MOKAN Wealth Management

Overland Park, KS

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September Is Life Insurance Awareness Month

Life insurance is one of those financial products that we put off thinking about. No one wants to talk about the eventuality of them passing away, and we especially don’t like to talk about what would happen if we passed away suddenly.

But life insurance is an important part of any financial and protection strategy. For National Life Insurance Awareness Month, we wanted to share some helpful information about life insurance, including what it is, its different types, and how it can help protect your family in case something happens.

What is Life Insurance?

According to Life Happens, a nonprofit dedicated to giving users unbiased insurance information, life insurance is an insurance policy that provides cash to your family or loved ones after your death. This “death benefit” helps replace your income and supports your loved ones also in non-monetary ways. Your family can use this payment for funeral expenses, mortgage payments, college tuition, and other bills.  1

The Different Types of Life Insurance

There are two main types of life insurance: term life insurance and permanent life insurance. Let’s look at the differences.

Term Life Insurance

Term life insurance policies cover the insured for a specific period, usually between 5 and 30 years, depending on your policy. Term policies pay a death benefit only if the insured person dies during the coverage term. These policies don’t carry any cash value, but the premiums are generally lower than permanent life insurance premiums. Furthermore, term life insurance policies may offer a greater level of flexibility because you can amend your policy as your needs change.

Permanent Life Insurance

Permanent life insurance policies cover the holder for their entire life. Some of these policies also carry a savings or investment component. According to US News, this cash value “grows tax-deferred over time and may be withdrawn or borrowed against while you’re still alive.” But remember that withdrawing these funds will decrease the policy’s death benefit unless the funds are repaid.  2

There are a few permanent life insurance options, including whole life (sometimes called “traditional” life insurance) and universal life. Each of these policies has its pros and cons.

When considering which life insurance policy is right for you, think about the following factors:

  • Coverage duration
  • Coverage amount
  • Premiums
  • Flexibility
  • Cash Value

Do You Need Life Insurance?

For most people, the answer to this question is “yes.” Life insurance can help protect the people you care about if something happens to you. This could include a spouse, children, disabled family members, aging parents, or any other dependents. There are a variety of coverage limits, and depending on your household expenses, you may not have to purchase an enormous life insurance policy. Even modest protection could help your family pay the bills and make arrangements.

A simple way to calculate how much life insurance you need is to consider all your immediate, ongoing, and future expenses, as well as the financial resources that your loved ones already have. Then, subtract your financial resources from the anticipated expenses to obtain the difference. Forbes lays out the DIME method: debt, income, mortgage, and education.  3

Ready to review (or begin) your life insurance policy for National Life Insurance Awareness Month? There are plenty of websites where you can sign up for a policy, or you can talk to a financial professional for help.

  1. https://lifehappens.org/life-insurance-101/
  2. https://www.usnews.com/insurance/life-insurance/term-vs-permanent
  3. https://www.forbes.com/advisor/life-insurance/how-much-life-insurance-do-you-really-need

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Investment Strategy: Financial Market Basics

When it comes to investing, the common terminology says that you’re investing in “the markets” or Wall Street. But what do these terms mean, and how are markets defined?

Simply put, financial markets are where traders and investors buy and sell assets. Markets can be used as a way for businesses to reduce risk and raise capital. Through markets, investors can buy into these companies in a way that hopefully makes money. The benefits of financial markets in a capitalist economy are numerous, from bringing confidence to the economy and helping to fund entrepreneurial ventures to providing liquidity to businesses. 1,2

Several types of financial markets can be invested in, including but not limited to stocks, bonds, derivatives, and commodities. We review and explain the basics of these four types of financial markets below.

The Stock Market

The stock market is a financial market where companies can go to raise capital to expand. Investors can buy the shares of a company—called stocks—through a broker-dealer. Stocks may be traded on listed exchanges, such as the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (Nasdaq) stock market. Indexes such as the Standard and Poor’s 500 Index and the Dow Jones tracks the averages of a group of companies that are publicly traded.  1,2

Mutual funds allow you to buy a bunch of stocks at once without having to pick them out individually. You may have seen mutual funds as an option for investing in your 401(k), for example.  1,2

The Bond Market

Bonds are used when companies need to raise a large amount of money. Unlike stocks, bonds are a security in which an investor loans money for a defined period at a preestablished interest rate. Furthermore, unlike stocks, in which there is no guarantee of financial gain, bonds are more like a loan agreement. The bond market sells securities, such as notes and bills issued by the United States Treasury.  1,2

Derivatives

Derivatives entail a more complicated financial market. Essentially, a derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (e.g., a security) or set of assets (e.g., an index). Derivatives are secondary securities whose value is solely derived from the value of the primary security that they are linked to. In and of itself, a derivative is worthless. Rather than trading stocks directly, a derivatives market trades in futures and options contracts, as well as other advanced financial products, which only have as much value as the primary security.  1,2

The Commodities Market

Commodities markets involve physical goods that are bought, sold, and traded. Whereas stocks and bonds are more akin to financial contracts, commodities markets deal in physical goods. There are four main types of commodities markets: energy, metals, agricultural products, and livestock.  1,2

When it comes to investing, there are many options to choose from, which can seem intimidating. While working closely with a financial advisor can help you decide which investments are right for you, it’s also important to understand the basic concepts of your investments. Don’t be afraid to ask your financial advisor about your investments. An intelligent investor is worth their weight in gold.

  1. https://www.thebalance.com/an-introduction-to-the-financial-markets-3306233
  2. https://www.investopedia.com/terms/f/financial-market.asp

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Social Security and Your Spouse

Many people know that they’re eligible for Social Security benefits, but did you know that there’s also a provision to provide for spouses, regardless of whether they’ve contributed to the program? You might also be eligible to claim spousal benefits if you’re widowed and, in some cases, even if you’re divorced.

You may be surprised to learn that if you apply for Social Security when you are married, you automatically apply for spousal benefits. This was added to recognize the many spouses who were stay-at-home parents and either never entered the workforce or didn’t enter the workforce for long enough to qualify for benefits of their own. ¹ ²

How does claiming spousal benefits work? For spouses to receive benefits, they must:

  1. Be at least 62-years-old or older or…
  2. Caring for a child 16-years-old or younger, or for a child receiving Social Security disability benefits. If you’re in this situation, Social Security benefits are not reduced.
  3. Your husband or wife must have also claimed Social Security benefits.
  4. You and your spouse must have been married for at least one year. ¹ ²

Spousal benefits are capped at 50% of the benefits your spouse would have received at their full retirement age. Moreover, if your spouse claims their benefits before retirement age, your benefits will also be reduced.1,2

It’s important to note that if your spouse dies, you should apply for survivor benefits and not spousal benefits. For people who are widowed, if your spouse’s benefits are higher than yours, you might be eligible to receive their full benefit amount instead of spousal benefits. However, if you remarry, you won’t be eligible to receive your late spouse’s Social Security benefits. 3,4

There are also certain conditions where you can receive spousal benefits even if you’re divorced. The following conditions must be met:

  • You and your ex-spouse must have been married for at least 10 years.
  • You must be divorced from your ex-spouse for at least two consecutive years.
  • You must be currently unmarried.
  • Your ex-spouse must be entitled to Social Security retirement or disability benefits.
  • The benefits you would have received from your work record must be less than the spousal benefits. 3,4

Spouses enjoy a lot of flexibility thanks to Social Security spousal benefits. As you near retirement, you’ll want to explore your options on how best to take advantage of the program and maximize your benefits.

  1. https://www.cnbc.com/2021/09/02/how-claiming-social-security-early-affects-your-spousal-benefits.html
  2. https://www.bankrate.com/retirement/social-security-spousal-benefits/
  3. https://www.marketwatch.com/story/how-do-i-claim-social-security-from-my-exs-earnings-11630534142
  4. https://www.investopedia.com/ask/answers/110614/how-does-my-spousal-social-security-benefit-work.asp

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Social Security and Retirement Earnings

The fact that you’ve decided to retire doesn’t necessarily mean you want to stop working. Retirement is a great time to explore alternative career options, try your hand at a new career, or work part-time to add a little extra cash to your bottom line every month.

However, continuing to work while collecting social security can affect your monthly benefits if you claim these before your full retirement age. Your full retirement age depends on the year you were born, so make sure you’re aware of this criterion before you claim benefits. ¹

The first and most important thing to know is that once you reach full retirement age, or age 70 (the maximum age at which you can continue to accrue benefits), there is no limit to how much you can earn. Once you’ve reached full retirement age, you are fully vested in the social security system, so your
benefits won’t be reduced. ²

However, if you continue working after you’ve retired before your full retirement age and are claiming social security, your benefits could be affected.

  • Your Social Security benefits might be temporarily reduced. If you opt to work while receiving social security before your full retirement age, you will only be able to receive a certain level of income before your bene t is temporarily reduced. In 2022, the social security earnings limit is $1,630 per month, or $19,560 per year, for someone who has not reached full retirement age. If you earn more than this amount, you can expect to have $1 withheld from your social security benefit for every $2 earned above the limit.¹ ²
  • The Social Security earnings limit depends on your age. Your full retirement age is based on the year you were born. The full retirement age for anyone born between 1943 and 1954 is 66 years old. Individuals born in 1960 or later have a full retirement age of 67.2,3
  • You might be eligible for a higher Social Security bene t later. The limit mentioned above changes the year you reach full retirement age. During this year, you lose only $1 of benefits for each $3 you earn above the limit until the month you reach full retirement age. Furthermore, the earnings limit goes up the year you reach this age. For 2022, the earnings limit for the year of full retirement age is $51,860. 4

Your best bet might be to continue to delay taking social security benefits until your full retirement age or later. Talk with your financial advisor to review your situation and determine when claiming social security is right for you and your family.

  1. https://www.cnbc.com/select/social-security-retirement-earnings-test-how-it-works/
  2. https://money.usnews.com/money/retirement/social-security/articles/what-happens-if-you-work-while-receiving-social-security
  3. https://www.ssa.gov/pubs/EN-05-10035.pdf
  4. https://www.forbes.com/sites/bobcarlson/2022/01/24/heres-how-working-after-62-can-change-your-social-security-benefits/?sh=5c586eff679d

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Social Security: Choosing When to Claim

One of the most critical decisions you can make regarding your retirement is when you choose to claim Social Security. Deciding when to claim Social Security can make a difference in your monthly bottom line.

Before You Retire

Your monthly Social Security Benefit amount is calculated based on the number of years you have worked and the taxes you have paid into the Social Security Benefits program. Social Security counts the years you have paid taxes as “credits” for years that you have worked. For example, if you were born in 1929 or afterward, you must have 40 credits to receive Social Security benefits when you retire. This is equal to about 10 years of work.1

Your benefit amount is also calculated by the number of credits you have earned during your working years. Fortunately, the Social Security Administration has made it easier for you to verify your expected benefits by setting up an online account. It is worth double-checking your earnings to catch errors, if any, and factor in your expected benefits as you strategize for retirement.1

What Age Should You Claim?

There are several ages that should be considered when deciding when to claim Social Security.

  • Early Retirement Age: The earliest age you can claim Social Security benefits is 62. However, if you claim Social Security early, you will be penalized for not waiting until the full retirement age.1,2
  • Full Retirement Age: This is the age when you are eligible to receive the full amount of your Social Security benefits. The full retirement age is calculated based on the year you were born. For example, for those born between 1943 and 1954, the full retirement age was 66. If you were born between 1955 and 1960, the full retirement age goes up to 67.1,2
  • Delayed Retirement Age: You can also delay the claim of your retirement benefits until age 70. If you wait until then, you will continue earning benefits. However, benefits stop accruing at age 70, so there may not be any reason to delay the claim of benefits past age 70.1,2

Deciding when to claim Social Security benefits is an important decision to make as you approach your retirement age. Talk with your financial advisor to make sure that you work together to decide the best time for you to apply for Social Security.

  1. https://www.ssa.gov/benefits/retirement/learn.html
  2. https://www.cnbc.com/select/when-should-you-collect-social-security/

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Retirement Strategy: How Much Should I Save?

“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 is a process. It shouldn’t be a number that you pull out of thin air.

The process 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 also may project what your income would look like each year in 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.

You may see retirement as an extension of the present rather than the future.

This is only natural, as we all live in the present, but the future will arrive. The costs you have to shoulder later in retirement may exceed those at the start of retirement. As you may be retired for 20 or 30 years, it is wise to take a long-term view of things.

You may have a health insurance gap.

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 make ends meet?

Age may catch up to you sooner rather than later.

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.

You could be alone one day.

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?

These are some of the blind spots that can surprise us in retirement.

They 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.

Your workplace retirement account can play a critical role in your overall retirement strategy. However, some people have gone further with such accounts than others, especially recently.

Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Aside from these blunders, some classic financial missteps plague retirees.

Calling them “mistakes” may be a bit harsh, as not all of them represent errors in judgment. However, whether they result from ignorance or fate, we need to be aware of them as we prepare for and enter retirement.

Timing Social Security.

As Social Security benefits rise about 8% for every year you delay receiving them, 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.

Managing medical bills.

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.

Underestimating longevity.

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.

Withdrawing strategies.

You may have heard of the “4% rule,” a guideline stating that you should take out only about 4% of your retirement savings annually. 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. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly.

Talking About Taxes.

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 its “preferred domain,” which means the taxable or tax-advantaged account that is most appropriate for it as you pursue a better after tax return for your entire portfolio.

Retiring with debts.

Some find it harder to preserve (or accumulate) wealth when you are handing portions of it to creditors.

Putting college costs before retirement costs.

There is no “financial aid” program for retirement. There are no “retirement loans.” Your children have their whole financial lives ahead of them.

Retiring with no investment strategy.

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

These are some of the classic retirement mistakes. To help you avoid them, take some time to review and refine your retirement strategy with the help of a trusted financial professional.

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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Overland Park, KS 66223

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Retire Ready Media

MOKAN Wealth Management is an Investment Advisor registered with the State of Kansas. This communication is not intended as an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy, or completeness of, any description of securities, markets, or developments mentioned. Please contact us at (913) 257-3991 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on the SEC’s website at www.adviserinfo.sec.gov.

Kyle Hammerschmidt

Kyle Hammerschmidt

Founder/Investment Advisor Representative

Professional Focus

Since 2014, Kyle has helped pre-retirees reduce taxes, invest smarter, and retire on their terms. As MOKAN’s founder and principal advisor, he is our clients’ go-to partner for tax-efficient retirement planning and investment management. Whether he’s presenting to a room full of pre-retirees at a retirement workshop or visiting with clients one-on-one, his objective is to help others pursue their retirement goals in a way that supports their best interests.

Many of his clients previously worked with (what Kyle calls) “disguised financial advisors” who offered them a stack of statements, a diversified pie chart, hidden and confusing fee schedules—and no real plan. Kyle’s goal is to provide massive value to pre-retirees through comprehensive, tax-efficient retirement planning and investment management.

WHAT KYLE DOES DIFFERENTLY

Kyle believes the financial industry is structurally flawed, and consequently, pre-retirees are not properly educated or prepared for their transition into retirement. That’s why he takes a “K.I.S.S.” approach to planning—he makes everything as simple and straightforward as possible—meaning no surprises, no hidden fees, and no fancy jargon or investment terms.

PUBLICATIONS

Kyle has a distinct passion for retirement education, and from the start of his career, his objective has been to teach pre-retirees how to be proactive and take charge of their financial futures. In 2017, he founded Retire Ready Academy, an educational program that teaches pre-retirees and retirees about tax-efficient retirement planning, Social Security, and investment management. In 2020, he published his book, Retire Ready, and today he contributes regularly to Kiplinger and Rethinking 65.

THE KYLE NINE

  1. Kyle lives in Overland Park with his beautiful (and incredibly patient) wife Amy and their three young children, Jovee, Jace, and Jordyn.
  2. Kyle and Amy met while attending K-State but didn’t start dating until six years later when Amy was about to leave the country for two years.
  3. Kyle’s dog Murphy once ate 24 chocolate-chip cookies in one sitting—and lived to tell the tale!
  4. Kyle and Amy enjoy staying active and going to the gym together whenever possible. (Their biggest incentive? The gym’s free two-hour daycare.)
  5. When thinking of a name for his first child, Kyle remembered a unique name from the Christmas movie, Elf—and now Jovee Hammerschmidt is the new head of the household.
  6. Kyle has an incurable sweet tooth. He will never turn down a fresh batch of cookies or a trip to get ice cream.
  7. Kyle is an avid Dallas Cowboys fan and tries to attend the Thanksgiving Day game every year. When he was 12, he had heart surgery in a Cowboys-sponsored hospital and got to visit the players.
  8. His favorite date-night spots are Bristol and J. Gilbert’s.
  9. Kyle’s favorite place in the world is his home.
Megan Harris

Megan Harris

Office Manager

Professional

Megan joined MOKAN Wealth Management as the Office Manager in 2018.
She is responsible for working on all of the back-end aspects of the client experience, maintaining an efficient and organized office so that Kyle is able to focus on client relationships and providing our clients with the best service possible! She will be the first friendly face you see when you visit our office!

Megan graduated from Ottawa University, earning a BS in Human and Social Services, minoring in Marketing and going on to pursue her MBA in Marketing. Prior to working with MOKAN Wealth Management, she spent time working for a local school district and also worked for some time in the wellness/fitness industry.

Personal

Some of Megan’s community involvement includes volunteering with the YMCA to assist in raising funds for their Annual Mission Campaign and serving for a few years on the committee for the Young Friends of Olathe Health Charitable Foundation.

Megan grew up on a farm in the small town of Spring Hill, KS. She just recently moved to the Overland Park area. She has 3 children close by and a granddaughter who just celebrated her 1st birthday! In her spare time, she loves being outdoors, yoga, fitness, gardening, the arts, travel, playing with her 2 dogs- Kona and Luna, and spending time with friends and family!

Kolin Hayes

Client Services Advisor & Lead Paraplanner

Professional

Kolin is a graduate of the University of Kansas with a degree in Business Management. Prior to working at MOKAN Wealth Management, he worked in financial education. He is passionate about helping people with their money before and during retirement.

Personal

Kolin lives in Prairie Village with his fiancee Liz, and their two dogs, Aggie and Georgia. He was a long snapper at The University of Kansas, and enjoys running and watching sports. During the summer, he enjoys spending time at the Lake of the Ozarks.

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Derek

Derek Prusa, CFA, CFP®

Derek

Benjamin Webster, CFP®

Derek

Andrew VanDerSchaaf, CPA

Thinking About Retirement

Meet Mark and Susan

How We Helped

  • Retirement Planning

  • Investment Management

  • Employer benefit

  • Tax Planning

  • Social Security Maximization

  • Income Planning

This is a hypothetical example provided for illustrative purposes only; it does not represent a real-life scenario and should not be construed as advice designed to meet the particular needs of an individual's situation.

Enjoying Retirement

Meet Bill and Martha

How We Helped

  • Retirement Planning

  • Investment Management

  • Tax Planning

  • Legacy Planning

  • Income Planning

This is a hypothetical example provided for illustrative purposes only; it does not represent a real-life scenario and should not be construed as advice designed to meet the particular needs of an individual's situation.

Work Optional

Meet Carrie

How We Helped

  • Retirement Planning

  • Investment Management

  • Tax Planning

  • Legacy Planning

  • Income Planning

This is a hypothetical example provided for illustrative purposes only; it does not represent a real-life scenario and should not be construed as advice designed to meet the particular needs of an individual's situation.

Disclaimer

MOKAN Wealth Management is a registered investment adviser with the state of Kansas and Missouri, and may only transact business with residents of those states, or residents of other states where otherwise legally permitted subject to exemption or exclusion from registration requirements. Registration with the United States Securities and Exchange Commission or any state securities authority does not imply a certain level of skill or training. This communication is not intended as an offer or solicitation to buy, hold, or sell any financial instrument or investment advisory services.