Imagine celebrating your 100th birthday surrounded by generations of family and friends. Once a rarity, reaching age 100 or beyond is becoming increasingly common, reshaping our perspectives on aging and retirement planning. As life expectancy continues to rise, proactive and thorough financial planning becomes more essential than ever.

Recent studies highlight an undeniable trend: more people are reaching age 100 than at any previous point in human history. According to research from the United Nations, the global population of centenarians is projected to reach approximately 3.7 million by 2050, up from about 593,000 in 2021. In the United States alone, the U.S. Census Bureau reports the number of centenarians grew by 50% between 2000 and 2014, and it's expected to increase eightfold by 2050.

Furthermore, a report by the Stanford Center on Longevity points out that today's children have more than a 50% chance of living beyond 100, drastically altering traditional views of retirement and financial security.

While strong employment and steady payroll taxes have temporarily bolstered the program's outlook, the long-term viability remains uncertain. A large part of the issue is that the population is aging, meaning the percentage of the population aged 65 and older is climbing. That means there is a lower number of workers per retiree paying taxes. That combined with a falling birthrate results in less money going into Social Security and the Social Security trust fund over time. Despite widespread apprehensions about the program's solvency, it is essential to dispel misconceptions about Social Security going "broke." Instead, the primary concern right now lies in the potential insolvency of the trust fund that pays a portion of Social Security benefits.

If Congress fails to act by 2033, the retirement trust fund will exhaust its reserves, leading to a shortfall in benefit payments. That will result in a 21% reduction in Social Security benefits for retirees. That would be detrimental for most retirees. Although this year's report was an improvement over last year's report, which projected a 26% reduction in benefits, the trajectory has generally been downwards, and could move further downward as more retirees begin collecting their Social Security benefits, less workers enter the labor market behind them, and inflation remains high. There is a critical need for proactive measures to safeguard financial security. Despite the looming threat, experts remain cautiously optimistic that lawmakers will implement reforms to mitigate the crisis and sustain the program's essential functions, as some bills addressing the issue have begun to appear.

Despite prevailing concerns, there exists a compelling financial incentive to delay claiming Social Security benefits. By deferring benefits until reaching full retirement age or even until age 70, individuals can secure higher monthly payments, thereby maximizing their lifetime benefits. While the temptation to claim early may stem from immediate financial needs or apprehensions about the program's future, prudent planning dictates a strategic approach to optimize long-term financial outcomes.

For individuals facing financial constraints or seeking to optimize their retirement income streams, strategic planning based on the individual's unique situation can offer viable solutions. For example, for one retiree, withdrawing funds from tax-deferred retirement accounts before mandatory distributions kick in can help manage tax liabilities and bridge income gaps while allowing Social Security benefits to accrue. That may not work for another retiree, though. On the other hand, for those with limited life expectancies or specific medical conditions, early claiming may be a prudent choice, albeit one that requires careful consideration of individual circumstances. The key is for each individual to find the right strategy for claiming Social Security benefits for themself.

"Will I outlive my retirement money?" This is one of the top fears for people who are starting to prepare for their retirement years. Determining how much money you need in retirement shouldn't be a number that you pull out of thin air. It's a process that should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income and project what your income could look like each year in retirement.

The process should also consider possible factors that could affect your retirement. We all have our "blue sky" visions of the way retirement should be, yet our futures may unfold in ways we do not predict. So, as you think about your "second act," you may want to consider some life and financial factors that can suddenly arise.

This is only natural, as we all live in the present, but the future will arrive, and the future will be different than the present. The expenses you have now may not exist in retirement, and you may have new expenses in retirement that you don't experience now. The costs you have to shoulder later in retirement may exceed those at the start of retirement, especially when it comes to medical expenses and potential long-term care. As you may be retired for 20 or 30 years, or even more, it is wise to take a long-term view of things.

Medicare isn't available until you turn 65. If you retire before age 65, what do you do about health coverage? You may shoulder 100% of the cost. Suppose you become disabled or seriously ill, and working is out of the question. How will you cover those medical and other expenses and make ends meet?

You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people you can trust to manage your finances. The medical expenses can be high, as could the cost of a caretaker if one is needed. And if you're unable to make decisions for yourself, who will make those decisions for you?

As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple's income. Keeping up a house or even a condo can be tough when you are elderly. Driving can also be a concern. If your spouse or partner is absent, will someone be available to help you in the future?

Unexpected issues and events that are always a possibility, but not front-of-mind, may quickly affect our money and quality of life. If you age with an awareness of them, you will be able to manage the outcome better.

As Social Security benefits rise about 8% for every year you delay receiving them until age 70, waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before you reach Social Security's Full Retirement Age (FRA) can mean comparatively smaller monthly payments. Important factor when determining the optimal age to begin Social Security benefits include your life expectancy, other income you may be receiving, and your expenses.

Medicare will not pay for everything. Unless there's a change in how the program works, you may have a number of out-of-pocket costs, including dental and vision care. Options for covering these extra medical expenses including paying for them with money and investments or purchasing MediGap or Medicare Advantage coverage.

With advances in medicine, people can and do live longer than in the past. Actuaries at the Social Security Administration project that around a third of today's 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.

You may have heard of the "4% rule," a guideline stating that you should take out only about 4% of your retirement savings annually in order to ensure you have enough assets to last through retirement. Recently, some experts have stated that number is now more like 3% or 3.5%. Whatever the right number is, some retirees try to abide by it, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. You may have heard of the "go-go years" in early retirement. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly.

It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming your retirement will be long, you may want to assign this or that investment to specific expenses, which means the taxable or tax-advantaged account that is most appropriate as you pursue a better after-tax return for your entire portfolio.

Some find it harder to preserve (or accumulate) wealth when you are handing portions of it to creditors. Many people have 30-year mortgages, but there are also mortgages available for 40 years and even 50 years. It's important to plan ahead properly to know if you'll have debt in retirement, how much debt you'll have, or if there is a way to retire debt-free.

There is no financial aid program for retirement. There are no special retirement loans. Committing to pay for children's college education could make a significant impact on assets you'll have available at retirement. Parents do want to help their children pay for college, and that's great! However, it's important to consider the retirement impact and the various other options that are available, including grants and scholarships, as well as the possibility of your children paying for their own college education since they have their whole financial lives ahead of them.

Expect that retirement will have a few surprises; the absence of a strategy can leave you without guidance when those surprises happen.

These were just some of the important factors that can have a significant influence on the quality of retirement. Not paying attention to these factors and more would be a mistake. To help you avoid those mistakes, take some time to review and refine your retirement strategy. If you don't know where to begin, Strateon Intelligent Wealth has comprehensive financial planning for just that.

The economic impact of COVID-19 has been felt around the world. And, unfortunately for many pre-retirees, it could potentially impact your Social Security benefits as well. A new 2021 report indicates that the Old-Age, Survivors, and Disability Insurance (OASDI) trust fund that provides additional capital for funding Social Security benefits when there is a shortfall from taxation will be depleted in 2033, which suggests that Social Security benefits could be cut to 78 percent of promised benefits by 2034 if Congress takes no action to address funding.¹ While Social Security long-term funding has been a concern for awhile now, it appears that a snowball effect caused by the COVID-19 pandemic has shortened the timeline. COVID-19 served as the catalyst for an economic recession in early 2020, with a plunge in employment rates - meaning a drop in payroll taxes as well.

In December 2020, the average monthly benefit for a retired individual receiving Social Security was $1,544.² Even with benefits at full funding, you may not be able to meet your financial needs in retirement on Social Security alone. For those who have the opportunity to plan and prepare, Social Security doesn't have to be their only source of retirement income. There are a few options to consider when preparing to supplement the difference between what you earn in Social Security benefits and what you need to thrive in retirement.

There are two types of Individual Retirement Accounts, or IRAs, to choose from - traditional IRAs and Roth IRAs. If you’ve had these accounts set up for some time and made contributions regularly, then the potential growth of these accounts could make up for Social Security reductions. However, there are a few things about your IRAs to consider toward retirement.

Contributions you make to a traditional IRA may be fully or partially deductible, depending on your individual circumstances. In most cases, once you reach age 72 you must begin taking required minimum distributions from your IRA. Withdrawals from traditional IRAs are taxed as ordinary income and, if taken before age 59 1/2, may be subject to a 10 percent federal income tax penalty.³ You may continue to contribute to a traditional IRA past age 70 1/2 as long as you meet the earned-income requirement.⁴

Roth IRAs differ from traditional IRAs because contributions are made with after-tax dollars. This means that Roth IRA contributions do not lower your yearly taxable income, but withdrawals made in retirement are tax-free.

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59 1/2. Tax-free and penalty-free withdrawals also can be taken under certain other circumstances, such as a result of the owner’s death. The original Roth IRA owner is not required to take minimum annual withdrawals. Lastly, high-income taxpayers may have a lower contribution cap, or cannot contribute to a Roth IRA at all, depending on their yearly income and tax-filing status.⁵

If your employer offers a defined contribution plan, such as a 401(k), 403(b) or 457 plan, the accumulated income in these accounts could supplement Social Security, especially if this amount has had time to grow.

Be aware that distributions from a defined contribution plan are taxed as ordinary income unless they are Roth 401(k) or 403(b) accounts. Individuals are required to take minimum distributions at age 72, and any distributions before age 59 1/2 are subject to a 10 percent tax penalty.

Though not as common as they used to be, pensions are a common type of defined benefit plan. Benefits established by an employer take into account work history and salary to determine benefits.

Unfortunately for some retirees and pre-retirees, if Social Security does not help make ends meet, and the above options are not available or don’t provide enough benefits, then it may be time to consider postponing your retirement. The good news though, is that working while collecting Social Security could potentially increase your benefit amount.⁶

Having multiple sources of income in retirement is important. But if Social Security is your primary source of income, then a reduction in benefits will certainly be challenging. Using the list above, one can consider their options to prepare appropriately. To consult a financial advisor for more guidance and to receive an approach tailored to your financial situation...

Strateon Intelligent Wealth works with entertainment professionals on both sides of the camera or microphone, across various disciplines, including movie and television production and post-production crew members, producers, directors, actors, athletes, writers, musicians, choreographers, dancers, and other entertainers and creatives. Strateon Intelligent Wealth knows your challenges & solutions in the media and entertainment industries including film, television, music, multimedia, and sports.

It’s important for entertainment professionals to find a financial advisor who is familiar with fluctuating income, and understands the complexities of having to pay various entities, managers, and business managers with their income. Most financial advisors are only familiar with working with executives and individuals with 9-5 jobs who have a flat salary or know what income and expenses will look like each year. For many entertainment professionals, income and expenses change yearly, monthly, weekly, and even daily, and sometimes those changes can be very drastic. It’s important to have an advisor who understands the dynamics of the finances of an entertainment professional and knows exactly how to manage the planning for somebody working in the entertainment industry.

Below are some scenarios that many entertainment professionals find themselves in as they work in media and entertainment.

Those in the entertainment industry come across unusual business challenges during their career. One such financial challenge is that income might not always be steady from year-to-year. Many entertainment professionals fall under the category of “gig workers.” These professionals don’t know when they’ll be working next or how long the next gig will last. They still need to pay bills, even when they don’t have any income. During times between gigs, they may be collecting unemployment at a considerable lower amount than their usual income. With that unemployment income, they may or may not have federal taxes withheld, and if they do, the 10% federal tax withholding may be considerably less than their actual tax rate. A financial planner can help entertainment professionals determine the correct amount of quarterly estimated taxes to pay to avoid underpayment penalties later during tax season, along with other solutions for handling the dynamics of their income.

Entertainment professionals working as gig workers may be receiving income that is non-employee, usually with a 1099. This type of income has no federal or state tax withholdings, so it’s important to have a financial planner and advisor that understands the type of income that is being received and how to properly plan for paying taxes.

Not only does this non-employee income have no federal or state tax withholdings, there is no Social Security withholding either. This means these entertainment professionals are not earning Social Security credits or having income reported to Social Security to be able to collect higher Social Security benefits in retirement. A financial planner that understands this kind of employment for so many entertainment professionals is important so that they know to pay the correct type of taxes to earn those credits and also to plan for the possibility of lower Social Security benefits in retirement.

Entertainment professionals that typically receive non-employee income also typically do not participate in any employer-sponsored retirement plans, such as a 401(k) or pension. Thus these entertainment professionals must find their own way to save and invest for their retirement.

Even entertainment professionals that may be gig workers, but receive employee income because they’re a member of a union, may find themselves with fluctuating income and a need to plan ahead for retirement due to the uncertainty of future Social Security benefits. They may also be receiving income that is combination of employee income and non-employee income, making it important to properly plan for tax season and avoid underpayment penalties.

Some entertainment professionals, such as actors, directors, writers, and musicians, may suddenly receive a large amount of income, but then not receive additional income later or have a longer period of time before they receive additional income.

Everyone’s heard the stories of celebrities (whether they be actors, athletes, or other entertainers) who made millions in a relatively short period of time, but squandered their sudden fortunes and in later years found themselves broke. Having a lot of money all of a sudden will make anyone want to splurge. The important thing is to maintain control of spending, which is harder than it sounds. A financial planner and advisor can help maintain control of spending by helping to establish a budget and monitoring the entertainment professional’s financial plan to ensure spending stays within limits, as well as finding the right investment plan tailored to the entertainment professional and their situation. This enables the entertainment professional to enjoy their newfound fortune for many years to come, and even pass it on to future generations.

Some entertainment professionals’ careers may be short-lived. This is especially true for many athletes. It’s important to have a game plan in place for what life will be like after retirement from their athletic career so they can live comfortably later in their life and provide for their family for years to come.

Some entertainment professionals have their own business or, especially in many cases with actors, a loan-out company. They call it the entertainment business for a reason, and that’s because it is a business. Like any business, an entertainment-related business needs tax-planning like a business. There may be ways of receiving extra tax deductions by having certain expenses go through the business instead of personal accounts. And business income, depending on the type of business entity, can be taxed differently than personal income. It’s important that the financial planner and advisor understands these differences, as well as how some entertainment-related expenses may actually qualify as a deductible business expense even though they would normally not qualify as a deduction for other individuals.

Entertainment professionals may travel a lot. This includes movie and television shoots that take crews and actors to other states and countries for long periods of time, athletes traveling for half or more of the year for games, exhibitions, and competitions all around the country and the world, and musicians on tours. It’s easy for finances to get away from you, especially when you're away from home for extended periods of time. A financial planner and advisor can monitor income and expenses to make sure the financial plan stays on track.

Some entertainment professionals are members of unions. For these entertainment professionals, if they work enough hours, they qualify for health insurance and other benefits. However, what if they don’t work enough hours? Well, then they don’t receive health insurance. Entertainment professionals need a plan in place to ensure they are able to have health insurance if they don’t qualify for their union’s benefits. And what if they aren’t in a union and must find health insurance on their own? Strateon Intelligent Wealth can help with the evaluation and selection of the right insurance to meet needs and budget restrictions.

Many professionals working in media and entertainment need to hire a team to help them manage their lives. This can include a day-to-day manager, a business manager, an attorney, agents, and an accountant.

It’s important to find a financial advisor who is comfortable working with an entertainment professional’s attorney and business manager, as well as other members of the team. An attorney will often develop different trusts or entities. It’s important that the financial advisor understands what has been done and created by the attorney as it relates to entertainment professionals. They should have a good working relationship to make sure that the different entities or trusts are properly funded and managed.

Business managers provide record-keeping services, account reconciliation, and tax management, among other services. A financial advisor works closely with a business manager to ensure the financial soundness of the entertainment professional’s business and personal life, as well as in different types of philanthropic giving and gifting options that could affect different short- and long-term goals.

It’s smart to hire a financial planner and advisor early in the team-building process. A financial specialist who focuses primarily on your unique income and tax situation will be able to work with your team more cohesively than an advisor who isn’t familiar with the life of an entertainment professional.

Those are just some of the scenarios that entertainment professionals can find themselves in. As an entertainment professional the reality of your life is unique, so there are surely other issues that you have to deal with. Strateon Intelligent Wealth is used to unique situations and able to adapt to your needs.

Even if you’re not yet earning substantial income from working as an entertainment professional, it’s important to have an advisor who is willing to help educate and empower you to begin your savings journey, who understands your short- and log-term goals, and is there from the beginning to help you build your future as you continue to accrue income.

Clearly, there is a lot to think about when planning for retirement. While we have a degree of control over many of the choices involved, there’s one big wild card called sequence risk.

Sequence risk is the risk that you’ll encounter negative investment returns in early retirement. This is an important consideration, because the random sequence – or order – in which you earn your returns early in retirement can have a significant impact on your lasting wealth. Simply put, a retirement portfolio that happens to experience positive returns early in retirement will outlast an identical portfolio that must endure negative returns early in retirement... even if their long-term rates of return end up the same.

Since nobody can predict which return sequence they’ll experience early in their retirement, every family should prepare for a range of possibilities in their realistic retirement planning.

It’s no secret that global stock markets are volatile. While long-term average annual returns may be in the range of 7%, markets rarely deliver this exact average any given year. Soaring one year, plummeting the next; we never know for sure how far above or below average each year will be.

During your career, you’re mostly spending earned income, while adding to your retirement reserves as aggressively as your plans call for. As long as you stay the course – benefiting from the upswings and enduring the downturns – tolerating market volatility is just part of the plan.

In fact, when you’re still accumulating wealth, market downturns give you the opportunity to buy more shares than you otherwise could when prices are higher. When the market recovers, you then have more shares to recover with, which ultimately strengthens your portfolio.

But then, you stop working, and start spending your reserves. This has an opposite effect. Now, when stock markets decline, you may need to sell shares at low prices, which means you’ll have to sell more of them to withdraw the same amount of cash. Even though the market is expected to eventually recover and continue upward, your portfolio will have fewer shares with which to participate in the recovery. This hurts your portfolio’s staying power. It won’t be able to bounce back as readily as when you were adding shares to it, or at least not taking them away.

Sequence risk should NOT change your overall approach to investing. As 2020 has clearly shown us, you never know what’s going to happen next. Crashes usually occur without warning, while some of the strongest rebounds arrive amidst the darkest days.

So, whether you’re 20, 40, 60, or 102, we still recommend building and maintaining a low-cost, globally diversified portfolio that reflects your personal goals and risk tolerances. It's still advised against trying to pick individual stocks or react to current market conditions. It's still suggested you only change your portfolio’s asset allocations if your personal goals have changed – never in raw reaction to changeable market moods.

What can you do to mitigate sequence risk if it happens to you?

If you are willing and able, you might postpone retirement, or even return to the workforce. Even part-time employment can help offset an ill-timed sequence of negative market returns. If your circumstances allow, you may be able to not only avoid spending retirement reserves during down markets, but even add more in (buying at bargain prices).

Were you planning for higher investment returns than reality has delivered? Since your portfolio is most vulnerable to negative sequence risks early in retirement, you may want to initially spend less than planned, to give your portfolio the fuel it needs to replenish itself.

When you retire, you typically have several sources of income to draw from. You may have traditional investment accounts, retirement accounts, Social Security, or pension plans. Your investments are usually divided between stocks and bonds. You may have equity in your home. You may have, or be in a position to create an annuity. You may have cash reserves. If you encounter stock market sequence risk early in retirement, you might be able to tap a combination of your non-stock assets for initial spending needs. This can mitigate the hit your portfolio will otherwise have to take if you must liquidate shares of stock.

Sequence risk is usually not the only consideration at play in retirement planning. There are taxes to consider. Estate plans to bear in mind. Carefully structured investment portfolios to maintain. Logistics to learn. All this speaks to the value an experienced advisor can add before, during, and after this pivotal time in your financial journey. Strateon Intelligent Wealth helps its clients prepare for and mitigate sequence risk within the greater context of their goals for funding, managing, spending, and bequeathing their lifetime wealth.

Financial planner. Financial advisor. Investment advisor. Investment manager. You may be wondering what they are and how they’re different. And most of all, you may be wondering what they can do for you and if you should have one. To many, the titles may be interchangeable. In reality, they are not. Each actually plays a different role. An Investment manager typically manages assets in an investment portfolio. An investment advisor typically provides investment advice, but doesn’t actually manage the account. A financial advisor typically provides financial advice to a person or business, or perhaps to a retirement plan. A financial planner, does so much more.

Financial planning is the long-term process of a financial planner working with you to define your financial goals and then develop and implement a personalized plan to achieve those goals. The reason it’s a long-term process is because your goals will change throughout your life, and those goal changes will necessitate adapting your financial plan and its implementation to those changes.

When you engage financial planning services, the financial planner gathers personal and financial information about you. That gathered information, along with additional data such as realistic assumptions for inflation, investment performance and returns, savings, and spending, are used in various calculations to project if, when, and how you’ll meet your financial goals. Many questions you have will get answered, including:

• What is the probability I’ll meet my goals?

• When is the likelihood I’ll achieve my goals?

• What changes do I need to make to achieve my goals?

  
  

Your goals can be anything from wanting to buy a house to wanting to start your own business to making sure you don’t run out of money in retirement, and anything in between and outside.

Hiring the right professional starts with understanding what financial planning is.

There are numerous ways a financial planner can work with you to achieve no only your financial goals, but your personal ones as well. A financial planner could actually be thought of as more of a life planner.

A financial planner helps organize your finances, manage your budget, and achieve your financial goals as efficiently as possible. A financial planner can identify areas you need to work on, such as overspending or poor saving habits. They can take out the guesswork of how much you need to save to be on track for retirement and help you figure out what types of accounts you should be putting that money into. Financial advisors can help you navigate complex financial matters such as taxes, estate planning, and paying down debt, as well as making sure you maintain an adequate emergency fund.

A good financial planner will listen to you to learn what’s important to you, and can help improve the quality of the financial decisions you make. Hiring a financial planner means you have an expert at your disposal who can give you informed and helpful advice on how to manage one of the most vital aspects of your life. A good financial planner will give you advice and recommendations regarding many different areas, including:

• Determining short- and long-term goals

• What you need to do differently with your finances

• Establishing and maintaining an emergency fund

• Budgeting and saving

• Types of retirement accounts to use and how much money to put in them

• How best to utilize benefits offered by your employer

• The type of mortgage you should have

• Mortgage payoff and/or refinance options

• Insurance options

• Tax optimization and planning

• Required rate of return from your investments to achieve your goals

• Risk tolerance assessment

• Selecting investment account types

• Identifying appropriate asset allocation

• Managing and eliminating debt

• Savings for your child’s college education

• When to begin receiving Social Security benefits

• Estate planning

• Business planning

  
  

It doesn’t stop there. Any questions you have regarding your finances or anything that could affect your finances and retirement are questions that a good financial planner can answer or help you answer.

A financial planner can also act as your investment advisor and investment manager. They may give you investment advice, helping you make the best decisions for those assets based on your personal situation, as well as manage your investment portfolio for you so you don’t have to worry about handling that complicated task yourself.

A financial planner’s goal is to ensure you're financially secure not just 5 or 10 or 20 years down the road, but all the way through your retirement, for the rest of your life. That means a financial planner will make sure you're not missing any opportunities now that will affect your future.

A good financial planner will provide you with the education and tools you need to plan out your financial future, helping you make the best decisions about your money so that money occupies less space in your life, leaving room for the things you care about most.

If you’re struggling to prioritize your financial goals, need a plan for where and how to save, want help with investment management, or you want to be able to spend less time thinking about your money and more time doing what you care about most, you may want to work with a financial planner.