For Some Businesses, Success is All in the Family

Twenty-five years ago, business analysts thought the traditional family business model would eventually become extinct. But here it is in 2016, and some of the largest brand names in America are still owned and operated by their original families: Walmart, BMW, Tyson, Samsung, Kohler, Christian Dior, Mars, Ford and Comcast. In fact, public and private family companies represent approximately 80 percent of firms throughout the world.1 

Some benefits of family-owned business include the ability to show other family members the ropes of the business at a young age and an inherent trust among co-workers who are related. Employing family members may also lead to a workforce that’s more interested in running the business than on just turning a profit in order to appease shareholders. That values-based sense of customer service and loyalty to employees is part of why family businesses are often more stable and geared for long-term success. 

Naturally, for a business to be successful long-term, business owners need to be conscientious in their succession planning. Too often, second-generation businesses fail because a family member with the wrong skill set, too little experience or uninterested lack of interest was put in charge in an effort to “keep it in the family.” 

Worse yet, by one set of metrics, the survival rate for a third-generation business is only 10 percent.2 Businesses should consider two tracks for succession planning: (1) a long-term CEO or operational manager and, (2) an immediate — albeit temporary — plan for someone to step into a management role in an emergency situation.3 

Speaking of emergencies, because a family business may be the only income source for multiple households within one family, it’s a good idea to have a business continuity plan in place. When you consider that 90 percent of small companies that experience a disaster end up closing their doors within two years, it could be a good idea to have a disaster preparedness plan and some form of business interruption insurance.4 

Life insurance is another tool that can be used to facilitate business longevity and succession planning. When used with strategies such as an irrevocable life insurance trust, entity redemption agreement or buy-sell agreement, insurance planning can direct how to handle a business owner’s interests in the event of his or her death.5 

An older family business may also be hampered by an outdated legal structure. It’s important to recognize that today’s court systems are predisposed to allow changes to previously irrevocable documents to accommodate new circumstances when consensus exists for change.6 

Content prepared by Kara Stefan Communications. 

1 Knowledge@Wharton. May 31, 2016. “Are Family Businesses the Best Model for Emerging Markets?” http://knowledge.wharton.upenn.edu/article/family-business-model-works-better-markets-others/. Accessed July 8, 2016.
2 Matthew Erskine. The Family Firm Institute. March 16, 2016. “Succession: Business success vs. ownership lifestyle.” https://ffipractitioner.org/2016/03/16/succession-business-success-vs-ownership-lifestyle/. Accessed July 8, 2016.
3 Christophe Bernard. KPMG. Feb. 23, 2016. “Steps to take for succession planning – for the CEO.” http://www.kpmgfamilybusiness.com/steps-to-take-for-succession-planning-for-the-ceo/. Accessed July 8, 2016.
4 Paul Vachon. Crain’s Detroit Business. July 3, 2016. “Disaster insurance experts: Business survival depends on preparedness, business continuity planning.” http://www.crainsdetroit.com/article/20160703/NEWS/160709988/disaster-insurance-experts-business-survival-depends-on-preparedness. Accessed July 8, 2016.
5Vernon W. Holleman. WealthManagement.com. Feb. 26, 2016. “Life Insurance’s Role in Family Business Planning.” http://wealthmanagement.com/insurance/life-insurance-s-role-family-business-planning. Accessed July  8, 2016.
6 Nick Di Loreto and Steve Salley. The Family Firm Institute. March 30, 2016. “Tempering the Power of Irrevocability: The influence of consensus in family enterprises.” https://ffipractitioner.org/2016/03/30/tempering-the-power-of-irrevocability-the-influence-of-consensus-in-family-enterprises/. Accessed July 8, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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Americans Entertain Entrepreneurial Ideas

When it comes to TV shows and movies, Americans have shown a recent obsession with the rise of entrepreneurs. “Shark Tank” is an annual Emmy nominee, and the feature film “Steve Jobs” took home a couple Golden Globes earlier this year. 

Perhaps it’s because many people lost their jobs during the recession, or maybe it’s because new technology and the “gig economy” has enabled more opportunity, but people seem to enjoy watching others rise to prominence as a result of their ideas and hard work. 

A look at the numbers may explain why so many Americans can relate to self-starters. One report revealed that one in three workers in the U.S. is a freelancer.1 Another found that all of the net employment growth in the United States since 2005 could be attributed to alternative work. 

Interestingly, the same study found that there are two types of mindsets among workers in “alternative” positions:2 

  1. 84% of independent contractors prefer to work for themselves
  2. 77% of temp-agency workers would prefer a permanent job

It seems a majority of people tend to seek out work best aligned with their mindset and employment prospects. But perhaps there is a middle ground: Using a part-time independent job to supplement income from a more secure job. 

For example, take a look at Uber workers. Two-thirds of the company’s drivers have other full-time jobs, and 48 percent have college degrees. It’s also been a popular income stream for those approaching or near retirement, as 25 percent of drivers are aged 50 and up.3 Certainly the rise in “gig” (short-term assignment) work opens up new opportunities for retirees who need to supplement their savings.   

Despite the increase in workers taking on side jobs, the number of entrepreneurs in the U.S. is actually experiencing a long-term decline. It’s one thing to work extra hours for a little more income, or applaud the initiative Steve Jobs took at the movie theater. But it’s another to act on your own idea and take a leap of faith with your own business ideas. 

Starting up a new business can be a risky endeavor. On average, one in five fail within two years, and 50 percent don’t make it to five years.4 This can at least be partially explained by the way new startups are financed. 

A quick look at headlines might lead you to believe that the majority of startups are funded by venture capitalists (firms that invest other people’s money). While these may make for great news stories, that’s not actually the case. Less than 5 percent of startup funding comes from venture capitalists,5 whereas about two-thirds get their capital from loans, personal savings, friends and family.6 

While it is fun to watch people strike it rich with their inventions on “Shark Tank,” it’s a rare occurrence that the average person has a million-dollar idea. It may not be as exciting, but proper saving and planning continues to be an effective way to ensure you have enough money in retirement. 

Content prepared by Kara Stefan Communications. 

1 Freelancers Union and Elance-oDesk. September 2014. “Freelancing in America.” http://fu-web-storage-prod.s3.amazonaws.com/content/filer_public/c2/06/c2065a8a-7f00-46db-915a-2122965df7d9/fu_freelancinginamericareport_v3-rgb.pdf. Accessed June 17, 2016.
2 Rick Wartzman. Fortune. April 27, 2016. “Working in the Gig Economy Is Both Desirable and Detestable.” http://fortune.com/2016/04/27/uber-gig-economy/. Accessed June 17, 2016.
3 Aparna Mathur. American Enterprise Institute. Feb. 2016. “New Economy, Old Challenges Facing Entrepreneurs.” https://www.aei.org/wp-content/uploads/2016/02/NEG-7_Policy_-MATHUR.pdf. Accessed June 17, 2016.
4 Dane Stangler. Ewing Marion Kauffman Foundation. 2016. “The Looming Entrepreneurial Boom: How Policymakers Can Renew Startup Growth.” http://www.kauffman.org/neg/neg-intro#theloomingentrepreneurialboomhowpolicymakerscanrenewstartupgrowth. Accessed June 17, 2016.
5 Arnobio Morelix. Ewing Marion Kauffman Foundation. May 13, 2016. “Three Facts You Probably Didn’t Know About and Venture Capital and Entrepreneurship.” http://www.kauffman.org/blogs/growthology/2016/5/three-facts-you-probably-didnt-know-about-and-venture-capital-and-entrepreneurship. Accessed June 17, 2016.
6 J.D. Harrison. The Washington Post. March 16, 2016. “No, entrepreneurs, most of you don’t need angel investors or venture capitalists.” https://www.washingtonpost.com/news/on-small-business/wp/2015/03/16/no-entrepreneurs-most-of-you-dont-need-angel-investors-or-venture-capitalists/. Accessed June 17, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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Retailers Innovate to Meet Shifting Needs

You can tell a lot about people by reviewing their purchase receipts. Where they shop, what restaurants they favor, where they prefer to buy gas. So, what can you tell by evaluating a huge database of receipts submitted over time by a large population of people? Retail trends. 

When researchers from Wharton School of Economics studied generational buying behavior, they determined millennials spend more money with new, high-tech merchants such as Uber, Lyft, Zappos and Zulily. Baby boomers, on the other hand, frequently shop at Costco, Home Depot, Macy’s and QVC. 

Millennials do more digital shopping; many boomers still go into stores. Millennials buy more gift cards than other generations, and they prefer buying e-cards because it’s easier and the recipient can’t lose them. Another interesting finding is that while boomers usually just buy gas at convenience stores, millennials actually go in and buy groceries, too. In fact, convenience appears to be a driving force among millennials, who prefer to place their Starbucks drink order via the app so it’s ready when they enter the store.1 

Integrating newly created channels for sales, like online service or an app, has been easier for new retailers than older ones. In many cases, despite the fact that a store may have a website where customers can shop online, most of the older brick-and-mortar stores still look the same as they did 20 or 30 years ago.2 That may be comforting to older shoppers, but some younger shoppers find them dated and inconvenient. 

Some innovative retailers have also started focusing on what is referred to as “frictionless shopping.” An example of this is the Amazon Dash button, wherein customers can reorder a regular item with the simple push of a button.3 

Surprisingly, two new trends on the rise actually have been around a really long time: subscription and TV shopping. Not only can you buy things like magazines and Ginsu knives via these channels, everything from beauty products to groceries to clothes can also be purchased via subscription or 24 hours a day on home shopping television networks.4 

Obviously, convenience is a driving theme for today’s shoppers. In response, a designer sunglasses retailer (Warby Parker) sends five pairs of glasses to a customer at once and allows them to send back the pairs they don’t want for free. This in-home convenience has increased their sales exponentially in recent years.5 

Overall, online shopping is on the rise. Fifty-one percent of Americans say it’s their preferred way to shop. One survey found that 96 percent of Americans have made an online purchase at some point in their lives, with 80 percent having made one within the past month.6 

Content prepared by Kara Stefan Communications 

1 Knowledge@Wharton. May 31, 2016. “How Millennials, Gen Xers and Baby Boomers Shop Differently.” http://knowledge.wharton.upenn.edu/article/new-tools-answer-age-old-question-of-what-do-customers-want/. Accessed June 10, 2016.
2 Knowledge@Wharton. May 16, 2016. “Omni-channel Is so 2010 – but Retail Still Hasn’t Figured it Out.” http://knowledge.wharton.upenn.edu/article/omni-channel-2010-retailers-still-struggling-adapt/. Accessed June 10, 2016.
3 VendHQ. May 20, 2016. “Retail trends & predictions: 2016.” https://www.vendhq.com/university/retail-trends-and-predictions-2016. Accessed June 10, 2016.
4 Deloitte. 2016. “Retail Trends 2016: Redefining convenience.” http://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends-2016.html. Accessed June 10, 2016.
5 Arram Kang. KPMG. May 2016. “Three key trends transforming the face of retail.” http://www.kpmgtechgrowth.co.uk/trendsinretail/. Accessed June 10, 2016.
6 Tracey Wallace. BigCommerce.com. June 6, 2016. “What Brands Need to Know About Omni-Channel Retail and Modern Consumer Shopping Habits.” https://www.bigcommerce.com/blog/omni-channel-retail/. Accessed June 10, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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Banks Dialing Up Mobile Services

New technology continues to be rolled out to make banking more convenient than ever. 

According to Federal Reserve research data, 53 percent of smartphone owners with a bank account have used mobile banking. Over 17 million customers at Wells Fargo alone use mobile banking, making it the fastest-growing channel in the company’s history.1 

Wells Fargo also announced plans for a mobile wallet that will integrate the bank’s debit and credit cards with its existing mobile apps for Android users. By the end of summer, customers will be able to make in-store purchases by tapping an Android phone at payment terminals worldwide. 

Eventually, Wells Fargo Wallet will enable customers to use an ATM without a debit or ATM card, although the bank says less than half of its ATMs will be enabled for this feature by the end of the year. 

Bank of America was the first to introduce this cardless feature at the bank’s ATMs, which requires a simple tap on the ATM screen. The company expects its cardless technology to be available at 5,000 Bank of America ATMs by year-end, with beta tests already established in a handful of large metropolitan areas (Boston, Charlotte, New York City, San Francisco and Silicon Valley).2 

Javelin Research reports that 29 million more U.S. adults used smartphones and tablets to conduct banking transactions than last year. Indeed, the increase in customers willing to open new accounts via their mobile devices is startling:3 

  • 33% opened accounts with a mobile device in 2015, up from 17% in 2014
  • 30% enrolled in mobile banking with a mobile device in 2015, an increase from 7% in 2014

On the other side of the purchase point, merchants must have the equipment that enables the mobile wallet process. Currently, Android Pay is accepted at more than 1 million stores in the U.S., including Walgreens, JetBlue, Bloomingdale’s, Macy’s and McDonald’s.4 

The Android Pay near field communication (NFC) system provides the option for a user to shut down a smartphone if it is stolen, so no one can use the phone as a credit card.5 In addition, the NFC system processes transactions via individual random account numbers — rather than your actual credit or debit card account number — so thieves can’t find your credit card number for their own phone or online transactions. 

The mobile wallet replaces swipe transactions where a credit card number is exposed, and many consider it more secure than a magnetic card.6 However, the technology is still vulnerable to fraud via an account takeover. This means someone can access your mobile wallet accounts using a device under his or her control. In 2015 alone, more than 112,000 consumers suffered account takeovers via mobile wallets.7 

Content prepared by Kara Stefan Communications 

1 John Ginovsky. Banking Exchange. June 3, 2016. “Wells enters wallet wars.” http://www.bankingexchange.com/news-feed/item/6282-wells-enters-wallet-wars?Itemid=637. Accessed June 10, 2016.
2 Melanie Scarborough. Banking Exchange. May 20, 2016. “No more getting carded at the ATM.” http://www.bankingexchange.com/news-feed/item/6258-no-more-getting-carded-at-the-atm. Accessed June 10, 2016.
3 Javelin Strategy & Research. May 19, 2016. “Top Banks Meet Customer Expectations for Mobile Banking Channel.” https://www.javelinstrategy.com/press-release/top-banks-meet-customer-expectations-mobile-banking-channel. Accessed June 10, 2016.
4 Android.com. 2016. “Shop at these favorites.” https://www.android.com/pay/. Accessed June 10, 2016.
5 Andy Boxall. Digitaltrends.com. May 20, 2016. “Everything You Need to Know About Android Pay.”http://www.digitaltrends.com/mobile/android-pay-guide/. Accessed June 10, 2016.
6 Melanie Scarborough. Banking Exchange. May 20, 2016. “No more getting carded at the ATM.” http://www.bankingexchange.com/news-feed/item/6258-no-more-getting-carded-at-the-atm. Accessed June 10, 2016.
7 Javelin Strategy & Research. April 14, 2016. “Suboptimal Security Solutions Leave Mobile Wallets Vulnerable.” https://www.javelinstrategy.com/press-release/suboptimal-security-solutions-leave-mobile-wallets-vulnerable. Accessed June 10, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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Minimum Wage Still Raising Concerns

During this politically charged election year, one of the driving issues involves wages: Gender inequality, overall income inequality and the controversial movement to increase the national minimum wage. 

The fast food industry would likely feel the most effects from a minimum wage increase, and recently some of the largest companies have announced varying plans of action if a raise is instituted. McDonald’s said it wouldn’t reduce jobs in light of a mandated wage increase, as its focus moving forward is on customer service. 

A former CEO of the company pointed out that this may not be the best fiscal approach, as it’s more costly long term to pay workers $15/hour than it is to install a $35,000 robotic arm that bags french fries. The cost may be worth it, as recent numbers demonstrate that McDonald’s focus on employee wages and benefits has improved its customer service scores, which increased by 6 percent in the first quarter compared to the same period last year. 

However, this philosophy is hardly widespread. The CEO of Carl’s Jr. and Hardee’s recently hinted that the overall food and beverage industry would likely engage in more automation if the government mandates a higher cost for labor.1 

The thing about wages is that there is a minimum standard by which a person can live, and any amount of money earned above that reflects his or her lifestyle choices. If you’re not earning what you need to meet all of your expenses — including saving regularly for retirement — then you may need to re-evaluate how you’re spending your income. We all need an insurance backstop for unexpected events such as an automobile accident, major repairs to your home or a health emergency. We’re happy to help you to find options that can optimize your income, so that one high-expense event doesn’t devastate your finances. 

Like most partisan issues, valid arguments can be posited on both sides of the wage war. While corporate profits may decrease by raising wages, those who receive increases have the opportunity to improve their quality of living. This is particularly true for low-income earners. One study revealed there are no U.S. states where a full-time minimum wage worker ($7.25/hour) could afford a one-bedroom apartment at the average fair market rent.2 

Similar arguments can be made for expanding government-sponsored health care benefits. It may cost more for taxpayers, but one recent study demonstrated that there could be direct benefits to employers. When comparing the numbers for low-income, childless adults living in the 14 states that expanded Medicaid in 2014 with those living in the 22 states that did not, two interesting findings emerged. 

First, in the Medicaid-expansion states, adults’ access to preventive care improved. Second, the average number of work days lost due to poor health in those states dropped by 12 percent, which works out to about a full day per month.3 

On the gender income equality front, a new study from the University of Notre Dame revealed the impact of having more women on corporate boards. The research found that public company boards with a large share of female directors correlated to significantly fewer mergers and acquisitions. The study observed that the women’s presence more likely led to smarter conversations about risk management, challenges and things that could go wrong. Indeed, previous studies have found that a more diversified boardroom is associated with better stock performance in tough markets, higher return on equity, fewer leadership-related scandals and less costly mergers.4 

In other discussions about wages, analysts have studied the tradeoff between today’s corporate expectation of boundary-less 24/7 accessibility and less engagement during the regular eight-hour workday, even suggesting that workers make a greater effort to appear busy than to get their work done efficiently.5 

There also are new innovations in the area of flex pay, such as the ability for workers to tap into wages for time already worked without having to wait until payday. One such innovation, called PayActiv, received a Best of Show award at FinovateSpring 2016 for its use of technology to ease the “cash flow struggles of working families.”6 

Content prepared by Kara Stefan Communications 

1 Kate Taylor. Business Insider. May 27, 2016. “McDonald’s CEO reveals how the fast-food chain will use robots in the future.” http://www.businessinsider.com/mcdonalds-wont-swap-workers-with-robots-2016-5. Accessed May 27, 2016.
2 Kelsey Ramírez. HousingWire. May 26, 2016. “It’s officially impossible to rent at minimum wage in most of the country.” http://www.housingwire.com/articles/37130-factsheet-its-officially-impossible-to-rent-at-minimum-wage-in-most-of-the-country. Accessed May 27, 2016.
3 Allison Bell. LifeHealthPro. Mar 26, 2016. “How has PPACA affected people’s health?” http://www.lifehealthpro.com/2016/05/26/how-has-ppaca-affected-peoples-health?page_all=1. Accessed May 27, 2016.
4 Danielle Paquette. The Washington Post. May 24, 2016. “The weird thing that happens when you put more women in the boardroom.” https://www.washingtonpost.com/news/wonk/wp/2016/05/24/when-women-rise-to-power-in-companies-a-weird-thing-happens/. Accessed May 27, 2016.
5 Ilan Mochari. Inc.com. May 18, 2016. “Why Your Employees Pretend to Work 80-Hour Weeks.” http://www.inc.com/ilan-mochari/managing-high-stress-workplaces-employees-work-life-balance.html. Accessed May 20, 2016.
6 Suzanne Woolley. Bloomberg. May 25, 2016. “You Worked Monday. Why Not Get Paid Monday?” http://www.bloomberg.com/news/articles/2016-05-25/you-worked-monday-why-not-get-paid-monday. Accessed May 27, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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Who is the Middle Class Now?

The definition of middle class can vary depending on who you ask. 

A young college graduate with a $22,000 entry-level job may consider herself middle class because her parents were, she graduated from college and she’s just starting her white-collar career. 

A married blue-collar worker with two children making $41,000 a year may consider himself middle class because the family owns a lovely three-bedroom home in the Midwest and their kids attend a good public school. 

According to standards followed by Pew Research, these people would be considered “lower income.” Pew categorizes middle-class household incomes as ranging from $42,000 to $125,000, and upper-income households as having incomes of $125,000 and above (measured with assumptions regarding household size and geographic cost of living).1 

Unfortunately, even those who truly fall under the “middle-class” category aren’t always in an optimal financial position. In a recent survey, people across all income thresholds responded that they would have a difficult time coming up with just $1,000 to pay for an emergency expense. This is how the numbers broke down:2 

·         75% of people in households earning less than $50,000

·         67% of people in households earning between $50,000 and $100,000

·         38% of people in households earning more than $100,000 

It’s worth repeating that more than one-third of households earning more than $100,000 a year don’t have $1,000 set aside in an emergency fund. 

The thing about emergencies is that we don’t adequately plan for them. We happily auto-transfer money from our paychecks to our 401(k) plans each month, but pay for out-of-pocket car repairs with a credit card. Which, incidentally, is how many people overburdened with credit card debt get started down that path. 

We believe that insurance takes many forms, and one of them is emergency funds. If you don’t have a liquid cash account for unexpected expenses, we encourage you to start saving. 

While money is typically the biggest factor in determining class, the St. Louis Federal Reserve Bank looked at three demographic characteristics — age, education and race — to assess middle class status. By and large, most people who fall into its middle class statistics are those who finished college, regardless of their age or race.3 

One reason for this is because even in low-wage industries, such as retail or food and beverage, employers appear more likely to hire a college graduate over applicants who did not finish college. In fact, this may account for why Americans with a bachelor’s degree have a 2.4 percent unemployment rate compared to the 5.9 percent of those with a high school diploma or less.4 

Just how much money does it take to live in a middle class household in this day and age? According to the Economic Policy Institute, the basic family budget for a two-parent, two-child family ranges from $49,114 in Morristown, Tennessee, to $106,493 in Washington, D.C. Geographic variations are primarily due to housing and child care costs.5 

We keep seeing headlines claiming that there are Americans who work full time and yet still live in poverty. For example, a full-time, full-year worker paid $7.25 per hour (the federal minimum wage) will earn about $15,080 a year before taxes, based on 2,080 annual hours. This is below the federal poverty line of $16,317 for a single parent with one child. Of course, that applies only to workers who make the federal minimum wage, but states can set their own laws.6 

For example, if you live in Montana and work for a business not covered by the Fair Labor Standards Act with gross annual sales of $110,000 or less, the minimum wage can be as low as $4 an hour.7 A full-timer in that scenario would earn about $8,320 a year, which makes it easy to see how coming up with $1,000 for an emergency expense could be difficult. 

Content prepared by Kara Stefan Communications 

1 Richard Fry and Rakesh Kochhar. Pew Research Center. May 11, 2016. “Are you in the American middle class? Find out with our income calculator.” http://www.pewresearch.org/fact-tank/2016/05/11/are-you-in-the-american-middle-class/. Accessed May 20, 2016.
2 Ken Sweet and Emily Watson. The Associated Press. May 19, 2016. “Poll: Two-thirds of US would struggle to cover $1,000 crisis.” http://bigstory.ap.org/article/965e48ed609245539ed315f83e01b6a2. Accessed May 20, 2016.
3 Tami Luhby and Tiffany Baker. CNNMoney. 2016. “What is middle class, anyway?” http://money.cnn.com/infographic/economy/what-is-middle-class-anyway/. Accessed May 20, 2016.
4 Josh Boak and Emily Swanson. The Associated Press. May 18, 2016. “Poll: Americans more upbeat about own finances than economy.” http://bigstory.ap.org/article/e8923ac9e5a64dba9117c8fc25e5789b/poll-americans-more-upbeat-about-own-finances-economy. Accessed May 20, 2016.
5 Elise Gould, Tanyell Cooke and Will Kimball. Economic Policy Institute. Aug. 26, 2015. “What Families Need to Get By.” http://www.epi.org/publication/what-families-need-to-get-by-epis-2015-family-budget-calculator/. Accessed May 20, 2016.
6 Ibid.
7 United States Department of Labor. Jan. 1, 2016. “Minimum Wage Laws in the States – January 1, 2016.” https://www.dol.gov/whd/minwage/america.htm. Accessed May 20, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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There’s no Ceiling on the Number of Housing Possibilities

America has long been dubbed the land of diversity, and our wide range of tastes is certainly reflected in our housing choices. There’s something for every preference, whether it be the architectural style (colonial, post-modern, Tudor, Victorian), the siding (wood, brick, stucco, vinyl) or the locale (urban, rural, coastal, plains). 

However, popular trends do tend to dominate the real estate market, and recently those trends have been fluctuating based on economic factors. For example, in the 1990s, we saw the birth of the “McMansion” — large, newly constructed homes boasting 4,000+ square feet.1 A bastion of the middle class, these homes were often generic in style, supersized and built quickly, hence the nod to the McDonald’s style of dining. However, nickname aside, these homes gave up-and-coming families the “we’ve arrived” stamp of respectability and affluence. 

When the recession hit, many of these houses began to lose equity, and the not-so-big-house became the trend once again. In recent years, we’ve also seen downsizing to the extreme, in the form of “Tiny Houses,” a 100 to 1,000 square foot hut no bigger than a camper, many of which are on wheels for convenient relocation.2 

Many retirees have found a happy medium in retirement by “right-sizing” their homes after the children move out. Moving to a smaller house once the need for kids’ bedrooms disappears provides the dual advantages of lower living expenses — such as reduced property taxes, utility bills and maintenance, as well as a more convenient means to “age in place” without the upkeep burden of a large home.3 

If you’re behind on your retirement savings goals, right-sizing may be an option. In many areas of the country, residential prices have risen considerably due to continued low inventory, which offers the potential for a good return on your home investment. Depending on your individual situation, you might want to consider buying a less expensive home and using some of your net proceeds to strengthen your retirement savings. If you’re in the market for buying or selling a house, you should consider talking with a qualified professional. Come talk to us if you’d like to learn more about retirement income strategies that may be suitable for you. 

Content prepared by Kara Stefan Communications. 

Interested in reading more? Here are some articles that may be of interest to you: 

[CLICK HERE to read the article, “An About-Face for McMansions” from The Wall Street Journal, May 19, 2015.] 

[CLICK HERE to read the article, “5 Stellar Tiny Houses You Can Buy Right Now” from Curbed.com, April14, 2016.] 

[CLICK HERE to read the article, “Baby Boomers, Downsizing for Retirement, Create Niche Real Estate Market” from Curbed.com, March 22, 2016.] 

1 Nick Gromicko. International Association of Certified Home Inspectors. 2016. “‘McMansions’ and Energy Inefficiency.” https://www.nachi.org/mcmansions-energy-inefficiency.htm. May 27, 2016.
2 Nick Gromicko. International Association of Certified Home Inspectors. 2016. “The Small House Movement.” https://www.nachi.org/small-house-movement.htm. May 27, 2016.
3 Jeff Reeves. USA Today. Mar. 9, 2016. “Less means more for Baby Boomers who downsize in retirement.” http://www.usatoday.com/story/money/personalfinance/2016/03/09/less-means-more-baby-boomers-who-downsize-retirement/80878654/. May 27, 2016. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice. 

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 

 

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