Concerns about future of Social Security amplify workers’ retirement insecurity

Concerns about future of Social Security amplify workers’ retirement insecurity

A new multi-year study finds 76% of workers in 2017 expressed concern that Social Security will not be there for them when they are ready to retire.

Social Security benefits lose 34% of buying power since 2000, including 4% in past year

Social Security benefits lose 34% of buying power since 2000, including 4% in past year

Social Security benefits have lost 34% of buying power since 2000, according to the 2018 Social Security Loss of Buying Power Study released in late June by The Senior Citizens League.

Association Health Plans: What small businesses need to know

Association Health Plans: What small businesses need to know

The U.S. Department of Labor recently announced regulations that will allow for the expansion of Association Health Plans (AHPs). But what exactly are AHPs, and what do they mean for small businesses?

Medicare Advantage plans will soon cover things like groceries, air conditioners

 Medicare Advantage plans will soon cover things like groceries, air conditioners

The Centers for Medicare & Medicaid Services (CMS) has expanded how it defines the "primarily health-related" benefits that insurers are allowed to include in their Medicare Advantage policies. Insurers would include these extras on top of providing the benefits traditional Medicare offers.

Study: Medicare Advantage Cut ER Visits 33% Compared To Fee-For-Service

Study: Medicare Advantage Cut ER Visits 33% Compared To Fee-For-Service

A new study by health research firm Avalere Health shows that Medicare beneficiaries enrolled in a Medicare Advantage plan have 33% less Emergency Room visits and 23% fewer stays in the hospital compared to those enrolled in traditional fee-for-service Medicare.

Why MYGA Rates Are Rising So Rapidly

I wanted to share this article from Stan "The Annuity Man" Haitcock for Marketwatch that perfectly explains why we find ourselves in a market of rapidly increasing Multi-Year Guarantee Annuity (MYGA) rates. We shall see if rates continue to rise as rapidly under the new Fed Chairman Jerome Powell as they did under outgoing Chairman Janet Yellen.

 The stock-market gurus seem to have already priced in the Fed's anticipated rate hike this week, but the annuity industry has its fingers and toes crossed with the hope of higher interest rates creating more sales through better contractual guarantees.   Everything is political   The interest-rate argument and decision is the ultimate political football. Senior citizens and retirees are clamoring for higher rates and reminisce about  Jimmy Carter CDs  they used to buy at their local bank. Most politicians see it only as a barometer for votes.  With over 90 million Americans now out of the workforce, and the economy limping along, there is really no valid argument, in my opinion, for rates to rise. However, I will be the first one to cheer if the Fed goes against current statistics.  As we all know by now with rates, nothing is a done deal. In a  recent column  by Ben White at Politico, he pointed out that Hillary Clinton backers aren't thrilled with a possible rate hike because they think it will somehow hurt her chances for the presidency. Go figure.   Lifetime income = mortality + interest rates   Even though different annuity types contractually solve for specific goals like legacy and principal protection, the majority of annuity strategies revolve around lifetime income. Sadly, most people are unaware that annuities are the only product on the planet that will pay regardless of how long you live. The trendy definition for this contractual solution is called solving for "longevity risk," and should be the only benefit proposition that annuity industry promotes.  Regardless of the type of annuity, the lifetime income-stream guarantee is a combination of return of principal and interest. Even though life expectancy is the primary pricing mechanism, interest rates do play a secondary role. So if the Fed raises rates, then annuity contractual guarantees will improve.   How rising rates will affect specific annuity types   For multi-year guarantee annuities ( MYGA ), which are similar to a CD in function, if rates rise, the contractually guaranteed annual yields will increase as well. Single-premium immediate annuities ( SPIA ), which some would say are the best contractual solution for "income now," will also have higher guaranteed payouts if rates increase.  For a deferred-income annuity ( DIA ), structured like an SPIA, but solving for "income later" needs, payouts will also be better with higher rates. Qualified-longevity annuity contracts ( QLAC ) — this is a DIA (aka: longevity annuity) — but for a traditional IRA or 401(k), will see help for payouts as well with a rate hike.  An  Income Rider  is an attached benefit that you can add to select variable and indexed annuities at the time of application to use for future income guarantees. Higher interest rates will raise the annual crediting percentages on  income riders .  For a variable annuity (VA), guaranteed contractual minimums will increase along with attached income-rider guarantees.  Fixed-index annuity ( FIA ) — the overhyped indexed annuity product — will also benefit from an interest-rate increase with their guaranteed contractual minimum return and any attached income rider. Even though FIAs were designed for CD-level returns, their index option strategies could also be more preferable with a Fed rate hike. However, even with higher rates, you will still get CD (not stock market) type returns.   Timing strategies are futile   I typically advise against anyone trying to time interest rates when considering the purchase of annuities. However, I have made a one-time exception because the Fed has indicated a definite decision this week. For the throngs of people who have been trying to time rates for the past three years, this week's decision might be your holiday gift.  With that being said, never forget that annuity companies have the big buildings for a reason. There are some really smart math geeks in those marble corridors that are pricing product guarantees to entice you into placing your money with them. They are constantly solving for and offering contracts to address the questions you are asking when it comes to interest rates, regardless if they are up or down.   There's a fly in the mortality ointment   Even if rates rise,  life expectancy  tables are expected to change across the board on 2016 to reflect you living to an older age. That means annuity payments will be longer, and in turn, lower. Sorry to be such a downer, but this is a fact that you need to be aware of when considering an annuity purchase right now. In other words, interest rates aren't the only item for consideration.   Carrier response is the big unknown   So if  Janet Yellen's Fed  does raise rates this week, the big unknown is the reaction time of annuity carriers to adjust their contractual guarantees. It's a competitive annuity world that is trying to attract your transfer of risk money, so one carrier change will definitely trigger their competitors to follow.  It will be interesting to see what happens with the Fed's decision. The interest-rate ball is in your court, Ms. Yellen. Let's hope it's an easy layup for you.

The stock-market gurus seem to have already priced in the Fed's anticipated rate hike this week, but the annuity industry has its fingers and toes crossed with the hope of higher interest rates creating more sales through better contractual guarantees.

Everything is political

The interest-rate argument and decision is the ultimate political football. Senior citizens and retirees are clamoring for higher rates and reminisce about Jimmy Carter CDs they used to buy at their local bank. Most politicians see it only as a barometer for votes.

With over 90 million Americans now out of the workforce, and the economy limping along, there is really no valid argument, in my opinion, for rates to rise. However, I will be the first one to cheer if the Fed goes against current statistics.

As we all know by now with rates, nothing is a done deal. In a recent column by Ben White at Politico, he pointed out that Hillary Clinton backers aren't thrilled with a possible rate hike because they think it will somehow hurt her chances for the presidency. Go figure.

Lifetime income = mortality + interest rates

Even though different annuity types contractually solve for specific goals like legacy and principal protection, the majority of annuity strategies revolve around lifetime income. Sadly, most people are unaware that annuities are the only product on the planet that will pay regardless of how long you live. The trendy definition for this contractual solution is called solving for "longevity risk," and should be the only benefit proposition that annuity industry promotes.

Regardless of the type of annuity, the lifetime income-stream guarantee is a combination of return of principal and interest. Even though life expectancy is the primary pricing mechanism, interest rates do play a secondary role. So if the Fed raises rates, then annuity contractual guarantees will improve.

How rising rates will affect specific annuity types

For multi-year guarantee annuities (MYGA), which are similar to a CD in function, if rates rise, the contractually guaranteed annual yields will increase as well. Single-premium immediate annuities (SPIA), which some would say are the best contractual solution for "income now," will also have higher guaranteed payouts if rates increase.

For a deferred-income annuity (DIA), structured like an SPIA, but solving for "income later" needs, payouts will also be better with higher rates. Qualified-longevity annuity contracts (QLAC) — this is a DIA (aka: longevity annuity) — but for a traditional IRA or 401(k), will see help for payouts as well with a rate hike.

An Income Rider is an attached benefit that you can add to select variable and indexed annuities at the time of application to use for future income guarantees. Higher interest rates will raise the annual crediting percentages on income riders.

For a variable annuity (VA), guaranteed contractual minimums will increase along with attached income-rider guarantees.

Fixed-index annuity (FIA) — the overhyped indexed annuity product — will also benefit from an interest-rate increase with their guaranteed contractual minimum return and any attached income rider. Even though FIAs were designed for CD-level returns, their index option strategies could also be more preferable with a Fed rate hike. However, even with higher rates, you will still get CD (not stock market) type returns.

Timing strategies are futile

I typically advise against anyone trying to time interest rates when considering the purchase of annuities. However, I have made a one-time exception because the Fed has indicated a definite decision this week. For the throngs of people who have been trying to time rates for the past three years, this week's decision might be your holiday gift.

With that being said, never forget that annuity companies have the big buildings for a reason. There are some really smart math geeks in those marble corridors that are pricing product guarantees to entice you into placing your money with them. They are constantly solving for and offering contracts to address the questions you are asking when it comes to interest rates, regardless if they are up or down.

There's a fly in the mortality ointment

Even if rates rise, life expectancy tables are expected to change across the board on 2016 to reflect you living to an older age. That means annuity payments will be longer, and in turn, lower. Sorry to be such a downer, but this is a fact that you need to be aware of when considering an annuity purchase right now. In other words, interest rates aren't the only item for consideration.

Carrier response is the big unknown

So if Janet Yellen's Fed does raise rates this week, the big unknown is the reaction time of annuity carriers to adjust their contractual guarantees. It's a competitive annuity world that is trying to attract your transfer of risk money, so one carrier change will definitely trigger their competitors to follow.

It will be interesting to see what happens with the Fed's decision. The interest-rate ball is in your court, Ms. Yellen. Let's hope it's an easy layup for you.

Meet Your New Medicare Card

New Medicare Card.jpg

The Centers for Medicare Services (CMS) has revealed the design for the new Medicare cards that all Medicare beneficiaries should receive by the end of 2018 with their new Medicare number. The standard system of using a beneficiaries social security number, followed by a letter (generally A) was becoming a liability for seniors to become susceptible to identity theft. The CMS has previously stated that they would be mailing these cards out in April of 2018, but please let us know if you start to see them earlier!

When Is The Solar Eclipse Where I Am?

Solar_eclipse_1999_4_NR.jpg

Solar Eclipse 2017 is almost upon us! For the first time since 1970s, a total solar eclipse will be visible across the contiguous United States on Monday, August 21st.

While all of Florida will not be in the range of the total eclipse, the majority of the sun will be blocked by the moon as they cross paths. In New Port Richey, over 81% of the sun will be covered at the eclipse's peak around 2:40pm EST. 

Follow this handy link to find out when the solar eclipse will be showing in full force where you are. Take advantage of nature's display on Monday, as the next time a total eclipse will reach the United States isn't until April 8, 2024!

Make sure to keep those eclipse glasses on! While it may seem that the sun's rays are dampened as the moon crosses over the sun, you can damage your retinas staring directly at it, even with sunglasses. While it is relatively safe to look up at the exact moment when the moon covers the sun in its totality, this will not happen in Florida, so make sure to cover your eyes.

Eclipse glasses have been selling out all over the country, but you may be able to pick them up still at local retailers like Walmart and 7/11. In our area, the eclipse will start around 1:20pm EST and finish by 4pm.