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

 

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

How Do Demographics Affect the Economy?

 

Back in 2019, economists claimed that the large population of older Americans, dubbed the “silver tsunami,” was creating a drag on the economy. The fear was that Americans were aging toward retirement at a faster rate than young adults were entering the workforce. Not only does this put a strain on our finance-as-we-go Social Security and Medicare programs, but a smaller workforce is less able to drive economic growth in the future.¹

Then the COVID-19 outbreak descended in 2020, which could result in a dramatic shift in our demographic mix. While Americans 65 and older account for 16% of the population, they represent 80% of people who are dying of the coronavirus. In just the first five months of the pandemic, the 65-and-up cohort represented between 70% and 94% of COVID-19 deaths, with variance by state. People age 85 and older accounted for 33% of those deaths.²

These numbers don’t just change the demographic picture, they also represent a transition in wealth. While estimates in wealth transfer from baby boomers to younger generations have been projected as high as $70 trillion over the next few decades, that timeline could move up. Because people age 65 and older are more vulnerable to the severe complications of COVID-19, some of those windfalls could be occurring sooner. That means family members will have to figure out the best way to handle an unexpected inheritance ahead of schedule.³

If you are looking at an inherited windfall, we can help guide you with strategies for your unique situation. There are numerous new laws and rules associated with things like inherited IRAs, as well as strategies you can take advantage of to position yourself for both investment growth and a reliable stream of income during your retirement. Please contact us to discuss.

Meanwhile, Americans are having fewer babies. Because many of today’s young adults entered the job market when the country was in a severe economic recession, it has taken longer for many to get a foothold in their career and build up a financial war chest. To do this, many have delayed buying a home and starting a family. In fact, between the start of the financial crisis in 2007 and 2018, the total fertility rate in the U.S. fell by 23%, from 2.12 children per woman to 1.73.⁴

As such, our population is growing at the slowest rate since the 1930s. The pandemic has not helped that statistic. Between July 2019 and July 2020, the nation grew at the lowest yearly rate since at least 1900 as a result of reduced immigration and birth rates.⁵

The Economic Innovation Group, using July 2020 data from the U.S. Census Bureau, shows that population growth is uneven across states. While the population has declined in California, Illinois and New York in the past few years, states with the highest rates of population growth since 2010 include:⁶

·         Utah (17.1%)

·         Idaho (16.3%)

·         Texas (16.3%)

·         Nevada (16.1%)

·         Arizona (15.8%)

Much of that migration could be due to baby boomers moving to warmer climates as they retire. However, recent trends also suggest that younger adults with their newfound ability to work remotely will be inclined to move out of highly populated cities to more affordable areas of the country.

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 Chris Farrell. Forbes. Aug. 25, 2019. “Is An Aging Population Hurting The U.S. Economy?” https://www.forbes.com/sites/nextavenue/2019/08/25/is-an-aging-population-hurting-the-u-s-economy/?sh=7a208e4d3aa1. Accessed Jan. 25, 2021.

² Meredith Freed, Juliette Cubanski, Tricia Neuman, Jennifer Kates and Josh Michaud. Kaiser Family Foundation. July 24, 2020. “What Share of People Who Have Died of COVID-19 Are 65 and Older – and How Does It Vary By State?” https://www.kff.org/coronavirus-covid-19/issue-brief/what-share-of-people-who-have-died-of-covid-19-are-65-and-older-and-how-does-it-vary-by-state/. Accessed Jan. 25, 2021.

³ Kristen Beckman. BenefitsPro. Nov. 19, 2020. “The great wealth transfer: What boomers and their families need to know.” https://www.benefitspro.com/2020/11/19/the-great-wealth-transfer-what-boomers-and-their-families-need-to-know/. Accessed Jan. 25, 2021.

⁴ Gilles Pison. World Economic Forum. Jan. 13, 2021. “People have more children in the north of Europe than the south. Here’s why.” https://www.weforum.org/agenda/2021/01/children-europe-eu-north-south-divide-childcare-social-policy-children-mothers/. Accessed Jan. 25, 2021.

⁵ Stef W. Kight. Axios. Jan. 11, 2021. “America’s population growth is slowing down.” https://www.axios.com/america-losing-population-growth-census-data-0342f3b6-8e98-41a9-92de-209f823d0d63.html. Accessed Jan. 25, 2021.

⁶ Kaia Hubbard. U.S. News & World Report. Jan. 13, 2021. “Population Growth Rates Are Highest in These States.” https://www.usnews.com/news/best-states/articles/2021-01-13/us-population-growth-rate-slowed-in-past-decade-report-shows. Accessed Jan. 25, 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