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Special Coverage Wealth Management

Living the Dream

By Barbara Trombley, CPA

Do you dream of retiring early? Do you picture yourself in sunny Florida at your vacation home during the winter and heading back to temperate New England for the summer? Playing golf, lying on the beach, enjoying grandchildren, and not adhering to a corporate work schedule — this is the dream of many, but is it a financial possibility? What are the pitfalls of an early retirement, and what can you do now to achieve your dream?

At the heart of the dream is financial independence. This means not relying on employment to fund your current lifestyle. Retiring in your 50s or at age 60 means that you cannot draw Social Security, and you need to figure out a healthcare plan. Many people today do not have access to pensions like the generation before us. So that means investing early and wisely is paramount to building the wealth needed to achieve your retirement dreams. Also, if you retire before age 59½, you need an investment account outside of your retirement plan to avoid a 10% penalty on withdrawals.

The most logical place to look for investments is your work retirement plan. Are you fully funding each year? At age 50, an employee can contribute $30,500 in 2024. That includes the catch-up contribution of $7,500. This may be the easiest place to invest as your funds are automatically withdrawn from your paycheck.

After your retirement plan, you can and should have a brokerage account or investment account with a financial advisor. These accounts come with many names, like individual, joint, non-qualified, etc., and send you a 1099 each year for your taxes. Many people are not aware of how easy it is to invest outside of your work plan. Investing in a well-managed portfolio, over time, will greatly increase your wealth.

“Many people today do not have access to pensions like the generation before us. So that means investing early and wisely is paramount to building the wealth needed to achieve your retirement dreams.”

Having a plan to withdraw from your portfolio is integral to a successful early retirement. Life expectancy is increasing, and inflation and market volatility may always impact your financial life. The old myth of withdrawing 4% of your portfolio and having it last for your lifetime may not work if you begin the withdrawals in your 50s.

Using a conservative rate of withdrawal and adjusting it for market volatility would be prudent. This means that a large nest egg may be needed to achieve your dream. Also, you may consider a type of insurance product called an annuity. At its core, an annuity provides a series of payments for a premium that you pay. There are many different types of annuities, so do your homework and understand the risks. Annuities can be valuable for providing a lifetime income stream that you may need to fund retirement.

When to start Social Security may be one of the most important decisions that a retiree can make. Yes, it adds a stream of income that will take the stress off retirement withdrawals, but taking it too early can be detrimental to a financially sound retirement. Social Security benefits are available at age 62, but they are reduced by approximately 32% of the full retirement-age benefit amount. Conversely, every year that a retiree waits after age 67, retirement benefits are increased 8% per year. Social Security planning should be approached with great care.

Perhaps the biggest challenge to an early retirement is finding a healthcare plan. Medicare does not begin until age 65. What do you do before then? Many early retirees go to the Health Insurance Marketplace, also known as the Affordable Care Act (ACA) marketplace. You can compare plans and see if you qualify for subsidies based on your income. Your income is what is shown on your tax return, so having an investment account outside of your work retirement plan can be advantageous when withdrawing living expenses in early retirement.

Other options could be COBRA from your last employer, or perhaps your spouse still works and has access to a policy. A last, and expensive, option would be to pay for private insurance. Many of my clients find the cost of private insurance to be prohibitive, and that is the reason many wait until age 65 to retire.

Tax planning can also play an important role in an early retirement. Investments can have many different tax structures. Traditional 401(k) plans, SIMPLE plans, and IRAs are all fully taxable when withdrawn after age 59½. Roth 401(k)s and Roth IRAs are not taxed upon withdrawal. Non-qualified investment accounts or brokerage accounts have a variety of tax implications, including dividends, interest, and capital gains. Structuring the withdrawals from your different accounts can play a very large role in planning for retirement and may save a lot of money if done properly.

Lastly, the word ‘retirement’ means many things to many people. For some people, it means not working at all, which requires a plan for fully funding your living expenses. For others, it means leaving your full-time, stressful career and taking on a part-time ‘fun’ job or a different career altogether, which would help pay the bills until Social Security full retirement age. Working with an experienced financial planner and not making this decision to retire early on your own is always recommended.

 

Barbara Trombley is a financial planner with Wilbraham-based Trombley Associates. Securities offered through LPL Financial. Member FINRA/SIPC. Advisory services offered through Trombley Associates, a registered investment advisor and separate entity from LPL Financial. Asset allocation does not ensure a profit or protect against a loss. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Special Coverage Work/Life Balance

Blurred Lines

During the pandemic, work arrangements were, in some ways, clearer than they are now — in short, remote work was the norm. Now, however, businesses and their employees are grappling with balancing company needs and culture with workers’ desire to maintain flexibility regarding when and where they get their jobs done. At the center of all of this is the amorphous, yet critically important, concept of work-life balance — and how, in some ways, remote work has made it even more challenging to achieve.

The employees at Paragus IT

The employees at Paragus IT have been returning to the office — but will be allowed to keep working at home some days.

 

Getting work done during the pandemic was … messy, Delcie Bean said. But it got done.

“In the heat of the pandemic, we had to have maximum flexibility and understood that everyone was doing their absolute best to get done what needed to get done and make sure the clients were taken care of,” the CEO of Paragus IT told BusinessWest. “It was going to be messy, but we had to get through it.”

Emerging from COVID-19, then, has been a time for employers to assess what happened and what they learned about the many different ways people can get their work done — and still have time for themselves.

“What did we lose having everyone remote, and what did we gain?” Bean said. “We realized it was some of both columns A and B — there were certainly some benefits and some risks.

“Really, we found it’s very employee-specific,” he went on. “Some employees really need the structure of the office — they get up, commute, work in the office, commute, relax at home. That’s what helps them separate work from life. Others were really flourishing with a blend, doing work from home; they were good at setting up boundaries and not having their work bleed into their life.”

Despite the evidence showing that many workers flourish at home — achieving work-life balance by establishing firm boundaries — that blurring of lines between work time and family time is a concern, according to area company leaders we spoke with. The result, oddly enough, can be even less balance than before.

“With more people working from home and having increased autonomy over their work schedule, it becomes more challenging to differentiate between work time and personal time,” said Patricia Coughlin, Human Resources director at Wellfleet in Springfield.

In Bean’s case, the post-pandemic strategy that developed was to require employees to work in the Hadley office at least three days — a gradual shift, actually, beginning with one day in June, two days in July, and three days starting in August. Anyone who wants to be on site every day is welcome to do so.

Patricia Coughlin

Patricia Coughlin

“With more people working from home and having increased autonomy over their work schedule, it becomes more challenging to differentiate between work time and personal time.”

“There are certain things that are lost when you’re 100% remote,” he said, giving examples like mentoring new employees and collaborative projects. “But if remote is working for you, we don’t want to stop you.”

He understands that some people need to be in the office to function because they have too many distractions at home.

“It depends on their personality. My home is not a distraction at all — once the kids are in school, my home is quiet, with nothing to distract me,” he said, adding, however, that there’s also nothing there to energize him.

“I need energy from other people to function at my best. We all work a little differently, process things a little differently. A lot of flexibility is good, as long as that flexibility works for both the employees and the company — but working at home can lead to issues with work-life balance if the work never goes away.”

Amy Roberts, chief Human Resources officer at PeoplesBank in Holyoke, said the bank’s leaders learned the organization can be effective while incorporating different types of work arrangements.

“When the pandemic hit and we had to move to a remote workforce for much of our corporate team, there was no question that our associates were dedicated and would get the job done,” she noted. “We had concerns about remote work as it relates to data security, customer impact, and overall engagement of our workforce. But we saw pretty quickly that we were able to operate, meet the needs of our customers, and keep our team engaged.”

For that reason, the bank is now working to establish a hybrid model for many roles and will continue to evaluate increased flexibility for team members. “We may also consider fully remote roles, but at this time those will be very limited.”

Amy Roberts says PeoplesBank wants to develop strategies with its employees to avoid overly blurring the lines between work and family time, especially when working at home.

Amy Roberts says PeoplesBank wants to develop strategies with its employees to avoid overly blurring the lines between work and family time, especially when working at home.

Like Bean, she noted that collaboration can suffer when people are not physically working together. “It’s such a big part of our day to day that we have to ensure people can easily get things done and make decisions as a team from anywhere. We feel this is an important aspect of any sustainable hybrid work model.”

Coughlin agreed that the pandemic made Wellfleet’s leaders more aware of the different ways people not only work well, but collaborate with their peers and find satisfaction in their work. As a result, the company plans to offer hybrid work arrangements and telework options as part of its model going forward.

“We learned from our employees that there is no one-size-fits-all methodology in creating an effective work environment,” she noted. “Throughout the pandemic, it became apparent that the ‘typical’ work arrangement may not be effective for all people.”

She added that this flexible approach is an attractive model that will allow Wellfleet to expand its talent pool while improving overall job satisfaction and increasing opportunities for growth and effectiveness. Again, however, the key is communication and setting boundaries.

“Supervisors and employees should set clear expectations of work schedules, availability, and when responses to e-mails are expected,” she said. “Maintaining this communication reduces the likelihood that employees feel the need to be available while on their personal time.”

 

Unhealthy Relationship

That latter concern is one employment experts across the country have been pondering. Constance Grady, a staff writer for Vox, recently penned an article titled “How Capitalism and the Pandemic Destroyed our Work-life Balance,” arguing that, in a precarious, COVID-disrupted economy, workers became even more attached to their work, in often-unhealthy ways.

“Those of us who were lucky enough to have jobs we could do from home brought our work into our living rooms, our kitchens, our bedrooms,” she wrote. “We pivoted. We shared strategies for how to be productive and overcome the stress of trying to work during a global health emergency. We challenged ourselves to meet and even exceed our pre-pandemic goals, against unfavorable odds. Despite everything, we prioritized work.”

But treating work as a sacred object has consequences, Grady argues. “We have treated work as something to be taken home and cherished. Work is our lover. And this year, we took it to bed.”

Bean understands that risk. “We’ve always strongly encouraged employees to have work-life balance as much as possible and encouraged people to unplug at the end of the day and not resume work until they’re back in the office again,” he said. “That worked much better in the pre-pandemic world, where there were cleaner lines between work and home.”

Paragus has long offered employees ‘discretionary time’ for personal obligations and appointments, which they can make up later. “We try to give employees freedom to schedule their work around what works for both them and the company.”

But over the past year, those lines blurred, with more people shifting their schedules or even working sporadically, a couple hours on and a couple off — especially when they were helping their homebound kids navigate the world of remote learning.

Hopefully, a return to something approaching normal, even if it does include some remote work, will sharpen those lines a bit. What helps, Bean said, is making firm decisions on what the home is actually for, especially at night.

“I’m very strict. When I get home, the phone goes on the counter and stays there until I go to bed. It’s rare for me to check e-mail at home, and it’s rare for me to work weekends. I try my best to model that you don’t need to work all night and on weekends to keep up; you can do your job during your work hours, then be with your family. You need that balance, and your family needs you there.”

Beyond that, he added, employees need to decompress from work in order to be productive the next day. “You need that separation time to process. You’re never able to let it sink in and reflect when you’re just going, going, going.”

Roberts agreed. “We are concerned about the blurring of lines with people who are working at home,” she said. “We are looking at this issue to determine if there are other ways we can ensure this balance with our plan for long-term workplace flexibility.”

Ideas include encouraging employees to work in a dedicated space, and at the end of the work day, leaving that room behind and closing the door — in other words, stick to the set work schedule.

“Obviously, if a customer issue occurs at the end of our day, we aren’t walking away, but in most cases we have seen that people have done a good job maintaining their normal work hours from any location — home or office.”

Understanding employee needs helps them to create balance while meeting the company’s needs, Coughlin added.

“When people have the flexibility to manage their schedule — for example, to attend a personal appointment and make up time later in the day — that can have a really positive impact on productivity. And everyone’s different; some people are more productive early in the morning, some are more productive in the evening, and others work best within a very set schedule.”

From a company perspective, she went on, it’s important to establish general standards that allow all employees the opportunity to achieve a healthy work-life balance — and it’s important to engage with employees to better identify what is meaningful to them.

“Work-life balance, and what that means, can really vary from person to person,” she noted. “One employee might be driven by the satisfaction in completing a task, while another takes satisfaction from counting hours ‘clocked in.’”

 

Creating a Culture

The bottom line, Coughlin said, is that Wellfleet’s people are fundamental in creating its culture, so it’s important to engage with them, through various platforms, to identify and implement ways to support a healthy work-life balance.

To that end, it offers education and trainings to improve work efficiencies, as well as communication regarding company benefits workers can utilize for personal purposes. Supervisors also work closely with employees to coach skills like prioritizing tasks, setting realistic goals, and time management.

“Wellfleet believes a healthy work-life balance fosters a culture in which employees are able to perform their job duties in a productive manner,” she added. “Good balance and increased flexibility in the workplace can help prevent burnout, reduce stress, and promote overall wellness.”

The company also offers employees the flexibility to adjust their work schedules to attend appointments and encourages them to use paid time off for their personal well-being, Coughlin said. “We saw the need to internally emphasize this message throughout the pandemic, although the ways we promoted this adapted to the circumstances.”

Wellfleet isn’t the only company re-emphasizing the need for workers to take time off, even if they’re not taking as many week-long vacations as before. HR Daily Advisor recently published a story on work-life balance that included input from several employers across the U.S. noting that employees have been de-emphasizing long vacations in favor of three-day weekends, staycations, and mental-health days off — as well as taking less time off overall.

“We have always focused on promoting a healthy work-life balance, and I don’t think remote work will change the way that we encourage our team to pay attention to this balance,” Roberts said. “Some of the ways that we promote this balance is our official work week being 38 hours, generous time-off plans, and fun team events and activities throughout the year. Our managers also do a good job of making sure they balance their expectations to ensure that a healthy work-life balance is a real thing.”

At the same time, Bean said, workers at any number of companies may have begun seeing those remote and flexible work models of the past 16 months as a permanent aspect of work-life balance — or, at least, they hope so. That could cause tension down the line, as employers, already struggling to retain talent in many industries, may have to negotiate such arrangements moving forward.

“However, another part of me knows behaviors and habits don’t change easily,” he added. “We, as a country, have 200 years of working 8 to 5 and going home. I don’t know if the pandemic was long enough to permanently break this muscle memory.”

If he’s right, companies adopting hybrid models now may eventually shift back to the typical, on-site work schedule of the past.

“Maybe people will work from home more than before,” he said. “But I don’t think this was that disruptive that we’ll fundamentally change the way we do work. It comes down to a lot of factors.”

Those factors range from employee desires to company needs and what type of culture an employer wants to promote. And the day might come when the current job surplus lessens and employers feel they have more leverage.

“How comfortable are you with making a decision, if an employer tells you to come back to the office or find new employment?” Bean said. “We’ll see how those things play out, and we’ll find out if the changes are temporary or long-term — and, if they’re long-term, how impactful they’ll be.”

Until then, employees will continue to get their work done in whatever way their company allows — and, hopefully, not take it to bed.

 

Joseph Bednar can be reached at [email protected]

Senior Planning

A Challenging First Step

By Joe Gilmore, Landmark Senior Living

Talking about long-term care needs with an elderly parent or other loved one can be a difficult thing. You may not know exactly how to approach it without coming off as rude or disingenuous. However, when it comes to a loved one’s health, it is important to cast aside how you feel to ensure that they can live safely and happily later in life. It is especially important to have this conversation before a problem occurs, not after.

An American Assoc. of Retired Persons survey found that two-thirds of adult children have never had this conversation. This is most likely due to the fact that a lot of adult children don’t know how to engage in this type of talk, or how to begin it. To begin, you have to decide who is going to be there during the talk and what the discussion is going to center around.

Keeping your loved one or parent safe later in their life is a priority, and talking to them about living situations, such as assisted living or even enlisting the help of a caregiver, is the first step. This is especially true if your parent or loved one has experienced a traumatic event in the recent past, such as a fall or the loss of a spouse.

Tips for the Talk

• Decide how you are going to do it and who’s going to be there. Sometimes a one-on-one talk is best; however, if you need someone to back up your points or provide another point of view, it may be a good idea to get other family members involved.

• Go over which talking points you will speak on before approaching your loved one, and set up a time and place to talk.

• Express each idea as an opinion of yours rather than a need for them. For example, choosing phrases like “I think” or “I need” rather than “you should” or “you need” are good ways to avoid conflict.

• Remind your loved one that everyone is there because they care and want to help keep them safe.

• Stay calm. Don’t raise your voice, speak over your loved one, or encourage any hostility during this discussion, as it will only make the situation worse.

• If your loved one immediately dismisses the idea of leaving their home, it may be best to drop the issue for the moment and bring it back up at another time.

The first step in beginning the talk is setting up how you are going to do it and who’s going to be there. Sometimes it is best for the talk to be a one-on-one; however, if you need someone to back up your points or provide another point of view, it may be a good idea to get other family members or loved ones involved. Every family is different, and it may be a good idea to disregard some family members when deciding who is invited to speak.

It is best to go over which talking points that you will speak on before approaching your parent or loved one. Meeting beforehand to talk about these things is recommended. Create a plan on how you wish to talk about this.

Understanding Your Loves Ones’ Goals for the Future

Your conversation about the future doesn’t have to focus only on a caregiving plan. You may also consider talking generally with your loved ones about what is important to them as they grow older. This checklist can be used as a starting point to better understand their priorities. Start by asking then to check all those that apply and then spend some time talking about each one in a little more detail:
__ To remain as independent as possible for as long as possible

__ To remain healthy and active

__ To remain in my home as long as possible

__ To focus on a hobby

__ To work for as long as possible

__ To become involved in the community

__ To remain as financially independent as possible

__ To take classes

__ To create a safety net in the event of an emergency or crisis situation

__ To start my own business

__ To buy a second home

__ To move closer to my family

__ To relocate to a smaller home

__ To retire in a different place

__ To travel

__ To be able to help my children and grandchildren

After going over the points you will make, the first thing you’ll want to do is set up a time and place to talk with your parent or loved one. This may require the use of some type of web communications like Skype or just over the phone if someone can’t be there or lives in a different area.

Depending on how you are hoping to help your parent, there are a few ways to go about this. For example, if you are just hoping to enlist the help of a caregiver, or become the caregiver yourself, it will take less convincing than, say, getting them to agree to be admitted to an assisted-living or residential care facility.

When speaking with a parent or a loved one about what you feel they should do, it is best to phrase it in a way that expresses that it is an opinion of yours rather than a need for them. For example, choosing phrases like “I think” or “I need” rather than “you should” or “you need” are good ways to avoid conflict.

Be sure to remind your parent or loved one that everyone is there because they care and want to help keep them safe. It may even be beneficial to bring up times when your parent may have had their health put at risk — maybe a fall or another incident.

This is also true for other major events like the loss of a spouse. There is evidence that the social isolation that stems from living alone and independently can lead to problems like loneliness and depression.

It is also important not to raise your voice or encourage any hostility during this discussion, as it will only make the situation worse. You should also be aware of when your parent is trying to talk. Do not try to speak over them, as it will likely lead to an argument. Keep your cool and remain calm during the discussion, even if others don’t.

Some parents will dismiss the idea of moving to an assisted-living facility immediately or adamantly. If this is the case, it may be best to drop the issue for the moment and bring it back up at another time down the road.

At the end of the meeting, make sure everyone has a clear understanding of the issues, concerns, and considerations presented.