Scary Financial Statistics to Avoid

Pumpkins with money signs.

While many enjoy being spooked at Halloween, what’s not so welcome are haunting feelings about a dark financial future. If your fear of finances is holding you back and you’re too frightened to brave the unknown, take a look at this list of financial statistics which suggests ways to avoid encountering a “scary” situation.

  • 67% of American workers have less than $50,000 saved for retirement. A worrisome number from a recent retirement survey that also revealed an even scarier statistic: 29% of Americans have less then $1,000 saved.1 The best way to get out of the dark here is to act now. Invest wisely and realize that saving money in a bank, for example, typically yields low returns. Instead, consider putting your money in a tax-deferred IRA account or 401(k) retirement account, especially if your employer matches contributions.
  • 25% of Americans making at least $100,000 live paycheck to paycheck.2 An alarming number of Americans, with what could be perceived as having lucrative jobs, still make poor financial decisions. For many, having more money equals more spending. Time to face your financial situation head-on. Practice making cuts in your monthly expenses to avoid living paycheck to paycheck while adding more to savings or investments that pay back. The more often you practice good spending habits the less scary and more fruitful your financial situation becomes.
  • Over 53% of Americans could not pay for an emergency that costs more than $400.3 This is a concerning statistic to think that the average American could not cover an unexpected expense, like a car breaking down or replacing a broken household appliance. General financial wisdom advocates establishing an emergency fund stocked with enough reserve cash to cover three to six months of living expenses. The best way to deal with this is to plan for the unexpected. If saving is an issue, consider setting up an automatic withdrawal from your paycheck to push more cash into savings.
  • Over 60% of parents feel more comfortable speaking to an advisor about finances than their adult children.4 Many families still struggle with financial conversations and today, more than ever, children are increasingly anxious about their finances. Don’t let your children make poor financial decisions that could seriously impact them—and possibly you—in the future. The best way to avoid this statistic is to involve them in appropriate financial conversations either at home or with a financial professional.

You don’t have to face the fear alone. Give Steve Lloyd at the UCCU Financial Group a call at 801.223.7502 if you’d like to schedule an appointment.

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC.

Cetera is under separate ownership from any other named entity.

 

 

 

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Social Security: Two Benefit Strategies Eliminated

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With the passage of the Bipartisan Budget Act of 2015, two strategies to potentially maximize Social Security benefit payments were eliminated.  Read this article to see if you still qualify.

An Overview

Prior to the budget’s passage, married couples had two strategies to help maximize their Social Security benefits: “file-and-suspend” and “restricted applications.” ¹

Under file-and-suspend, the higher-earning spouse filed for benefits and then suspended them, allowing the lower-earning spouse to claim a spousal benefit. This also let the higher-earning spouse accrue delayed retirement credits. Upon attaining age 70, the couple then could switch to their own individual benefit to receive the highest possible amount.

Restricted Application

A restricted application allowed an individual, upon attaining full retirement age, to file only for a spousal benefit, based on the individual’s spouse’s work record, delaying his or her benefits until age 70. Upon reaching age 70, the individual would then convert to his or her own benefit.

Married couples also could combine the above strategies with one spouse filing and suspending a worker benefit, while the other spouse filed a restricted application to receive the spousal benefit only.

Divorced recipients

These strategies could be used by divorced recipients, too. A divorced spouse was permitted to file a restricted application for a spousal benefit at full retirement age, as long as the former spouse was 62 or older. At age 70, the divorced spouse then switched over to his or her own worker benefit, assuming it was a higher amount.

The Policy Behind the Elimination

The elimination of file-and-suspend claims becomes effective on May 1, 2016. It also prohibits restricted applications for anyone who has not reached age 62 by the end of 2015. Since file-and-suspend is only available to those who have reached full retirement age, it remains available to individuals who are age 66, or will be so by April 30, 2016. (Couples who have already executed such claims are unaffected by the new law.) ²

The reason that Congress acted, and the President signed into law this change, was to save money and close perceived loopholes in the Social Security program.

Overall savings will be small compared to the larger financial challenges that Social Security faces. These changes will save about 0.02 percent of the taxable wages and self-employment income subject to Social Security taxes over the next 75 years, according to the Social Security Administration—a fraction of the program’s long-term deficit of 2.65 percent of taxable payroll.3 ³

According to one study, these changes will impact just 0.1 percent of all Social Security participants. ⁴

Strategy & Choices

There was one other change not yet widely discussed that may have implications for you.

For someone who exercised a file-and-suspend strategy, the rules provided the ability to receive a retroactive lump sum payment if an individual changed his or her mind and lifted the suspension. (They did lose any bump up in payment amount that came with delaying benefit payments, however.) This flexibility is also being eliminated under the budget act.

This ability to lift the suspension was a particularly important planning strategy because it allowed an individual who may have come down with a life-threatening illness or underwent a change in financial status to retroactively go back to their original filing date and receive a lump sum for the benefit amount not paid during the suspension period.

Keep in mind that Social Security has undergone a number of substantive changes since its inception. While the elimination of these strategies may be disappointing, these changes do not undercut the central promise of this critical social contract. In fact, they were implemented to strengthen it.

  1. Social Security Administration, 2016.
  2. Social Security Administration, 2016.
  3. The New York Times, October 30, 2015.

The New York Times, October 30, 2015.

For more information on this subject contact Steve Lloyd, Office Manager, UCCU Financial Group, at 801-223-7502.

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC.
Cetera is under separate ownership from any other named entity.
Not NCUA/NCUSIF Insured – No Credit Union Guarantee – Not A Deposit – May Lose Value
Not Insured By Any Federal Government Agency.
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Taxes and Investment Gains Correlation

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Taxes play an important role in your investment strategy, regardless of your tax bracket. That’s why understanding how short and long-term term capital gains impact your investments over time can be critical. Below is a quick explanation on how that works.

Taxes and Investment Gains

Simply put, short-term gains are realized on investments held for under a year, while long-term capital gains are derived from investments held for more than one year. For example, if you purchase 100 shares of stock for $20 per share and sell them six months later for $25 per share, the $500 in profit is considered a short-term capital gain by the IRS and taxed at as ordinary income. Conversely, if you wait more than a year to sell the shares, they will be taxed at the long capital gains rate of 15% to 20%, depending on your tax bracket.

For investors in higher tax brackets, this rate can be substantially lower than the rate applicable to short-term gains.

Depending on your tax bracket, if you held the same shares for a year or more, you could end up making more money if the stock price continues to increase but still pay less at tax time. In addition, only your net investment income is taxable, meaning if you gain $500 from one investment but lose $500 on another in the same tax year, then your net gain is $0 and you are not required to pay any additional taxes.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.

If you’d like to learn more about the relationship between investments and taxable gains in your portfolio, contact the UCC Financial Group at (801) 223-7502.

Securities and advisory services offered through Cetera Advisor Networks LLC, member FINRA/SIPC.
Cetera is under separate ownership from any other named entity.

Not NCUA/NCUSIF Insured – No Credit Union Guarantee – Not A Deposit – May Lose Value
Not Insured By Any Federal Government Agency.

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Take the First Step – Start Planning Your Financial Future

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