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Joe Lucey

How to Motivate Yourself to Exercise

Researchers believe one way to eliminate a bad habit is to replace it with a good one. For example, say you’d like to get out of the habit of watching too much television. At the same time, you’d like to motivate yourself to exercise every day.

To get started, identify three factors associated with the bad habit: Reminder, routine and reward. The reminder is the trigger that initiates the behavior. For example, perhaps you turn on the television every morning while eating breakfast. Breakfast, even that first cup of coffee, may be the reminder — the act that reminds you to turn on the TV.

Next, because you do this every morning, watching TV has become your routine. The reward? While that may differ for each person, it could range from catching up on the day’s news, laughing at the jokes of a morning talk show host, or having warm, nostalgic feelings while watching reruns of an old TV show.

In order to change the old habit, identify three new factors that correlate with the habit you want to develop. In the case of exercise, maybe going outside to retrieve the newspaper is your reminder. Instead of reading the paper right away, perhaps continue walking around your neighborhood block, and pick up the paper when you return. Your reward may be reading the paper upon your return, along with the knowledge that you’ve gotten some exercise for the day.

You may even consider enhancing both your reward and motivation by inviting your spouse or a neighbor to join you on this daily walk. The greater the reward, the more likely you are to continue until it becomes a habit. If this new habit breaks or even reduces the amount of time you spent on your bad habit, all the better.

Two of the key ingredients to changing (or developing) an ingrained habit are motivation and confidence. Consider how motivated you are to make the change and how confident you feel about your ability to do so. If you rate low on either of these fronts, try reducing the scale of the habit to something more achievable. For example, reduce the number of hours you watch TV each day, or simply walk half a block before retrieving the newspaper. The more success you achieve with the truncated goal, the more likely your motivation and confidence will grow to fully changing or developing a new routine.

Strategies for Paying for College

Even as college tuition continues to rise, more and more American families are paying less out of pocket than in previous years. During the 2015-16 academic year, grants and scholarships paid the largest portion of college expenses — 34 percent, compared to 30 percent the year before.

In addition to grants and scholarships, parent income and savings provided for 29 percent of costs. Student resources chipped in for 12 percent, and loans covered another 20 percent. On average, households paid $23,688, slightly less than in 2014-15.

Parental and student income and assets have a big impact on the student’s eligibility for financial aid. For parents, the most significant factor is income, followed by assets held in a 529 college savings plan, Coverdell ESA savings and taxable savings and investment accounts.

However, here is an important point for high-net worth families: Even if you don’t expect your student to qualify for financial aid, you should submit a Free Application for Federal Student Aid (FAFSA) application every year in order for your student to be eligible to receive a federally subsidized student loan.

If you use invested funds to help pay college expenses, be aware of any taxable events triggered by withdrawals. For example:

  • Withdrawals from traditional IRA and 401(k) accounts are taxed as ordinary income
  • Withdrawals of contributions from a Roth IRA are tax free, but withdrawals that represent earnings are taxed as ordinary income
  • Assets taken from taxable accounts may be subject to capital gains taxes

We believe you should try to exhaust other resources before paying for college expenses with funds allocated to retirement savings accounts.

A 529 college savings plan can offer numerous advantages for parents or grandparents helping to cover a student’s tuition. You can open multiple 529 accounts — one for each child or grandchild, and it doesn’t matter if different accounts name the same individual as beneficiary. Following are a few of the 529’s benefits:

  • Assets in the account remain under the control of the account owner
  • However, for the purpose of removing assets from the owner’s estate, 529 contributions are considered a gift to the account beneficiary
  • Contributions earn interest tax free
  • Withdrawals made to pay for qualified college expenses are tax free
  • Withdrawals for any other reason also are tax free, with the exception of the portion considered earned interest, which will be taxed as income plus a 10% tax penalty
  • Distributions from a grandparent-owned 529 are considered student income

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Age-Old Advice for Good Health

For some retirees, losing memory and thinking skills in old age can be just as worrisome as the loss of health. “Brain training,” which involves mental exercises like crossword puzzles and learning a foreign language, can help, but that’s just part of what it takes to maintain a sharp mind.

Scientists are researching the correlation that continuing certain healthy behaviors, practiced in combination, can help retain mental acuity. Indeed, this could mean that stopping them may promote deterioration.

A more complete approach to brain training is to pursue a disciplined regimen of a combination of the following healthy behaviors:

  • Physical exercise — Promotes the growth of new brain cells and increases activity in the parts of the brain associated with the ability to plan, organize, remember details and filter speech.
  • Eat healthy — Whole grains, fruits and vegetables, and healthy fats from fish, nuts and oils. Also, don’t over eat or under eat — maintain the same calorie intake day after day.
  • Get enough sleep — If you suffer from sleep loss due to sleep apnea, an overactive bladder or as a side effect from a medication, address these conditions to help improve the quality and quantity of sleep.
  • Computer and video games can help improve attention and the ability to react quickly as well as sharpen thinking skills.
  • Meditation or exercises such as tai chi appear to increase the brain’s cognitive reserve, which is the ability to switch between different tasks and deal with stressful events.

The problem for many adults is that when they retire, they gradually stop doing some or all of these things. While no single activity on this list is guaranteed to work, regular deployment of these different factors in combination has shown demonstrated results.

Health Savings Account Update

Introduced in 2003, a Health Savings Account (HSA) used in combination with a high deductible health care plan provides three tax advantages:

  • Income tax deduction for annual contributions
  • Tax-deferred growth
  • Tax-free withdrawals for qualified health care expenses

Depending on the fate of the current health care law, the HSA could become even more useful. Both the new president and Republicans in Congress have called for an increase in the contribution limit to the maximum out-of-pocket limits for high-deductible health plans. If those rules take effect in 2017, the individual HSA limit would rise from $3,400 to $6,550 for individuals and $6,750 to $13,100 for family plans. It has also been proposed that an HSA should not be subject to estate taxes when passed on to beneficiaries.

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

The Perils of Focusing on Profit

Over the past 10 years, corporate America has cut back on jobs and reduced expenses in an effort to do more with less. Some economic observers believe that today’s emphasis on short-term profits and shareholder value has resulted in additional negative impacts. For example, overworked and disenfranchised employees, job and wage stagnation, smaller profit margins and a lack of innovation.

One analyst says corporate share prices would be more sustainable if companies invested more in real goods and services and less on “financial shenanigans,” such as share buybacks and stock price manipulation.

The life cycle of the corporation is changing due to many factors, including globalization, deregulation and new technology. Unfortunately, management practices have not evolved quite so fast, so many companies are trying to manage these new disrupting factors using practices of the past, which are not nearly as effective in today’s market.

Over the past 50 years, the following factors may have resulted from too much focus on corporate profits:

  • Real returns of American companies are 75 percent less than they were in 1965
  • Real economic growth has been steadily slowing over the last 50 years
  • The life expectancy of a large firm has declined from 75 years to only 10 years
  • The financial sector alone represents 7% of the U.S. economy, 25% of corporate profits and yet only 4% of jobs

However, there are companies that have adapted operations to the new world market, exhibiting more agility, innovation and creativity than ever before. Today’s “Creative Economy” is designed to deliver ongoing value to customers, which inevitably should benefit shareholders. In fact, corporate sustainability may depend on how well companies integrate both new technology and new management practices, including financial transparency, consumer-driven products and services, and a knowledgeable, engaged and scalable workforce. In other words, focus more on the task — not the reward.

Retirement: Spending vs. Income Planning

One common rule of thumb for retirement savings is to replace 80 percent of your pre-retirement income — or an even higher percentage. But what if you currently spend more than you earn? Or what if you spend much less than you earn? Perhaps a better measure would be to base your retirement income on your current spending habits. After all, income isn’t always a measure of a person’s lifestyle; spending habits often provide more clarity on the lifestyle we live.

In retirement, you will likely spend less money on things like housing, clothes, commuting and children. On the other hand, you may spend more money on health care and household assistance. Therefore, it may make sense to plan on having enough income to cover the same level of spending as your pre-retirement years.

According to a survey by the Employee Benefit Research Institute, about 38 percent of retirees report they actually spend more in retirement than they did while they were working. Twenty-one percent say they spend less, while 38 percent say they spend the same amount.

If you go by the results of this survey, more than half of pre-retirees need to plan for at least as much income as they spend now — which may be a challenge for those who already spend more than they earn. Regardless of how much you earn now, you may want to consider basing your retirement income plan on how much you currently spend, rather than how much you currently earn.

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice.  Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.