When it comes to medical or legal advice, the value of getting a second opinion is fairly well established and defined. What about financial decisions? At what point does it make sense to get a second (or a third) opinion on money matters? Here we discuss some benefits of seeking a second financial opinion, including a few situations in which a gut check may not just be useful but downright necessary.

Many Eggs, Many Baskets

As the adage goes, you never want to put all your eggs into one basket—and jumping headlong into a financial strategy recommended by one person does just that. What if their advice is outdated or does not fit your particular financial situation? What if the person providing the advice may actually be receiving a commission based on the products you select? By getting a second opinion, you will have a stronger strategy and a way to confirm that the initial advice you received was either on target or not suitable for you. Another benefit of a second financial opinion is that it can encourage you to reevaluate and reassess your goals. If your personal, employment, or financial situation has changed since the last time you reviewed your portfolio, it is an excellent time to make sure these changes are taken into account in future decisions. You may also need to reevaluate your investments or rebalance your asset allocation. Finally, by getting a second opinion, you will also have a chance to compare the costs and fees charged by different financial professionals. You may discover that you are happy to pay a higher fee for more tailored advice; on the other hand, you may decide that your financial situation does not warrant advice from someone whose fees are more at the high end of the scale.

When You May Need a Second Opinion

Situations in which you could benefit from a second opinion include: 

• You are a DIY investor. If you have been managing your own investments, it is a good idea to bring in a professional to give your portfolio a top-to-bottom review. You may discover some opportunities you have missed.
• You have been using the same financial professional since you began investing. If the second opinion matches up with your original financial professional's advice, you may feel more confident that you are on track. If this advice is different, you will know there is a disconnect somewhere and can work to track it down.
• You do not have a relationship with a financial professional. If you have not yet partnered with a financial professional, you may not be aware of all the services and strategies available. It is important that any financial professional you choose is a good fit for your style and financial situation. An initial interview can help you assess their investment strategies, values, and principles before you become a client.

There are more circumstances in which a second opinion may be warranted, but these three situations cover a great deal of ground. If you're concerned about taking your next financial steps or just want a comprehensive review of your balance sheet, a financial professional can help. Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss. Asset allocation does not ensure a profit or protect against a loss. This article was prepared by WriterAccess. LPL Tracking #1-05318847

Those turning 65 this year have a 7 in 10 chance of needing long-term care (LTC) at some point.¹ With the cost of a private room in a nursing home now topping $100,000 per year, the thought of paying this — or for a loved one — can be staggering.² However, the high cost of LTC is no reason to delay creating a care plan. It is important to think through the implications of LTC on retirement plans, the effect that paying for LTC may have on you or your spouse, and options that can defray these costs. Here you will find four steps to consider when thinking about LTC.

Assess Your Likelihood of Needing Care

As many as 70% of people may need LTC in their lives, which also means that 30% won't. If you are among the minority, your plans may look different than those expecting to need LTC. How many loved ones have required LTC? What does family health history look like? Assessing the likelihood that you will need LTC at some point can inform the rest of the planning process.

Evaluate LTC Costs

LTC costs vary widely depending on location, local costs of living, the level of care needed, and the amenities offered. An apartment in an assisted-living community in Pella, Iowa, will likely cost less than a private room in a San Diego nursing home. Some instead opt to stay in their homes and hire private caregivers. By researching and evaluating costs in your area, you will have a better idea of what to expect in the location where you will receive LTC.

Research Payment Options

Ways to pay for LTC include:

• Private savings
• An LTC insurance policy
• An annuity or pension
• Medicaid (with asset restrictions)

One of the main complications with LTC occurs when one spouse requires care but the other does not. In order for the spouse needing care to qualify for Medicaid, they must have minimal assets. This situation can leave the other spouse without adequate resources to support themselves. A financial professional can work with married couples to create a plan that allows both spouses to receive the care they need. Meanwhile, an annuity or pension can provide regular income to help pay for LTC—sometimes in combination with an LTC insurance policy or payment from retirement savings. Reviewing all options at your disposal can help evaluate future steps.

Create an LTC Fund

Once you have identified your best options for paying for LTC, it is time to create a dedicated LTC fund or track your investments. Having certain funds earmarked for LTC needs ensures they will be there when you need them. You may also want to consider investing in LTC insurance, which helps cover the costs of a LTC facility without dipping into personal assets. LTC insurance may not be right for everyone, and coverage varies, so it is important to discuss coverage with your financial professional before committing.   Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Long Term Care insurance, annuity or security. To determine which product(s) or investment(s) may be appropriate for you, consult your financial professional prior to purchasing or investing. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by WriterAccess. LPL Tracking #1-05313109.  

Footnotes

¹ How Much Care Will You Need?, Administration for Community Living, https://acl.gov/ltc/basic-needs/how-much-care-will-you-need ² Nursing Home Costs in 2022, SeniorLiving.org, https://www.seniorliving.org/nursing-homes/costs/  

One of the main concerns about retirement is health care. As healthcare costs continue to rise, medical bills may quickly derail your retirement plan. The good news is when you turn 65, you will be able to apply for Medicare, which provides you with coverage for some of the larger bills you may face during your retirement. Though navigating Medicare is a little tricky, the following tips can make the process less daunting.

1. Watch Your Dates

There are deadlines for Medicare. The first is the Initial Enrollment Period. If you sign up during this time, you can avoid a significant amount of hassle. This enrollment period starts three months before you turn 65 and extends until three months after. Failing to sign up on time may result in up to $6,500 more in premiums over 20 years. This occurs because you may be assessed a 10 percent penalty for each year that passes without enrollment.¹

2. Find the Correct Doctor

A change in insurance may mean you need to change physicians. Providers have the option of accepting the Medicare program in different ways or not accepting it at all. If your doctor is a participating provider, they agree to the Medicare fee and will take that as the entire covered portion, which means you will likely only be responsible for 20%. If your doctor is a non-participating provider, they will accept Medicare as a form of payment but may charge you up to 15% more, which you will have to pay out of pocket.¹ You may also want to consider switching to a doctor that specializes in geriatrics so that they have more experience in issues that you may encounter as you age.

3. Understand All the Benefits

There are many benefits of Medicare that people often overlook. These benefits are designed to make your life easier and help you stay on top of your health. With Medicare, you are entitled to an annual wellness visit where your doctor will perform a physical and order any necessary screenings. If you have difficulty traveling to appointments, you might take advantage of Medicare's virtual consultations. They also offer nutritional counseling as part of your plan.¹

4. Schedule Procedures Strategically

If you are close to retirement and have an upcoming procedure planned, you may want to compare the costs between your current plan and Medicare. In some cases, Medicare may offer more coverage for the procedure, so it may be beneficial to wait if possible.²

5. Keep Good Medical Records

Good medical records will help your physicians and healthcare facilities properly manage your conditions. Keeping proper records may also prevent you from overpaying as well. Just like any insurance, Medicare is confusing when it comes to billing, and mistakes will happen. Keep track of your explanation of benefits and payments to ensure you don't double-pay or overpay for appointments and procedures.²   Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by WriterAccess. LPL Tracking # 1-05305304.  

Footnotes

¹7 Tips on How Best to Use Medicare, AARP,  www.aarp.org/health/medicare-insurance/info-2019/tips-for-medicare.html ²5 Medicare Tips for New Retirees, Money.com, money.com/5-tips-medicare-tips-new-retirees/

Because inflation could reduce your purchasing power over time, you'll probably need to contribute more to your retirement plan than you think. What seems like a healthy amount now is likely to feel smaller and smaller over time. All investing involves risk, including the possible loss of principal, and there can be no guarantee that any investment strategy will be successful. Asset allocation and diversification do not guarantee a profit or protect against investment loss.   Making decisions about your retirement account can seem overwhelming, especially if you feel unsure about your knowledge of investments. However, the following basic rules can help you make smarter choices regardless of whether you have some investing experience or are just getting started.

1.  Don't lose ground to inflation

It's easy to see how inflation affects gas prices, electric bills, and the cost of food; over time, your money buys less and less. But what inflation does to your investments isn't always as obvious. Let's say your money is earning 4% and inflation is running between 3% and 4% (its historical average). That means your investments are earning only 1% at best. And that's not counting any other costs; even in a tax-deferred retirement account such as a 401(k), you'll eventually owe taxes on that money. Unless your retirement portfolio keeps pace with inflation, you could actually be losing money without even realizing it. What does that mean for your retirement strategy? First, you might need to contribute more to your retirement plan than you think. What seems like a healthy sum now will seem smaller and smaller over time; at a 3% annual inflation rate, something that costs $100 today would cost $181 in 20 years. That means you may need a bigger retirement nest egg than you anticipated. And don't forget that people are living much longer now than they used to. You might need your retirement savings to last a lot longer than you expect, and inflation is likely to continue increasing prices over that time. Consider increasing your 401(k) contribution each year by at least enough to overcome the effects of inflation until you hit your plan's contribution limits. Second, you may consider investing a portion of your retirement plan in investments that can help keep inflation from silently eating away at the purchasing power of your savings. Cash alternatives such as money market accounts may be relatively safe, but they are the most likely to lose purchasing power to inflation over time. Even if you consider yourself a conservative investor, remember that stocks historically have provided higher long-term total returns than cash alternatives or bonds, even though they also involve greater risk of volatility and potential loss. Note: Past performance is no guarantee of future results. Note: Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in such a fund.

2.  Invest based on your time horizon

Your time horizon is investment-speak for the amount of time you have left until you plan to use the money you're investing. Why is your time horizon important? Because it can affect how well your portfolio can handle the ups and downs of the financial markets. Someone who was planning to retire in 2008 and was heavily invested in the stock market faced different challenges from the financial crisis than someone who was investing for a retirement that was many years away, because the person nearing retirement had fewer years left to let their portfolio recover from the downturn. If you have a long time horizon, you may be able to invest a greater percentage of your money in something that could experience more dramatic price changes but that might also have greater potential for long-term growth. Though past performance doesn't guarantee future results, the long-term direction of the stock market has historically been up despite its frequent and sometimes massive fluctuations. Think long term for goals that are many years away and invest accordingly. The longer you stay with a diversified portfolio of investments, the more likely you are to be able to ride out market downturns and improve your opportunities for gain.   The dollar-cost averaging you do when you make automatic contributions to the investments in your retirement plan account involves continuous investment in securities regardless of price changes. You should consider your financial and emotional ability to continue making purchases during times when prices are low. Dollar-cost averaging does not guarantee a profit or protect against a loss.   Mutual funds are sold by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

3.  Consider your risk tolerance

Another key factor in your retirement investing decisions is your risk tolerance — basically, how well you can handle a possible investment loss. There are two aspects to risk tolerance. The first is your financial ability to survive a loss. If you expect to need your money soon — for example, if you plan to begin using your retirement savings in the next year or so — those needs reduce your ability to withstand even a small loss. However, if you're investing for the long term, don't expect to need the money immediately, or have other assets to rely on in an emergency, your risk tolerance may be higher. The second aspect of risk tolerance is your emotional ability to withstand the possibility of loss. If you're invested in a way that doesn't let you sleep at night, you may need to consider reducing the amount of risk in your portfolio. Many people think they're comfortable with risk, only to find out when the market takes a turn for the worse that they're actually a lot less risk tolerant than they thought. Often that means they wind up selling in a panic when prices are lowest. Try to be honest about how you might react to a market downturn and plan accordingly. Remember that there are many ways to manage risk. For example, understanding the potential risks and rewards of each of your investments and their role in your portfolio may help you gauge your emotional risk tolerance more accurately. Also, having money deducted from your paycheck and put into your retirement plan helps spread your risk over time. By investing regularly, you reduce the chance of investing a large sum just before the market takes a downturn.

4.  Integrate retirement with your other financial goals

Think about establishing an emergency fund; it can help you avoid needing to tap your retirement savings before you had planned to. Generally, if you withdraw money from a traditional retirement plan before you turn 59½, you'll owe not only the amount of federal and state income tax on that money but also a 10% federal penalty (and possibly a state penalty as well). There are exceptions to the penalty for premature distributions from a 401(k), such as having a qualifying disability or withdrawing money after leaving your employer after you turn 55. However, having a separate emergency fund can help you avoid an early distribution and allow your retirement money to stay invested. If you have outstanding debt, you'll need to weigh the benefits of saving for retirement versus paying off that debt as soon as possible. If the interest rate you're paying is high, you might benefit from paying off at least part of your debt first. If you're contemplating borrowing from or making a withdrawal from your workplace savings account, make sure you investigate using other financing options first, such as loans from banks, credit unions, friends, or family. If your employer matches your contributions, don't forget to factor into your calculations the loss of that matching money if you choose to focus on paying off debt. You'll be giving up what is essentially free money if you don't at least contribute enough to get the employer match.

5.  Don't put all your eggs in one basket

Diversifying your retirement savings across many different types of investments can help you manage the ups and downs of your portfolio. Different types of investments may face different types of risk. For example, when most people think of risk, they think of market risk — the possibility that an investment will lose value because of a general decline in financial markets. However, there are many other types of risk. Bonds face default or credit risk (the risk that a bond issuer will not be able to pay the interest owed on its bonds, or repay the principal borrowed). Bonds also face interest-rate risk, because bond prices generally fall when interest rates rise. Investing internationally carries additional risks such as differences in financial reporting, currency exchange risk, and economic and political risk unique to the specific country. This may result in greater share price volatility. Political risk is created by legislative actions (or the lack of them). These are only a few of the various types of risk. However, one investment may respond to the same set of circumstances very differently than another. Putting your money into many different securities, as a mutual fund does, is one way to spread your risk. Another is to invest in several different types of investments — for example, stocks, bonds, and cash alternatives. Spreading your portfolio over several different types of investments can help you manage the types and level of risk you face. Participating in your retirement plan is probably more important than any individual investing decision you'll make. Keep it simple, stick with it, and value time as  a  strong ally.       Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. This article was prepared by Broadridge. LPL Tracking #1-05165799

More consumers are conducting financial transactions online and may become vulnerable to tracking, hacking, identity theft, phishing scams, and other cyberspace risks. While nothing can guarantee complete safety on the Internet, understanding how to protect your privacy can help mitigate your exposure to risk.   Here are some ways to help you safeguard your information:   Read privacy policies. Before conducting any financial transactions online, carefully read the privacy policies of each institution that you plan to do business with to find out how secure your financial information is. If you do not understand the legal jargon, email or call customer service to request a simplified explanation of the privacy policy.   Avoid using weak PINS and passwords. When deciding PINS, passwords, and other log-in information, avoid using your mother’s maiden name, your birth date, the last four digits of your Social Security number, or your phone number. Avoid other obvious choices, like a series of consecutive numbers or your home town. Also, do not use the same PINS and passwords on multiple sites.   Look for secured web pages. Use only secure browsers when shopping online to help safeguard your transactions during transmission. There are two general indicators of a secured web page. First, check that the web page url begins with “https.” Most urls begin with “http;” the “s” at the end indicates that the site password will be encrypted before being sent to a third-party server. Second, look for a “lock” icon in the window of the browser. (It will not be in the web page display area.) You can double-click on this icon to read details of the site’s security policy. Be cautious about providing your financial information to websites that are unfamiliar. Larger companies and well-known websites have developed policies to protect the rights and financial information of their customers. So, resist the temptation of providing personal information to unknown companies. Keep your operating system up-to-date. High-priority updates can be critical to the security and reliability of your computer, and may offer the latest protection against malicious online activities. When your computer prompts you to conduct an update, do it as soon as possible. Update antivirus software and spyware. Keep both your antivirus and your spyware programs updated regularly. Keep your firewall turned on. A firewall helps protect your computer from hackers who might try to delete information, crash your computer, or steal your passwords or credit card numbers. Make sure your firewall is always on. Do your homework. To learn more tips that may help you secure your computer and protect your private information when conducting financial transactions online, visit www.getnetwise.org, www.onguardonline.gov, or www.wiredsafety.org. In addition, the Federal Trade Commission (FTC) works on behalf of consumers to prevent fraudulent, deceptive, and unfair practices in the marketplace. To file a complaint or to obtain more information, visit www.ftc.gov or call 1-877-FTC-HELP (1-877-382-4357). As the Internet continues to evolve, new risks, along with additional protective measures, will be revealed. However, it is up to you to work on safeguarding your financial information online through education and awareness.     This article was prepared by Liberty Publishing, Inc.     LPL Tracking #1-05174395  

For those approaching the age of 65, Medicare can be confusing, and you might also be wondering how it compares to your current health care coverage. This guide addresses your questions about Medicare and how you might deal with coverage gaps. Understanding Medicare Medicare is a government program that provides medical insurance for United States citizens or permanent legal residents ages 65 and older. It is also available to younger individuals with disabilities. It is not the same as Medicaid, which is a similar program for qualifying low-income people of all ages. Enrollment Before you consider Medicare, make sure you are enrolled in social security benefit collection. You can do so through the Social Security Administration website in the time period of three months before and after your 65^th birthday. Original Medicare Once you begin receiving your social security benefits at age 65, you are automatically enrolled in Medicare parts A and B (often called original Medicare). Medicare part A covers hospital costs and Medicare part B covers doctor visits. Prescription coverage, which is Medicare part D, is the only part you need to enroll in yourself as it is an optional add-on. Medicare Advantage You might be wondering, what about part C? This is where your options broaden. If you’re not satisfied with the coverage that parts A, B, and D provide, Medicare part C allows you to choose your benefits through a Medicare Advantage plan. Most standalone part C coverage has built-in prescription coverage, but if not, you can still supplement your coverage from part C with additional coverage in part D. Most part C plans offer extra benefits, such as vision, hearing, and dental, among others. So it is worth your time to explore those options to ensure you feel comfortable with your coverage. Here is a summary of what we just reviewed:

• Medicare part A – Covers hospital costs. You are automatically enrolled.
• Medicare part B – Covers doctors visits. You are automatically enrolled.
• Medicare part C – Medicare Advantage plan, which you can shop for yourself. It often includes prescription coverage, but you can supplement part C with any other part.
• Medicare part D – Prescription coverage. You must enroll in this yourself if you want it.

Cost Look at the cost guidelines on the official Medicare website for up-to-date premium numbers. It’s wise to talk to a Medicare insurance agent if you want to find the best prices and plans possible for a Medicare Advantage plan or if you have general cost questions. The cost of your Medicare plan depends on which parts you’re enrolled in and a few other personal factors. However, all the plans have options to charge based on a monthly premium, which is a fixed amount you pay each month for your coverage. There are also options to enroll in parts A and B with a deductible and coinsurance, which means you pay out of pocket for a set amount. Once your deductible has been spent, you may have 100 percent of the costs covered, or, for example, around 80 percent of the costs covered by your plan, and the remaining 20 percent will be paid by you. Coverage guidelines Now that we’ve gone over your options, let’s talk about how to choose the right coverage for you. According to most Medicare resource sites, these are the questions you should consider before enrollment. Health

• How often do you go to the doctor?
• What health issues do you have or are you predisposed to?
• Do you take medication regularly? If so, are you comfortable paying those costs out of pocket?
• Do you have a specialist you see regularly?

Budget

• What can you pay each month in premiums?
• Are you able to pay copays or coinsurance for services?
• Would a high out of pocket cost completely throw off your budget?

Preferences

• Do you have doctors, hospitals, and pharmacies you like to go to?
• Will you need health care coverage while traveling?
• Are there additional coverages to consider, such as an employer or retiree plan?

Turning 65 is an incredible milestone, so don’t let Medicare options weigh you down. Talk to an agent about your questions and concerns after reviewing this guide to ensure you have peace of mind with your coverage. Content provider: ReminderMedia LPL Tracking #1-05200790

Understanding the importance of life insurance is one thing. Understanding the tax rules is quite another. As insurance products have evolved and become more sophisticated, the line separating insurance vehicles from investment vehicles has grown blurry. To differentiate between the two, a mix of complex rules and exceptions now governs the taxation of insurance products. If you have neither the time nor the inclination to decipher the IRS regulations, here are some life insurance tax tips and background information to help you make sense of it all.

Life insurance contracts must meet IRS requirements

For federal income tax purposes, an insurance contract cannot be considered a life insurance contract--and qualify for favorable tax treatment--unless it meets state law requirements and satisfies the IRS's statutory definitions of what is or is not a life insurance policy. The IRS considers the type of policy, date of issue, amount of the death benefit, and premiums paid. The IRS definitions are essentially tests to ensure that an insurance policy isn't really an investment vehicle. The insurance company must comply with these rules and enforce the provisions.

Keep in mind that you can't deduct your premiums on your federal income tax return

Because life insurance is considered a personal expense, you can't deduct the premiums you pay for life insurance coverage.

Employer-paid life insurance may have a tax cost

The premium cost for the first $50,000 of life insurance coverage provided under an employer-provided group term life insurance plan does not have to be reported as income and is not taxed to you. However, amounts in excess of $50,000 paid for by your employer will trigger a taxable income for the "economic value" of the coverage provided to you.

You should determine whether your premiums were paid with pre- or after-tax dollars

The taxation of life insurance proceeds depends on several factors, including whether you paid your insurance premiums with pre- or after-tax dollars. If you buy a life insurance policy on your own or through your employer, your premiums are probably paid with after-tax dollars. Different rules may apply if your company offers the option to purchase life insurance through a qualified retirement plan and you make pretax contributions. Although pretax contributions offer certain income tax advantages, one tradeoff is that you'll be required to pay a small tax on the economic value of the "pure life insurance" in the policy (i.e., the difference between the cash value and the death benefit) each year. Also, at death, the amount of the policy cash value that is paid as part of the death benefit is taxable income. These days, however, not many companies offer their employees the option to purchase life insurance through their qualified retirement plan.

Your life insurance beneficiary probably won't have to pay income tax on death benefit received

Whoever receives the death benefit from your insurance policy usually does not have to pay federal or state income tax on those proceeds. So, if you die owning a life insurance policy with a $500,000 death benefit, your beneficiary under the policy will generally not have to pay income tax on the receipt of the $500,000. This is generally true regardless of whether you paid all of the premiums yourself, or whether your employer subsidized part or all of the premiums under a group term insurance plan. Different income tax rules may apply if the death benefit is paid in installments instead of as a lump sum. The interest portion (if any) of each installment is generally treated as taxable to the beneficiary at ordinary income rates, while the principal portion is tax free.

In some cases, insurance proceeds may be included in your taxable estate

If you hold any incidents of ownership in an insurance policy at the time of your death, the proceeds from that insurance policy will be included in your taxable estate. Incidents of ownership include the right to change the beneficiary, the right to take out policy loans, and the right to surrender the policy for cash. Furthermore, if you gift away an insurance policy within three years of your death, then the proceeds from that policy will be pulled back into your taxable estate. To avoid having the policy included in your taxable estate, someone other than you (e.g., a beneficiary or a trust) should be the owner. Note: If the owner, the insured, and the beneficiary are three different people, the payment of death benefit proceeds from a life insurance policy to the beneficiary may result in an unintended taxable gift from the owner to the beneficiary.

If your policy has a cash value component, that part will accumulate tax deferred

Unlike term life insurance policies, some life insurance policies (e.g., permanent life) have a cash value component. As the cash value grows, you may ultimately have more money in cash value than you paid in premiums. Generally, you are allowed to defer income taxes on those gains as long as you don't sell, withdraw from, or surrender the policy. If you do sell, surrender, or withdraw from the policy, the difference between what you get back and what you paid in is taxed as ordinary income.

You usually aren't taxed on dividends paid

Some policies, known as participating policies, pay dividends. An insurance dividend is the amount of your premium that is paid back to you if your insurance company achieves lower mortality and expense costs than it expected. Dividends are paid out of the insurer's surplus earnings for the year. Regardless of whether you take them in cash, keep them on deposit with the insurer, or buy additional life insurance within the policy, they are considered a return of premiums. As long as you don't get back more than you paid in, you are merely recouping your costs, and no tax is due. However, if you leave these dividends on deposit with your insurance company and they earn interest, the interest you receive should be included as taxable interest income.

Watch out for cash withdrawals in excess of basis--they're taxable

If you withdraw cash from a cash value life insurance policy, the amount of withdrawals up to your basis in the policy will be tax free. Generally, your basis is the amount of premiums you have paid into the policy less any dividends or withdrawals you have previously taken. Any withdrawals in excess of your basis (gain) will be taxed as ordinary income. However, if the policy is classified as a modified endowment contract (MEC) (a situation that occurs when you put in more premiums than the threshold allows), then the gain must be withdrawn first and taxed. Keep in mind that if you withdraw part of your cash value, the death benefit available to your survivors will be reduced.

You probably won't have to pay taxes on loans taken against your policy

If you take out a loan against the cash value of your insurance policy, the amount of the loan is not taxable (except in the case of an MEC). This result is the case even if the loan is larger than the amount of the premiums you have paid in. Such a loan is not taxed as long as the policy is in force. If you take out a loan against your policy, the death benefit and cash value of the policy will be reduced.

You can't deduct interest you've paid on policy loans

The interest you pay on any loans taken out against the cash value of your life insurance is not tax deductible. Certain loans on business-owned policies are an exception to this rule.

The surrender of your policy may result in taxable gain

If you surrender your cash value life insurance policy, any gain on the policy will be subject to federal (and possibly state) income tax. The gain on the surrender of a cash value policy is the difference between the gross cash value paid out (plus any loans outstanding) and your basis in the policy. Your basis is the total premiums that you paid in cash, minus any policy dividends and tax-free withdrawals that you made.

You may be able to exchange one policy for another without triggering tax liability

The tax code allows you to exchange one life insurance policy for another (or a life insurance policy for an annuity) without triggering current tax liability. This is known as a Section 1035 exchange. However, you must follow the IRS's rules when making the exchange.

When in doubt, consult a professional

The tax rules surrounding life insurance are obviously complex and are subject to change. For more information, contact a qualified insurance professional, attorney, or accountant.   Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. This article was prepared by Broadridge. LPL Tracking #1-393921

No matter where you are in life, you may have at least a few financial goals. Perhaps you want to buy a house, save for your child’s college education, or retire early. Regardless of what your goals are, financial planning can help you work towards them. Let’s dive deeper into what financial planning is and how it may benefit you.   What is Financial Planning? Financial planning is examining your financial situation and designing a specific plan to help you pursue your goals. Financial planning involves multiple areas of finance, such as budgeting, debt management, savings, retirement planning, insurance, and estate planning. In addition, financial planning may include holistic planning, which focuses on addressing your life goals by properly managing your financial resources, health, and other aspects of life.   Why work with a financial professional? An experienced financial professional can help guide you through the financial planning process by providing advice in several areas of your financial life. They'll examine your current income, savings, and investments, then make recommendations on improving your financial situation to manage your goals. While every financial professional has their distinct strengths and specialties, most can advise you on the following:  

• How you can get out of debt.
• What you can do differently to save money.
• How much to keep in your emergency fund.
• The types of retirement accounts that meet your situation.
• How much money you need to save to meet your retirement goals.
• Whether you should refinance your existing mortgage or work to pay it off early.
• If you have the appropriate type of insurance for your situation.
• How to improve your tax situation.
• How to adequately save for your child’s education.

  Reasons to work with a financial professional While you can pursue financial planning independently, you can benefit by working with a financial professional.

• Determine if you’re on track with your goals: A financial professional can analyze your current financial situation and make recommendations on what is going well and what you can improve.
• Get a Second Opinion: Even if you feel confident in your financial skills, a financial professional can give you a second opinion. They may fast-track your strategies and make suggestions to help you work towards your goals more efficiently.
• Manage Roadblocks: If you lose your job, go through a divorce, or experience other life events that impact your finances, a financial professional can help you navigate the situation to make choices that position you for a successful financial future.

  Consult Your Financial Professional Together with your financial professional, review your situation to determine the ideal life plan for you. Contact us today to get started.   Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. LPL Tracking # 1-05193191

Matching your tolerance for risk with your investment objectives

  Everyone wants a comfortable retirement, but the road you take there will depend on your specific situation. When you invest, you assume a certain level of risk (but like everyone you’re hoping that your holdings will increase in value). One of the most challenging aspects of investing involves matching your tolerance for risk with your investment objectives.

Beyond Your 401(k)

Have you taken the time to really project the amount of money you may need in retirement? While setting aside a percentage of your income in a 401(k) is an important step, chances are you will need more than current limitations may allow you to save. Most people supplement their employer-sponsored retirement benefits and Social Security income with personal investments. In order to develop a fitting plan, you need to have your goals in sight. In 2022, your elective deferral (contribution) limit for your 401(k) is $20,500. If you’re age 50 or older, you may save an additional $6,500. While the contribution often rises in upcoming years and your employer may match contributions above this limit, will your employer-sponsored plan allow you to save enough? Cast your net as far as possible—can you contribute to your 401(k) and afford to invest in other opportunities? Increasing your savings rate now may help you later.

Asset Allocation and Diversification

Are you an aggressive, moderate, or conservative investor? Your answer probably depends in large part on your stage in life and your financial resources, and will most likely change over time. Aggressive investors tend to have a longer time frame—as many as 35 years or more to save and invest until they reach retirement—and a greater capacity to withstand loss. For example (the following percentages will vary greatly by investor and their definition of the terms aggressive and conservative investments), stocks may account for 85% of a relatively aggressive portfolio compared to 40% for a more conservative portfolio. As investors near retirement, their asset allocation strategies generally change to account for lower risk tolerance and an emphasis on income over growth. With a 401(k), you become responsible for managing your portfolio, not your employer. While one aspect of a retirement savings plan is investing for the long term, it is still important to stay involved and make adjustments as needed. Choosing to be an active money manager rather than a passive investor can help you maintain the appropriate allocation strategies and pursue your long-term goals. Remember that it may be important to diversify within asset categories. For example, spread your equity investments among large-cap, mid-cap, and small-cap stocks, as well as vary your fixed-income investments with different types of bonds and cash holdings. The diversification strategy you choose for your 401(k) should complement your strategies for investments outside of your retirement plan.

Tax Considerations

Because retirement plans offer tax benefits, they carry certain restrictions, such as when withdrawals can be made without penalty. While funds in a 401(k) are made with pre-tax dollars and have the potential for tax-deferred growth, withdrawals made before the age of 59½ may be subject to a 10% Federal income tax penalty, in addition to the ordinary income tax that will be due. Some 401(k) plans are featuring the Roth 401(k) too. If your employer offers this option, you may be able to designate all or part of your elective salary deferrals to a Roth account. Although contributions are made with after-tax dollars, earnings and distributions are tax free, provided you have held the account for five years and are at least 59½ years old when you access funds. If you’re looking to save specifically for retirement, in addition to your 401(k), consider a Roth IRA, which allows earnings to grow tax free. While contributions are made with after-tax dollars, your withdrawals will be tax free provided you are older than age 59½ and have owned the account for five years. Early withdrawals may be subject to a 10% Federal income tax penalty, unless you qualify for an exemption. Certain income limits apply. Taking advantage of the tax benefits retirement arrangements offer is a valuable strategy, but also consider building more liquidity and flexibility into your overall savings and investment plan. In the event you need access to funds before retirement, have a contingency plan such as an emergency cash reserve and relatively liquid investments. However, keep in mind how accessing savings in the short term will affect your long-term goals. As you look toward retirement, consider increasing your overall savings rate, maintaining appropriate asset allocation and diversification strategies, and planning for taxes. Over time, your investments will inevitably be affected by legislative reform and market swings, but with a long-term outlook and continued involvement you are better positioned to manage the fluctuations and changes to work towards your objectives. Investment returns and principal values will change due to market conditions and, as a result, when shares are redeemed, they may be worth more or less than their original cost. Past performance is no guarantee of future results.   Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. Asset allocation does not ensure a profit or protect against a loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. This article was prepared by AdviceIQ. LPL Tracking #1-05306507  

You want to retire comfortably when the time comes. You also want to help your child go to college. So how do you juggle the two? The truth is, saving for your retirement and your child's education at the same time can be a challenge. But take heart — you may be able to reach both goals if you make some smart choices now.

Know what your financial needs are

The first step is to determine your financial needs for each goal. Answering the following questions can help you get started: For retirement:

• How many years until you retire?
• Does your company offer an employer-sponsored retirement plan or a pension plan? Do you participate? If so, what's your balance? Can you estimate what your balance will be when you retire?
• How much do you expect to receive in Social Security benefits? (One way to get an estimate of your future Social Security benefits is to use the benefit calculators available on the Social Security Administration's website, ssa.gov. You can also sign up for a my Social Security account so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor's, and disability benefits.)
• What standard of living do you hope to have in retirement? For example, do you want to travel extensively, or will you be happy to stay in one place and live more simply?
• Do you or your spouse expect to work part-time in retirement? For college:
• How many years until your child starts college?
• Will your child attend a public or private college? What's the expected cost?
• Do you have more than one child whom you'll be saving for?
• Does your child have any special academic, athletic, or artistic skills that could lead to a scholarship?
• Do you expect your child to qualify for financial aid?

Many on-line calculators are available to help you predict your retirement income needs and your child's college funding needs.

Figure out what you can afford to put aside each month

After you know what your financial needs are, the next step is to determine what you can afford to put aside each month. To do so, you'll need to prepare a detailed family budget that lists all of your income and expenses. Keep in mind, though, that the amount you can afford may change from time to time as your circumstances change. Once you've come up with a dollar amount, you'll need to decide how to divvy up your funds.

Retirement takes priority

Though college is certainly an important goal, you should probably focus on your retirement if you have limited funds. With generous corporate pensions mostly a thing of the past, the burden is primarily on you to fund your retirement. But if you wait until your child is in college to start saving, you'll miss out on years of potential tax-deferred growth and compounding of your money. Remember, your child can always attend college by taking out loans (or maybe even with scholarships), but there's no such thing as a retirement loan!

If possible, save for your retirement and your child's college at the same time

Ideally, you'll want to try to pursue both goals at the same time. The more money you can squirrel away for college bills now, the less money you or your child will need to borrow later. Even if you can allocate only a small amount to your child's college fund, say $50 or $100 a month, you might be surprised at how much you can accumulate over many years. For example, if you saved $100 every month and earned 8% annually, you'd have $18,415 in your child's college fund after 10 years. (This example is for illustrative purposes only and does not represent a specific investment. Investment returns will fluctuate and cannot be guaranteed.) If you're unsure about how to allocate your funds between retirement and college, a professional financial planner may be able to help. This person can also help you select appropriate investments for each goal. Remember, just because you're pursuing both goals at the same time doesn't necessarily mean that the same investments will be suitable. It may be appropriate to treat each goal independently.

Help! I can't meet both goals

If the numbers say that you can't afford to educate your child or retire with the lifestyle you expected, you'll probably have to make some sacrifices. Here are some suggestions:

• Defer retirement: The longer you work, the more money you'll earn and the later you'll need to dip into your retirement
• Work part-time during
• Reduce your standard of living now or in retirement: You might be able to adjust your spending habits now in order to have money later. Or, you may want to consider cutting back in retirement.
• Increase your earnings now: You might consider increasing your hours at your current job, finding another job with better pay, taking a second job, or having a previously stay-at-home spouse return to the workforce.
• Invest more aggressively: If you have several years until retirement or college, you might be able to earn more money by investing more aggressively (but remember that aggressive investments mean a greater risk of loss). Note that no investment strategy can guarantee success.
• Expect your child to contribute more money to college: Despite your best efforts, your child may need to take out student loans or work part-time to earn money for college.
• Send your child to a less expensive school: You may have dreamed your child would follow in your footsteps and attend an Ivy League school. However, unless your child is awarded a scholarship, you may need to lower your expectations. Don't feel guilty — a lesser-known liberal arts college or a state university may provide your child with a similar quality education at a far lower cost.
• Think of other creative ways to reduce education costs: Your child could attend a local college and live at home to save on room and board, enroll in an accelerated program to graduate in three years instead for four, take advantage of a cooperative education where paid internships alternate with course work, or defer college for a year or two and work to earn money for college.

Can retirement accounts be used to save for college?

Yes. Should they be? That depends on your family's circumstances. Most financial planners discourage paying for college with funds from a retirement account; they also discourage using retirement funds for a child's college education if doing so will leave you with no funds in your retirement years. However, you can certainly tap your retirement accounts to help pay the college bills if you need to. With IRAs, you can withdraw money penalty free for college expenses, even if you're under age 59½ (though there may be income tax consequences for the money you withdraw). But with an employer-sponsored retirement plan like a 401(k) or 403(b), you'll generally pay a 10% penalty on any withdrawals made before you reach age 59½ (age 55 or 50 in some cases), even if the money is used for college expenses. There may be income tax consequences, as well. (Check with your plan administrator to see what withdrawal options are available to you in your employer-sponsored retirement plan.)   Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. This article was prepared by Broadridge. LPL Tracking #1-05116943