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Some people don't need life insurance. Do you?

What would the financial loss be to the people you care most about if you died earlier than expected?

-Foundation for Financial Wellness

Video Transcript

Life insurance is not only a financial decision. It’s actually much more of an emotional decision. You’ll literally never see the financial benefit. However, you should feel the benefits of your life insurance coverage each night your head hits the pillow knowing that you’re protecting the people you love most.

Life insurance decisions can start by answering a few important questions, and probably the most important question that you should answer regarding life insurance is the exact question that you’re likely to never hear from the insurance agent. Do you need life insurance? We’re serious here. What makes you believe you need life insurance?

The answer may lie a couple layers deeper. Let’s keep asking and answering a few more questions on this.

What would the financial loss be to the people you care most about if you died earlier than expected?  

How much life insurance would you need to cover that liability?

How would you select the best way to protect from that loss? 

Is it a goal of yours to know that you will leave a certain dollar amount behind after you’re gone, regardless of your net worth?

What type of life insurance fits for you?

The good news is that life insurance is incredibly flexible and is one of the most useful tools in long-term financial planning. But it shouldn’t be a given that everyone has a need to purchase life insurance. If you have a need, then cover it, fully. If you don’t then save those dollars and put them to work elsewhere in your financial plan.

So let’s do a brief assessment to see if any of these apply to you.  And please remember that every situation is different, and the best thing to do is to speak with an experienced financial planner to determine your personal need for life insurance.

OK, now a quick review for you to decide if you have any decisions to make or actions to take.

The real action from this lesson is to get clear on if you have a life insurance need. 

If you do, how much?

And, for how long?

Of course life insurance gets much more complicated as it gets integrated into your financial plan, but this is a great place to start.

As always, don’t forget to take advantage of your private counseling session. It’s included. It’s private, and it’s confidential, and it’s always with one of our Certified Financial Wellness Counselors. To schedule your counseling session, simply click on the “Request Counseling” button.

What is a reverse mortgage, and would it be good for me?

It’s like asking if a stone is good or bad. If thrown through a stained glass window, it's a bad thing. If used to construct an orphanage in a 3rd world country, it's a very useful and valuable thing.

-Foundation for Financial Wellness

Video Transcript

OK, let’s talk about reverse mortgages. This can be a really polarizing and misunderstood financial tool, and this is exactly why we love to teach about the topic! Like any other financial product, a reverse mortgage isn’t necessarily intrinsically good or bad, it’s just a financial product. It’s like asking if a stone is good or bad. If thrown through a stained-glass window, it's a bad thing. If used to construct an orphanage in a third-world country, it's a very useful and valuable thing. 

So, how would you plan to use a reverse mortgage? Some of the most common uses of a reverse mortgage by retirees include well first and foremost, it is used to supplement retirement income. It can turn into an income stream. Someone who has become the trusted voice in the industry is Ph.D. Wade Pfau. He’s recently stated that, “Used strategically, a reverse mortgage can greatly improve the sustainability of your retirement income.” It’s part of your financial plan.

It also allows you to stop making traditional mortgage payments in retirement. Of course, you’ll have to continue paying your taxes and your insurance, but the mortgage goes away.

Or maybe take a small amount of equity and pay up your long-term-care coverage. We talked about that in another lesson, or single pay into a life insurance policy if you need that.

You might use it to make your Medicare payments.

You can establish a line of credit that’s tied to increasing equity of the home for years into the future.

Or something called a standby portfolio protection — Essentially you use the reverse mortgage to enhance your cash flow during economic downturns. That prevents you from having to take money from your portfolio while it’s in a loss.

So, let’s do a quick review. Do you have any decisions to make or actions to take at this point?

I would say be sure to hang around and take part of our other Reverse Mortgage lesson as we’re going to get into more of the nuts and bolts of how they actually work. But, for now I would encourage you to consider learning more before making a decision, a yes or a no, on whether a reverse mortgage might make sense for you and your family.

This is something that we’re very comfortable talking about, so I want to remind you to take advantage of your counseling session if this is a topic that you would like to discuss. The counseling’s included. It’s private. It’s confidential, and it’s always with one of our Certified Financial Wellness Counselors. To schedule your counseling session, simply click on the “Request Counseling” button.

Are you considering a reverse mortgage but have no idea if it's right for you?

Are reverse mortgages safe? Well, as long as all loan terms are met, the FHA (Federal Housing Administration) guarantees no repayment of the loan until the last borrower moves out, sells, or passes away.

-Foundation for Financial Wellness

Video Transcript

Alright, let’s dive headfirst into the nuts and bolts of reverse mortgages at this point. Fair warning, there are a lot of details here, so if you’re a notetaker, you might want to get a pen and paper ready and don’t be afraid to hit “pause” as you do that. We’re going to hit on a bunch of topics here.

So, some projected changes on the horizon:

• 10,000 people a day hitting 62 years old for the next 20 years.
• 3,000 of them are still making a mortgage payment.
• At 62, 84% will be in jeopardy of running out of money.
• At 66, 50% would still be likely to run out of money.
• Lower savings rates with less retirement preparation is a reality.
• There’s fewer pensions and defined benefit plans.
• We go through ebbs and flows and oftentimes have a greater need for security and certainty is higher than ever before especially with us living longer, which causes concern about outliving our money.

So, some reverse mortgage basics:

• You must be age 62 or older.
• FHA-qualified home
• You must live in the home more than six months a year.
• Generally it won’t affect Social Security or your Medicare benefits. There’s some nuances there, so be sure to speak to a professional.

Some reverse mortgage benefits:

• You keep the title to your home.
• Basic credit, income, and property qualifications.
• Loan proceeds from equity very between 30 to 74% are usually income tax free.
• No mortgage payments during the loan term. Your mortgage payments go away if you still making them. You’re still responsible for maintenance of the home and the payment of taxes and insurance, but you must stay in the home.

Let's talk about like are reverse mortgages safe.

• Well, as long as all loan terms are met, the FHA (Federal Housing Administration) guarantees no repayment of the loan until the last borrower moves out, sells, or passes away.
• When you move out of your home, you or your estate have up to 12 months to repay the loan, sell the home.
• No penalty for early payment (may vary in some states, but generally speaking).
• This loan is a nonrecourse loan. If the balance on the loan exceeds the home value, HUD/FHA makes up the difference! • After costs of sale and loan is paid off, heirs of estate keep excess proceeds from the sale of the home, if any.

So, a quick review for you. Do you have any decisions to make or actions to take?

Considering a reverse mortgage might make sense for you, and if it does, then find someone you trust to go through it thoroughly with you. There are a lot of moving parts to these things and having a trusted resource to lean on really is priceless.

As always, don’t forget. You can take advantage of your private counseling through the foundation. It’s included, it’s private and confidential, and it’s always with one of our Certified Financial Wellness Counselors. To schedule that counseling session, simply click on the "Request Counseling" button.

Has the overwhelming scope of investing for retirement ever caused you not to invest at all? You are not alone. Beginners and veterans alike deal with psychological paralysis from time to time.

Another thought distortion we have is called “Disqualifying the Positive.”  This is when we feel like we take one step forward and two steps back. It sounds like, “Awesome! Great! I just put away $1,000 in the bank. That’ll never be enough to make a dent in my situation.”

-Foundation for Financial Wellness

Video Transcript

Our head trash and blind spots take a variety of forms. For example, we “Should” all over the place.

We say things like, “I should have more money saved before I speak with a financial professional.”

“I should have saved more.”

“I should have spoken with my significant other before I purchased that expensive car.”

OK.  You really should have done that.  But “Shoulding” ourselves is incredibly common.

For many of us it’s not “Shoulding.” Instead it’s “Magnifying” our thoughts. We literally blow the situation way out of proportion.  Some examples - We say things like:

“It will take me forever to pay off my debt.” 

“Dealing with this financial stuff is simply impossible.”

“I am beyond help.”

So while we believe getting right financially may take forever, or that our situation isn’t beyond help, believe me, it’s not beyond help.

Another thought distortion we have is called “Disqualifying the Positive.”  This is when we feel like we take one step forward and two steps back. It sounds like:

“Awesome! Great! I just put away $1,000 in the bank. That’ll never be enough to make a dent in my situation.”

Or “Wow, yeah I have money in a mutual fund, but I really don’t think I can save enough to retire.”

Finally we use  All-or-nothing Thinking, and “do it right or don’t do it at all” mentality.

For example you might say something like, “I don’t do any type of investing. I’m not a financial expert, and I would probably just mess things up anyway.”

I’m betting some of those might sound familiar, but the good news is that once you can identify the pattern, you can correct it.  

And, if these are familiar but not quite right, don’t worry!  We’re going to help you rewrite those scripts to improve your odds at a financially well-lived life.

If you would like to know more about negative thought patterns that you might use, we have a worksheet to help you identify what some of those potential negative thought patterns are. Click on the worksheet or go to the Resources Tab to download the Thought Barriers Worksheet.

OK, quick review for you to decide if you have any decisions to make or actions to take.

Are you “Shoulding,” “Magnifying,” or maybe “Disqualifying the Positive?” 

Be sure to download the Thought Barriers Worksheet and do your homework! Be honest with yourself, have these conversations with your significant other and agree to make decisions for healthier thinking and healthier financial behaviors!

As always, don’t forget. Take full advantage of your private counseling session. It’s included. It’s private. It’s confidential, and it’s always with one of our Certified Financial Wellness Counselors. To schedule that counseling session, simply click on the "Request Counseling" button.

Are your negative thoughts about money preventing you from becoming financially well? Don't fall prey to a self-fulfilling prophesy.

If we're repeating that same negative script many, many times a day, you can see how our mind, which could be our most powerful tool, can actually be a self-destructive weapon.  And those negative thoughts actually become a self-fulfilling prophecy.

-Foundation for Financial Wellness

Video Transcript

Money impacts every area of our lives, with our work, our families, and that stress certainly isn’t doing our health any favors.  So, how do we fix it?  Well, it starts with our thinking.

So much so, that much of our lives are pre-occupied with actually negative thoughts about money.  And by allowing those thoughts to exist, we allow no space for creating solutions.  Now, this course is not some mumbo-jumbo positive self-talk thing. Instead it’s about real life, practical application that you can implement right away.

Remember, financial wellness isn’t just about education. It’s about taking action, and sometimes that action is simply just making a decision. Oftentimes, the first decision is what we chose to think or believe about finances, which will then create healthier financial behaviors.

Let's take a look at how these recurring thoughts impact us on a daily basis.

Scientists estimate that the average person has around 50,000 thoughts a day. 

The brain essentially wants to be as efficient as possible, so it repeats many of the same thinking processes again and again.

What science has learned, is that unfortunately 70% - 85% of these repetitive thoughts are negative and have negative connotations.

If we're repeating that same negative script many, many times a day, you can see how our mind, which could be our most powerful tool, can actually be a self-destructive weapon.  And those negative thoughts actually become a self-fulfilling prophecy.

Now, we call these negative beliefs and thought patterns that we are aware of “head trash“ and the one’s we are unaware of, or are below the surface, we call them “blind-spots.“

So, a quick review for you to decide if you have any decisions to make or actions to take at this point.

Begin thinking about any negative or self-defeating thoughts or scripts that you may be living with that would improve your life if they were rewritten. Also, be sure to watch Financial Thought Barriers – Part 2 for a worksheet you can download and do this on your own!

As always, don’t forget to take advantage of your private counseling session. It’s included, it’s private and confidential and it’s always with one of our Certified Financial Wellness Counselors. To schedule your counseling session, simply click on the "Request Counseling" button.

Do you have a dollar amount in mind that you need to have before you retire? Have you thought about how much of that amount will be taken in taxes when you begin to use it?

Imagine being that poor, misguided mountain climber who didn't pack the right gear and didn't possess the skill to both climb up to the top of the mountain, and more importantly, get back down again safely. Planning for retirement is a lot like that mountain climber.

-Foundation for Financial Wellness

Video Transcript

On May 29, 1953, Sir Edmund Hillary became the first confirmed climber to have reached the summit of Mount Everest. Mt. Everest’s peak is a dizzying 29,029 feet. And, despite the risks, thousands swarm to Nepal every year in an effort to conquer the tallest point on Earth. Many of them never leave.

In fact, over 250 bodies remain on Everest, giving it claim to the title of the world's largest open-air graveyard. While most deaths occur due to avalanches, falls, and exposure to the harsh elements, the area known as the “Death Zone” holds a terribly high body count and comes with its own unique set of problems.

Not unlike retirement and all of its unique set of potential problems! In fact, it is reported that more than half of the deaths that occur on Everest, happen on the decent...yes, on the way down!

Think of saving money for your future like climbing a mountain. Imagine being that poor, misguided mountain climber who didn't pack the right gear and didn't possess the skill to both climb up to the top of the mountain, and more importantly, get back down again safely. Planning for retirement is a lot like that mountain climber.

Before you retire, you save your money. That's your accumulation phase. During retirement, you climb down from the peak of the mountain by taking money out of your retirement account. That's your distribution phase. Seems simple enough, but it's not. And that's because the math changes dramatically at the top of the mountain when you account for the taxes you will owe. Although your journey appears to be two distinct planning phases, it's really just one continuous, but evolving expedition.

What most people think of as Retirement Savings tools are geared only for the climb up (the saving for retirement). They are not as concerned about the climb down...when we retire and begin withdrawing those saved dollars and all too often getting surprised by how much of those dollars Uncle Sam demands from us in the form of income taxes.

OK, now a quick review for you to decide if you have any decisions to make or any actions to take.

Not much to do just yet on the topic of taxes as we have more lessons ahead with action items for you. If you’re a planner, then I’d suggest you pull out the tax file and review last year’s personal taxes because it will help put our next lesson on taxes in more context.

As always, don’t forget to take advantage of your private counseling session. It’s included, it’s private and confidential and always with one of our Certified Financial Wellness Counselors. To schedule your counseling session, simply click on the "Request Counseling" button.

Are you planning for Social Security to be your primary source of living expenses during retirement? Do you know your expected Social Security monthly income during retirement? If not, it's time to find out.

If you want to find out the estimate of how much you might receive through social security when you reach retirement age, you can request an estimate by going to www.ssa.gov.

-Foundation for Financial Wellness

Video Transcript

In this lesson we are going to briefly touch on Social Security as one of the three categories of retirement income sources. However, be sure to take a look at the other lessons specifically on Social Security as its own topic.

Every paycheck you received throughout your life where there was taxable income, include payments to social security.  Those small deposits created a supplemental retirement fund through the social security administration. Some are adamant that social security will not be there when they retire. Either way social security is here now and is a way to supplement your retirement plan.

If you want to find out the estimate of how much you might receive through social security when you reach retirement age, you can request an estimate by going to www.ssa.gov.

OK, now a quick review for you to decide if you have any decisions to make or actions to take.

Have you gone to the ssa.gov website yet to download your Social Security Benefit estimate?

As always, don’t forget to take advantage of your private counseling session. It’s included, it’s private and confidential and it’s always with one of our Certified Financial Wellness Counselors. To schedule your counseling session, simply click on the "Request Counseling" button.

If you start taking Social Security at age 62, the monthly payout will be much less than if you wait to take it later. If you wait to take it later, you'll get a higher monthly benefit but have fewer months left in your life to enjoy it. Where is the "sweet spot?"

Think of Social security as an annuity you have been investing money into during your working years. But rather than paying to an insurance company, you’ve been paying it to Uncle Sam.

-Foundation for Financial Wellness

Video Transcript

Your Social Security election is one of the most important financial decisions that you’re going to make in your life. Please know that the Foundation for Financial Wellness has created an entire series on the topic of Social Security election because of the importance and because of the comprehensive nature of those decisions that you are going make. It literally plays a part in nearly every retirement planning calculation. I mean, how could you leave it out?

Also, this is one of the most requested conversations for 1:1 counseling sessions. You are entitled to as a student of this course. I’ll always remind you at the end of each lesson.

So first, know that the Social Security Administration (SSA) creates an estimate of how much Social Security you’ll receive during retirement. As of 2011, these statements are no longer mailed to you as hard copies.

Now you’ll need to access your statement online: www.ssa.gov. 

If you are going to take advantage of your 1:1 counseling session, please bring that print off with you. It will help a ton.

Think of Social security as an annuity you have been investing money into during your working years. But rather than paying to an insurance company, you’ve been paying it to Uncle Sam.

At the point of initiating your social security payout, it’s like a SPIA, Single Premium Immediate Annuity, which is indexed for inflation. It has unique tax benefits in that a portion of it might not taxable, and it’s a guaranteed stream of income that you and your spouse cannot outlive! That’s powerful.

I mean just hearing that explanation should give us pause and realize, wow, this is a powerful piece of our retirement income plan!

OK, now a quick review for you to decide - do you have any decisions to make or actions to take?

Number one - Go to www.SSA.gov and pull your social security benefit estimate.

Number two - Pull this information into your retirement plan and schedule a time with your financial planner and / or tax consultant.

Or as always, don’t forget. You can take full advantage of your private counseling session. It’s included. It’s private. It’s confidential, and it’s always with one of our Certified Financial Wellness Counselors. To schedule your counseling session, simply click on the “Request Counseling” button.