Difference?

The earlier you begin planning for retirement, the better off you will be. However, the problem is that most people don’t know how to get started or which product is the best vehicle to get you there.

A good retirement plan usually involves more than one type of savings account for your retirement funds. This may include both an IRA and a 401(k) allowing you to maximize your planning efforts.

If you haven’t begun saving for retirement yet, don’t be discouraged. Whether you begin through an employer sponsored plan like a 401(k) or 403(b) or you begin a Traditional or Roth IRA that will allow you to grow earnings from investments through tax deferral, it is never too late or too early to begin planning.

This article discusses the four main retirement savings accounts, the differences between them and how Saxon can help you grow your nest egg.

“A major trend we see is that if people don't have an advisor to meet with, they tend to invest too conservatively because they are afraid of making a mistake,” said Kevin. “Then the problem is that they don't revisit it and if you’re not taking on enough risk you’re not giving yourself enough opportunity for growth. Then you run the risk that your nest egg might not grow to what it should be.”

“Saxon is here to help people make the best decision on how to invest based upon their risk tolerance. We have questionnaires to determine an individual’s risk factors, whether it be conservative, moderate or aggressive and we make sure to revisit these things on an ongoing basis.”

 

Kevin Hagerty,  Financial Advisor

Traditional IRA vs. Roth IRA

Who offers the plans?

Both Traditional and Roth IRAs are offered through credit unions, banks, brokerage and mutual fund companies. These plans offer endless options to invest, including individual stocks, mutual funds, etc.

Eligibility

Anyone with earned, W-2 income from an employer can contribute to Traditional or Roth IRAs as long as you do not exceed the maximum contribution limits.

With Traditional and Roth IRAs, you can contribute while you have earned, W-2 income from an employer. However, any retirement or pension income doesn't count.

“Saxon is here to help people make the best decision on how to invest based upon their risk tolerance. We have questionnaires to determine an individual’s risk factors, whether it be conservative, moderate or aggressive and we make sure to revisit these things on an ongoing basis.”

Tax Treatment

With a Traditional IRA, typically contributions are fully tax-deductible and grow tax deferred so when you take the money out at retirement it is taxable. With a Roth IRA, the money is not tax deductible but grows tax deferred so when the money is taken out at retirement it will be tax free.

"The trouble is that nobody knows where tax brackets are going to be down the road in retirement. Nobody can predict with any kind of certainty because they change,” explained Kevin. “That’s why I'm a big fan of a Roth.”

“A Roth IRA can be a win-win situation from a tax standpoint. Whether the tax brackets are high or low when you retire, who cares? Because your money is going to be tax free when you withdraw it. Another advantage is that at 70 ½ you are not required to start taking money out. So, we've seen Roth IRA's used as an estate planning tool, as you can pass it down to your children as a part of your estate plan and they'll be able to take that money out tax free. It's an immense gift,” Kevin finished.

Maximum Contribution Limits

Contribution limits between the Traditional and Roth IRAs are the same; the maximum contribution is $5,500, or $6,500 for participants 50 and older.

However, if your earned income is less than $5,500 in a year, say $4,000, that is all you would be eligible to contribute.

"People always tell me 'Wow, $5,000, I wish I could do that. I can only do $2,000.' Great, do $2,000,” explained Kevin. “I always tell people to do what they can and then keep revisiting it and contributing more when you can. If you increase a little each year, you will be contributing $5,000 eventually and not even notice."

Withdrawal Rules

With a Traditional IRA, withdrawals can begin at age 59 ½ without a 10% early withdrawal penalty but still with Federal and State taxes. The Federal and State government will mandate that you begin withdrawing at age 70 ½.

Even though most withdrawals are scheduled for after the age of 59 ½, a Roth IRA has no required minimum distribution age and will allow you to withdraw earned contributions at any time. So, if you have contributed $15,000 to a Roth IRA but the actual value of it is $20,000 due to interest growth, then the contributed $15,000 could be withdrawn with no penalty.

Employer Related Plans - 401(k) & 403(b)

A 401(k) and a 403(b) are theoretically the same thing; they share a lot of similar characteristics with a Traditional IRA as well.

Typically, with these plans, employers match employee contributions .50 on the dollar up to 6%. The key to this is to make sure you are contributing anything you can to receive a full employer match.

Who offers the plans?

The key difference with these two plans lies in if the employer is a for-profit or non-profit entity. These plans will have set options of where to invest, often a collection of investment options selected by the employer.

Eligibility

401(k)'s and 403(b)'s are open to all employees of the company for as long as they are employed there. If an employee leaves the company they are no longer eligible for these plans since 401(k) or 403(b) contributions can only be made through pay roll deductions. However, you can roll it over into an IRA and then continue to contribute on your own.

Only if you take possession of these funds would you pay taxes on them. If you have a check sent to you and deposit it into your checking account – you don't want to do that. Then they take out federal and state taxes and tack on a 10% early withdrawal penalty if you are not age 59 ½. It may be beneficial to roll a 401(k) or 403(b) left behind at a previous employer over to an IRA so it is in your control.

Tax Treatment

Similar to a Traditional IRA, contributions are made into your account on a pretax basis through payroll deduction.

Maximum Contribution Limits

The maximum contribution is $18,000, or $24,000 for participants 50 and older.

Depending on the employer, some 401(k) and 403(b) plans provide loan privileges, providing the employee the ability to borrow money from the employer without being penalized.

Withdrawal Rules

In most instances, comparable to a Traditional IRA, withdrawals can begin at age 59 ½ without a 10% early withdrawal penalty. Federal and State government will mandate that you begin withdrawing at age 70 ½. Contributions and earnings from these accounts will be taxable as ordinary income. There are certain circumstances when one can have penalty free withdrawals at age 55, check with your financial or tax advisor.

In Conclusion…

"It is important to make sure you are contributing to any employer sponsored plan available to you so that you are receiving the full employer match. If you have extra money in your budget and are looking to save additional money towards retirement, that’s where I would look at beginning a Roth IRA. Then you can say that you are deriving the benefits of both plans - contributing some money on a pretax basis, lowering federal and state taxes right now, getting the full employer contribution match and then saving some money additionally in a Roth that can provide tax free funds/distributions down the road," finished Kevin.

To download the full article click Here.


5 Benefits Communication Mistakes That Kill Employee Satisfaction

Are you using the proper communication channels to inform your employees about their benefits? Take a look at this great article from HR Morning about how to manage to communicate with your employees to keep them satisfied at work by Jared Bilski.

Good benefits communication is more important than the actual benefits you offer – at least when it comes to employee satisfaction.
Proof: When a company with a rich benefits program (i.e., better than industry standard) communicated poorly, just 22% of workers were satisfied with their benefits.

On the other hand, when an employer with a less rich benefits program communicated effectively, 76% of employees were satisfied with the benefits.

These findings come from a Towers Watson WorkUSA study.

At the at the 2017 Mid-Sized Retirement & Healthcare Plan Management Conference in Phoenix, AZ., Julie Adamik, the former head of Employee Benefits Training and Solutions at PETCO, highlighted the five most common benefits communication mistakes that put firms in the former category.

Satisfaction killers

1. The information is boring. Many employees assume that if the info is about benefits, it’s probably boring. As a result, they tend to tune out and miss critical material.

2. The learning styles and preferences of different generations aren’t taken into account. With multiple generations working side-by-side, a one-size-fits-all approach is doomed to fail.

3. The budget is too low. If your company has a $15 million benefits package, you shouldn’t accept upper management’s argument that a $2,500 communication budget should cover it. HR and benefits pros need to take a stand in this area.

4. The language is “too professional.” Assuming that official-sounding language is better than “plain speak” is a common but costly communication mistake.

5. There’s too much information being covered. Cramming everything into a single open enrollment meeting is guaranteed to overwhelm employees.

Cost, wellness, personal issues and care

Employers also need to be wary of relying too heavily on tech when it comes to benefits communication. Even though there are plenty of technological innovations in the world of benefits services and communications, but HR pros should never forget the importance of old-fashioned human interaction.

That’s one of the main takeaways from a recent Health Advocate study that was part of the whitepaper titled “Striking a Healthy Balance: What Employees Really Want Out of Workplace Benefits Communication.”

The study broke down employees’ preferred methods of benefits communications in a number of areas. (Note: Employees could select more than one answer.)

When asked how they preferred to receive health cost & administrative info, the report found:

  • 73% of employees said directly with a person by phone
  • 69% said via a website/online portal, and
  • 56% preferred an in-person conversation.

Regarding their wellness benefits:

  • 71% of employees preferred to receive the info through a website/online portal
  • 62% said directly with a person by phone, and
  • 56% preferred an in-person conversation.

In terms of personal/emotional wellness issues:

  • 71% of employees preferred to receive the info directly with a person by phone
  • 65% preferred an in-person conversation, and
  • 60% would most like to receive the info via a website/online portal.

Finally, when it came to managing chronic conditions:

  • 66% of employees preferred to receive the info directly with a person by phone
  • 63% would most like to receive the info via a website/online portal, and
  • 61% preferred an in-person conversation.

See the original article Here.

Source:

Bilski J. (2017 April 4). 5 benefits communication mistakes that kill employee satisfaction [Web blog post]. Retrieved from address http://www.hrmorning.com/5-benefits-communication-mistakes-that-kill-employee-satisfaction/


What Marketplace Health Insurance Plans Cover

Do you know what is covered in your marketplace health insurance plan? Find out more about your health insurance plan and everything it covers in this article by HealthCare.Gov.

All plans offered in the Marketplace cover the same set of essential health benefits.

Every health plan must cover the following services:

  • Ambulatory patient services (outpatient care you get without being admitted to a hospital)
  • Emergency services
  • Hospitalization (like surgery and overnight stays)
  • Pregnancy, maternity, and newborn care (both before and after birth)
  • Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
  • Prescription drugs
  • Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)

Additional benefits

Plans must also include the following benefits:

Essential health benefits are minimum requirements for all Marketplace plans. Specific services covered in each broad benefit category can vary based on your state’s requirements. Plans may offer additional benefits, including:

When comparing plans, you’ll see exactly what each plan offers.

See the original article Here.

Source:

Author (Date). What marketplace health insurance plans cover [Web blog post]. Retrieved from address https://www.healthcare.gov/coverage/what-marketplace-plans-cover/


The benefits of financial wellness counseling

Are your employees being properly educated on the benefits on their financial well-being? If not take a look at this article from Benefits Pro about the value of educating your employees in financial wellness by Jack Craver

Money Management International, a nonprofit credit counseling organization, is touting the results of a recent survey it conducted as evidence that employers can significantly reduce stress among their employees by offering them financial counseling resources.

MMI announced recently 86 percent of the 150 employees it provided financial counseling to at an Oregon-based nonprofit health agency say they have less stress related to money as a result of the counseling.

In addition, most of the employees at Samaritan Health Services say the counseling led to them achieving certain financial goals, such as reducing debt (60 percent), setting aside more money for retirement (38 percent), boosting their credit score (30 percent) or buying a home (8 percent).

"At MMI, we know that financial coaching, counseling, and education work, but seeing the incredible, positive impact this program has made on the financial outlook of these clients is simply amazing,” says Julie Griffith, Mapping Your Future account manager, in a statement accompanying the study’s release.

Other research has shown employers are increasingly viewing financial counseling as a key component of wellness initiatives due to the significant psychological and emotional toll money-related anxiety takes on employees.

In addition to causing depression, sleep deprivation and all sorts of health problems that reduce an employee’s productivity, financial stress often distracts employees from their work. A survey last year showed that 37 percent of U.S. employees report spending time on the job thinking about or dealing with personal finances.

The awakening to the importance of financial wellness coincides with a number of studies which shed light on young Americans’ lack of savings. One study found a solid majority of Americans have less than $500 in savings. Another found that the U.S. personal savings rate was just 5.7 percent, roughly half of what it was 50 years ago.

See the original article Here.

Source:

Craver J. (2017 March 08). The benefits of financial wellness counseling [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/03/08/the-benefits-of-financial-wellness-counseling


Why employers should rethink their benefits strategies

Has your employee benefits program grown old and stale? Take a look at the great article from Employee Benefits Advisors about the benefits of upgrading your employee benefits to match your employees' needs by Chris Bruce.

Historically, employee benefits have been viewed as a routine piece of the HR process. However, the mentality of employees today has shifted, especially among the growing population of millennial employees. Today’s workforce expects more from their employers than the traditional healthcare and retirement options, in terms of both specific benefit offerings and communications about those offerings.

For companies, it’s critical they address the evolving needs of their workforce. With unemployment rates plunging to their lowest levels since before the financial crisis, the search for talent is heating up, and organizations need to work harder than ever to retain top talent in a competitive job market. To do this, I see three steps that organizations need to take when rethinking their benefits strategy and engaging with employees: embrace a proactive rather than reactive benefits strategy, think digital when it comes to employee communications and consider the next generation of employee benefits as a way to differentiate from the competition.

1. Reconsider your benefits evaluation process

The benefits process at most companies is reactive — executives and HR only look to evaluate current offerings when insurance contracts expire or a problem emerges. When the evaluation does happen, the two factors that often concern employers the most are product and price. Employers often gravitate toward well-known insurers that offer the schemes that appear familiar. However, this can often lead companies to choose providers who fall short on innovation and overall customer experience for employees.

This approach needs to be flipped on its head. Companies should be proactive in determining which benefit schemes best meet the needs of their workforce. The first step is going straight to the source: talk to employees. Employers can’t know what benefits would be most appealing to their employee base unless they ask. By turning the evaluation process to employees first, companies can better tailor new benefits to meet the needs of their workers, and also identify existing benefits that might be outdated or irrelevant, therefore saving resources on wasted offerings.

Data and analytics also are playing an increasing role across the HR function, and benefits is no exception. By leveraging technology solutions that allow HR to track benefits usage and engagement, teams can better determine what is resonating with employees and where benefits can be cut back or where they should be ramped up.

2. Put down the brochure and think digital engagement

Employee education is another area of benefits that can often perplex companies. According to a recent survey from Aflac, half of employees only spend 30 minutes or less making benefit selections during the open enrollment period each year. This means employers have a short window of time to educate employees and make sure they are armed with the right information to feel confident in their benefits selection.

To do this effectively, HR needs to move past flat communication like brochures, handouts and lengthy employee packets and look for ways to meet employees where they live — online. By testing out innovations that create a rich experience, while still being simple and intuitive, employers can grab the attention of their workforce and make sure key information is communicated. For example, exploring opportunities to create cross-device experiences for employees so they can interact on-the-go, including augmented reality applications or digital interactive magazines. Additionally, for large corporations, hosting a virtual benefits fair can provide a forum for employees to ask questions in a dynamic setting.

3. Embrace the next-generation of benefits

As organizations become more savvy and nimble, personalization will have a huge impact in encouraging employee engagement and driving satisfaction among today’s increasingly diverse workforce. We have already started to see some companies embrace this new approach to benefits, adding out-of-the-box items to normal offerings — from debt consolidation services and wearable health tracking technology to genome testing and wedding concierge services.

The fact is, the days of “status-quo” benefits are gone, and employees today want benefit options that match their current life circumstances. To best engage employees, organizations need to be proactive in evaluating benefits regularly and using analytics to track usage, identify opportunities to implement digital communication elements and look for ways to introduce new benefits to meet the needs of their employee base. By following these steps, organizations can gain a competitive edge when it comes to attracting and retaining top talent.

See the original article Here.

Source:

Bruce C. (2017 March 10). Why employers should rethink their benefits strategies [Web blog post]. Retrieved from address http://www.employeebenefitadviser.com/opinion/3-steps-employers-can-take-to-rethink-benefits-strategy?feed=00000152-1377-d1cc-a5fa-7fff0c920000


How to encourage increased investment in financial well-being

Disappointed that your employees are not putting enough into your company's financial programs. Take a look at this article from Employee Benefits News for some helpful tips to help improve your employees' spending on financial well-being by Cort Olsen,

As few as 15% of employers say they are satisfied with their workers’ current savings rate in programs such as 401k(s), according to a new report from Aon Hewitt. In response, employers are increasingly focused on increasing savings rates and looking to expand financial well-being programs.

More workplace wellness programs are including a financial component, in which employers aim to help employees with financial issues from budgeting to paying down debt to saving for retirement.

Aon Hewitt surveyed more than 250 U.S. employers representing nearly 9 million workers to determine their priorities and likely changes when it comes to retirement benefits. According to the report, employers plan to emphasize retirement readiness, focusing on financial well-being and refining automation as they aim to raise 401(k) savings rates for 2017.

Emphasizing retirement readiness
Nearly all employers, 90%, are concerned with their employees’ level of understanding about how much they need to save to achieve an adequate retirement savings. Those employers who said they were not satisfied with investment levels in past years, 87%, say they plan to take action this year to help workers reach their retirement goals.

“Employers are making retirement readiness one of the important parts of their financial wellbeing strategy by offering tools and modelers to help workers understand, realistically, how much they’re likely to need in order to retire,” says Rob Austin, director of retirement research at Aon Hewitt. “Some of these tools take it a step further and provide education on what specific actions workers can take to help close the savings gap and can help workers understand that even small changes, such as increasing 401(k) contributions by just two percentage points, can impact their long-term savings outlook.”

Focusing on financial well-being
While financial wellness has been a growing trend among employers recently, 60% of employers say its importance has increased over the past two years. This year, 92% of employers are likely to focus on the financial well-being of workers in a way that extends beyond retirement such as help with managing student loan debt, day-to-day budgeting and even physical and emotional wellbeing.

Currently, 58% of employers have a tool available that covers at least one aspect of financial wellness, but by the end of 2017, that percentage is expected to reach 84%, according to the Aon Hewitt report.

“Financial wellbeing programs have moved from being something that few leading-edge companies were offering to a more mainstream strategy,” Austin says. “Employers realize that offering programs that address the overall wellbeing of their workers can solve for myriad challenges that impact people’s work lives and productivity, including their physical and emotional health, financial stressors and long-term retirement savings.”

The lessons learned from automatic enrollment are being utilized to increase savings rates. In a separate Aon Hewitt report, more than half of all employees under plans with automatic enrollment default had at or above the company match threshold. Employers are also adding contribution escalation features and enrolling workers who may not have been previously enrolled in the 401(k) plan.

“Employers realize that automatic 401(k) features can be very effective when it comes to increasing participation in the plan,” Austin says. “Now they are taking an automation 2.0 approach to make it easier for workers to save more and invest better.”

See the original article Here.

Source:

Olsen C. (2017 February 06). How to encourage increased investment in financial well-being [Web blog post]. Retrieved from address http://www.benefitnews.com/news/how-to-encourage-increased-investment-in-financial-well-being?brief=00000152-14a7-d1cc-a5fa-7cffccf000


10 tips for next generation benefits

Great article from Benefits Pro about ten tips to help improve your benefits for the next generation by Erin Moriarty-Siler,

If brokers and their clients want to continue to attract and, more importantly, retain millennials and other generations entering the workforce, they'll need to start rethinking benefits packages.

As part of our marketing and sales tips series, we asked our audience for their thoughts on the next generation and their benefits needs.

Here are the 10 tips we liked best.

1. Show appreciation

“Even if you don't have the time and resources to roll out the red carpet each time an employee joins your team, they should feel as if you do. Even something as simple as a team lunch to welcome them and a functioning computer can go a long way toward making a new employee feel valued and at home.” Sanjay Sathe, president & CEO, RiseSmart.

2. Real world benefits

“It's important for benefits professionals and brokers to transform their organizations’ benefits offerings to align better with what both the individual and the generational millennials value — benefits that reflect the real world in which all generations in today's workforce think about the interconnection between their careers, employers, and personal lives.” Amy Christofis, client account executive, Connecture, Inc.

3. A millennial world

“One can no longer think of millennials as the ‘kids in the office.’ They are the office.” Eric Gulko, vice president, Summit Financial Corporation

4. New normal

Millennials are no longer just data and descriptors in a PowerPoint slideshow about job recruitment. They are now the majority, and how they do things will soon be the norm. It's important to consider these implications.

5. Innovation

“If we want to build organization that can innovate time and again, we must recast our understanding of what leadership is about. Leading innovation is about creating the space where people are willing and able to do the hard work of innovative problem solving.” Linda Hill, professor of business administration, Harvard Business School

6. Don't make assumptions

“Just because millennials are comfortable using the internet for research doesn't mean they don't also like a personal touch. Employers need to be wary of relying on only one communication vehicle to reach millennials. Sixty percent of millennials say they would be willing to discuss their benefits options with someone face to face or over the phone.” Ken Meier, vice president, Aflac Northeast Territory

7. The power of praise

“The prevailing joke is that millennials are ‘the participation trophy generation,’ having always been praised just for showing up, not necessarily winning. Turn that negative perception into a positive by realizing that providing constructive, encouraging feedback when it's earned motivates this generation to strive for even more successes.” Kristen Beckman, senior editor, LifeHealthPro.com

8. Embrace diversity

“For the first time, employers are likely to have up to five generations working together — matures, baby boomers, Generation X, millennials (Generation Y) and now Generation Z. From their workstyles to their lifestyles, each generation is unique.” Bruce Hentschel, leads strategy development, specialty benefits division, Principal Financial Group

9. Non-traditional needs

“Millennials have moved the needle in terms of work-life balance. They don't expect to sit in their cubicles from 9-5. They want flexibility in their work location and hours. However, on the flip side of that, they are more connected to their work than generations before, often logging ‘non-traditional’ work hours that better fit into their lives.” Amy Christofis, client account executive at Connecture, Inc.

10. Listen in

“If there's one thing the Trump victory teaches us, it's to listen to the silence in others. Millennials may be giving the financial industry the silent treatment, but that doesn't mean they don't want to talk.” Christopher Carosa, CTFA, chief contributing editor,FiduciaryNews.com

 

See the original article Here.

Source:

Moriarty-Siler E. (2017 February 03). 10 tips for next generation benefits [Web blog post]. Retrieved from address http://www.benefitspro.com/2017/02/03/10-tips-for-next-generation-benefits?page_all=1


3 Financial Risks That Retirees Underestimate

Are you worried about the risks associated with retirement? If so check out this article from Kiplinger about some of the risks associated with retirement that retirees underestimate by Christopher Scalese

When you think of risk in retirement, what comes to mind? For many, the various risks associated with the stock market may be the first. From asset allocation risk (avoiding keeping all of your eggs in one basket) to sequence-of-return risk (the risk of taking out income when the market is down), these factors become increasingly important once your paychecks stop and you begin drawing from your investments for retirement income.

However, these are only the tip of the iceberg when it comes to key risks that should be considered for retirement planning in today's economy. Here are three areas I commonly see retirees and pre-retirees forgetting to consider:

1. Portfolio Failure Risk

How long can you live off of income from your investments? Is it likely that your investments can provide an income stream you won't outlive? There are many theories, such as the ever-popular 4% rule, which suggests that, if you maintain a portfolio consisting of 60% bonds and 40% equities, you can take 4% of your total portfolio each year. However, studies in recent years have shown this method to have about a 50% failure rate based on today's low-interest rates and market volatility.

Another withdrawal method is guessing how long you'll live and dividing your savings by 20 to 30 years—but what happens if you live 31 years?

If you do not have a written income plan for how to strategically withdraw from your accounts over the duration of your retirement, this may be a significant risk to consider.

2. Unexpected Financial Responsibility Risk

Life is full of surprises, and retirement is no different. Today's retirees are known as the "sandwich generation" with financial pressures coming from all sides—often having to provide for grown children and aging parents at the same time.

Additionally, there are difficult but significant financial planning considerations for the future loss of a spouse. You can expect to lose a Social Security payment and potentially see changes to a pension. Simultaneously, tax brackets will shrink when going from married to single, taking a larger piece of your already-reduced income.

Having a proactive, flexible financial strategy can be essential in helping you adapt to your many changing needs throughout the course of your retirement.

3. Health Care Risk

Beyond the considerations for inflation on daily purchasing power in retirement, rising costs of health care, particularly as Americans continue living longer, require explicit planning to avoid a physically disabling event from becoming a financial concern. From Medigap options to long-term care and hybrid insurance policies, considering insurance coverage for perhaps one of the most significant expenses in retirement may be a pivotal point in your retirement planning.

While these obstacles may seem daunting, identifying and understanding the concerns unique to your retirement goals should be the first step to help overcome them.

See the original article Here.

Source:

Scalese C. (2017 January). 3 financial risks that retirees underestimate [Web blog post]. Retrieved from address http://www.kiplinger.com/article/retirement/T037-C032-S014-3-financial-risks-that-retirees-underestimate.html


10 tips for furthering benefits education

Are you looking for some new ways to educate yourself in the world of benefits? Here are some great tips from Benefits Pro you can use to help increase your knowledge about benefits by Erin Moriarty-Siler

In order to maintain relevant in today's ever-changing benefits market, it's important that brokers and benefits professionals keep learning.

Whether that be by networking with others in the industry, diving in with new technology efforts, or simply chatting about client needs, it's essential industry professionals keep learning.

As part of our our marketing and sales tips series, we asked our audience for their thoughts on how to continue their benefits education.

Here are the 10 tips we liked best.

1. Cost-effective education excites employees

Employees are eager to better themselves, especially if doing so can be cost effective through innovative benefits. Consider offering financial planning and educational services like career development courses or college prep classes, as these are becoming more and more popular.

2. Industry events

Disruption will continue in the insurance industry, but will you be able to keep up? Stay up-to-date by attending industry events, such as the BenefitsPRO Broker Expo in April.

3. Practice makes perfect

To retain knowledge and keep a competitive edge, it's important to practice and refresh skills year-round (think social media training, for instance).

4. It's not a "no," it's a growth opportunity

Treat rejection as a learning opportunity. Find ways to turn a no into a yes and remember that persistence prevails.

5. Trial and error is the best teacher

“Experiments are usually about learning. When you get a negative outcome, you’re still really learning something that you need to know.” Linda Hill, professor of business administration, Harvard Business School

6. Think outside your own experience

Look to your colleagues for exclusive insight you might not have. Ask a younger co-worker what they’d most like out of a benefits package, or what type of insurance is best for your officemate nearing retirement.

7. Learning and education are not created equal

“I’m a three-time college dropout, so learning over education is very near and dear to my heart, but to me, education is what people do to you, learning is what you do to yourself.” Joi Ito, director, MIT Media Lab

8. Become the expert

“You can distinguish yourself with top-notch technical or industry knowledge. It pays to be viewed as an expert, whether in risk management or the regulatory landscape. You’ll open up many opportunities by becoming an authority.” Renee Preslar, communications manager, Transamerica Employee Benefits

9. Money, money, money

“The No. 1 employee wellness trend in 2017 will be an increasing focus on helping employees better themselves financially by providing the tools, resources, education and environment to improve their finances.” Matt Cosgriff, retirement plan consultant, BerganKDV Wealth Management.

10. Too much is never enough

“You can never be overdressed or overeducated.” Oscar Wilde

See the original article Here.

Source:

Moriarty-Siler E. (2017 January 24). 10 tips for furthering benefits education[Web blog post]. Retrieved from address http://www.benefitspro.com/2017/01/24/10-tips-for-furthering-benefits-education?ref=hp-news&page_all=1