As Americans' average life expectancy increases, many people are afraid of outliving their savings.

One solution that has gained popularity in recent years is what's known as "longevity insurance." Longevity insurance is designed to provide guaranteed income from the time you reach old age—usually around 85—to the time you die.

The thinking is that by age 85, your savings may be depleted. The appeal of longevity insurance is that it can allow you to remain independent as long as you desire.

Longevity insurance typically provides larger payouts the earlier you buy the policy. If you buy a $50,000 policy at age 50, you will receive significantly more annual income than you would if you bought the same policy at age 60. The insurance is available with various bells and whistles; for example, adding inflation insurance will ensure that your dollars won't have lost value decades from now.

My view on longevity insurance is that it may be right for certain people. Yes, there's a cost associated with it. But if that buys you peace of mind, it may be worth it. Still, I invite you to discuss longevity insurance with me before you pull the trigger.

It's important to understand that when you buy the insurance, you're betting that you will live past age 85. If you don't, the insurance company keeps your money—your heirs don't get any of it. What's more, the lump sum you invest in longevity insurance today won't be available until you reach old age. If you need it in an emergency, you're out of luck.

One alternative some people may be more comfortable with is setting aside a chunk of money in a separate account, investing it and then tapping it when your nest egg is running out.

Finally, it's important to be realistic about how much money you'll actually need in your old age. I believe as you get less active—less travel, less time on the golf course, and so on—you need less income. You may assume you need longevity insurance, when in fact you probably don't.

Longevity insurance is an interesting new option and may make sense for many people. Yet every person's situation is different; as with any investment or major financial decision, it's wise to look at all the variables before making a decision.

The rally that followed Donald Trump's election in November has cooled off—but that doesn't mean good investment opportunities have disappeared.

After the election, sectors like financials and energy took off, posting big gains for several months. But they've more recently reversed course. Energy is down nearly 8% over the past three months. Financials are off nearly 1%.

Part of the reason for the pullback is that the market has become skeptical of Trump's ability to turn his campaign promises into reality. Specifically, the struggle to pass healthcare legislation has cast doubt on whether economic stimulus legislation such as tax cuts, infrastructure spending and deregulation can be passed.

Such legislation would have put a charge into the earnings of financial and energy companies, and their stock prices rose in anticipation. But with Washington appearing as divided as ever--even under Republican control—many investors have taken their gains and cashed out.

As enthusiasm has faded for "Trump-trade" stocks in some sectors, investors have redirected their money to other opportunities.

Healthcare has risen about 5% over the past three months on renewed investor interest. Investors had shied away from the sector because of uncertainty arising from looming healthcare reform.

Now that a big shakeup isn't an immediate threat, the industry is seen as more stable. And because healthcare stocks didn't participate in the Trump rally, many are attractively priced.

Another emerging sector is technology. It's up nearly 9 points in the past three months after being largely left out of the Trump rally.

It's normal for market leadership to rotate from one sector to another as conditions change. The trick for investors is to find the best opportunities—at the best prices—as new sectors gain momentum. They're always a place to make money in the market.

Most people think their accountant should handle their tax return, and their financial advisor should handle their investing, and never the twain shall meet.

But the fact is that your financial advisor must see your tax return in order to provide you with the best investment advice. It's the reason that, although I'm primarily an investment advisor and planner, I personally help with many of my clients' tax returns each year.

Using the information on your taxes allows a good advisor to maximize your after-tax rate of investment return. And in the current environment of low bond yields and stock-market volatility, every bit of return you can squeeze out is especially valuable. Remember, taxes are always the biggest single drag on returns.

What do advisors look for in a tax return? For one thing, knowing a client's tax bracket allows an advisor to better manage selling decisions that lead to capital gains.

Your return also shows the taxes you're paying on the interest from your investments. Based on this information, your advisor may recommend tax-free munis or other ways to make your interest non-taxable. Munis have delivered low returns the past few years, but rising interest rates are now making them more attractive.

There are additional ways your tax information can be used to help maximize your investment returns. It can help your advisor decide how to allocate your investments among taxable, tax-deferred and tax free accounts, for instance.

But beyond investing, the information in your tax return can be used to improve your financial planning. For example, a list of dependents can help your advisor address child education and elderly parent concerns. A list of medical expenses can lead to advice on insurance coverage and tax-efficient ways to fund your medical spending.

Ultimately, your financial success, including investing and planning, requires an open line of communication with a trusted advisor. And sharing your tax returns is one of the best ways to make sure your advisor can serve you most effectively.


The stock market has been pushing higher and higher for eight years now, including a strong leg up following the presidential election. As a result, some investors feel that stocks are now too richly priced to buy.

But there is still good value in the market if you know where to look. Hint: Don’t necessarily look within the sectors that have soared. Broad market rallies usually leave behind certain sectors, and within those sectors can be found individual stocks with attractive prices and strong growth potential.

It’s a cliché, but the market regularly throws out the babies with the bathwater. And that presents opportunities for those willing to do the work and find long-term winners.

Take Target Corp. (TGT). A year ago, the retailer traded in the $80s. Today, it’s around $55 a share. It’s easy to see why investors would be turned off by Target based on short-term criteria. One of the biggest is that it recently fell short of its fourth-quarter earnings projections.

But bear in mind that when the market punishes securities based on a disappointing quarterly report, it overreacts and drives the price down too much. Smart value investors might look at a stock like Target and see that its falling price has created a high dividend yield—currently 4.35%.

More importantly, Target also has a high return on invested capital. Return on invested capital is a key longer-term measure of a company’s profitability—it illustrates how effective a company is at generating a profit from every dollar you invest.

At Target’s current price—which is as low as we’ve seen since the wake of its 2013 credit-card data breach—its stock is a value. To be clear, the point of this blog isn’t that you should run out and buy TGT shares. It’s that even in this richly priced market, there are quality value plays to be found.

As always, value investments require patience. Those that reward investors do so over time, not immediately. But such stocks often have strong dividend yields that help us to remain patient. Target’s yield is about twice that of the 10-year Treasury, for example, and is easily outpacing inflation. By the way, the company has posted 49 consecutive years of dividend increases, which is another market of a strong organization.

The takeaway: When the market is up, certain stocks will be left behind. Those that are unfairly left behind by the market’s short-sightedness can prove to be long-term winners. 

We are well into tax season, and that presents a good opportunity not just to look at your earnings and tax liabilities, but to re-evaluate whether you are on track to retire and achieve other long-term goals.

Unfortunately, few individuals take an in-depth look at their complete financia picture every year. And most financial advisors only do a simple portfolio review. But I believe being prepared for retirement merits the extra effort.

Investors should sit down around now and take a close look at how much money they're making. They also need to understand how much of their income—after taxes, retirement savings, and debts such as home loans—they are actually using.

Remember that in retirement, you will likely not have the same expenses you currently do. Retirement savings won't be necessary, and you'll likely have your mortgage paid off. You'll then need to figure out how much income you'll need in retirement, adding 3% annual inflation to protect your buying power.

Here's an example. Let's take a 45-year-old married couple earning $150,000 a year.
After tax deductions and exemptions, they pay around $30,000 in taxes every year, bringing them to $120,000 of spendable income. Will they need the same amount of annual income once they retire at age 65? Not likely. For starters, their $2,500 monthly mortgage payment, including taxes and insurance, will just become $500 in taxes. And they'll no longer be contributing $10,000 a year for retirement savings.

That brings their retirement income needs to $85,000 a year; and 20 years from now, that will be $170,000 after inflation. Social Security will provide a big chunk of that: Let's say the wife gets $24,000 a year, and the husband gets $36,000. The gap is now down to $110,000.

Since the couple don't have corporate pensions, they'll need to generate $110,000 a year from their retirement savings. They will need $2.2 million to throw off that amount of annual income over the course of their retirement.

Based on this information, I can tell clients whether they're stashing away enough for retirement, or need to be saving more. And I can calculate the rate of return that they'll need to grow that savings to $2.2 million.

If they're ahead on savings, they can breathe easy. If they're behind, they know what they have to do. Either way, the clients will end up with peace of mind that they'll have the income they need. Remember, your savings rate is the part of the retirement equation over which you have the most control. You can't force the markets to give you a certain return, but you can definitely discipline yourself to contribute the right amount to your savings.

Bear in mind that this annual check-in can and should cover changes in your personal life and career. Maybe you've changed jobs, or remarried. Maybe one spouse has retired. Are you living larger these days? Or more modestly? All of that helps determine the amount of retirement income you'll need, and sets the stage for any needed adjustments you can make right away.

If you're reading this and feeling like you want more confidence about being on track for your retirement, feel free give me a call, and I'll be happy to review your situation.