FINANCIAL Planning2 | The Daily News | Financial Planning | April 2022 Did you know you may be able to take your 401(k), 403(b), or 457 plan and roll it into another type of retirement account while you are still working? Let’s look at how these rollovers can happen and the pros and cons of making them. To start, some basics. Distributions from 401(k) plans and most other employer-sponsored retirement plans are taxed as ordinary income, and if you take one before age 59½, a 10% federal income tax penalty commonly applies. In addition, 20% of the withdrawn amount is withheld for tax purposes. Generally, once you reach age 72, you must begin taking required minimum distributions. 1 Now, the fine print. You may be able to take a distribution from your qualified, employer-sponsored retirement plan while still working, via an in-service non-hardship withdrawal. This is done by arranging a direct rollover of these assets to an Individual Retirement Account (IRA) in order to potentially avoid both the 10% penalty and the 20% tax withholding in the process. It’s important to note that this option is only available if allowed by your employer. 2 It may be smart to speak to your financial professional before making any changes. Generally, distributions from traditional IRAs must begin once you reach age 72. The money distributed to you is taxed as ordinary income. When such distributions are taken before age 59½, they may be subject to a 10% federal income tax penalty. The Pros and Cons of Early Retirement Plan Rollovers Should you withdraw and reinvest your retirement plan money while you are still on the job? The criteria for making in-service non-hardship withdrawals can vary. Some workplace retirement plans simply prohibit them. Others permit them when you have been on the job for at least five years or when assets in your plan have accumulated for at least two years or you are 100% vested in your account. 2 Weigh the pros and cons. Who knows if your reinvested assets will perform better in an IRA than they did in your company’s retirement plan? Only time will tell. Right now, you can put up to $7,000 into an IRA, annually, if you are 50 or older. The limit on annual additions, however, is much more impressive at $58,000 for 2021. Lastly, if your employer matches your retirement plan contributions, getting out of the plan may mean losing future matches. 3 If you are interested in learning more, stop by our Bay Colony Branch located at 3350 Cross Colony Dr, Dickinson, TX. To schedule an appointment, contact: John Eyster | Financial Advisor 409.941.8696 | john.eyster@cunamutual.com This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. AMOCO Retirement and Investment Services professionals are registered representatives of CUNA Brokerage Services, Inc. Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI) member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty states of the United States of America. Citations: 1. IRS.gov, March 3, 2021; 2. IRS.gov, March 3, 2021; 3. IRS.gov, March 3, 2021April 2022 | Financial Planning | The Daily News | 3 F inancial planning has be- come a catchphrase in recent years, and it’s something many consumers may not fully understand. Learning some key components of financial planning can help people have more capital on hand to help them achieve their short- and long-term goals. A 2018 study commissioned by GuideVine that polled 1,000 Americans 30 and older about their finances found that many lack knowledge of basic financial terms. In addition, the study found that numerous people feel completely lost in regard to having a solid plan with their money. Financial planning can be intimidating, but learning the basics of sound money management can help people se- cure their financial futures. Financial planning is a process of setting objectives, assessing assets and resources, estimating future financial needs and making plans to achieve financial goals, according to the online learning resource WiseGeek. Investing, risk management, retirement plan- ning, tax requirements and estate planning are key components of financial planning. To get started with financial planning, individuals will need to see where they stand financially, establish financial goals and create a plan to reach those goals, ac- cording to the financial guide and online resource Ramsay. While a person can create his or her own financial plan, oftentimes the help of a financial planner can make sure that all avenues are being explored, especially for financial novices. It’s important to note that financial planning may mean dif- ferent things to different people. For some, planning may revolve around saving for a child’s college tuition but still having enough money left to retire. Another per- son may be looking to save extra money to invest in a business venture. Others who are living paycheck to paycheck may need help reevaluating their spending so they can grow their savings. One of the key components of financial planning is to begin doing it as soon as possible. A financial plan can be instituted at any age, and goals can be revisit- ed as life changes occur. TOPICS TO ASK WHEN INTERVIEWING A FINANCIAL ADVISOR What’s their fiduciary status? People new to investing will no doubt find some financial jargon confusing. Fiduciary is one term that novice investors may be unfamiliar with. A fiduciary is a financial professional who must place clients’ interests ahead of his or her own. Fiduciaries also must disclose any existing or potential conflicts of interest that might affect clients’ willingness to work with them. That includes how they earn their money. Non-fiduciaries have no such responsibility, so they can sell clients a particular investment without having to tell clients how their own compensa- tion is affected by that sale. Some fiduciaries work for spe- cific funds that only allow them to sell those particular funds’ pro- prietary products. That’s the case even if they believe there are oth- er investments that are better for given clients. Such arrangements must be shared with clients for advisors to maintain their fiducia- ry status. The Certified Financial Planner Board of Standards’ “Rules of Conduct” can be found at www. cfp.net. How do they make their money? Fees should be discussed be- fore signing an agreement with a financial advisor. Ask advisors you interview how they earn their money. Some might charge clients a percentage of the assets they’re managing while others may earn money by selling you specific products. Investors have a right, and an obligation to them- selves, to understand how finan- cial advisors they work with will earn money. That’s smart investing and can help investors sleep easy knowing their advisors have put clients’ interests first. What services do they offer? Financial advisors offer different services. Some might only suggest investments, while others may help clients come up with compre- hensive financial plans that focus on short- and long-term goals. Some investors may only want suggestions, while others may need more from their advisors. Determine which type of investor you are and then find the right advisor for you. How often can you contact them? Investors, particularly those without much experience, might be comfortable knowing they can contact their financial advisors as often as they’d like. Some advisors are more accessible than others, so discuss access with advisors be- fore signing any agreements, and determine if you’re comfortable meeting just once a year to go over things or if you want more routine check-ins. — Metro Creative Connection Start thinking about financial planning now FINANCIAL PLANNING SET FINANCIAL GOALS EVALUATE RESOURCES & ASSETS ESTIMATE FUTURE NEEDS MAKE A FINANCIAL PLAN ▶ INVESTING ▶ RISK MANAGEMENT ▶ RETIREMENT ▶ TAXES ▶ ESTATE PLANNING THE PROCESS THE KEY COMPONENTS SOURCE: METRO CREATIVE CONNECTION GRAPHIC: LIZ DAVIS/THE DAILY NEWS4 | The Daily News | Financial Planning | April 2022 F inancial changes are a fact of life. One of the biggest financial changes occurs when starting a family. Starting a family can come with a measure of sticker shock, particu- larly for young couples without much financial history. As of 2015, American parents spent, on average, more than $230,000 on child costs from birth until the age of 17, according to data from Money.com. Today, that number is closer to $245,000 per child, which does not include the cost of college, according to the U.S. De- partment of Agriculture. When mulling the cost of starting a family, pro- spective parents can ask themselves the following questions to get a handle on their finances. • Can I afford big-tick- et baby items related to safety and comfort? Items may include a new vehicle with high crash- test ratings or renovations to a home to provide a safe nursery. If renova- tions are unlikely, then would-be parents may need to consider the costs of moving. • Have I considered daily child expenses? Diapers, formula, laun- dry detergent, clothing for each stage of growth, and various other items are necessary when rais- ing a child. Make a list of such items and their potential costs. • Do I have adequate health insurance? Ex- penses for a delivery can range from $3,000 to up- ward of $37,000 per child for a normal delivery, and from $8,000 to $70,000 if a C-section or special care is needed, according to Pew Research. Consid- er how much your health insurance will cover and how much adding a child to a policy will increase your rates. • Will I need daycare? In order to afford added expenses, both parents may have to work. A family’s average childcare costs are roughly $755 per month, according to BabyCenter.com. • Can I afford life insurance? Once you begin a family, it is im- portant for both parents to have a life insurance policy in place to pro- vide for surviving family members in the event of an untimely death. Couples who want to start a family can make the transition go smooth- ly by figuring out their fi- nances before welcoming a baby into the family. — Metro Creative Connection How finances change when starting a family S aving is a vital component of financial plan- ning. However, more than half of Americans are saving too little and do not have an accurate grasp of their spending habits. While there’s no magic formula to save money, and the amount of money one should save each month depends on how he or she wants to live now and in the future, a handful of strategies can help people save more money each year. • Follow the 50/30/20 rule. The popular 50/30/20 rule advocates for allocat- ing 50 percent of your budget to essentials like rent, food and housing, 30 percent for discre- tionary spending and 20 percent for savings. Many people cannot save 20 percent of their income. In such instanc- es, people can make a concerted effort to save 10 percent of their take- home pay. • Build an emergency fund. The credit reporting agency Experian recom- mends consumers keep between three and six months’ worth of expens- es in an emergency fund. The fund should cover expenses on the absolute necessities paid each month, like utilities rent/ mortgage and groceries. • Set goals. Savings goals can help a person stay on track and pro- vide motivation to put money away. Establish separate savings ac- counts for each goal to reduce the temptation to spend. For example, if the goal is to save more for vacations, then a person can open an account where funds are used exclusively for vacations. • Automate with your employers’ help. Certain employers allow workers to direct deposit a paycheck into more than one bank account. It’s easy to request the payroll manager put 10 per- cent or 20 percent of a paycheck into a sav- ings account while the remainder is depos- ited into a checking account. Automated deposits can help indi- viduals get accustomed to living on less. • Plan more meals. Impulse buying is one of the most costly ways that families overspend. The average consumer in the United States spends $5,400 annu- ally on impulse buys, according to a 2018 sur- vey from Slickdeals.net. More than 70 percent of impulse spending goes toward food. Families looking to cut costs can plan more meals so they know what they need when they visit the grocery store, which should re- duce the amount of money they spend on spur-of-the-mo- ment purchases. • Simplify special occasions. It can be fun to go a little overboard for birthday parties, an- niversaries and holiday gatherings. However, such spending should be seen as a luxury. Momentous occasions can be both special and inexpensive. Birthday picnics in the park or at the beach can be just as unique and memorable as lavish parties, and they won’t cost nearly as much. • Think of new ways to get away. Many campsites are free or charge nominal fees to use their facilities, and such excursions can be great ways for families accustomed to flying and five-star hotels to enjoy new experiences. — Metro Creative Connection Ways to save more each month while cutting down on expensesApril 2022 | Financial Planning | The Daily News | 5 Y oung adults seek college degrees in order to secure well-paying jobs that help establish future financial stability, includ- ing fulfilling the dream of home ownership. Too often, however, college graduates are finding stu- dent loan debt is hinder- ing their future goals. Older millennials between the ages of 26 and 35 are carrying siz- able student loan debts, according to a recent study by the National Association of Realtors (NAR) and SALT, a con- sumer literacy program provided by the non- profit American Student Assistance. With balanc- es between $70,000 and $100,000 still remaining on years-old loans, this demographic’s ability to buy a home is greatly compromised. While other factors have contributed to the decline in the housing market, student debt accounts for up to 35 percent of the decline, according to a report released in August 2017 by the U.S. Federal Reserve Bank of New York. Roughly 32 per- cent of people in their 20s owned a home in 2007, but that number dropped to 21 percent in 2016. Respondents to various surveys, includ- ing those by NAR and Pew Research Center, have said that student loans have made it more difficult to buy homes. This is not the only potential pitfall of student loans. Consider- able student loan debt also may contribute to weaker spending among young adults and less wealth accumulation through the years. It also may delay travel plans, marriage plans and oth- er large purchases that are often the markers of an established and secure future. The Federal Reserve Bank report suggests that every additional $10,000 in student debt is associated with a 1.5 percentage point decline in the probability of buying a home by the age of 30. Furthermore, the report also states that almost half of peo- ple between the ages of 23 and 25 are still living with their parents. Of those who were able to purchase a home, they are still car- rying a median student debt of $41,200, accord- ing to the American Student Assistance. That figure actually surpass- es the average annual income of $38,800. “The tens of thousands of dollars many millen- nials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and oth- er major life decisions,” said Lawrence Yun, NAR chief economist. Student loan debt may be compelling some millennials to take second jobs, work in careers outside of their fields of study and delay marriage and starting a family. Student loan debt also is affecting millen- nials’ ability to save for retirement. The NAR report found that 61 percent of respondents at times were not able to make retirement contri- butions. Consolidation of stu- dent loans, refinancing for lower interest rates or extending the term of the loan to make pay- ments more amenable are ways to alleviate some of the burden of student loan debt. Flex- ible payment plans and better loan counseling can help as well. Many millennials are finding that student loan debt is compromising their ability to secure their financial futures, which can have far-reach- ing consequences. — Metro Creative Connection Student debt delays home ownership and more “The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and other major life decisions.” LAWRENCE YUN, NAR CHIEF ECONOMIST6 | The Daily News | Financial Planning | April 2022 Because We Know Your New Home Is More Than Just a Roof Over Your Head Personalized Mortgage Solutions • Purchase or Refinance • Conventional/FHA/VA Financing • HECM/Reverse Mortgages • Jumbo Loan Options • New Construction • Consolidation • Home Renovation Call today for your free consultation! We have the options and expertise to put home ownership safely within your reach. NMLS #70160 409.771.1316 • 713.355.9999 Fax SUSANA FINKEL Mortgage Loan Originator, MLO 628242 SECURE MORTGAGE COMPANY 2500 West Loop South, Suite 250 Houston, Texas 77027 April 2022 | Financial Planning | The Daily News | 7 T he fury of Mother Nature’s wrath is displayed in vivid color during stormy times of year, including hurricane season. And it seems no area of the planet is safe from such furor. In Septem- ber 2018, Hurricane Flor- ence battered the south- eastern coast of the United States while Typhoon Mangkhut hit Hong Kong. Just a few months earlier, California saw devastating wild fires, and, in August, torrential rain flooded many areas of Taiwan. Whether storms touch down nearby or over- seas, the globalized economy means the financial fallout from nat- ural disasters can be felt near and wide. Hurricanes cost an av- erage of $21.8 billion per event in damages for the United States, according to the National Centers for Environmental Infor- mation estimates that. It’s easy to underestimate the scope of the financial burdens caused by natural disasters. Here are a few ways to protect one’s financial interests in ad- vance of natural disasters. • Consumers should review and update their insurance policies regularly, according to experts at Property Casu- alty Insurers Association of America. Many home- owners are underinsured for natural disasters, particularly for flood- ing, which are not included in most policies. • Adjust insurance shortfalls based on what insur- ers provide and the type of weather that tends to affect the area in which you live. • Policies should re- imburse for hotel rooms or meals out if a home is uninhabitable after a disaster. In a Consumer Reports survey of people who experienced property damage after a hurricane, 5 percent said they had to stay elsewhere, while 42 percent needed to relocate temporarily after damages from wildfires. • Remove valuables and store them in another location that’s outside the path of the storm. Theft, vandalism and looting can occur after storms. • Have a backup employment plan and savings strategy if storms come through regularly. It is not uncommon for local businesses to shut down for some time to recover. This can mean temporary or permanent loss of employment. • Recognize your port- folio may suffer as com- modity prices and stocks take a hit if regions are decimated by natural disasters. Think ahead in regard to how your investments may be af- fected and make changes accordingly to mitigate the financial damage. — Metro Creative Connection Prepare for the financial impact of natural disasters Courtesy/The National Centers for Environmental Information In 2021, the United States experienced record-smashing 20 weather or climate disasters that each resulted in at least $1 billion in damages. Cash on hand can help small-busi- ness owners the same way that siz- able savings accounts can help laid off workers overcome a sudden loss of income. Forced closures during the COVID-19 pandemic hurt many small businesses because their bills still came due even if government officials deemed them “nonessen- tial” and forced them to close. Rent was still due each month and, in many instances, contracts signed prior to the pandemic still had to be honored, even if companies were no longer generating revenue. Small businesses that success- fully made the work-from- home transition can safeguard themselves against future uncertainty by reducing their office space. Small-business owners can renegotiate existing leases to allow for subleasing or simply move into smaller offices when existing leases expire. Money saved on office rentals can be redirected to help businesses grow their cash reserves. Small-business owners should keep watchful eyes on their inventories, advises the Small Business Adminis- tration. The goal in doing so is to ensure you can continue to meet sales needs without ending up with a stockpile of leftover merchandise that’s difficult to move if or when retail sales slump. How can a small business plan for financial uncertainty? of small-business owners are concerned about financial hardship due to prolonged closures from the pandemic. BUILD CASH RESERVESWATCH INVENTORIES REDUCE RENTED SPACE SOURCE: METRO CREATIVE CONNECTION; METLIFE & U.S. CHAMBER OF COMMERCE SMALL BUSINESS CORONAVIRUS IMPACT POLL 70% 8 | The Daily News | Financial Planning | April 2022 Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp. Investment products: Are Not FDIC InsuredAre Not Bank GuaranteedMay Lose Value The Bull Symbol and Merrill are registered trademarks of Bank of America Corporation. The College for Financial Planning Institutes Corp. owns the service marks Chartered Retirement Planning Counselor SM , CRPC®, and the CRPC® logo, and the certification marks Chartered Retirement Planning Counselor™, CRPC™, and the CRPC™ logo. CFP Board owns the marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the U.S. © 2022 Bank of America Corporation. All rights reserved. MAP3023665 | AD-03-22-0254 | 470965PM-0421 | 03/2022 Brassieur, Schraufnagel and Associates Marcia Brassieur, CRPC ® , CPFA ® Senior Financial Advisor 409.766.2718 marcia_brassieur@ml.com Mason Schraufnagel, CFP ® , CPFA ® Wealth Management Advisor 409.766.2736 mason.schraufnagel@ml.com Theresa Walker, CPFA ® Financial Advisor 409.766.2726 theresa.l.walker@ml.com Merrill Lynch Wealth Management 306 22nd Street Galveston, TX 77550 fa.ml.com/brassieurassoc We can provide customized, comprehensive advice and guidance to help you stay on track and pursue your goals. Call us to talk it through. When the world changes, we’re here to helpApril 2022 | Financial Planning | The Daily News | 9 T he decision to buy a home is significant. Real estate is the biggest investment the average person will make in his or her lifetime, which underscores just how significant the homebuy- ing decision can be. The national median price of a home in the United States is $272,446, according to the real estate experts at Zillow. However, since the National Association of Realtors reported a record-low housing inventory late in 2020, the average house price has been ris- ing rapidly nationwide. The medi- an home sales price is at $374,900, and certain states have much high- er prices, according to the Federal Reserve Bank of St. Louis. Most people do not have $300,000 to $600,000 in savings on-hand to purchase a home in cash. That means they’ll need to rely on financing to pay for their dream homes. CONVENTIONAL LENDING Conventional lending refers to when a bank or another financial institution loans a homebuyer money to buy a home. This is one of the most common ways to fund a home purchase. Personal credit score as well as credit history help determine eligibility and inter- est rates for conventional loans. Availability of assets as well as income level are some additional determining factors. Conventional loans are traditionally 10-, 15- or 30-year notes and will require a certain percentage as the down payment to secure the loan. The bank will determine the down payment requirement, which is typically somewhere between 3 and 20 percent. FHA LOAN A Federal Housing Administration loan is issued by an FHA-approved lender. These loans are designed for low-to-moderate-income borrowers, according to the financial guide In- vestopedia. FHA loans require lower minimum down payments and lower credit scores than many conventional loans. FHA loans also require mort- gage insurance up front, plus annual- ly for 11 years or the life of the loan depending on the length of the loan. HELOC A Home Equity Line of Credit, commonly called a HELOC loan, borrows against the available equity in your home to create a line of credit, much like a credit card. These funds can be used for large expenses or to consolidate higher-interest rate debt on other loans, according to Bank of Amer- ica. It may be possible to use a HELOC to secure funding to make improvements to a home for those who want to flip it as an invest- ment property. PRIVATE MONEY LENDERS Individuals investing in real estate who do not intend to use a property as a primary residence may turn to private money lend- ers. These investors can tap into capital from personal connections and lend at specified interest rates and payback periods, according to Fortune Builders, a real estate in- vesting resource. Keep in mind the interest rate likely will be higher with a private lender than through a conventional lender. The repay- ment term also will be shorter. VA-BACKED LOAN The U.S. Department of Veterans Affairs has a program for acquir- ing loans through conventional lenders that will be guaranteed partially against loss through the VA. This enables a lender to give better loan terms, such as the option to pay no down payment. Interested parties need to qualify for a Certificate of Eligibility and then work with qualified lenders. People have several options to finance the purchase of a home. These loans can help make the dream of home ownership a real- ity. Potential buyers are urged to speak with mortgage professionals or financial planners to consider their options. — Metro Creative Connection Understanding the different real estate financing options Your credit score will be a factor in determining just how much bargaining power you have for lower interest rates on mort- gage loans, according to the financial resource NerdWallet. The higher the credit score, the better. Well before shopping for a mortgage, manage your debt, pay it off if possible and fix any black marks or mistakes on your credit report. How to get the best mortgage financing deal The vast majority of homeowners secured a mortgage to purchase their homes. Learning about the mortgage process can help new buyers navigate these sometimes tricky financial waters. Some lenders allow you to pay points in advance, which will lower the interest rate. Get points quoted in dollar amounts so they’ll be easier to compare. If you’re unfamiliar with points, discuss the concept with your financial advisor. Become informed of the rate trends in your area. Lower rates translate into significant savings amounts per month and over the life of the loan. Rates may be fixed, though some are ad- justable-rate mortgages (also called a variable or floating rate). Each has its advantages and disadvantages, and a financial consultant can discuss what might be in your best interest. Mortgage brokers will serve as the middle person in the transaction. A broker’s access to several different lenders can translate into a greater array of loan products and terms from which to choose. Get information from various sources, whether they are com- mercial banks, mortgage companies, credit unions or thrift institutions. Each is likely to quote different rates and prices, and the amount they’re willing to lend you may vary as well. Investigating various lenders can help you rest easy knowing you got the best rate. Lenders may charge additional fees that can drive up the overall costs associated with getting a mortgage. Compare these fees as well so you can be sure you get the best deal. LEARN YOUR CREDIT SCORE INVESTIGATE VARIOUS LENDERS CONSIDER A MORTGAGE BROKER LEARN ABOUT RATES DISCUSS POINTS WITH YOUR FINANCIAL ADVISOR AND LENDER — Metro Creative ConnectionNext >