Searching for income in a low yield world


By Allen Costellow - Guest columnist



If you’re looking for a few minutes of entertainment, call three banks and ask them what their current yield is on certificates of deposit. I checked online today and found the following yields: 1 year 1.10%, 3 year 1.40% and 5 year 2.15%. To put this in perspective a couple retiring to day with $100,000 in savings could expect to receive approximately $2,150 on the 5 year example above. This coupled with the average social security payout (with a 50% spousal benefit included) puts you slightly above the HHS poverty level and out of reach of any federal assistance. On the other hand a couple retiring with a one million dollar account would receive approximately $21,500 per year for the use of their money for the five years. That coupled with the same social security averages shown above would provide them with an annual income of $42,897 of which $32,198 is considered “provisional income” and would require that 50% of their social security income be included in their income calculations for tax purposes. So exactly what is a person to do?

In decades past the game plan was fairly straight forward. You worked for 40 years and your employer paid you a lifetime pension and provided healthcare to pay what Medicare didn’t. That pension coupled with social security and a consistent return on your personal savings allowed most people to retire and live comfortably because debt levels were low. Today, according to the bureau of labor statistics only 22% of retirees receive a company sponsored pension, and according to the social security administration in 2010 the average “near retiree” still had over $100,000 in housing debt and over $18,000 in consumer debt. Now factor in inflation. According to www.usinflationcalculator.com an item purchased in 1913 for $20.00 would cost $480.41 in 2015. Even at 2.5% inflation, your purchasing power will be cut in half during 20-25 years in retirement.

Is there one perfect investment that will meet these and your other financial concerns? No, there is not. But there is a way you can increase your chances exponentially: Increase your level of financial education! I don’t mean go back to school or get your MBA. I mean learn how money works, and use what is available to maximize your finances according to your personal risk tolerance and lifestyle. The challenge of accumulating assets requires a different skill set than making those assets last for a lifetime. If you are in or near retirement, it is essential that you either develop these new skill sets or find someone who can help.

Check back next time, as we will be discussing strategies for making social security elections. If you are married, there are literally hundreds of potentialities.

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By Allen Costellow

Guest columnist

To contact Allen Costellow, Investment Advisor/Registered Representative, call 1-888-926-9884. Securities offered through Center Street Securities, Inc. (CSS), a registered Broker-Dealer & member FINRA & SIPC. Investment Advisory Services offered through Center Street Advisors, Inc. (CSA), an SEC Registered Investment Advisor. Wealth Concepts Group, CSA & CSS are independent of one another

To contact Allen Costellow, Investment Advisor/Registered Representative, call 1-888-926-9884. Securities offered through Center Street Securities, Inc. (CSS), a registered Broker-Dealer & member FINRA & SIPC. Investment Advisory Services offered through Center Street Advisors, Inc. (CSA), an SEC Registered Investment Advisor. Wealth Concepts Group, CSA & CSS are independent of one another

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