​Do you use an employer-sponsored 401(k) plan to save for retirement? A 401(k) is one of the most powerful savings tools available, primarily because it offers tax-deferred growth and possibly employer matching contributions. Those two features can help you accumulate a significant amount of assets over time.
 
Your 401(k) plan is meant to be a savings vehicle for retirement. However, many plans allow you to take distributions before you reach retirement age. For instance, you may be able to take a loan from your plan. Or you can even cash out your plan balance if you leave your employer.
 
It can be tempting to dip into your 401(k) balance before retirement, especially if you face an emergency. However, you may want to resist that urge. A new study found that early 401(k) distributions may be creating a retirement crisis. A study from Deloitte estimates that there will be more than $7 billion in 401(k) loan defaults in 2018 alone. The study also found that the loan distributions and the loss of future investment growth could create a $2.5 trillion shortfall for retirees.1
 
Plan distributions and cash-outs are also creating issues. This usually happens when people change jobs. After leaving an employer, many people opt to take their vested balance in a lump sum rather than roll it into an IRA. This decision eliminates future tax-deferred growth and creates current penalties and tax liabilities. More than 40 percent of job changers cash out their plan, and in 2017 the total value of cash-out distributions reached almost $68 billion.2
 
You can avoid these risks by planning in advance and staying informed about your options. Below are a few tips on how to protect your 401(k) assets. Your financial professional can also help you develop a strategy.

401(k) Loans
 
The costs associated with a 401(k) loan can be significant. Of course, the best way to avoid those costs is simply not to take a loan. If you’re facing a significant financial challenge, however, it may be too tempting to pass up. You may feel like a loan is your best option.

Consider the consequences and the alternatives, though, before you take a loan. You’ll lose future compounded growth on the loan amount. That could substantially reduce your future savings. Also, a portion of your future 401(k) contributions will go toward loan repayment instead of retirement savings. And if you default on the loan, you’ll have to pay taxes and maybe an early distribution penalty. Look at your budget and other options to find an alternative to taking a loan.
 
If you already have a 401(k) loan, you may want to see if your plan administrator allows early repayments. Some plans allow you to increase your regular contribution and pay off the loan faster. That could reduce your interest payments and get you back on track to saving for retirement.

Distributions
 
It used to be that people stayed with one employer their entire career. Those days are long gone. Today, more than 20 percent of 401(k) participants change jobs each year.2
 
When you change jobs and leave behind a vested 401(k) balance, you have a few options. One is to cash out the plan, which can be tempting. The distribution can provide a quick lump sum of cash to help you pay off debt or achieve other short-term goals.

However, a plan cash-out can be costly. You lose future tax-deferred growth on those funds, and you’ll likely have to pay a 10 percent early distribution penalty on the entire amount. The result is that you’ll get an amount that’s far less than your actual balance.
 
One way to avoid these costs is to roll your 401(k) balance into an IRA. There are no taxes or penalties when you roll over a 401(k) balance. Also, an IRA offers tax-deferred growth. You can choose from a wide range of tools and allocation options to meet your needs, and then your funds will grow tax-deferred until you retire.

Ready to implement a strategy to protect your 401(k) plan? Let’s talk about it. Contact us today at J. Harris Financial. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.thinkadvisor.com/2018/10/10/leakage-loan-defaults-to-spark-2-5-trillion-retire/
2https://www.workforce.com/2018/02/14/retirement-account-bank-account-employees-cash-401ks-record-numbers/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18184 - 2018/10/22

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​Think about your biggest financial concerns. What tops the list? If you’re like most Americans, you’re worried about saving for retirement, paying down debt or even dealing with costly medical bills. Most other financial risks can be covered through various insurance products.

There’s one potential risk that may deserve more attention, though. It’s disability, and it may be more likely than you think. According to the Council for Disability Awareness, 25 percent of all adults will miss work because of disability at some point in their lives.1
                                                                                        
Many people don’t think about disability risk because they participate in a group disability plan. Disability insurance is a common element in many group benefit plans. The coverage is often low-cost, so it may seem like an effective form of protection against disability risk.
 
Is group coverage really sufficient, though? It depends on your budget and objectives. It may be that an individual policy better fits your needs. Below are some of the key differences between group disability insurance and an individual policy. If you don’t have group coverage, or if you feel yours is insufficient, you may want to talk to your financial professional about additional protection tools.

Coverage Flexibility
 
Disability insurance is meant to replace your income if you’re unable to work because of injury or illness. The benefits are usually paid as a percentage of your monthly income. In a group plan, the percentage is usually defined in the plan document and is the same for everyone, regardless of individual need. It’s not uncommon for group plans to replace only half or 60 percent of income.
 
Individual policies allow for more flexibility so you can adjust your coverage to better fit your needs. For example, some may pay up to 80 percent or even all of your income as a benefit.
 
There are also differences with regard to when the benefit is paid. All disability policies have what’s called an elimination period. This is an amount of time that must pass between the time you suffer the disability and when benefits start. For instance, many policies have a 60- or 90-day elimination period.
Again, in a group plan, the elimination period is fixed and defined for all participants. In an individual policy, you may be able to select from a variety of elimination periods to better fit your needs.

Portability
 
One of the biggest challenges with any employer-based insurance is that the coverage is tied to your employment. If you ever leave the employer, you lose the insurance. Your new employer may not have similar protection.
 
An individual insurance policy stays with you regardless of where you work. That means you always have disability protection, no matter how many times you change employers. As long as you meet the premium requirements, the policy stays in force.

Eligibility
 
The biggest distinction between a group policy and an individual policy may be how disabilities are defined. To qualify for benefits, your disability must meet the definition and guidelines of your specific policy.

Many group policies have limited definitions of disability. For example, you may have to be totally disabled to qualify for benefits. Of course, while many disabilities may take away your ability to continue in your career, they aren’t necessarily total disabilities. If you’re a dentist and you severely injure your hand, you may be unable to continue work as a dentist even if you could work in other careers.

With an individual policy, you can choose “own occupation” coverage. This means you are considered disabled if you aren’t able to continue in your career, even if you could work in other jobs. This type of coverage can be helpful if you work in a highly skilled industry.
 
Ready to protect yourself against disability? Let’s talk about it. Contact us at J. Harris Financial. We can help you analyze your risk and develop a plan. Let’s connect soon and start the conversation.
 
1http://disabilitycanhappen.org/disability-statistic/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18185 - 2018/10/22

​​If you ask most millennials about their planning, you’ll likely get an answer about their career, family or perhaps even a business they want to start. Millennials, generally defined as those born between the early 1980s and early 2000s, are so young that their focus is on immediate goals and challenges.
 
If you’re a millennial and you haven’t planned for retirement or other long-term goals, you still have time to do so. However, there’s one type of planning that you may not want to put off for the future. It’s estate planning, which involves a strategy for your assets and loved ones in the event of your death.
 
Granted, death may be a highly unlikely scenario at your age. Also, it’s not exactly pleasant to think about one’s own death. However, the issue is too important to ignore. That’s especially true if you have children or other dependents. Many people think estate planning is only for the wealthy or those nearing retirement. The truth is that it’s an important process for most adults. Below are a few ways in which you and your family could benefit from a simple estate plan.

Child Care
 
Perhaps one of the most important aspects of any estate plan is that it allows you to designate who will care for your children after you pass away. This is done via a will. If you die without a will, the local probate court will make all decisions on your behalf, including who will care for your children. The court may select someone you wouldn’t have chosen yourself.
 
You also may have life insurance that would go to your children upon your death. Many insurers won’t pay a death benefit to a child. Instead, the benefit may go to a court-appointed guardian, whose wishes may not align with your own. Instead, you could set up a trust on behalf of your children and make the insurance payable to the trust. That way, the money would be used the way you want.

Financial and Health Care Decisions
 
Estate planning isn’t just for what happens after you pass away. It also helps you plan for periods in which you may be disabled or physically unable to manage your own affairs. For instance, you could be involved in a dangerous accident or possibly be diagnosed with a severe illness like cancer. While these types of events aren’t likely, they do happen.
 
You can use estate planning documents such as a power of attorney or living will to guide decisions on your behalf if you’re ever incapable of making them yourself. These tools could be especially helpful if you’re single or if you have a partner but aren’t married. For instance, your power of attorney can designate a specific individual to make all your financial and health care decisions.

Digital Assets
 
If you’re like many millennials, you have some kind of digital footprint. Maybe you’re active on social media. You almost certainly have email. Maybe you’re a freelancer or entrepreneur and do much of your work online.
 
If you pass away, your family may need to access your accounts. You can create documents that provide them with specific instructions on who should access which accounts and what login information to use. This could help your family gather needed information and ease the process of settling your estate.
 
Ready to create your estate plan? Let’s talk about it. Contact us today at J. Harris Financial. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18086 – 2018/10/1

​Income is at the core of any retirement strategy. Simply put, your goal in retirement is to generate more income than you spend. That way you can preserve and increase your assets and make your savings last for life. If you can’t generate enough income, you may deplete your assets and face difficult challenges in the later years of retirement.
 
A number of issues could threaten your retirement income. One is taxes. Another is inflation, or the gradual increase in prices from year to year. If you’re generating income from your retirement savings, you also may face market risk. A downturn in the market may threaten your ability to create income.
 
One potential strategy is to create a stream of guaranteed* retirement income using a tool called an annuity. Annuities are popular for a wide range of reasons, but one of the biggest is their ability to generate a guaranteed* lifetime income stream. Below are a few ways you can incorporate an annuity into your retirement strategy:

SPIA
 
Single Premium Immediate Annuities (SPIA) are annuities that allow you to convert a portion of your retirement assets into a guaranteed* income stream. The insurer calculates a payment amount based on your premium amount and age. Generally, the older you are, the higher your income amount will be. You then receive the payment for the rest of your life.
 
There are usually other payment durations available besides a lifetime income stream. For example, you could get payments over a set number of years. You could get an income amount for your lifetime and your spouse’s lifetime. Remember, though, that changing the duration will change the payment. The shorter the expected duration, the greater the payment will be.
 
It’s also important to note that once you purchase a SPIA it cannot be surrendered or reversed. Once you convert your assets into the income stream, you can’t reverse your choice. You no longer have access to the lump sum and instead have the regular payments. It’s always wise to maintain liquid assets as an emergency reserve.

Interest
 
There are some deferred annuities that pay regular periodic interest. These annuities are called fixed deferred annuities. You purchase the annuity with a lump sum of money and defer income payments while receiving a fixed interest rate over a set period of time. After that period, your interest rate may fluctuate, but it will never go below a stated minimum rate.
 
You can let your interest accumulate and grow your money on a tax-deferred basis. However, you can also take withdrawals of the interest as income. These annuities have a traditional stated rate of interest are not subject to  market exposure, so there’s no risk of loss due to market volatility. A fixed annuity could be an effective way to generate supplemental income.

Income Rider
 
Some annuities offer additional benefits through optional riders. These riders may include or increase any fee for the annuity but also provide additional protection. One of the most popular riders is a guaranteed* minimum income benefit.
 
With this rider, the annuity typically has an income account value that grows by a stated rate of interest. This income account value is used to determine the guaranteed lifetime income amount that will be available once you elect to turn on income.  The income account value is separate from the annuity’s accumulated value and is not available as a lump sum withdrawal.   
 
These benefits are commonly found on fixed indexed annuities and variable annuities. While each operates differently, both types allow you the opportunity to increase your assets while providing for a guaranteed minimum amount if income in the future. Your financial professional can help you decide whether this type of rider makes sense for you.
 
Ready to develop your retirement income strategy? Let’s talk about it. Contact us today at J. Harris Financial. We can help you analyze your needs and goals and create a plan. Let’s connect soon and start the conversation.
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18113 – 2018/10/8

​Considering buying life insurance? That could be a wise decision, especially if you have children or other dependents who rely on you for income. Many people purchase life insurance to protect their spouse, children or other loved ones. If you pass away, those closest to you may face financial difficulty. Life insurance minimizes that risk and provides them with a tax-free benefit they can use to overcome financial challenges like debt or loss of income.
 
You may find the available life insurance choices to be overwhelming. A wide range of policies are designed to meet different goals and needs. You also may be unsure of how much coverage you need or how the policy will interact with your group life insurance.
 
Below are a few common questions and answers about purchasing life insurance. A financial professional can help you answer additional questions and find the right protection for your needs.

Do I still need individual coverage if I have it through my employer?
 
It’s common for employers to offer life insurance protection as part of a group benefit package. This employer-based coverage is often affordable or may have no cost. If you’re covered by an employer plan, you may believe that you don’t need an individual policy.
 
You may not want to rely on employer coverage as your only form of protection, though. If you lose your job or change employers, you may lose your group coverage. If your health has declined in the meantime, you may not qualify for an individual policy. You can avoid that risk by purchasing individual coverage while you’re healthy. An individual policy helps you stay covered no matter what happens in your career.

How can I get the coverage I need and stay in budget?
 
Perhaps you need a significant amount of coverage but are also on a tight budget. Fortunately, there are a couple of ways you can maximize your premium dollars and get as much protection as possible. One is to purchase term insurance. This provides coverage for a limited duration, such as 10 or 20 years. Everything else being equal, a term policy is usually more affordable than a permanent policy.
 
Another strategy is to purchase life insurance sooner rather than later. Two of the biggest factors in calculating your premium are your age and your health. The older you are, the higher your premiums are likely to be. There’s also the risk that you may develop a health issue as you get older. You can avoid that risk by purchasing life insurance as soon as you identify a need.

How much death benefit do I need?
 
It’s impossible to predict every challenge your family may face after your death. People often use simple formulas, such as a multiple of their annual income, to estimate a coverage amount. However, those equations and formulas aren’t based on your unique needs.
 
The best approach is to consider the financial needs and difficulties your family may face after you pass away. Would they miss your income? Would they face sizable debts? Do you want to help them achieve certain financial goals such as retirement or higher education? A financial professional can help you estimate the cost of these objectives and project an accurate funding need.
 
Ready to develop your life insurance strategy? Let’s talk about it. Contact us today at J. Harris Financial. We can help you analyze your needs and find the right coverage for you. Let’s connect soon and start the conversation.
 

Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17962 – 2018/9/4

​Are you in the market for life insurance? That could be a wise decision for you and your family. Life insurance is an effective tool for protecting against one of life’s greatest risks—the death of a breadwinner or family provider.
If you’ve never purchased life insurance before, you may be overwhelmed by the wide range of options available. How do you know which type is right for you? And how do you know how much coverage is right for you?
Those are important questions, but they’re not the only choices you may face. Many insurance policies offer optional benefits called riders. These are additional features you can add to your policy. Some increase your premiums, but others don’t. The decision to choose a particular rider should be based on your unique needs and goals.
Below are a few of the most popular riders and why they might be right for you. A financial professional can help you analyze your needs and develop the appropriate strategy.
Waiver of Premium
This rider is so common that it’s now often included in the base coverage of many policies. It’s a feature that waives your premiums if you ever become disabled and unable to work.1 Essentially, it’s a protection against disability, so you don’t lose your life insurance along with your ability to generate income. Even if you think disability is a remote possibility, this rider is usually so affordable that it makes sense.
Guaranteed Insurability
Your eligibility for life insurance protection is based on your age and your health. If you suffer a major health issue, like a heart attack or cancer, you may have trouble getting life insurance in the future, even if you’ve recovered from the ailment.
Guaranteed* insurability is a rider you can add to your life insurance policy that minimizes that risk in the future. Assume you purchase a policy when you’re healthy and choose the guaranteed* insurability rider. Then you suffer a serious health crisis. Your rider allows you to purchase additional coverage in the future at your original health classification, without going through underwriting. It could be a very helpful form of protection.
Accelerated Death Benefit
Life insurance is meant to provide protection to your loved ones after you pass away. However, things don’t always go according to plan. It’s possible you and your family may need the death benefit before you die.
This rider provides that option in the event you suffer a terminal illness. The rules of each policy are different. If your diagnosis qualifies, however, you can take a portion of your death benefit while you are battling the illness. Your family can then use it to pay for care, medical bills or any other expenses.
Return of Premium
Term insurance is often popular because it’s an affordable coverage option. It provides protection for only a limited period of time, however, and your premiums don’t accumulate as cash value inside the policy. If you outlive your policy, you may feel as though you wasted your premium payments.
A return-of-premium rider allows you to get some of those premium dollars back at the end of the term. While this may seem attractive, be aware that these riders often increase the premium significantly. It may be more cost-effective to take the lower premium and simply save the difference.
Ready to plan your life insurance protection strategy? Let’s talk about it. Contact us today at J. Harris Financial. We can help you analyze your needs and choose the policy that’s right for you. Let’s connect soon and start the conversation.
 
1http://disabilitycanhappen.org/disability-statistic/
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
17964 – 2018/9/4