Can Money Buy Happiness

In 2010, a study was published by two Nobel prize-winning economists purporting that people with more money feel better about their lives. However, that held true only up to an annual salary of $75,000 ($90,000 in today’s dollars). Past the $75k threshold, people weren’t necessarily any happier.

That scenario has apparently changed in the ensuing decade. A recently updated version of the study now concludes that happiness continues to increase with income – without a cap.1

How do you define happy? The way we quantify happiness during our working years may be different from retirement. That’s largely because some of us define ourselves by our work or career status – how much we earn and whether we’ve reached our professional goals. Once we retire, the focus is put less on these things – our happiness can be shifted towards other things.

It may be family, travel, improving our golf or tennis game, pursuing hobbies, or checking off that bucket list. When we are in the retirement planning stage, it’s important to think about what will make you happy in retirement. From there, you can establish a number – your total assets – that support those concrete goals. That’s different from coming up with a random number and then living whatever lifestyle you can with it. If you’d like to discuss your retirement goals in more depth, feel free to contact us.

The 2020 World Happiness Report promises to be an interesting read because it’s the first in which data was collected during a global pandemic. While you would think the responses would be dreary, there are some positive patterns to consider. Across 12 countries, people affected by lockdowns developed stronger relationships with friends, neighbors and even the front-line workers at their local stores. In fact, 62% reported that living under a lockdown made them feel more connected to their community. More than half (58%) determined that those human connections are what make them truly happy.2

If you speak with retirees from earlier generations, there has long been a common theme that the important factor affecting a happy retirement is health – not wealth. More than 80% of today’s retirees agree. According to a recent Merrill Lynch study, regardless of wealth, Americans age 50 and older say that their biggest worry in preparing for retirement is being able pay for health-care expenses.3

Everyone’s ideal retirement is different. Your actual plans are what can change the goalposts for “the number” you need to have saved by retirement. While traditional retirement advice recommends we save anywhere from 10 to 15% of current income for retirement, you may be able to save less – or need to save more – to achieve the specific lifestyle you want in retirement. In other words, budget for the lifestyle you plan to enjoy, not the income that you presently earn.4

It’s one thing to scale your annual retirement income to your lifestyle – but what about the big-ticket risks? The Society of Actuaries (SOA) has identified a number of post-retirement risks that can affect income, such as the need for long-term or nursing care.5 By unbundling the income and insurance elements of your plan, you may be better able to afford the retirement lifestyle that will make you happy.6

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

1 Alex Ledsom. Forbes. Feb. 7, 2021. “New Study Shows That More Money Buys More Happiness, Even For The Rich.” https://www.forbes.com/sites/alexledsom/2021/02/07/new-study-shows-that-more-money-buys-more-happiness/?sh=561c2ff770d5. Accessed March 1, 2021.

2 World Happiness Report. Feb. 24, 2021. “Let’s Build Back Happier!” https://worldhappiness.report/blog/lets-build-back-happier/. Accessed March 1, 2021.

3 Kathleen Coxwell. New Retirement. Jan. 9, 2020. “65 Retirement Tips for a Healthy, Wealthy and Happy Retirement!” https://www.newretirement.com/retirement/retirement-tips-healthy-wealthy-happy-retirement/. Accessed March 1, 2021.

4 Paula Pant. The Balance. Feb. 11, 2021. “Plan for Retirement Based on Lifestyle, Not Current Income.” https://www.thebalance.com/plan-for-retirement-based-on-lifestyle-not-current-income-453919. Accessed March 1, 2021.

5 Ken Hawkins. Investopedia. Jan. 4, 2021. “Common Post-Retirement Risks You Should Know.” https://www.investopedia.com/articles/retirement/08/post-retirement-risks-outlive-assets.asp. Accessed March 1, 2021.

6 Jerry Golden. Kiplinger. Nov. 4, 2020. “Find the Income to Insure Against Retirement Risks.” https://www.kiplinger.com/retirement/601671/find-the-income-to-insure-against-retirement-risks. Accessed March 1, 2021.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

That Pesky Early Withdrawal Penalty: It's There for a Reason

One way for the government to potentially earn more tax revenue is by eliminating the early withdrawal penalty. This is the typical 10%-tax penalty on distributions from retirement accounts by people younger than age 59 ½.1

If that penalty didn’t exist, investors may be more inclined to pull money out of their retirement accounts, whether to purchase necessities or to splurge on a luxury item. Without that penalty, they would pay only income taxes on the distribution, which seems somewhat equitable since they received a tax break on the contributions that went into the account. But paying 10% to the government on top of those taxes? It can be very discouraging.

On the one hand, that means the government will have to wait longer to receive tax revenues on those tax-deferred assets. On the other hand, it means the government will likely receive higher tax revenues because taxes will be due on long-appreciated capital gains. However, the other way the government benefits is because the more that people put away for retirement, the less they will have to rely on government benefit programs during retirement.

So, in many ways, the early withdrawal penalty is a win-win for both investors and the government, except during times when financial struggles are particularly difficult, such as during a pandemic. After the COVID-19 outbreak, millions of Americans lost income, and many had no choice but to pull money out of their retirement accounts to help make ends meet.

If you are considering making a withdrawal from your 401(k) — or any other investment account — to meet your current income needs, give us a call. We can review your financial situation to see if there may be a better way to leverage your assets that will help protect your potential for investment growth in the future.

Recognizing that Americans needed cash fast, the government stepped in with the CARES Act in the spring of 2020, permitting retirement account owners younger than age 59 ½ to withdraw up to $100,000 from their savings without paying the 10% penalty.2 That provision ended in 2020, but a major disaster declaration was signed into effect for account owners who experienced federally declared disasters, not including COVID. For example, during the Texas winter storm.3

However, Olivia S. Mitchell, executive director of the Pension Research Council at Wharton School of Business, says withdrawing money early from retirement accounts for any reason is a terrible idea. According to Mitchell, the biggest danger to doing so is the opportunity risk, and she cited the following example:

Assume a 40-year-old withdraws $50,000 from her retirement account today. By retirement at age 67, she would have given up more than $223,000 in retirement assets (assuming an annual return of 5.7%). Converted into annual benefits, that’s about a $14,000/year reduction in retirement income for the rest of her life.4

In other words, taking $50,000 out of your savings today may save you a 10% penalty, but it could potentially negatively affect your retirement lifestyle in the future.

If you did make a 401(k) distribution last year, note that the CARES Act also included a provision to help restore some of your potential investment gains. Investors have three years to pay the amount withdrawn back to the plan without any tax consequences — income taxes or the early withdrawal penalty.5 This is a substantial expansion period compared to the usual 60 days — and hopefully gives many retirement plan owners time to recoup and repay that “loan” to themselves.

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

1 Jim Blankenship. EFT Trends. Feb. 23, 2021. “16 Ways to Withdraw Money From Your 401(k) Without Penalty.” https://www.etftrends.com/16-ways-to-withdraw-money-from-your-401k-without-penalty/. Accessed Feb. 25, 2021.

2 Mark Paller. Forbes. Feb. 25, 2021. “How The CARES ACT Changed Retirement Plan Distribution Rules.” https://www.forbes.com/sites/forbesfinancecouncil/2021/02/25/how-the-cares-act-changed-retirement-plan-distribution-rules/?sh=6a4193b64add. Accessed Feb. 25, 2021.

3 Alex Briseno and Todd J. Gillman. The Dallas Morning News. Feb. 22, 2021. “Additional 31 Texas counties included in federal major disaster declaration.” https://www.dallasnews.com/news/politics/2021/02/22/additional-31-texas-counties-included-in-federal-major-disaster-declaration/. Accessed Feb. 25, 2021.

4 Knowledge@Wharton. Feb. 23, 2021. “Why Early 401(k) Withdrawals Are a Bad Idea.” https://knowledge.wharton.upenn.edu/article/why-early-401k-withdrawals-are-a-bad-idea/. Accessed Feb. 25, 2021.

5 Andrew Osterland. CNBC. Jan. 21, 2021. “Here are tax issues to consider if you tapped retirement account to weather 2020.” https://www.cnbc.com/2021/01/21/here-are-tax-issues-to-consider-if-you-tapped-retirement-account-in-2020.html. Accessed Feb. 25, 2021.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Shopping for Life Insurance During the Pandemic

It may come as no surprise to learn that there was a jump in life insurance applications during 2020.1 While contemplating one’s demise may feel like something you can delay when healthy, financial planning clearly weighed heavily on the minds of Americans during the current deadly pandemic.

Rest assured that for anyone who already owns a life insurance policy and then passes away due to a COVID-related condition, their beneficiaries will receive the death benefit (as long as premium payments are current). Once you purchase a life insurance contract, the terms are set and cannot be changed after purchase.

However, if you’re considering applying for life insurance while the pandemic is still ongoing, you can expect a few challenges. Because the coronavirus has had a high fatality rate among people age 65 and older, some insurers have temporary limited the age for which they will issue a new policy. Some won’t issue policies after age 70; others have cut the age limit to 60.2

If you have traveled out of the country recently, particularly if you’ve been to a country with a substantial outbreak, the insurer may require a quarantine period before considering your application. The same goes for if you are currently infected with the virus; you’ll have to wait until you are fully recovered to apply for life insurance.

Traditionally, life insurers generally required a physical exam as part of the application process to ensure the candidate wasn’t facing imminent death when he or she applied for a policy. However, because of today’s social distancing guidelines, many insurers have delayed that requirement — relying solely on a medical questionnaire. Those questionnaires will very likely ask if you have been treated for COVID-19.3

Even pre-existing health conditions such as diabetes and asthma, which are high-risk factors for serious COVID-19 cases, may be heavily weighted when determining your policy premium. While medical underwriting is no longer permitted to determine health insurance terms and rates, it is baked into the life insurance application process and can affect individual premiums.

In fact, in upcoming years, as insurers amass and evaluate medical data related to the coronavirus, they are apt to adjust policy terms and rates, particularly in anticipation of subsequent medical conditions suffered by COVID-19 survivors. This is perhaps reason enough to go ahead and apply for life insurance now — assuming you are relatively young and healthy — before those factors become an issue.

Finally, if you’ve lost your job and are worried about being able to keep up with life insurance payments, call your insurer about alternative payment options. Considering today’s high unemployment rate, some carriers are offering to defer premiums for up to 90 days.4

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

1 Megan Leonhardt. CNBC. Sept. 1, 2020. “Applications for life insurance are on the rise—here’s what you should know before you buy.” https://www.cnbc.com/2020/09/01/what-to-know-about-buying-life-insurance-during-the-covid-19-pandemic.html. Accessed Feb. 23, 2021.

2 Cynthia Paez Bowman. Bankrate. Oct. 29, 2020. “Can you get a life insurance policy during COVID-19?” https://www.bankrate.com/insurance/life-insurance/coronavirus-and-life-insurance/. Accessed Feb. 23, 2021.

3 Sterling Price. ValuePenguin. Jan. 15, 2021. “How Is the Coronavirus (COVID-19) Affecting Life Insurance? An FAQ.” https://www.valuepenguin.com/life-insurance-coronavirus-faq. Accessed Feb. 23, 2021.

4 Ibid.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

Is the Market Poised for a Value Shift?

 

The stock market continues to exhibit resiliency in the face of disrupting factors, ranging from a global pandemic to a severe economic decline to a controversial presidential election. For many years, Wall Street analysts warned a market correction was long overdue. Despite intermittent volatility, those concerns largely have not borne out.

You may be tired of worrying about a correction, but there’s no denying many share prices appear to have topped out, if not in an outright bubble.¹ While growth-oriented investors may be willing to keep rolling the dice and hope prices rise even higher, a growing number are looking to transition to value stocks.

Value stocks are considered those priced lower than merited given certain company fundamentals, such as earnings, sales or book value. They are often believed to be overlooked in the market because their returns are relatively unimpressive. However, value stocks are kind of like the tortoise in the race against the hare (i.e., growth stocks). They may slowly plod along but, because they lack “flash” or volatility, can outpace their growth peers in the long term.²

Some stock analysts are starting to favor value stocks in the current landscape. They believe additional stimulus efforts will increase the money supply, and that will drive a commodity boost. Commodity outperformance, in turn, tends to be more positive for value stocks. One investment analyst recently projected value stocks could outperform growth stocks by as much as 30%, as measured from Q4 of 2020 through Q3 of 2024.³

Moving forward, the analysts at Russell Investments say they favor non-U.S. equities over U.S. equities, undervalued cyclical value stocks over expensive technology and growth stocks, and the value offered by emerging markets (EM) equities.⁴

From a performance standpoint, the long-term story is quite different from recent short-term numbers. In 2020, value funds on average lost more than growth funds in the first-quarter market collapse and continued to lag after the market bounced back. By year end, value stock funds posted one of their worst years on record relative to growth funds.⁵

However, when you compare very long-term performance, value stocks have doubled the success of growth stocks. According to Bank of America, since 1926, value investing has returned 1,344,600% compared to 626,600% by growth investing.⁶

We often recommend diversification among investment portfolios, and adding value stocks or value-oriented mutual funds/ETFs is another way to diversify an equity allocation. If you’d like more guidance about stocks and their role in a retirement portfolio, please feel free to contact us.

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

¹ Palash Ghosh. Forbes. Feb. 17, 2021. “Can Stocks Keep Rising Or Is A Correction Imminent? Here’s What To Expect, According To Market Experts.” https://www.forbes.com/sites/palashghosh/2021/02/17/can-stocks-keep-rising-or-is-a-correction-imminent-heres-what-to-expect-next-according-to-eight-wall-street-experts/?sh=3f43a7201fa8. Accessed Feb. 23, 2021.

² Tim Smith. Investopedia. Nov. 26, 2020. “Value Stock.” https://www.investopedia.com/terms/v/valuestock.asp. Accessed March 9, 2021.

³ William Watts. Marketwatch. Feb. 22, 2021. “‘Excessive stimulus’ puts value stocks on track to outperform growth over next 4 years, says Stifel’s Bannister.” https://www.marketwatch.com/story/excessive-stimulus-puts-value-stocks-on-track-to-outperform-growth-over-next-4-years-says-stifels-bannister-11614020385. Accessed Feb. 23, 2021.

⁴ Russell Investments. Feb. 4, 2021. “2021 Global Market Outlook.” https://russellinvestments.com/ca/global-market-outlook. Accessed Feb. 23, 2021.

⁵ Peter Brennan. S&P Global. “Tide may eventually be turning for value stocks after strong end to gloomy 2020.” https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/tide-may-eventually-be-turning-for-value-stocks-after-strong-end-to-gloomy-2020-61992240. Accessed March 9, 2021.

⁶ Rob Berger. Forbes. Nov. 12, 2020. “Do Value Stocks Really Outperform Growth Stocks Over The Long Run?” https://www.forbes.com/advisor/investing/value-vs-growth-stocks-perfo[rmance/. Accessed Feb. 23, 2021.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

 

Retirement Planning Insights

 

Amid lost jobs and a scaled-back economy in 2020, some workers may have decided to retire earlier than planned. There are a couple of Social Security strategies worth considering in this scenario.

First, if both spouses are over age 62, determine if you can make ends meet by taking only one Social Security benefit while letting the other benefit accrue to a higher level. Depending on your circumstances, it may be better to let the higher earner’s benefit accrue untapped as long as possible. This tactic not only provides higher income for the latter stages of retirement, but also allows the surviving spouse to receive a higher benefit – which is important when the household income is cut in half.

A second strategy is to wait until the economy recovers and then look for another job. If you start Social Security and then go back to work in fewer than 12 months, you can stop your benefit and actually pay back the money received. That will reset your start date and enable your benefit to continue accruing until you’re ready to retire again.¹

Remember, there are various strategies you can use to create bridge income should you retire early or just want to give your Social Security benefits and/or investments more opportunity to grow. For example, if you downsize to a less expensive living arrangement, you can use excess equity to create a reliable income stream either throughout a specific period of time, or for life. Please contact us if you’d like to learn more about strategic retirement income solutions.

One of the silver linings of the pandemic was that the average savings rate among Americans increased significantly last year. According to the Bureau of Economic Analysis, the U.S. personal savings rate soared to a record 32.2% in April 2020 – which coincided with many state and local lockdowns. The previous one-month record was set back in May of 1975, at a mere 17.3%. Throughout the past decade, our savings rate has floated between 6-8%.²

Even if for only one month, Americans proved that they could live without many everyday goods and services. For the sake of saving more aggressively for retirement and other long-term goals, consider keeping your savings rate high, even post-pandemic. If that seems too challenging, consider appointing a “cut-back month” when you and your family commit to reducing expenditures just for one month. You may have done that last April; consider doing it again. If you are successful, consider deploying a cut-back month once every quarter.

What’s the best way to accumulate extra savings to build your wealth? Here are the 2021 contribution limits for various tax-advantaged accounts:³

 

·         Employer-sponsored 401(k)/403(b) plans – $19,500 ($26,000 for age 50+)

·         SIMPLE IRA and SIMPLE 401(k) – $13,500 ($16,500 for age 50+)

·         Traditional and Roth IRAs – $6,000 ($7,000 for age 50+)

·         Health Savings Accounts (HSAs) – $3,600 individuals; $7,200 families

 

If you’ve maxed out your available tax-deductible contributions, consider stashing extra cash into a Roth IRA. They’re funded with money you’ve already paid taxes on, so qualified distributions are tax free.⁴ Moreover, a Roth does not mandate required minimum distributions (RMDs) at any age, so if you don’t need that money during retirement, it’s a way to continue accumulating assets for your heirs.

While it is generally recommended that investors save at least 15% of their annual earnings to generate adequate retirement income, that number may need to be higher or lower based on what age you started saving and your retirement goals. To determine the percentage of income (“savings multiple”) you should consider saving going forward, divide your total retirement savings by your annual income.⁵

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

¹ Ilana Polyak. BenefitsPro. Dec. 28, 2020. “3 Social Security changes coming in 2021.” https://www.benefitspro.com/2020/12/28/3-social-security-changes-coming-in-2021/. Accessed Feb. 18, 2021.

² Alex Gailey. NextAdvisor. July 31, 2020. “The Pandemic Has Resulted in Record U.S. Savings Rates, but Only for Some.” https://time.com/nextadvisor/banking/savings/us-saving-rate-soaring/. Accessed Feb. 18, 2021.

³ T. Rowe Price. Feb. 4, 2021. “2021 Key Financial Numbers That You Need to Know.” https://www.troweprice.com/personal-investing/resources/insights/key-financial-numbers.html. Accessed Feb. 18, 2021.

⁴  Roger Young. T. Rowe Price. Feb. 3, 2021. “What You Need to Know When Deciding Between Roth and Traditional.” https://www.troweprice.com/personal-investing/resources/insights/what-you-need-know-deciding-between-roth-and-traditional.html. Accessed Feb. 18, 2021.

⁵  Judith Ward. T. Rowe Price. Feb. 4, 2021. “What Adjustments Should I Make to My Retirement Savings?” https://www.troweprice.com/personal-investing/resources/insights/what-adjustments-should-i-make-my-retirement-savings.html. Accessed Feb. 18, 2021

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

 

Thinking About Relocating?

 

Two-thirds of homebuyers and sellers would consider moving to a different city or area if their employer allowed them to work remotely on a permanent basis. Correspondingly, more than 70% of homebuyers and sellers say they expect to be able to work remotely after the pandemic.¹

 

Here’s a shock: Even if you don’t move, but you work remotely out of state (or several different states, if you travel while working), the income you earn could be subject to those states’ income tax — which could mean you’d be double-taxed. Each state has its own tax laws related to working remotely. While some set a minimum of work days before being subject to state taxes, more than 20 states have a one-day rule for owing state income taxes.² Some states may issue a tax credit to eliminate double taxation of that income, but the credit may not cover the full liability if your home state tax rate is higher.

 

If these circumstances applied to your work status in 2020, it might be a good time to consult with an experienced tax professional. There are many complex tax issues related to last year’s pandemic, including tax deductions associated with working from home, claiming a stimulus credit, rules associated with returning (rolling over) a required minimum distribution (RMD) you took (but didn’t have to) and many others.³ If you need a referral for a tax professional, we may be able to help out.

 

Some states and localities are excited about the prospect of remote workers permanently relocating to areas with a lower cost of living — so much so that they are offering incentives such as flights to Hawaii, an income tax break or up to $10,000 in cash. Most of these inducements have strings attached, like already having a remote job and committing to living in the area for one or two years.⁴

 

Work arrangements aren’t the only reason people may consider moving in the near future. It’s common among new retirees to relocate to a state with a warmer climate, and/or one that has lower or zero state income taxes, such as Florida.⁵ In doing so, a retiree won’t have to pay state taxes on his or her retirement benefits. Remember, however, that states with no income tax have to drum up revenue somehow, which often means a high consumer sales tax or high property taxes.

 

On the other hand, if you’re looking to relocate to a state with generous city and county amenities, cultural events and high-end real estate, consider a more affluent area. According to a recent analysis by Moneypenny, California, Massachusetts, Washington, New York and Hawaii are on target to be the wealthiest states in the U.S. by 2025. That analysis was based on three combined criteria: real GDP, personal income per capita and real estate prices.⁶

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

 

¹ Redfin. Jan. 12, 2021. “Redfin Survey: One-Third of Homebuyers Would Relocate If Remote Work Becomes Permanent; One-Third Already Have.” https://press.redfin.com/news-releases/news-release-details/redfin-survey-one-third-homebuyers-would-relocate-if-remote-work. Accessed Feb. 18, 2021.

² Susan Tompor. Detroit Free Press. Feb. 18, 2021. “Where did you work remotely during COVID-19 pandemic? It may affect your taxes.” https://www.freep.com/story/money/personal-finance/susan-tompor/2021/02/18/remote-work-tax-returns-pandemic-taxes/4244398001/. Accessed Feb. 18, 2021.

³ IRS. Aug. 24, 2020. “IRS: Deadline to return distributions to retirement accounts is Aug. 31.” https://www.irs.gov/newsroom/irs-deadline-to-return-distributions-to-retirement-accounts-is-aug-31. Accessed Feb. 18, 2021.

⁴ Stacey L. Nash. Bob Vila. February 2021. “13 U.S. Cities Incentivizing Remote Workers to Relocate.” https://www.bobvila.com/slideshow/13-u-s-cities-incentivizing-remote-workers-to-relocate-578931. Accessed Feb. 18, 2021.

⁵ Katherine Loughead. Tax Foundation. Feb. 17, 2021. “State Individual Income Tax Rates and Brackets for 2021.” https://taxfoundation.org/state-income-tax-rates-2021/. Accessed Feb. 18, 2021.

⁶ Moneypenny. Jan. 28, 2021. “Ranked: The richest states by 2025.” https://www.moneypenny.com/us/resources/blog/ranked-the-richest-states-by-2025. Accessed Feb. 18, 2021.

 Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies

 

 

The Power of American Workers

 

First unveiled while President Joe Biden was still on the campaign trail, his “Build Back Better” infrastructure plan aims to help tackle unemployment and climate change. The plan calls for $2 trillion in spending over four years with investments in infrastructure, manufacturing, innovation, research and development, and clean energy, as well as training for displaced workers. The plan’s ambitious goals are to produce more and better-paying jobs to get the economy back on track, all while tackling the country’s older infrastructure and the global climate crisis.¹

 

Curing the world of COVID-19 is not the panacea that will heal our nation’s economic woes; our problems go back further than that. The globalization of manufacturing jobs was spurred in part in 1994 by the NAFTA agreement between the U.S., Canada and Mexico. While designed to eliminate trade barriers by reducing tariffs on imports and exports between the countries, many manufacturers found they could also enhance profit margins by taking advantage of cheaper labor in other countries. The U.S. saw a subsequent 30% drop in manufacturing jobs between 1993 and 2016.²

 

Biden’s new investment plan could help restore some U.S. manufacturing. Similar to the former administration’s plan for reducing taxes, the goal is to boost GDP and, in turn, help pay for the outlay of funds.

 

It is difficult to predict the success of a new administration’s plans, but they do offer clues as to industries that may benefit from the focus of government funding efforts. However, your financial plan should be designed to reflect your goals, regardless of the current political environment. Make sure you have a safety-net plan in place for the future. If you’d like to learn about tools that could potentially offer reliable retirement income, please give us a call at (734) 769-1719.

 

Because Biden’s new plan is focused on tangible manufacturing and infrastructure jobs, it is likely to be embraced by America’s labor union workforce. This demographic has lost footing in both participation and power over the past 40 years. Consider that in 1983, the nationwide union membership rate was 20.1% with 17.7 million union workers. As of 2020, the union membership rate had dropped to 10.8%. Presently, membership is almost evenly split between public and private sectors, with about 7.2 million workers in the former and 7.1 million in the latter. Private-sector industries that have high unionization rates include utilities (20.6%), transportation and warehousing (17.0%), and telecommunications (14.3%).³

 

In early January of this year, hundreds of employees at Google and its parent company, Alphabet, launched a union — a rarity in the tech industry. Dubbed the “Alphabet Workers’ Union,” it will be run by workers and open to both full-time employees and independent contractors employed by the company. This is also new, as labor union collective bargaining agreements have traditionally excluded contractors.

 

Google employees are less interested in better pay and benefits and more focused on having a greater influence in company business decisions and operations. Some examples of their goals include input into the company’s work in the defense sector, plans to develop a censored search engine for China and the company’s handling of sexual misconduct claims.⁴

 

These moves are a clear reflection signaling the modern era — and the emerging power of today’s American workers.

 

We take pride in assisting our clients with incorporating all aspects of their life into their Retirement Roadmap 360®. Take control of your financial future and give us a call at (734) 769-1719 today to see how we may be able to help you!  

 

¹ Jessica Lombardo. ForConstructionPros.com. Jan. 15, 2021. “Biden Announces Plan for Economic Recovery, Promises Infrastructure Next Month.” https://www.forconstructionpros.com/infrastructure/news/21232282/biden-plan-for-economic-recovery-includes-infrastructure. Accessed Feb. 26, 2021.

² David Floyd. Investopedia. Nov. 11, 2020. “NAFTA’s Winners and Losers.” https://www.investopedia.com/articles/economics/08/north-american-free-trade-agreement.asp. Accessed Feb. 8, 2021.

³ U.S. Bureau of Labor Statistics. Jan. 22, 2021. “Union Members Summary.” https://www.bls.gov/news.release/union2.nr0.htm. Accessed Feb. 8, 2021.

⁴ Brian Fung. CNN. Jan. 4, 2021. “Google workers have formed the company’s first-ever union.” https://www.cnn.com/2021/01/04/tech/google-alphabet-union/index.html. Accessed Feb. 8, 2021. 

 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Investment Advisory Services are offered by Imber Financial Group, LLC., a Registered Investment Adviser firm. Insurance services are offered through Imber Wealth Advisors, Inc. Imber Financial Group, LLC. and Imber Wealth Advisors, Inc. are affiliated companies