2019 Third Quarter Newsletter

NEWSLETTERWith Knowledge Comes Condence
THIRD QUARTER 2019

Upcoming Workshop: Foundations of Financial Planning

Life is busy, so it can be hard to know
if you’re doing the right things in your
financial life.

Perhaps you are juggling saving for college and saving for
retirement. Or maybe you want to make sure your family will
be financially sound should you die unexpectedly. For others,
investing is intimidating. Financial planning includes things like
budgeting, getting out of debt, investing, saving for retirement,
and making sure you have appropriate insurance coverage.

If you want to learn more about financial planning and the keys
to building a sound financial future, our Foundations of Financial
Planning workshop is for you. Attendees will walk away with
financial tools and action items to start—or continue—down the
road to financial success.

Knowledge is a strong and valuable asset. We want to help
educate you about financial planning, so please know this
workshop is solely educational—we do not sell any products.
Complimentary refreshments will be served. There is no cost for
this event, but space is limited.

WORKSHOP DETAILS: WHO: Anyone! Whether you’re a client of the firm or
not, we encourage you to attend and bring a friend.
RSVP: By Wednesday, October 16 by emailing
[email protected], calling WHEN: Wednesday, October 23, 6-7:30 p.m.
317-872-5090, or via Eventbrite.
WHERE: The Pyramids, Pyramid Three,
COST: None, but space is limited. Lower Level, Conference Room A & B
(3500 DePauw Blvd, Indianapolis, IN 46268)

Worley Erhart-Graves Financial Advisors is a Registered Investment Advisor. Registration as an investment advisor is not an endorsement of the firm by
securities regulators and does not mean the advisor has attained a particular level of skill or ability. All expressions of opinion reflect the judgment of
the authors as of the date of publication and should not be construed as personalized investment advice. Different types of investments involve varying
degrees of risk, and there can be no assurance that any investment will either be suitable or profitable for a client’s portfolio. Worley Erhart-Graves Financial
Advisors is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Worley Erhart-Graves Financial Advisors, Inc., is affiliated with Smitson Erhart-Graves Tax Advisors, LLC, through common control and ownership. Smitson
Erhart-Graves Tax Advisors provides accounting and tax preparation services. If you require such services, we may recommend you use Smitson Erhart-
Graves Tax Advisors, although you are under no obligation to do so. Fees for financial planning and investment advisory services are separate and distinct
from the fees Smitson Erhart-Graves Tax Advisors charges for their services.

Show Me The Money!

Juli Erhart-Graves, CFP®

I love to get a deal on things I buy, so I shop with coupons, wait age 62 for a discounted amount or as late as age 70 for a much
for sales, and rack up rewards at stores I frequent. It may sound higher benefit.
strange, but some people can get a deal when claiming Social
Security by using the Restricted Application strategy! Those that are married, divorced, or widowed may be eligible
for a benefit based on the earnings record of a spouse, ex-
In general, if you have paid into Social Security for the required spouse or deceased spouse, known as a spousal benefit. This
amount of time, you earn a benefit based on your annual is where the Restricted Application strategy comes in for those
earnings. You can start your full Social Security retirement reaching Full Retirement Age in 2019 and born before January
benefit at your Full Retirement Age (age 66 to 67 for most of 2, 1954. This strategy lets an applicant restrict his/her claim to
us). You also have the option to start your benefit as early as a spousal benefit only. When claiming the spousal benefit only,
your own benefit continues to grow at 8% per year until age
70. This means money now and more money later!

Keep in mind, for a claimant to use this strategy, the spouse
must have started their Social Security benefit. In addition,
widows and widowers may have additional claiming and
switching options.

There’s no surefire way to know you are going to come out
ahead no matter how and when you claim Social Security, but
for those that meet the Restricted Application requirements,
this can be a great option.

Annuitizing Can Be a Longevity Hedge

Gail Gill, CFP®

How long do you plan to live? Is that number slowly increasing Think of it this way: A lump sum of money is like a cloud. If that
every year with medical breakthroughs, healthy living, and cloud creates a constant sprinkle of rain for the rest of your life,
staying fit? In today’s era, more people are living longer than then it has been annuitized.
ever expected. The question is: “Did you save enough to
support 30+ years in retirement?” When you turn the spigot on to receive insurance-backed equal
payments for the rest of your life (i.e., when you have annuitized),
Steve Vernon, a retired Watson Wyatt actuary and current the insurance company is giving you back your money. Once you
fellow at the Stanford Center on Longevity, said, “Many outlive your initial deposit, then you start receiving the insurance
have saved enough for a 1960’s retirement but not the ‘long company’s money. Thus, the longevity hedge.
retirement’ likely to emerge in the 21st century.”
When initially building the lump sum of money, most people
The looming thought of running out of money in your 80s has do so in a brokerage account, IRA, or 401k account—but not
some people turning to “annuitizing” as a longevity hedge. an annuity. This makes sense because most annuities have high
administrative fees and handcuffs that are often referred to as
Annuitizing happens when you take a lump sum of money surrender fees. Surrender fees (usually 7% or less) are charged if
(could be from a savings account, brokerage account, IRA, you need your money back earlier than the annuity allows. The
401k, or even an annuity) and trade it in for a lifetime of administrative fees run about 3%. Investing your money
insurance-backed equal payments.
CONTINUED ON NEXT PAGE

Clear Steering

Pam Smitson, CPA, CGMA

For many families, summer break can be just as busy as Katie did very well on her drive that day. It made me realize how a
the school year. This summer was Girl Scout activities, 4-H word of confidence can help produce success. This holds true with
projects, ballet, and Purdue University Teen Ambassador my tax service—with knowledge comes confidence. Clients trust
engagements. Oh, and my daughter Katie turned 15 years old! that I have read the “manual” and will give solid advice with any tax
With that milestone birthday came the learner’s permit and situation they may encounter.
driver’s education classes.
Taking the Gamble
Katie requested a driver’s manual for her birthday. I didn’t
have the heart to tell her it was free. Nonetheless, that was Bonnie Struck, CMFC®
her gift, all wrapped up with a bow! She diligently studied the
manual, and before her classes began in July, she passed her Two years ago, my friend was awarded a large
written exam and received her learner’s permit. Then came divorce settlement and, at age 60, was in
the behind-the-wheel instruction. Her first day behind the the enviable position to retire the following year. He parked his
wheel, she said, “This is much more challenging than I thought settlement in a cash account because he does not trust the stock
it would be. Adults make it look so easy.” It was good to know market. In his words, “it is a form of gambling.”
that she wasn’t overly confident.
He wanted to know how conservative or aggressive he needed
My older daughter, having gone through this process with me, to be with his investments. I am careful not to overestimate
advised Katie not to let me in the vehicle. That was the best my familiarity of a friend’s financial situation, but his statement
advice she has received so far. But the day came when she indicated to me his knowledge of investments was very limited,
had to take the car on the Muncie bypass to go to her driving and that was causing him great anxiety. With his impending
test. She was terrified—and so was I! I refrained from grabbing retirement, he assumed that he would only need income, thus
the car door, slamming on the invisible brake, and limited my eliminating the need to invest in stocks.
speech (at least the volume) to keep her calm.
This experience impressed upon me the need to educate clients
As I dropped her off, she asked me to follow her on the on the importance of owning diversified stocks (mutual funds and
drive. I could tell that she was apprehensive. As difficult as it ETFs) in most portfolio designs.
was, and as any good mother would do, I told her that I had
complete confidence in her driving skills. As I drove away Retiring at 60 is exciting but can come with some challenges.
with tears flowing, I saw her chin go up and shoulders back Income is essential, but with at least 25 years to go, you will need
as she walked to the instructor’s car radiating confidence. growth. Cash and bonds are not growth investments; they provide
income and assist in weathering volatile market movement. Stocks
CONTINUED FROM PREVIOUS PAGE provide growth, but can also provide income. In retirement, the
first inclination is to remove stocks from your portfolio, when it
at a brokerage firm such as Schwab, Fidelity, or Vanguard is may only require shifting some of your growth stocks to value
usually less than 1%. Since it takes 30-40 years to build a nice (dividend-paying) stocks. This provides income and may reduce
retirement fund, the lower expense translates to huge savings some of your portfolio volatility.
after being compounded for many years.
Later in retirement, you may lower your stock exposure
If you choose to receive insurance-backed equal payments incrementally. However, determining the acceptable amount of
for life, make an appointment with an immediate-annuity growth and value stocks, as well as domestic and international
representative to learn all the details about the annuity. Then stocks, in a portfolio is predicated on the investor’s income needs,
consider meeting with a fee-only financial planner for a non- risk tolerance, and time horizon. If your portfolio is causing you too
biased second opinion. much stress, it may be time to re-evaluate your objectives.

STANDARD PRESORT
US POSTAGE
PAID

INDIANAPOLIS, IN
PERMIT NO. 937

3500 DePauw Blvd. | Suite 1035
Pyramid One, Third Floor
Indianapolis, IN 46268

317.872.5090 Phone
855.872.5090 Toll Free
317.872.5095 Fax

wefinancialadvisors.com

compassion inspire time Maya Angelou said it best: “If you get, give. If you learn, teach.”
GET INVOLVED service Community involvement is a powerful way to bring about positive,
measurable change to the communities in which we live and
generosity operate. Worley Erhart-Graves has a busy fall season ahead, as we are
communityGIVEunite PURPOSE sponsoring several upcoming community activities. On September 28,
C A R E make a difference you will find us at the Results Tent of the Indy Women’s Half Marathon,
kindness ALTRUISM where we will be passing out race times to the 5k and half marathon
loving participants. We will also be at the finish line after the race, handing
TEAM out awards to the category winners.
WORK
vUisNionITEINSPNIROWE Then, on to helping fight psoriasis and psoriatic arthritis by sponsoring
attitude connect the National Psoriasis Foundation (NPF) bingo event on Thursday,
give SHARE October 10. The NPF serves 2.1 million people annually through its
patient and professional health education and advocacy initiatives and
time GET INVOLVED has funded $14 million in research grants and fellowships.

If you have been a client for years, you know the ladies at Worley
Erhart-Graves love their pets! That is why we are sponsoring the
Spay-Neuter Services of Indiana Haunted Hair Ball on Saturday,
October 26 at the Rathskeller. This organization reduced the number
of animals entering shelters by performing 15,284 spay/neuter
surgeries in 2018 alone.

We hope to see you at one or all of these events! Join us in helping
our community.