Inside • Saving for the kids • Be credit smart •Financial planning tips and idea
Published by Southern Lakes Newspapers 2022
Investing
IN YOUR FUTURE
PAGE 2 • 2022 • INVESTING IN YOUR FUTURE
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Creating healthy financial habits that stick Investing
With prices on the rise, nearly everyone is looking for ways to make their money go further. In fact, the latest Google Search data shows that individual searches for “monthly budget template” increased a whopping 350 percent in the last five years in the United States alone. While there’s no silver bullet when it comes to managing your money, you can build healthier financial habits that help you move toward your goals. Here are four tips for taking more control of your money:
IN YOUR
Future A publication of Southern Lakes Newspapers LLC 1102 Ann St., Delavan, WI 53115 (262) 728-3411
Know where your money is going The first step toward any goal is starting with a clear-eyed view of where you are. Your finances are no different, and to build a better relationship with your money, you first need to know where it’s going. Digital personal finance apps like Google Pay and others make it easy to see exactly how much money you have, what you’ve spent and where you’ve spent it – all from your mobile phone. You can quickly see how much you’ve spent by category (like groceries and gas) or by business (like your favorite neighborhood coffee shop or big-box retailer). The detailed view can help you identify which expenses you can cut back on without feeling it too much.
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top: Rather than aiming for perfection, small, consistent steps can make a real difference. The goal of taking control of your finances is not to deprive yourself of living an enjoyable life – it’s to create better habits, one step at a time, to set yourself up for a more secure and prosperous future. left: Keeping track of where your money is spent is an important part of financial success.
Try the 50/30/20 rule Once you know where your money is going, you’ll need a rough plan for how to allocate it in the future. The 50/30/20 split can be a helpful rule of thumb for managing spending. The general idea is that about 50 percent of your money should go toward essentials (housing, transportation, medical costs, groceries, etc.), 30 percent toward wants (dining out, new clothes, entertainment, etc.) and about 20 percent toward paying off debt or saving for the future.
STOCK PHOTO Investing in Your Future
Take advantage of special deals and offers
coupon at checkout.
Online offers and deals are the modern-day coupons without all the clipping and sorting. With personal finance apps like Google Pay, all of the deals available to you are accessible and searchable through your mobile app. Just tap and activate the offers you like and the next time you make a purchase from that business, the offer will be automatically applied. No more fumbling for the right
Just as overly restrictive diets don’t usually work for long, the same is true for restrictive budgets. Both fail because they aren’t sustainable and can lead to counterproductive splurging.
Aim for progress, not perfection (BPT)
PAGE 4 • 2022 • INVESTING IN YOUR FUTURE
Protect your loved ones If you’re a millennial, the chances you’ve already invested in a private life insurance policy are probably pretty low. The share of Americans covered by life insurance slid from 63% in 2011 to 52% in 2021 – and the most pronounced decrease has come from younger generations. It makes sense – you’re young and healthy, and extra money goes towards the latest iPhone, smart home device or international travel. With the last 18 months forcing even younger generations to confront their own mortality, 48% of millennials are reportedly planning to buy within the next 12 months. Here’s why now is the time for millennials to prioritize life insurance:
Save money over time For all the stereotypes about millennials, it’s a generation of good planners who are responsible and strong forward-thinkers. The cost of a life insurance policy is largely dependent upon risk (healthy millennials are generally considered a lower risk), so buying a life insurance policy when you are young can help lock in lower rates with term or permanent insurance.
Buying life insurance is easier One of the main reasons millennials have avoided life insurance is because it has traditionally been a pain to buy. Fortunately, advances in technology have made it easier to purchase almost anything. Millennials use virtual assistants or e-commerce sites to shop for groceries and
Reasons why millennials need life insurance
order takeout. Same-day delivery is no longer a perk, but an industry standard that even the life insurance industry is beginning to embrace. Signing up for life insurance isn’t difficult now that there are streamlined processes like the Quility direct-toconsumer platform, which allows applicants to receive a personalized policy up to $1 million approved and delivered on average in ten minutes or less – no doctor’s visits or in-person meetings necessary. The 100% online platform, which recently added two new term life products, including the brand’s proprietary Quility Level Term product, is the new industry standard in simplicity, convenience and affordability. The company also has licensed insurance agents available for in-person, virtual or telephone meetings.
Protect your family from financial burden Millennials have long prioritized their careers and financial security but, as even the youngest millennials enter their mid-20s, more and more are starting families. It has become commonplace for people to believe they don’t need life insurance because they don’t have any children yet. But just because you don’t have dependents doesn’t mean there aren’t people who depend on you. Life insurance will help protect your spouse or long-term significant other with whom you own or rent a home, and allows your parents or siblings to cover unanticipated costs as they grieve. Half of millennials acknowledge their families would face financial hardship should a wage-earner die unexpectedly – and 43% expressed concern about
leaving their dependents in a difficult financial bind. That’s especially important for millennials who have long prioritized their careers and financial security, but are now looking to start families as even the youngest of the generation enter their mid-20s.
Consider your cosigners Today’s graduates are strapped with record-breaking student loan debt, so it’s important for millennials to consider their cosigners when shopping for life insurance. Certain types of debt are waived in the event of an unexpected death – and that includes student loans. However, many millennials have their parents or loved ones cosign on loans, credit cards or mortgages. If that’s the case, your student loan debt would transfer to your cosigner in the event of an unexpected death. A life insurance policy would help ease that financial burden in a time of grieving. Millennials are among the most educated and knowledgeable generations in history. They’re health conscious, financially conscious and socially conscious. Yet, life insurance has been overlooked because the industry has made things too complex, too confusing and too inconvenient. COVID has raised awareness about the important role life insurance plays in families’ financial security, so it’s time for millennials to consider getting life insurance sooner rather than later. Quility can help secure your financial future in 10 minutes or less. Get insurance your way at www.quility.com.
Millennials are among the most educated and knowledgeable generations in history. They’re health conscious, financially conscious and socially conscious. Yet, life insurance has been overlooked because the industry has made things too complex, too confusing and too inconvenient. STOCK PHOTO Investing in Your Future
(BPT)
INVESTING IN YOUR FUTURE • 2022 • PAGE 5
How many couples make long-term financial decisions together? Just 20% Should married women and men be equally involved in long-term financial decisions? Your answer is likely a resounding yes! The problem is, although everyone agrees a joint financial approach is best for spouses, it’s rarely happening in reality. According to the 2021 “Own Your Worth” report from UBS, the world’s largest global wealth manager, nearly 100% of women and men believe women should be more involved in long-term financial decisions, such as investing, financial planning and estate planning. What’s more, women and men overwhelmingly believe that unless women are equally involved in these decisions, there will never be true gender equality. Despite these strong beliefs, in heterosexual marriages, men continue to manage most of the finances. Seven in 10 men say they take the lead on long-term financial decisions, often believing they know more about long-term finances than their spouse. But there’s good news: Among men who take the lead, nine in 10 wish their spouse was more involved in long-term financial decisions. Both women and men agree that making longterm financial decisions together would increase their confidence in the future, minimize financial mistakes and reduce anxiety about money. Currently, only about 20% of couples make long-term financial decisions together. Surprisingly, this is even more common in younger couples. Prior to marriage, 88% of millennial women plan to share long-term financial decisions equally or take the lead. But after marriage, only 15% of millennial women make these decisions together. Fifty-one percent
defer to their spouses - more than any other generation. The importance of equal spousal participation is something that became clear the moment that John had an unexpected heart attack at age 34. “It dawned on me while I was sitting on a hospital gurney thinking I was going to die that my wife doesn’t know where most of our investments are,” he said. “I’m using my last breaths to tell her exactly where the funding is.” Fortunately, John survived and he and his wife, Chris, learned an important lesson. They now communicate regularly about finances and have everything documented in writing. This gives them both confidence in the future no matter what happens. John and Chris’s story is part of “Real life, real stories,” an Own Your Worth video series found at UBS. com/women which shows how real people manage money, what’s at stake and lessons learned. “Participation is the key to change,” says Carey Shuffman, Head of the Women’s Segment at UBS. “It’s critical for women to take their seat at the ‘money table’ so they can actively design the life and legacy they want. Men can be instrumental allies in removing barriers so active participation is possible.” Male allyship is a priority for both Michael and George, two men featured in one of the videos. “It’s a 50/50 partnership, but we split up the work and hold each other accountable,” said Michael, a millennial husband, about his equal financial partnership with his wife, Michelle. George, a retired Baby Boomer and husband to
Bonnie, agrees. “With us discussing all the financial decisions that we made, it helped us to make the best decisions because two heads are always better than one. My wife has a good handle on all the finances, so when I’m gone I have peace of mind she will do the right thing.”
First steps for equal financial involvement Every couple’s situation is unique, but the most important thing is to get started together. Schedule regular conversations about where your finances are currently and your vision for the future. Be open, honest and value each other’s opinions. To help share longterm financial decisions equally, ask each other some questions: • What do you want to accomplish in your life? • Who are the people that matter most to you? • What do you want your legacy to be? • What are your main concerns? • How do you plan to achieve your life’s vision? “When couples participate equally in long-term decisions, they feel greater confidence in achieving their goals, greater satisfaction in their financial situations and less stress about money, so this is a very powerful step in any marriage,” said Shuffman. “The importance of participation in long-term financial decisions doesn’t just apply to women in couples - women who are not in a partnership can ask these questions of themselves, or speak with other trusted loves ones, peers, or a financial professional, to help them get started.”
While both women and men agree managing investments and finances together is the best way to secure their future, only about 20% of couples make long-term financial decisions as a team. STOCK PHOTO Investing in Your Future
(BPT)
Why it pays for seniors to maintain good credit PAGE 6 • 2022 • INVESTING IN YOUR FUTURE
The benefits of maintaining good credit include looking more reliable in the eyes of prospective employers and securing lower mortgage interest rates when buying a home. Those rewards can benefit anyone, but they’re especially enticing to young people. But what about seniors? Do individuals stand to benefit significantly from maintaining good credit into their golden years? According to the credit reporting agency Experian, senior citizens tend to have the best credit scores of any consumer demographic. That could be a byproduct of years of financial discipline, and there are many benefits to maintaining that discipline into retirement.
Home buying and borrowing Buying a home is often considered a big financial step forward for young people, but that doesn’t mean aging men and women are completely out of the real estate market. In its 2020 “State of the Nation’s Housing” report, the Joint Center for Housing Studies of Harvard University reported that the share of homeowners age 65 and older with housing debt doubled to 42% between 1989 and 2019. In addition, 27% of homeowners age 80 and over were carrying mortgage debt in 2019. Maintaining strong credit after retirement can help homeowners who still have mortgage debt get better terms if they choose to refinance their mortgages. Even
seniors who have paid off their mortgages can benefit from maintaining good credit if they decide to downsize to a smaller home but cannot afford to simply buy the new home outright.
Rewards Retirement is often associated with travel, recreation and leisure. Such pursuits can be more affordable when seniors utilize rewards-based credit cards that help them finance vacations, weekend getaways and other expenses associated with traveling. Seniors who maintain strong credit ratings into their golden years may have more access to the best travel-based rewards cards than those whose credit scores dip in retirement.
Unforeseen expenses No one knows what’s around the corner, but savvy seniors recognize the importance of planning for the unknown. The COVID-19 pandemic seemingly came out of nowhere, and among its many ripple effects was the sudden job loss experienced by seniors. The JCHS report found that 21% of homeowners age 65 and over had reported loss of employment income related to the pandemic. Unforeseen medical expenses also can compromise seniors’ financial freedom. Maintaining a strong credit rating into
The importance of a strong credit rating is often emphasized to young people. However, a strong credit rating can be equally beneficial for seniors. STOCK PHOTO Investing in Your Future
older adulthood can help seniors navigate such financial uncertainty more smoothly. Such a strategy can help seniors secure low-interest loans or credit cards that can
help them pay down sudden, unforeseen expenses without getting into significant debt.
(METRO CREATIVE)
TYPES OF RETIREMENT ACCOUNTS The ability to retire with financial security is a goal for millions of people across the globe. Though people may stop working in retirement, many of their existing bills, and even some new ones, will still need to be paid. Retirement is often imagined as a time of unbridled financial freedom, but that’s only possible when individuals, including young professionals, prioritize planning for the day when they call it quits. Retirement accounts and plans are a popular way to save for life after working. Individuals have various retirement plan options at their disposal, and each is unique in its own way.
account holders a considerable sum of money so long as they continue to make contributions. One significant advantage to 401(k) plans is that many employers will match contributions up to a certain percentage. For example, some may match up to 2%, so employees who contribute 2% or more will actually be depositing no less than 4% of their income each week into their 401(k) accounts. Perhaps most beneficial is that employer matches do not count toward the annual 401(k) contribution limits, which the IRS notes were $19,500 in 2021.
IRA An Individual Retirement Account is a tax-advantaged way to save for retirement. Anyone with earned income can open an IRA. Money deposited into an IRA cannot be withdrawn prior to account holders reaching 59.5 years of age without incurring a steep tax penalty of 10 percent. There are limits to how much individuals can deposit into an IRA. The Internal Revenue Service notes that the deposit limit for all IRA accounts in 2021 was $6,000 ($7,000 for account holders age 50 and older). In addition, there are different types of IRAs, including traditional IRAs,
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A Simplified Employee Pension plan is typically established by a small business owner or self-employed individual. However, small business owners can set them up for their employees as well. Roth IRAs, Payroll Deduction IRAs, and Contributions to an SEP will reduce SIMPLE IRAs. Each has its rules regarding taxable income, and the money will grow taxes, eligibility and withdrawals, and tax-deferred. Individuals enrolled in an individuals are urged to discuss which type SEP will only pay taxes on the money upon of IRA is best for them with a financial withdrawal. professional. One of the advantages to an SEP is it has significantly higher contribution limits, which the IRS notes were $58,000 or 25% of the employee’s compensation, whichever A 401(k) is another tax-advantaged was lower, in 2021. However, SEPs are retirement account typically offered through an employer, though self-employed employer contribution only, so they rely a individuals can enroll in a Solo 401(k) plan. lot on employers’ available cash. No retirement accounts are the same. When enrolled in a 401(k) plan, Individuals are urged to conduct their own employees will have a portion of each research and choose the plan that best suits paycheck direct deposited into a longtheir needs. term investment account. Contributions (METRO CREATIVE) to a 401(k) are made pre-tax, which saves
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Annual investment checkup Just like with a car, it’s a good idea to perform some annual maintenance on your retirement plan. Here’s a five-point inspection guide to help you continue to get good mileage out of your plan and ensure it stays reliable on your trip to retirement.
2. Increase your retirement plan contribution While the ultimate goal is to max out your retirement account contributions, don’t stress if you aren’t there yet. Focus first on making sure you contribute enough to receive your full employer match if your plan offers one – otherwise, you’re missing out on free money. Then, aim to increase your contribution by at least 1%–2% each year, working up to saving 10%–15% of your pretax income each year. Finally, make sure to review current retirement plan contribution limits
Perform this five-point inspection to help keep your retirement plan’s motor running smoothly
changes in the market caused stocks to now account for 85% of your portfolio’s value. That’s why it’s important to periodically check your asset allocation to see if it aligns with your current strategy. Keep in mind, you may also want to rebalance to a more aggressive or conservative allocation should your tolerance for risk change.
1. Review your retirement saving goals It’s challenging to predict your retirement needs, particularly if you’re in your 20s or 30s. But financial planners generally recommend replacing about 75% of pre-retirement income. Even if your retirement is decades away, you should use a retirement calculator at least once a year to estimate whether you’re on track to reach your goals. Your recordkeeper will likely have retirement calculators and other planning tools on their website. You can also check out the interactive retirement calculator at aceyourretirement.org, which includes a digital “retirement coach” that can help walk you through some personalized retirement plan action steps that may help you achieve your retirement goals.
INVESTING IN YOUR FUTURE • 2022 • PAGE 7
4. Consolidate your accounts
Sara Putz Community State Bank Wealth Management • Vice-President LPL Financial Advisor 1500 Main St. • Union Grove, WI 53182 Cell: 262-705-4596 Office: 262-864-2354 sara.putz@lpl.com • csb.bank
You may have a 401(k) from a past job that you no longer contribute to. Rolling over the funds from one or more other accounts into one retirement account can help make your financial life more manageable, keep your savings organized and potentially reduce your account management fees. Just make sure you follow transfer or rollover rules so you don’t get hit with an unexpected penalty or tax bill.
5. Review or name your beneficiaries
When you first signed up for your retirement plan, you may have skipped this step. Or, you may want to make adjustments if your family status has changed. Make sure your designated beneficiaries align with your will, if you ($19,500 in 2021, plus an additional $6,500 have one. Also, please note that when it comes to employer-sponsored retirement catch-up contribution if you’re age 50 or older). While you might not have been able plans, the law requires written consent from your spouse if you decide to name to contribute the maximum amount in the anyone besides them as the beneficiary. past, you may have more to save now. This material was created for educational and informational purposes 3. Rebalance your only and is not intended as ERISA, tax, investment portfolio legal or investment advice. If you are Over time, market changes can lead to seeking investment advice specific to shifts in your portfolio’s asset allocation. your needs, such advice services must be For example, you may have started with a obtained on your own separate from this 75/25 stock-fund-to-bond-fund split, but educational material.
Kmotion, Inc., is at 412 Beavercreek Road, Suite 611, Oregon City, OR 97045; www.kmotion.com, ©2021 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Community State Bank and CSB Wealth Management are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using CSB Wealth Management, and may also be employees of Community State Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Community State Bank or CSB Wealth Management. Securities and insurance offered through LPL or its affiliates are: • Not insured by FDIC or any other government agency; • Not Community State Bank guaranteed; • Not Community State Bank deposits or obligations; and • May lose value.
Strategies to ease the burden of student loan debt Student loan debt in the United States is growing. According to EducationData.org, federal student loan debt has grown at an annual average rate of just under 28 percent since the start of the 21st century. Private student loan debt also is a significant burden, totaling $132 billion by the end of 2020. As student loan debt has risen, managing that debt has become an important component of financial planning. Individuals with student loan debt can look into various strategies to help ease their debt burdens.
Reconsider your employment As student loan debts have risen, employee repayment assistance programs once associated strictly with government jobs have grown in popularity at private companies. The Coronavirus Aid, Relief, and Economic Security Act passed around the onset of the pandemic in 2020 included a tax-free provision for employer-sponsored loan assistance programs. The tax benefits helped both employees, who did not have to pay income taxes on loan assistance money provided by their employers, and businesses, who received payroll tax exclusions on funds paid to employers via the program. The CARES Act provision was temporary, but experts at Goldman Sachs have noted that many private companies have gotten creative in regard to helping employees pay down student loan debt. For example, some have allowed employees to redirect PTO and vacation pay toward their
student loans. Individuals with sizable student loan debts whose companies do not currently offer such benefits can look for new employment opportunities with firms that will help them pay down their debts.
Consolidate loans Consolidation is often viewed through the lens of simplifying loan repayment by combining all loans into one so borrowers with multiple loans only need to make a single payment each month. That impression is correct, but there’s more to consolidation than simplifying repayment. The experts at Credit.com note that consolidation typically allows borrowers to change their repayment terms. Longer repayment terms will increase the amount of interest borrowers pay over the life of the loans. But longer repayment terms also allow borrowers to pay less each month, which can free up money to pay bills and build savings for large purchases, including a home.
Know your loans Many borrowers signed their student loan documents when they were 18, while others might have signed when they were 22 or 23 and about to enter graduate school. It’s easy for young borrowers to overlook important details like interest rates, but individuals who have multiple loans must recognize that the interest rates on loans that have not been consolidated almost certainly vary. Learn the interest rates on your loans and make a concerted effort to pay extra principle each month on the
Student loan debt is a significant burden for millions of individuals. Finding ways to ease that burden can help borrowers secure their financial futures. STOCK PHOTO Investing in Your Future
loans with the higher interest rates. Doing so can save borrowers a lot of money over time and get them that much closer to eradicating their student loan debt.
(METRO CREATIVE)
PAGE 8 • 2022 • INVESTING IN YOUR FUTURE
CHECKUPS ARE GOOD FOR YOUR FINANCIAL HEALTH. Like annual physicals, a yearly financial checkup can help uncover hidden problems, inspire you to set new goals, provide information you need to improve your health, and help make sure you’re on track for well-being. I specialize in thoughtful and objective investment guidance aimed at keeping your finances and goals in shape.
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Call today for more information or to schedule a consultation. Sara Putz
CSB Wealth Management Vice President LPL Financial Advisor 1500 Main Street Union Grove, WI 53182 Cell: (262) 705-4596 Office: (262) 864-2354 sara.putz@lpl.com csb.bank
It's not about current value; it's about future value. Invest in Your Future. Invest in Real Estate.
Located at: Community State Bank 1500 Main Street, Union Grove, WI 53182
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INVESTING IN YOUR FUTURE • 2022 • PAGE 9
Smart ways to save money for your kids While there are many ways to set your kids up for a successful future, money in the bank is one of the most powerful financial tools you can pass along. Every dollar you save or invest can help your child create a productive and stable foundation for many years to come. When it comes to saving for your kids, the sooner the better. Building up funds now can ensure kids will have less to worry about as they get older and can open up more financial opportunities. To help you get started, consider these several ways to save wisely for your kids.
Open a college savings account If higher education is in your child’s future, consider a 529 savings plan. This is a tax-advantaged investment plan that can be opened as soon as your child is born. The money grows tax free and can be withdrawn without taxes. There are two types of 529 plans: prepaid tuition and education savings. Prepaid tuition plans can purchase credits at a participating university and lock in current tuition costs. An education savings plan is an investment account where funds are designated for qualified college expenses. Be sure to consult a tax advisor to assist with your specific circumstances as this is only intended to provide general information.
Invest in a home
Allow kids to use debit cards
Purchasing a home can be one of the most secure and highest-return investments you can make for your children, especially in today’s housing market. A home can be passed down through generations or sold when the value has increased. If you’re looking to invest in a home for your children, consider manufactured housing. Manufactured homes attached to a permanent foundation appreciate at an average rate of 3.4%, while traditional homes appreciate at an average rate of 3.8%. So, while manufactured homes may not appreciate at the exact same rate, they’re pretty close! Vanderbilt Mortgage and Finance can help you finance manufactured housing with their newly improved loan process, which allows you to apply online and track your progress digitally. Vanderbilt’s Home Loan Guide offers more ideas on how to budget and prepare for buying a home.
Consider teaching your kids money management skills early on by allowing them to use a debit card co-owned by you. If you have teenagers who earn an income, this is a great tool for learning how to deposit checks, set aside money for savings and more.
Use Roth IRA contributions If you have a Roth IRA account, you can use some of the funds to pay for qualifying education expenses. If your account is at least five years old, you can withdraw up to your original contribution amount. Be sure to consult a tax advisor to assist with your specific circumstances.
Open a high-yield savings account A high-yield savings account can be a great place to stash birthday and holiday gift money over the years and watch it continue to grow. This type of account can typically be co-owned and managed by parents until your child is responsible enough to manage it on their own.
Set aside money in a trust fund Putting money for your kids in a trust doesn’t have the same tax benefits as a 529 plan, but it does pose some important benefits. Trust accounts allow you as parents to create exact rules around how you want the funds dispersed to your children. For example, you can give the money in a series of installments or request that it be used only toward tuition. Paid Content by Vanderbilt Mortgage and Finance, Inc.
Whether you’re thinking about your child’s education or simply want to set aside funds for when they reach a certain age, plan ahead and consider these tips and options for reaching your goals. STOCK PHOTO Investing in Your Future
(BPT)
PAGE 10 • 2022 • INVESTING IN YOUR FUTURE
Buy with Confidence, Sell with Success! 5 Reasons Why Buying a Home is a Good Investment:
HOW TO BE A
smart credit consumer
Financial planning encompasses a host of strategies designed to help people enjoy the fruits of their labors. Financial planning is often associated with saving for retirement. However, smart credit management is an integral component of financial planning that can begin paying
dividends long before adults are ready to retire. Capital One notes that the benefits of a good credit score include lower credit card and mortgage interest rates, which can save
• CONTINUED ON PAGE 12
1. Build Equity 2. Tax Benefits 3. Investment Potential 4. Creative Freedom 5. Predictable Payments
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Various strategies can help individuals become smart credit consumers and reap the rewards that a strong financial reputation has to offer. STOCK PHOTO Investing in Your Future
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INVESTING IN YOUR FUTURE • 2022 • PAGE 11
Plan for the future
RETIREMENT READINESS HACKS TO HELP YOU SAVE SMARTER What are your goals for the future? If retirement planning is top of mind, you’re not alone. According to new research from Empower and Personal Capital, 36% of Americans are making retirement planning a priority this year. That’s more than those who said losing weight (28%), buying a house (14%) or getting a new job (11%). Whether you’re just getting started or looking to kick it up a notch, here are some of the best ways to save for retirement in 2022 and beyond:
Understand your complete financial picture It’s important to look at your finances from where you are in the present and where you want to be in the future. Make sure you’re in a good spot now, so you can stay on track to accomplish future financial goals. One simple way to start is understanding where your money is going and any barriers that are holding you back from meeting your goals. Utilize online tools that can help provide a holistic snapshot of your financial life and commit to making changes where necessary. For example, determine areas you can decrease spending and put more money toward saving.
Maximize retirement savings plan perks Don’t leave “free” money on the table. If you have an employer-sponsored 401(k) plan (or 403b, 457 or other), enroll and meet your match. This is the money your employer provides to match what you set aside
for retirement, so you can save more than if you did it individually. Additionally, check out the IRS 401(k) limits and consider maxing out your contribution. For 2022 the IRS allows individual contributions of $20,500 per person and $27,000 (including catch-up contributions) for people age 50 and older. If that’s not possible, consider increasing your contribution a bit every year. Remember to explore all options of your employer’s retirement plan to create a savings approach that is right for you. For example, some employers offer a Roth 401(k), which is funded with taxed dollars. There are no income limits on a Roth 401(k) and withdrawals are tax-free at age 59½ as long as your initial account contribution was made five or more years prior to the withdrawal.
Contribute to an IRA IRAs are another retirement tool to consider directing savings into. IRAs are great options for self-employed workers, small businesses, teens with their first job and those who are maxing out their employer retirement plan. Even if a spouse isn’t working, they may be eligible to fund a spousal IRA. Remember, you can save in both a 401(k) and an IRA. Which type of IRA is right for you? A traditional IRA gets a tax break upfront because it is funded with pretax dollars and a Roth IRA is funded with post-tax dollars, so you can pull that money out in retirement and not have to pay additional taxes on the contributions and earnings. If
flexibility is important, a Roth IRA might be a good choice because you can withdraw your contributions without penalties at any time if needed.
Contribute to a Health Savings Account Health savings accounts (HSAs) are a convenient way to set aside money for expenses related to your health, but they are also a smart financial tool. HSA contributions reduce your taxable income so you benefit come tax time. HSA earnings growth and qualified withdrawals are also tax free, rounding out HSAs’ triple tax advantage. In 2022, an individual with coverage under a qualifying high-deductible health plan can contribute up to $3,650, according to the IRS. What’s more, there’s also no “use it or lose it” requirement, and many programs allow you to invest your HSA money once you hit a certain threshold. This means it’s a great way to save for health expenses now as well as during retirement.
Get help from a pro Financial planning can be confusing and complex, so don’t be afraid to ask for help. A financial advisor can help you determine exactly what your financial goals are, walk you through your options, and provide a personalized plan. Getting trustworthy advice can have a big impact on how confident you feel about your prospects going forward.
No matter what stage of life you’re in, it’s never too early to start saving for retirement. There are plenty of paths you can take, and the earlier you start, the better off you’ll be. STOCK PHOTO Investing in Your Future
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PAGE 12 • 2022 • INVESTING IN YOUR FUTURE
Explore these college savings strategies Enrolling in a trade school or college is widely considered the next step after a student graduates from high school. College is especially popular, as the U.S. Bureau of Labor Statistics reports that 62.7 percent of high school graduates went on to colleges and universities in 2020. Finding ways to pay for higher education has long been a goal for students and their families. PrepScholar, a college testing preparation resource, calculates that, by 2033, students can expect to pay around $237,000 at in-state public universities and $464,000 at private colleges or universities for four-year degrees. That high cost is why so many families take proactive steps to set aside funds for college soon after their children are born. No matter the situation, taking the steps to plan and save helps to make schooling more affordable.
529 college savings plan
Saving for college can start early and there are various vehicles for families to explore. STOCK PHOTO Investing in Your Future
A 529 is a specialized savings account for college and university costs. Most plans can be opened by a U.S. citizen or resident alien age 18 and older. The individual opening the account can be a parent, grandparent, cousin, or even a friend. The student is the beneficiary of the account. Four-year schools, community colleges and vocational/trade schools accept 529 accounts as payment sources. The only requirement is that the school must participate in the U.S. Department of Education student financial aid programs.
Education savings account The financial experts at Ramsey Solutions say an ESA works like a Roth
IRA but it is designed specifically for education expenses. Individuals can invest up to $2,000 (after tax) per year, per child. The account grows tax-free. The rate of growth varies based on investments in the account. Ramsey estimates that at an average return rate of 12 percent on a $36,000 investment ($2,000 per year for 18 years) would grow to around $126,000 by the time the child starts college. An ESA also can be used to pay for K-12 private school tuition, school supplies, tutoring, or textbooks. It also can be transferred to a sibling if the money is not needed for a particular student.
UTMA/UGMA plan This plan is different from ESAs and 529s because it is not specifically designed for college savings. The Uniform Transfer/ Gift to Minors Act is in the child’s name but is controlled by a guardian until the child reaches age 18 or 21. This mutual fund account can be used to save for college with reduced taxes, or funds can be used for other expenses, such as a car or housing.
Advanced placement classes AP classes allow high school students to take college-level courses that can be converted into college credits. Each AP class reduces the need to pay for a class in college. This can add up to some significant savings. In addition, performing well in AP classes may make students more attractive to colleges and universities, helping students to earn academic scholarships.
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SMART CREDIT • CONTINUED FROM PAGE 10
You may not think about taxes all year but we do.
individuals tens of thousands of dollars over the life of their home loans. In addition, the Federal Trade Commission reports that the better an individual’s credit history, the easier it is for that person to establish utility services, including electricity and internet service. With so much to gain, individuals should do everything they can to be smart credit consumers. These strategies can help consumers use credit to their advantage as they look to gain from this vital component of financial planning.
Recognize the factors that affect your score
At H&R Block, we’re available year-round to discuss the tax implications of your lifechanging events. From wedding bells, babies and new homes to medical issues and natural disasters, we’re here to put our expertise to work for you.
A credit score is generated using a formula that takes various factors into consideration. These factors include payment history, credit utilization rate, length of credit history, and credit inquiries, among others. Each variable is important, but paying balances in full and on time each month is a great way to build a strong financial reputation in the eyes of creditors. In addition, avoid overutilization of credit, especially if you can’t pay balances in full each month.
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Check credit before looking for a job One easily overlooked benefit of being a smart credit consumer is its impact on
individuals’ ability to find a good job. The Consumer Financial Protection Bureau urges individuals to check their credit reports before they begin looking for a job so they can correct any mistakes that may be on their reports. That’s because some employers look at applicants’ credit reports as part of their background checks. Smart credit consumers recognize that monitoring their credit is just as important as utilizing it wisely. Consumers can access reports from each of the three main credit reporting agencies (Equifax, Experian and TransUnion) for free once every 12 months.
Don’t wing it Much like successful retirement planning is often the culmination of decades of hard work, strategizing and saving, becoming a smart credit consumer involves commitment to a well-developed plan to utilize credit. Impulsive use of credit can quickly compromise individuals’ credit histories and financial reputations, so develop a plan to use credit wisely and stick to that plan. A successful credit utilization strategy should be rooted in paying bills on time, and ideally in full, each month to avoid potentially costly interest charges. Identify any bad credit utilization habits and do your best to eliminate them. If necessary, work with a financial planner to develop your credit utilization strategy.
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Keefe partners with Compass
INVESTING IN YOUR FUTURE • 2022 • PAGE 13
NATIONAL FIRM POSITIONS LOCAL AGENCY FOR FUTURE By Jason Arndt STAFF WRITER
Keefe Real Estate, of Lake Geneva, late last year announced a partnership with leading real estate technology company Compass. The partnership, according to President and CEO Tom Keefe, is not necessarily a change in direction. “We were not looking to take the company in a new direction and over the years, we have been approached by franchises, or other companies, looking to buy Keefe,” Keefe said Tom Keefe recently. “When Compass called, it was different.” Keefe, who stayed on as managing director, said the decision came amid an unprecedented shift in the real estate market. The third-generation owner, in a social media message on the company Facebook page, explained the industry changes. “Like many industries, real estate has reached a moment where change has been completely unprecedented,” he said. “The tools we need to continue to serve you, our customers, with the best possible service are becoming more complex.” “It is simply becoming harder and harder
for small, independent brokerages, like Keefe to keep up.” Keefe also noted viable competition is emerging from primary feeder markets, including some firms developing new business models.
Compass has national reach Compass is the nation’s largest independent brokerage with a global headquarters in New York. Compass employs more than 23,000 agents, serving hundreds of the top cities across the country, according to a news release issued by Keefe. In 2020, Compass agents sold $152 billion in residential real estate and completed more 66% more transactions than they did the year before. In Chicago, Compass ranks second for closed sales volume and market share, up from its No. 5 ranking at the end of 2020, and is home to more than 1,400 agents. “By partnering with a larger company, and one that has substantially more resources, we will be able to provide you with the same personal attention and quality of service, while being able to offer you a stronger marketing reach and tools to support the sale or purchase of your home,” Keefe said in his Facebook message.
Leaders, agents remain Under the new Keefe Real Estate Compass brand, the company continues to operate as a market leading real estate brokerage in Southern Wisconsin and Northern Illinois, maintaining its leadership
team, agents and staff as well as existing offices, with the added resources of Compass, according to Keefe. “This is a partnership that will allow us to continue to operate all of our existing offices, and will embrace our local management and staff to remain so that we can continue to support our agents and clients,” Keefe said. “This partnership is full of opportunity and I will be staying on as managing director to lead the team.” Keefe said he planned on maintaining the same mission his grandfather had when he founded the company in 1943. Compass shares a similar philosophy, according to Keefe. “Over three generations of family ownership, our mission has always been to enhance the lives of our agents and staff through careers in real estate, and go above and beyond for our clients. This is a mission we have carried out over the years, and it is one we intend to continue to fulfill, by partnering with Compass,” he said. “We are excited to join a company that shares the same philosophy we do and values their agents as customers and trusted partners.” Rachael Rohn, Compass’ regional president, said she has a personal connection to Lake Geneva and looks forward to partnering with Keefe Real Estate. She also admires the local real estate firm. “As a Chicagoan, I’ve spent the last 16 years taking getaway trips to Lake Geneva and have incredibly fond memories of the people and the experiences I’ve had
here. I’ve been professionally admiring Keefe Real Estate over the years, and I am thrilled to partner together to match Compass’ technology with Keefe’s legacy and local expertise to serve our agents and customers.”
Building on trust Keefe, in his Facebook post, shared the news with his agents and employees before making the announcement. “I want to say that as a company, and as a family, serving our community as your trusted real estate partner over the decades has been an honor and a privilege and has brought my family an immense amount of pride and happiness,” he said. Keefe Real Estate specializes in real estate in Walworth, Racine, Kenosha, and McHenry counties. According to the company, Keefe Real Estate and its associates have been the market leader for decades in Walworth, as well as the leading seller of lakefront properties accounting for nearly 50% of all regional lakefront transactions. Keefe asked his customers, agents, and prospective buyers and sellers to hold the same time-honored trust demonstrated in the last several decades. “Trust was a guiding principal that my grandfather instilled in the DNA of Keefe when he started the company in 1943, and it is that trust that I believe has been at the core of our success since then,” he said. “As we move into this next chapter, I ask that you trust us once again.”
A historic home with 160 feet of frontage on Geneva Lake was among the listings offered in 2021 by Keefe Real Estate. The list price was $5,750,000. According to Keefe, the firm handles 50% of all regional lakefront property sales. COURTESY OF KEEFE REAL ESTATE Investing in Your Future
PAGE 14 • 2022 • INVESTING IN YOUR FUTURE
Factors to consider before investing in real estate The appreciation of real estate over time has long made owning a home or an investment property a sound financial strategy. Prospective home buyers spend considerable time looking for a property they’re hoping to call home. Various factors, including property taxes and the reputation of local schools, may be considered as homeowners decide where to look for a new home. That vetting process is equally important, albeit slightly different, when buyers are consider investing in properties they don’t intend to live in. Real estate can be a great way to diversify an investment portfolio and earn extra income. Before shopping for an investment property, novice investors may want to consider certain factors to determine if real estate is the best investment vehicle for them.
Rental potential and the local labor force Location is a significant factor to consider when investing in real estate, but recent shifts in how and where people work could change the real estate investment landscape. Investment properties can be a great way to diversify a portfolio. Potential investors must consider a host of factors to determine if real estate is an investment they want to make. STOCK PHOTO Investing in Your Future
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A 2020 Gartner, Inc., survey of more than 300 financial executives and leaders in the finance industry found that roughly 25% will move at least one out of every five of their on-site workers to permanently remote positions in the years ahead. Economists note that this shift to remote working could be among the more lasting trends to emerge from the pandemic. Before investing in real estate, prospective investors should examine local trends to see if more and more locals are working remotely, and whether or not that’s affecting the market for rentals.
To flip or not to flip Flipping properties gained popularity in the second decade of this century, but figures from the property database curator ATTOM Data Solutions indicates that returns on investments in flipped properties declined for the third straight year in 2020. Though flipping can still yield a strong return, investors may not realize the returns on flipped properties that they might have realized as recently as five years ago. Potential investors should
conduct some research regarding real estate market trends, including flipping data where available, to make the most informed decision possible.
Condition of the property Product shortages were another trend to emerge during the pandemic, and disruptions to the supply chain will not necessarily go away anytime soon. In addition, the cost of various products associated with home improvements, including lumber, skyrocketed during the pandemic. The National Association of Home Builders noted that while lumber prices declined in 2021, the price of lumber packages quoted to builders remained high. That means real estate investors who invest in properties that will need work could be forced to pay a lot to fix these properties. And ongoing supply chain issues could extend the time it takes to renovate a property. Investors must be able to bear these costs and lag times to make the most off their real estate investments.
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INVESTING IN YOUR FUTURE • 2022 • PAGE 15
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