SML Planning Minute

Episode 308 – For many, many people, their home is their biggest asset. Can you use your home to fund a portion of your retirement? It’s not ideal, but here are five ideas you can try if you need to.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, five ways to use home equity as a source for retirement income.

It’s been said over and over again that for many people, their home is their biggest asset. If that’s true for you, can you use your home to fund a portion of your retirement? It may not be the best choice, but your home can help.

Here are five ways to potentially use your home as a source of retirement funds if needed. None of these are easy. Your home may be your biggest asset, but it’s probably also your least liquid.

Keep in mind that there is no perfect answer. Each one of these has its downsides. In fact, none of these options are ideal. The ideal solution is simply to save enough money well in advance through some other means. But what if it’s too late for that? Here are some interesting choices:

Also known as a HELOC, a Home Equity Line of Credit is an easy way to access the equity in your home. It is a line of credit where you can borrow money—up to a designated maximum—against your home. Of course, the HELOC must be repaid. Depending on how big your mortgage is, the interest on your home equity loan could be deductible. But keep in mind that interest rates ain’t what they used to be. According to Bankrate, as of October 2024, the average HELOC interest rate is 8.36 percent.[1] Nevertheless, the HELOC can help provide access to a source of funds.

This could make sense depending on interest rates, including the rate on your current mortgage. If the value of your home has gone up since you’ve owned it, there’s a good chance that you can access some of your home equity. In other words, it may be possible to pull out some cash against your home equity and use it for some other purpose, like retirement. It can also be a good alternative to selling your home, particularly if the market drops.

While sometimes difficult to understand, a reverse mortgage essentially converts your home equity into a monthly payment while you’re still living there. It is a way of selling your home equity to the bank one month at a time.

The majority of reverse mortgages don’t get repaid until the borrower leaves the house. Instead, the loan typically gets paid back when the borrower sells the home or dies. In these cases, whoever sells the home, likely either the initial borrower or the borrower’s estate, will get the remaining proceeds.[2]

There are federal regulations when it comes to reverse mortgages. Most reverse mortgages are issued through a set of government-insured programs that have their own rules and qualification standards.

The temptation to move into a smaller home often occurs when the last child moves out. People tend to feel that they just don’t need all that room anymore and you can save money on utilities, maintenance and upkeep. There is also a tax incentive that can help.

When you sell, the first $250,000 in profit, or $500,000 for married couples, is free of capital gains tax. If your gain is less than that, you won’t have to pay any capital gains tax at all. But there are some rules you must follow. Among them, the home must be your primary residence for at least two of the five years. Also, you can only use the exclusion once every two years.[3]

Home prices are way higher than they were a few years ago. And you may be able to take advantage by selling your home and moving into a cheaper rental. This can be an attractive option for someone who’s tired of dealing with (and paying for) all the yard work and maintenance. As many people in the Southeast can attest to, if you’re not the owner, you don’t have to worry as much about things like storm damage.

Despite all these additional options, the best way to prepare for retirement is still the old-fashioned way: Save the money as you go. You’ll have less to worry about later.

[1] Ostrowski, Jeff. “Current home equity interest rates.” Bankrate.com. https://www.bankrate.com/home-equity/current-interest-rates/?zipCode=10025 (accessed October 11, 2024)

[2] Treece, Dock David. “Reverse Mortgages: How They Work And Who They’re Good For.” Forbes.com. https://www.forbes.com/advisor/mortgages/reverse-mortgages/ (accessed October 10, 2024)

[3] Taylor, Kelley R. “Capital Gains Tax Exclusion for Homeowners: What to Know.” Kiplinger.com. https://www.kiplinger.com/taxes/capital-gains-home-sale-exclusion (accessed October 11, 2024)

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

Tax laws are complex and subject to change. The information presented is based on current interpretation of the laws. Neither Security Mutual nor its agents are permitted to provide tax or legal advice.

The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

Episode 307 – According to an estimate by Experian, the average American adult holds $6,501 in credit card debt. Is there a way out? Here are six things that you might want to try.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, six ideas on how to manage debt.

In today’s economy, you don’t have to be a big spender to feel overwhelmed by how much you owe. You’re certainly not alone. As of late last year, the average American adult held $6,501 in credit card debt, according to an estimate by Experian.[1] This is up 10 percent from the previous year. And credit card interest rates can be as much as 20 percent, or even higher.

Once you’re saddled with a significant amount of debt, there is rarely an easy way out. But if you’re in that situation, here are six things that you might want to try. The idea is to get your debt under control before it has more serious consequences for your financial health.

One final note. Owing money to someone else is not always such a bad thing, and living debt-free is not always the best choice. You need to look at the details of the debt itself. For example, if you bought a house a few years ago with a 3 percent mortgage and tax-deductible interest, why would you hurry to pay it back? You may be able to get a better rate of return simply by keeping the extra money and investing it.

[1] Horymski, Chris. “Average Credit Card Debt Increases 10% to $6,501 in 2023.” Experian.com.
https://www.experian.com/blogs/ask-experian/state-of-credit-cards/ (accessed October 21, 2024)

[2] Sherman, Emily. “6 Easy Ways to Pay Off Debt.” usnews.com.
https://money.usnews.com/money/personal-finance/debt/articles/easy-ways-to-pay-off-debt (accessed October 21, 2024)

[3] Frankel, Robin Saks. “5 Steps To Take Now To Save More And Reduce Debt.” Forbes.com.
https://www.forbes.com/advisor/personal-finance/steps-to-take-to-save-more-and-reduce-debt/ (accessed October 18, 2024)

[4] Coleman, Sara. “The pros and cons of 0% APR credit cards.” Bankrate.com.
https://www.bankrate.com/credit-cards/zero-interest/pros-cons-of-zero-percent-apr-cards/?tpt=b (accessed October 21, 2024)

[5] Sorter, Amy. “7 tips to help dig your way out of debt.” Bankrate.com.
https://www.bankrate.com/personal-finance/debt/ways-to-get-out-of-debt/?tpt=b (accessed October 18, 2024)

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

Tax laws are complex and subject to change. The information presented is based on current interpretation of the laws. Neither Security Mutual nor its agents are permitted to provide tax or legal advice.

The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

Episode 306 – Behavioral economics has become a buzzword over the last few years. But understanding its role in making financial decisions can lead to a better outcome.

Hello, this is Bill Rainaldi with another edition of Security Mutual’s “SML Planning Minute.” In today’s episode, we take a look back at one of our favorite previous episodes. What is “behavioral economics,” and can it help you figure out how to make financial decisions?

Behavioral economics became a buzzword in 2017 when Richard Thaler, a professor at the University of Chicago, won the Nobel Prize for Economics. The concept is a simple one: investing is not a purely mathematical decision. Psychology plays a role in the economic decision-making processes of individuals and institutions. If you understand the psychology, you’ve got a head start when it comes to financial decisions.

Behavioral economics tries to explain why, when it comes to financial matters, an individual might make irrational decisions, and why their behavior doesn’t always follow the predictions of economic models. Decisions such as what kind of car to buy, how much to save for retirement, or whether to eat that last piece of chocolate cake are all influenced by behavioral economics. Behavioral economics seeks to explain why an individual selects one option over another. People sometimes make decisions that are not actually in their own self-interest, simply because people can be emotional and easily distracted.

There are some basic applications of behavioral economics that you can see in your everyday life. Here are a few of them.

Availability bias states that our decision-making process is most strongly influenced by events closest and most available to us. You are more likely to buy a snow blower after a major storm than you are in the middle of summer.

How does this apply to investing? One of the effects of availability bias is what’s known as “FOMO,” or fear of missing out. A stock may seem overpriced to you, but the price keeps going up. If you pass on this stock at $500 per share, you might worry that next year it could be $1,000.

Anchoring is something that can lead to bad results when you’re investing. Let’s say you find a stock that had been selling for $100 a share, but after a few months, the price has fallen to $80. You may be hesitant to sell that stock at $80, $90, or $95 simply because you bought it at $100. This has nothing to do with what the company is actually worth.

Be aware that corporate America understands this, and they are using this type of behavioral economics to market their products. Technology companies use anchoring all the time. You often see this when the latest smartphone is introduced. Let’s say the new phone initially cost $800, but it’s now selling for $500. By introducing the phone at a higher price and then reducing it, consumers will tend to believe they’re getting a good deal, even if the plan all along was to sell the phone at $500.

Confirmation bias occurs when we pay more attention to the things that support our pre-existing ideas. We tend to rationalize our opinions, and pay less attention to things that contradict those opinions. Almost everyone does it, and it can be dangerous when we’re investing. If you like a particular company’s product, you might ignore any red flags or risks the company is facing.

What if you were betting on a coin flip, and “heads” came up five times in a row? According to the gambler’s fallacy, your next bet would be tails, simply because you recognize how unlikely it is to get “heads” six times in a row. But the truth is that the odds are always 50-50. The previous five flips have no bearing on the sixth.

The same phenomenon occurs when we invest. People tend to commit to the gambler’s fallacy when they see a stock that has gone up or down for several days or weeks in a row. This can lead to an unfortunate situation where you buy low and sell lower.

Herd Behavior is something you see in many places. When people line up at a food truck for some tacos, others tend to go along and line up with them. The rationale is that since the line is long, the food must be good. Herd behavior happens in investing as well. When everyone buys a stock, there is a subtle belief that it can’t go wrong since everyone is buying. Herd behavior can be the cause of exuberance, overvaluations and price bubbles.

Present bias provides a good explanation for why people tend to be bad at saving. In a trade-off situation, it is simply the tendency to settle for a smaller present reward than to wait for a larger future reward.

In recent years, understanding present bias has led to at least one concrete change in the way people save money. It is the more popular use of “auto-enrollment” in company pension plans.

The introduction of auto enrollment was a result of the work done by behavioral scientists, including Richard Thaler. And that research showed that you were less likely to do something, such as save money using a 401(k), if you had to take action in order to participate.

Studies by Allianz Global Investors, among others, have shown that saving increases when an employer moves from an “opt-in” retirement plan—where the employee has to affirmatively choose to participate—to automatic enrollment. Thus, the concept of auto enrollment emerged and became part of the Pension Protection Act in 2006.

Under the Pension Protection Act, automatic enrollment allows an employer to enroll its employees and make salary reductions without having to actually complete the enrollment process. It’s simply easier to participate now, and more people are saving money as a result.

Behavioral economics shows how people too often make poor decisions based on biases of which they may not even be aware. Biases affect our decision-making, including financial decisions, when we least expect it. They can undermine our rational thought process and lead to poor conclusions. I hope today’s podcast helped to raise your awareness of those biases, so you can keep them in mind when making important financial decisions and formulating protection strategies.

Contact your local Security Mutual Insurance Advisor today to coordinate your financial plans and help you achieve your goals and objectives.  

Benz, Christine. “Behavioral Finance Research in Action.” morningstar.com, Nov 17, 2010. Accessed April 7, 2021. https://www.morningstar.com/articles/360350/behavioral-finance-research-in-action

ChangYueSin. “The 8 Key Concepts of Behavioural Finance.” TheAncientBabylonians.com, July 14, 2019. Accessed April 7, 2021. https://www.theancientbabylonians.com/the-8-key-concepts-of-behavioural-finance/

Kenton, Will. “Behavioral Economics.” Investopedia.com, updated September 28, 2020. Accessed April 7, 2021. https://www.investopedia.com/terms/b/behavioraleconomics.asp

Miller, Terin. “Behavioral Finance: Concepts, Examples and Why It’s Important.” TheStreet.com, March 28, 2019. Accessed April 7, 2021. https://www.thestreet.com/personal-finance/education/behavioral-finance-14909070

Samson, Alain. “An Introduction to Behavioral Economics.” behavioraleconomics.com. Accessed April 7, 2021. https://www.behavioraleconomics.com/resources/introduction-behavioral-economics/

The University of Chicago Booth School of Business. Richard H. Thaler Biography. ChicagoBooth.edu. Accessed April 7, 2021. https://www.chicagobooth.edu/faculty/directory/t/richard-h-thaler

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

Tax laws are complex and subject to change. The information presented is based on current interpretation of the laws. Neither Security Mutual nor its agents are permitted to provide tax or legal advice.

The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

• COVID-19 (coronavirus) Information

Episode 305 – It has never been a more important time to consider business succession planning for small business owners to ensure that their financial security, retirement and family legacy plans are fulfilled.

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

Tax laws are complex and subject to change. The information presented is based on current interpretation of the laws. Neither Security Mutual nor its agents are permitted to provide tax or legal advice.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

• COVID-19 (coronavirus) Information

Episode 304 – Even when you optimize your Social Security claiming strategy, there are still going to be problems that need fixing. Life insurance can be the perfect tool to address some of the shortcomings that Social Security creates.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, Connecting the Dots: Using Life Insurance With Social Security.

Even when you optimize your Social Security claiming strategy, there may still be problems that need fixing. Life insurance can be the perfect tool to address some of the shortcomings that Social Security creates.

Optimizing Social Security is often much more complicated than many people realize. For almost everyone, even when you get the most you can out of it, it’s still not nearly enough to meet your monthly expenses. And certain circumstances can cause income shortfalls or gaps even with maximized Social Security benefits. Here, we examine some of those shortfalls that Social Security fails to address, and how life insurance can help fill in those gaps.

Surviving Spouse’s Benefit

Survivor benefits are one of few aspects of Social Security that, in most cases, are relatively simple. As long as both spouses live past their Full Retirement Age (assume age 67), the survivor benefit is simply the higher of the two benefits. For example, if I collect $2,000 per month and my wife collects $1,000 per month, the survivor benefit is $2,000. If I die before she does, her benefit goes up from $1,000 per month to $2,000 per month. If she dies before me, my survivor benefit stays at $2,000. Note that we are ignoring the effect of annual cost of living adjustments, but the concept applies either way.

So, for my wife, there’s good news and bad news. The good news is that if I die first, her benefit doubles. The bad news (aside from the fact that I’m no longer there!) is that as a household, the total benefit has gone from $3,000 per month to $2,000 per month.

If she’s like most people, she’ll probably want to stay in her own home for as long as she can. She’d prefer to avoid going into assisted living or a nursing home until she must.

But until then, what happens to the household expenses? The mortgage payment will likely stay the same, as will the real estate taxes. And without me there, the maintenance expense may actually go up. So, the expenses stay the same or go up, while the household income goes down.

This is where life insurance comes in. A relatively small policy, say $300,000, purchased at age 60, can be used to create a pool of money to help replace the lost Social Security income after the first spouse dies.

But of course, there’s no guarantee that I will be the first to die. All things being equal, she probably will outlive me since females generally live longer than males, but there is no way of knowing. So, to do the job properly, you may need to have a separate $300,000 policy for each spouse.

“Hedging” Your Social Security Bet

Here’s another situation where life insurance can help. No matter when I collect my Social Security benefit, I am essentially making a bet. If I’m in good health and believe I can afford to wait, collecting Social Security at age 70 may be the best choice. It almost certainly will be the right choice if I live into my late eighties or beyond. But if I die before I get there, I’ve lost in more ways than one.

I may expect to live a very long time, but what if I’m wrong? If I can afford it, one way to hedge my bet is to use life insurance.

Here’s another example. Let’s say I’m age 60. I will reach Full Retirement Age at 67, but I have options. I can collect as early as age 62 or as late as age 70. Let’s say my full benefit is $3,000 per month at age 67. If I start at age 62, my benefit would be reduced by 30 percent, to $2,100. If I wait until age 70, the benefit will grow by 8 percent per year (non-compounded), or up to $3,720 per month.

But what if I die suddenly just before my 70th birthday? I decided to forgo $108,000 of cumulative Social Security benefits that otherwise could have been collected and enjoyed if I had started at age 67; even more if I had collected at age 62.

Side bar

Keep in mind that the so-called “earnings test” could make it difficult, if not impossible, to collect your Social Security benefit prior to Full Retirement Age if you continue to work. In 2025, the earnings limit is $23,400. There will be a benefit reduction of $1 for every $2 of excess wages you earn above that amount. The earnings test goes away when you reach Full Retirement Age.

In this example, if I’m 60 years old and healthy, I could consider purchasing a $200,000 life insurance policy. That way, if I died, there would be additional money for my heirs to replace the Social Security income I chose to forego.

How much would it cost? Using Security Mutual Life’s Security Designer WL4U3 10 Pay, a male preferred nonsmoker aged 60 could purchase a guaranteed death benefit of $200,000 for an annual premium of $13,053. The policy would be fully paid up at age 70 when the insured files for Social Security. Should the insured unexpectedly die before that age, the policy would replace most, if not all, of the income given up by waiting. In this example, if the insured survives to 70, the policy’s guaranteed cash value would be $114,324 (provided premiums are timely paid) and continue growing each year the policy remains in force thereafter. This cash value provides an important living benefit for the policyowner. The cash value can be used to supplement the retirement income.

These are just two of the ways in which life insurance can be beneficial in Social Security optimization. There are numerous other instances where life insurance can help with Social Security and retirement planning. The possibilities are endless. Consult a life insurance advisor from Security Mutual Life today to explore how life insurance can complement Social Security benefit selection strategies.

The examples provided are hypothetical and are not intended to serve as a projection of any specific life insurance policy. The depicted strategy may not be suitable or appropriate to your individual circumstances. The material presented should not be interpreted as a recommendation.

Policy Form Nos. 2112-NY-17CSO; ICC14-2112; Series 2112. Insurance products are issued by Security Mutual Life Insurance Company of New York. Product availability and features may vary by state. Eligibility for life insurance is subject to the Company’s underwriting rules and receipt of payment. Premium rates will vary based on any and all information gathered during the underwriting process, and medical exams may be required. Life insurance policies contain exclusions, limitations and terms for keeping them in force. Your agent can provide costs and details. Guarantees are based on the claims-paying ability of Security Mutual Life Insurance Company of New York.

We encourage readers to seek personalized advice from a qualified professional regarding their personal financial circumstances and objectives.

The illustrations provided are hypothetical and are not intended to serve as a projection of any specific life insurance policy. The material presented should not be interpreted as a recommendation.

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

Episode 303 – “Accelerated inheritance” is a new term for an old idea: giving assets to your kids while you’re still living, rather than waiting until you die. But does it work?

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, does it make sense to give money to your kids while you’re still living?

The term “accelerated inheritance” is a relatively new way of describing an old idea: parents giving some of their assets to their adult children while they’re still living, rather than waiting until they die.

It certainly does make sense in some cases. Financially secure parents are usually inclined to help their children, who may have a new mortgage, childcare expenses, or student debt.

Note that gift tax exclusions can be used when funding an accelerated inheritance. This means that both you and your spouse can give each of your children up to $18,000 in 2024 without any gift tax implications. For example, a husband and wife with two children can give $36,000 in annual individual gifts to each child, for a total of $72,000, without creating a taxable gift.

If you go beyond this amount, you must file a federal gift tax return. But that doesn’t necessarily mean you’re going to owe any gift taxes. Instead, you count the overage against your lifetime federal gift and estate tax exclusion amount. In 2024, the combined lifetime gift and federal estate tax exclusions are $13.61 million per person. So, if you go above the $18,000 annual exclusion amount, you won’t have to write a check to the IRS, unless you’ve gifted more than $13.61 million. Note that without a change in the tax law, the lifetime exclusion amount will be reduced in half at the end of 2025.

So, giving large amounts of money to your children can be easy and without tax complications. But when is it a good idea, and when it is a bad idea? Here are some of the pros and cons of accelerated inheritance.

First, some of the advantages:

Now, some of the disadvantages:

For those who are hesitant, there is one other piece of good news. You don’t have to give them all this money in cash. You can structure the living inheritance in the form of a trust. With qualified legal assistance, a trust can be used as a way to protect assets against creditors, divorces and spendthrift ways.

Your Security Mutual Life insurance advisor can help get the process started. Your Security Mutual Life insurance advisor will assemble your team and coordinate with your attorney and tax professional to review your situation and to determine the plan that will best suit your needs and objectives.

[1] Schwartz, Larry. “More Info on Mickey Mantle.” espn.com. https://www.espn.com/classic/000813mickeymantleadd.html (accessed October 4, 2024).

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

Episode 302 – Is divorce ever easy? Almost never. And the financial aspects can be especially tricky. Here are 9 thoughts that may help you weather the storm.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, some thoughts on divorce and finance.

Is divorce an easy process? Rarely, if ever. But here are nine things to keep in mind if you’re ever faced with such a daunting task.

Divorce can be an expensive and emotionally draining process. Careful planning can at least make it a little bit less of a burden.

[1] Manganaro, John. “7 Insights on Advising Wealthy Clients in a Divorce.” ThinkAdvisor.com. https://www.thinkadvisor.com/2024/07/18/7-insights-on-advising-wealthy-clients-in-a-divorce/?printer-friendly (accessed Oct. 1, 2024)

[2] Forbes Expert Panel®. “10 Important Financial Factors To Consider During A Divorce.” Forbes.com. https://www.forbes.com/councils/forbesfinancecouncil/2021/02/08/10-important-financial-factors-to-consider-during-a-divorce/ (accessed Oct. 1, 2024)

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

Episode 301 – Single parents must have their financial house in order, through insurance, financial and estate plans, to help protect their sources of income, existing assets and their children.

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

• COVID-19 (coronavirus) Information

Episode 300 – Anyone who has ever tried to call a large bank or medical practice knows one simple truth: It’s becoming increasingly difficult to talk to a real person. But that’s just what so many of us need. The case for interaction with a real people is especially important when it comes to life insurance.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, our 300th, why you need a real person to help with your life insurance needs.

Every September, Life Happens sponsors Life Insurance Awareness Month, a time to call attention to the importance of life insurance planning.  As September comes to a close, we thought we would take a look at how important it is to have a real person to talk to when you make this important decision.

Anyone who has ever tried to call a large bank or medical practice knows one simple truth: It is becoming increasingly difficult to talk to an actual human being. But that’s exactly what so many of us need.

The case for interaction with a real person is especially important when it comes to life insurance. Some people are convinced—often mistakenly—that anything can be cheaper if you buy it online. But are you really getting your money’s worth? Life insurance can be complicated. When it comes to life insurance purchases, being educated about what you’re buying can be difficult especially without proper guidance.

In a recent article in Think Advisor magazine, author Bryce Sanders gives us a few good reasons why it’s usually better to deal with an actual human being when looking at life insurance.[1] Here they are in order.

How much coverage do you need? What type of policy? Who’s going to own it? Should you add any special riders such as chronic illness or waiver of premium riders? There are a lot of decisions you need to make. The more-affordable policy may not be the best policy in the long run. A real-life insurance agent can help you figure out exactly what you may need, help explain some of the terms you may not understand and help put your mind at ease. An agent can listen to your concerns, answer your questions, and recommend appropriate alternatives.

You need to file a claim. Or change a beneficiary. Or quickly make a missed payment before it’s too late. Your agent knows where to go, what forms you need, how to complete the paperwork. Can you get that so easily if you buy a policy online?

As Sanders points out, there are quite a few online-only companies with serious sounding names. Some may be located offshore without you even realizing it. Some may mimic the names of other industry giants. Is it even a real company? A reputable professional agent only deals with reputable companies.

Need help with college funding, retirement planning or estate planning? Do you have concerns about disability insurance or even about your business insurance? Chances are your agent can provide you with so much more than just life insurance. Your Security Mutual Life Insurance Advisor is there to help. Your SML insurance advisor will assemble your team and coordinate with your attorney and tax professional to review your situation and to determine the estate plan that will best suite your needs and objectives.

Do you trust the person you’re about to do business with? It’s a lot easier to evaluate when you’ve actually met them.

Buying online tends to be one and done, but life insurance doesn’t always work that way. The convenience of online purchases can be efficient and save time. Life insurance differs from other purchases. You may need more in the future due to a growing family, inflation, tax law changes, or many other reasons. Or maybe you want your term coverage to become permanent. If your agent made things easier for you the first time, wouldn’t you want to deal with them again?

The price of a policy is important. But it’s nowhere near the only thing. How about policyholder service? Need to make a simple change, like a change of address? Simple for some companies, but not for all. Your agent should know which companies are easy to deal with, or at least, how to get to the right people if they’re not.

And that’s not all. We’ll throw in one more reason to deal with a live agent: Underwriting. Online companies like to advertise their cheapest rates. But they might not tell you how difficult it is to get them. And what if you don’t qualify? The cheapest company may end up being closer to the most expensive. A real person can work directly with the insurance company to make sure you’re getting the best deal you can for your health situation, even if that means finding a different company.

The convenience of online shopping can add efficiency and save time and money when purchasing many consumable goods or simple electronic devices. Buying life insurance to protect your family or business differs from these transactions. When you’re buying life insurance, make sure you understand what you’re buying, who you’re buying it from and how it helps meet your needs. Consider working with a professional and reputable life insurance agent from Security Mutual Life. You’ll be glad you did!

[1] Sanders, Bryce. “8 Reasons Why Clients Need a Live Insurance Agent.” ThinkAdvisor.com. https://www.thinkadvisor.com/2024/04/17/8-reasons-why-clients-need-a-live-insurance-agent/?printer-friendly (accessed Sept. 6, 2024)

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state. 

Episode 299 – The Secure Act and Secure 2.0 were both designed to assist people when it comes to saving for retirement. But as with any new law, the rules can be confusing, and some of the provisions are still being phased in.

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, here are some important retirement savings rules changes you may have missed.

2019 seems so long ago. So much has changed since then: A pandemic, war in Ukraine, expanded conflict in the Middle East, the return of inflation and tension—once again—in the Royal family.

But it was back in December 2019, when the original Secure Act was signed into law. Its companion piece, Secure Act 2.0, came along three years later. Some of the provisions in both acts were phased in gradually. Here are some upcoming changes you might have missed.

Required Minimum Distributions (or RMDs). RMDs are a huge part of retirement planning. An RMD is the amount of money you must withdraw annually from a traditional IRA or 401(k). The first withdrawal must take place by April 1 of the year after you reach age 73. Starting in 2033, RMDs begin at age 75.[1]

The amount of the withdrawal is based on a government formula which requires you to take out a bigger percentage of the account each year as you age. When received, RMD distributions are considered taxable income.

It is difficult to miss an RMD when you have an independent custodian, but it does happen. The penalty for a missed RMD is severe, but the Secure Act softened the impact considerably. Prior to 2023, the penalty for a missed RMD was 50 percent. The Secure Act reduced this to 25 percent. But that’s not all. If you correct the mistake within two years, the penalty could be reduced further to 10 percent.[2] The IRS will also consider waiving the penalty entirely on a case-by-case basis if you have a good reason, such as a sudden illness.

There is also now a three-year statute of limitations if you miss an RMD. Prior to Secure 2.0, if you missed an RMD, the interest and penalties could go on indefinitely.

Roth 401(k). You don’t get a tax deduction when you contribute money to a Roth IRA or 401(k). But once inside the plan, the money grows tax-free, and with certain conditions, money can also come out of the plan on a tax-free basis. But a Roth 401(k) had one significant disadvantage when compared to a Roth IRA: RMDs. Up until this year, if you had a Roth 401(k), you had to make Required Minimum Distributions once you reached age 73. Not so for a Roth IRA. But Secure 2.0 changed that. RMDs are no longer required when you have a Roth 401(k).

There is also more flexibility available with a Roth 401(k) when it comes to an employer match. Matching contributions are a way employers can encourage their employees to participate in a 401(k). If some of your paycheck is withheld to go into a 401(k), the employer may match that contribution up to a certain percentage. Prior to last year, any matching contributions had to be made to a pre-tax account, even if you chose the Roth option for your own contribution. But since 2023, if the plan allows, the employee can choose to have the employer match classified as a Roth (after-tax) contribution. The one disadvantage to this is that the employer match, if placed into a Roth account, will be considered taxable income to the employee when it goes in.

Excess contributions to an IRA. Anyone can contribute up to $7,000 a year to a traditional IRA or $8,000 a year if you’re over age 50. This does not mean that the contribution will be tax-deductible. If you’re married filing jointly and make over $123,000 in 2024, some or all of your deduction will be lost.[3]

But what happens if you put in too much money? Excess contributions happen more frequently than many people realize. People may have more than one IRA set up, or they may have inadvertently contributed more than 100 percent of their taxable compensation. If this happens, there is a 6% excise tax for every year the excess contribution remains in an IRA. Under the new rules there is now a six-year statute of limitations for excess contributions to an IRA . The statute of limitations starts when the owner’s tax return is filed.[4]

SEP and Simple IRAs. These are special plans that are available to smaller employers and the self-employed. Under the new rules, Roth contributions are now allowed to these plans.

The Secure Act and Secure 2.0 were both designed to assist people when it comes to saving for retirement. But as with any new law, the rules can be confusing. Your Security Mutual Life insurance advisor can help. Your Security Mutual Life insurance advisor will assemble your team and coordinate with your attorney and tax professional to review your situation and to determine the estate plan that will best suite your needs and objectives.

[1] Mengle, Rocky. “New RMD Rules: Starting Age, Penalties, Roth 401(k)s, and More.”  Kiplinger.com https://www.kiplinger.com/retirement/new-rmd-rules (accessed September 3, 2024)

[2] Sloane, Leonard. “Changes in Retirement Savings Rules to Know Before Year’s End.” wsj.com. https://www.wsj.com/personal-finance/retirement/retirement-savings-rules-changes-year-end-555b4465?st=spr2ziagzcndc87&reflink=article_email_share (accessed September 3, 2024)

[3] Fidelity Smart Money. “IRA contribution limits for 2024.” Fidelity.com https://www.fidelity.com/learning-center/smart-money/ira-contribution-limits (accessed September 3, 2024)

[4] Appleby, Denise, “How Secure 2.0 Helps Protect Investors From Penalties and Excise Taxes.” Morningstar.com. https://www.morningstar.com/financial-advisors/how-secure-20-helps-protect-investors-penalties-excise-taxes (accessed September 16, 2024)

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®.  The content provided is intended for educational and informational purposes only.  Information is provided in good faith.  However, the company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information. 

 The information presented is designed to provide general information regarding the subject matter covered.  It is not to serve at legal, tax or other financial advice related to individual situations, because each person’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation

 To help reach your goals, you need a skilled professional by your side.  Contact your local Security Mutual life insurance advisor today.  As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives.  For more information, visit us at SMLNY.com/SMLPodcast.  If you’ve enjoyed this podcast, tell your friends about it.  And be sure to give us a five-star review.  And check us out on LinkedIn, YouTube and X (formally Twitter).  Thanks for listening, and we’ll talk to you next time.

 The applicability of any strategy discussed is dependent upon the particular facts and circumstances.  Results may vary, and products and services discussed may not appropriate for all situations.  Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently.  We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances.  Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York.  Product availability and features may vary by state.