Facing Financial Fears

Maybe your heart skips a beat when bills and bank statements arrive. Perhaps you fear your identity will be stolen or you’ll lose your job. Or it’s facing the looming questions: Have I saved enough? How do I create a budget and make it work? Here are several common fears and how to face them this Halloween.

I fear I may never get out of debt.

How to face your fear: The scariest part is identifying exactly how much debt you have and why. Once you’ve assessed your debt, devise a plan to pay off the smallest debt first. If you need some help contact our financial advisor. We’ll help you come up with a plan to get you back on track.

I fear bills and bank statements.

How to face your fear: Bills and bank statements are unavoidable, but don’t live in denial if you’ve gotten to the point of fearing bills and bank statements you’re probably overspending. Cut back don’t spend more than you make. Then build a budget and stick to it. We have tools and calculators to help you.

I fear my identity will be stolen.

How to face your fear: Be diligent. Monitor your credit reports, bank statements and transactions Sign up to receive text or email alerts from your bank or credit union if your financial institution offers this service.

I fear I haven’t saved enough for my future.

How to face your fear: It’s never too late to start! Open up a 403(b) or IRA. Contribute more. Pay yourself first and stick to your budget.

I fear I will lose my job someday.

How to face your fear: Prepare in advance. Establish an emergency fund and stash away at least six months of living expenses.

Remember, facing your financial fears doesn’t have to be scary. The key is to identify the cause of your fears and face them by taking action, making a plan, and being realistic about your situation.

Keeping it cool with a pool

Ahhh, the backyard pool…splashing around with family and friends, a chance to relax and relieve some stress, and a fun way to get some exercise. No wonder they’re so popular. According to the trade group Pool & Hot Tub Alliance, there are 10.4 million residential swimming pools in the United States. And the small window of warm weather in Wisconsin every year makes time at the pool even more special.

So there’s a lot to love about a backyard pool. But like anything else, there is a price tag that comes with it in order to keep everyone safe and make sure you’re financially protected.

With some careful planning and preparation, you can have a great summer with your pool. Before you dive in, you need to recognize the real signs of drowning, take some safety precautions, and make sure you’re financially covered so you don’t get dunked.

Drowning doesn’t look like drowning: It’s silent

Think you know what drowning looks like? Of the approximately 750 children who will drown next year, about 375 of them will do so within 25 yards of a parent or other adult. In 10% of those drownings, the adult will actually watch them do it, having no idea it is happening (source: CDC).

Drowning is usually a deceptively quiet event. The dramatic waving and yelling we often see on television and the movies actually rarely happens in real life. Dr. Francesco A. Pia, Ph.D, calls what people actually do to avoid suffocation in the water “the instinctive drowning response.” Here is some of what it looks like:

It’s still possible for a person to wave and yell for help very early on. Unlike true drowning, they can still grab a lifeline or a throw ring, etc. But that initial period doesn’t last long.

If you see someone who looks like they’re just treading water, looks glassy-eyed, or has their head tilted back with their mouth open, ask them, “Are you all right?” If they don’t respond, you may have less than 30 seconds to rescue them.

And remember—children playing in and around the pool make noise! If the kids aren’t making noise, get to them right away and find out why.

Play it safe

Better safe than sorry is more than just a piece of common sense. When it comes to having a pool, it should be your cardinal rule. Some of the tips below may seem obvious, but it’s easy to underestimate what can actually happen around a pool. Stay vigilant and you’ll reduce the risk of someone getting hurt.

Insurance costs and protection

Most insurance companies, like Member Benefits, require a pool to be four feet from the ground to the top of the pool in order to be covered in the policy. For an inground pool, the yard must be fenced in.

From an insurance perspective, swimming pools are considered an attractive nuisance—something that is likely to entice children and could pose a risk of injury. As the owner, you have the burden of taking adequate measures to protect children. Even if someone comes over and uses the pool without your knowledge, you may be liable for any potential injury they may suffer from it. So take safety measures seriously to reduce your risk. You may also want to increase your liability coverage through a personal umbrella policy.

Whether you have a pool or are considering purchasing one, be sure to talk to your insurance company so that you clearly understand your specific options, obligations, and coverages in your plan.

One last thing

Don’t forget to contact your town about local safety standards and permit requirements before you install a pool. Your neighborhood association may also have guidelines for you to follow.

So before you dive into your pool this summer, take some time to understand your risks and responsibilities and keep everyone safe. You’ll still have plenty of time to relax and make some waves.

>> Create a pool safety kit and more.

Keep track of your beneficiaries

While saving as much as you can for retirement is important, it’s just as important to determine the beneficiaries of your account—and keep them up to date.
Naming beneficiaries for your retirement accounts is an important first step in your estate planning. Without careful consideration, your decision may have unexpected tax and estate planning implications.

Naming beneficiaries

There are two basic types of beneficiaries. Primary beneficiaries are entitled to receive any undistributed assets in your account following your death. They share equally in your account unless you specify different percentages. If a beneficiary predeceases you, his or her share of your account is divided proportionately among the surviving beneficiaries.

Contingent beneficiaries are entitled to receive any undistributed assets in your account only if you have no surviving primary beneficiaries at the time of your death. If there are no surviving primary beneficiaries, your contingent beneficiaries share equally in your account unless you specify different percentages.

You may name anyone as a beneficiary of your account. Although spousal beneficiaries have the most flexibility with an inherited retirement account, for many reasons you might find it more appropriate to name someone other than your spouse as your primary or contingent beneficiary. You may also name a trust or charity, as well as other options. However, these options may have different financial consequences. Consult an attorney or tax advisor if you have questions about your beneficiary designations.

Types of accounts

The types of accounts that may require beneficiaries include:

It’s important to keep your account with Member Benefits up to date as well as any other accounts you may have. When members don’t update their beneficiaries after a major life event and then pass away, those named beneficiaries can no longer be changed. If members have no beneficiaries named on their account, the account will go to their estate. Unfortunately, that can cause many issues and delays in accessing those funds if they are needed.

Be sure to name and update your account beneficiaries on all of your accounts—and make sure they match up with your estate plan as well.

Trampolines: Worth the risk?

But if your plans for summer fun include using a backyard trampoline, make sure you know the risks and realities that come with it. Here’s what you need to consider.

Accidents happen

There is a surprising amount of power that can be generated from jumping on a trampoline—children can bounce up to 30 feet, according to the Consumer Product Safety Commission (CPSC). According to the CPSC, trampoline-related injuries have been increasing over the years, with an estimated 331,800 trampoline injuries treated in emergency rooms in 2019 alone.

Injuries are commonly caused by:

Head and neck injuries account for 10–17% of all trampoline-related injuries. These often happen with falls and failed somersaults or flips and can be the most catastrophic of all trampoline injuries suffered.

An “attractive nuisance”

You may think of trampolines as just a fun way for the family to get some exercise. But from an insurance perspective, they’re considered an attractive nuisance—something that is likely to entice children and could pose a risk of injury. Other examples include swimming pools, discarded appliances, and abandoned cars.

As the owner of the trampoline, you have the burden of taking adequate measures to protect children. Even if someone comes over and uses the trampoline without your knowledge, you may be liable for any potential injury they may suffer from it.

Will insurance cover you?

If you have a trampoline or are considering purchasing one, talk to your insurer about your home policy coverage. Typically, insurance companies handle them in one of four ways:

No exclusions. The insurance company doesn’t place any restrictions on trampoline ownership or usage in accordance with your home policy.

Coverage with safety precautions. An insurance company may include coverage if you have pads to cover the trampoline springs, a net enclosure for the sides, and/or other safety precautions.

A trampoline exclusion. Many insurance companies consider trampolines to be too hazardous to insure. This means no matter who gets injured on the trampoline or how they get injured, the insurance company will not cover those claims.

Refusal to insure the home. Some companies will not write a home policy if there is a trampoline on the premises.

Since trampolines represent a higher risk of liability, you may want to consider purchasing personal umbrella insurance. This may extend your liability protection beyond your existing home policy limit.

However, don’t just assume that because you have one or both of these policies that you are covered. Under some circumstances, you may not be. Contact your insurer so you understand your policy guidelines.

Considerations for renters

Your landlord has the obligation to keep the property reasonably safe for tenants. Since trampolines are considered an attractive nuisance, he or she may risk liability costs for allowing one. Check your rental agreement or speak with your landlord to find out whether or not a trampoline is allowed on the property.

If you decide to take the leap

If you must have a trampoline, put safety first. Take these steps recommended by the CPSC to reduce the risk of injury:

Regardless of the precautions put in place, the American Academy of Pediatrics strongly discourages the home use of trampolines. More than 1 million people visited the emergency department for trampoline injuries between 2002 and 2011, according to a September 2019 report from the AAP. Most patients were younger than 17 years.

The decision to purchase or keep a trampoline comes down to risk versus reward. While they may seem appealing as a fun summer activity, know the safety risks as well as the legal and financial risks to you and ask yourself: Are they worth it?

More about staying safe with your pool

The Consumer Product Safety Commission recommends that you create a pool safety tool kit to have near your pool to ensure you are ready to respond if there is an incident. It should include:

Once you are set on safety precautions and on knowing all your responsibilities as a pool owner, you can relax and enjoy! Here are a few fun facts about from swimmingpool.com that you might find interesting:

Have a fun summer!

Coffee or Savings

Take a look and see what saving $20 per month could do for your savings goals with our infographic demonstrating the power of compound interest!

If you would like to download a PDF of the infographic, click on the image.

coffee or savings

This infographic and these calculations are for informational purposes only and is not intended to constitute legal, financial, or tax advice. Certain recommendations or guidelines may not be appropriate for everyone. Consult your personal advisor or attorney for advice specific to your unique circumstances before taking action. Your actual situation may be different from the value shown here. This example uses a projected interest rate of 6% for illustrative purposes only. No guarantees are expressed or implied. Results will vary depending upon the actual rate used in the calculation. Over time, the results of any investment will fluctuate, can lose value, and are not guaranteed.

The 403(b) retirement program is offered by the WEA TSA Trust. TSA program registered representatives are licensed through WEA Investment Services, Inc., member FINRA. All advisory services are offered through WEA Financial Advisors, Inc., a registered investment advisor.

Subscribe to a simple savings plan

If you’re looking for an easy solution to boost your retirement savings this year, we have one word for you: Automatic. Making contributions directly from your checking or savings account or taking advantage of payroll deduction are the easiest ways to build your IRA retirement savings with Member Benefits.

Chances are you’re already paying for other things automatically through a subscription. Do you watch shows on Netflix, Hulu, or a similar platform? Look forward to monthly boxes of prepackaged meals, beauty products, or the like? If so, you’re probably enjoying its benefits without really missing the money that’s being taken from your account every month to pay for it.

Automating your retirement savings contributions is like signing up for a subscription service to benefit the future you. It’s easy to do with Member Benefits. Just set it, forget it, and watch your retirement savings grow over time.

You have two options to choose from. Both make for smaller, easier-to-manage installments—and they are free with no additional fees.

Bonus: Both options can also be used for your auto and home insurance premiums.

Subscribe to a new savings plan—you’ll thank yourself later. Call us at 1-800-279-4030 to learn more, or enroll online to start saving with an IRA today.

Have you planned for this financial risk?

The duration of paid care varies widely. However, according to LongTermCare.gov, about 69% of those who turned 65 in 2017 will need an average of three years of some kind of LTC during their lifetime. And that can be costly. For example, in Wisconsin, the median cost for a semiprivate room in a nursing home for just one month is $8,334 (Genworth Cost of Care Survey 2018).

Unfortunately, most people haven’t planned for this financial risk—only about 7.2 million Americans have LTC insurance (AARP). For many, this means losing their wealth in a short period of time, even for a relatively brief nursing home stay.

Because neither health insurance nor Medicare was designed to pay for LTC services, individuals who require these services as a result of an accident or illness may need to dip into their personal savings or use other assets to cover the costs…unless they have LTC insurance.

LTC insurance can be more affordable than you think. If you meet requirements, plans may include rate caps, limited-time pay options, or the ability to insure two people for a discounted premium.

Contact us at 1-800-279-4030 for more information on our long-term care insurance program.

Freshen up your financial knowledge

Build a budget

A budget sets the groundwork for sprucing up your finances. Think of it as a road map for managing your money or a tool that helps you make smarter decisions as you track your monthly expenses.

Not only does it help ensure you’ll have money for the things you need and that are important to you, but having a spending plan can also help keep you out of debt (or work your way out of it).

In simple terms, a budget compares what’s coming in with what’s going out. And it’s not just for those who need to closely monitor their money—even people with large paychecks and lots of money in the bank can benefit too.

Why have a budget?

  1. It helps maximize your savings and investments, allowing you to make sure your hard-earned money is being used to its best purpose.
  2. You’ll be better prepared in case of an emergency such as a job loss, major health crisis, or extensive home repair.
  3. You can build in a plan to pay off debt.
  4. It gives you some room to splurge. That may sound counterintuitive, but having a budget can “give you permission” to buy those concert tickets or celebrate at that nice restaurant by tracking your expenses and building in an amount you choose for the fun spending.
  5. It can help you clarify your short- and long-term savings goals. Long-term financial goals are often too easy to put off for later. For example, depending on your age, saving for retirement may seem a long way off. However, a budget can help you discover a way to fit it in, even if it’s just a small amount at first. Starting earlier than later gives you a huge advantage by utilizing the power of compound earnings (see next page).
  6. You’ll be less likely to spend money you don’t have. Before credit cards, people knew easily whether or not they were living within their means. But in 2017, the average American had a credit card balance of $6,375, up 3% from the year before (Experian). Those who don’t pay attention and overuse their credit cards may not realize they’re overspending until they’re weighed down with debt.

Budgets are not just about saving and spending. One important aspect of your financial health is protecting yourself from loss with appropriate insurance coverage. We can help you assess what you need.

Budgeting options

You don’t need to be a math whiz to create and maintain a budget. Spreadsheets and online software can take care of the calculations for you. Do a search for software online, create your own spreadsheet, or go old school with a ledger—whatever works for you.

Stick with it

The point of a budget is to give you more financial freedom, not less. If you find yourself having a hard time following a budget, follow these tips:

Creating a budget is not a “one and done” project. Once you’ve built your budget, review it regularly and make adjustments because life changes…just like the seasons.

Save for your future

Saving for retirement should be at the top of your list of long-term budget goals.

While Wisconsin public school employees are fortunate to have the Wisconsin Retirement System (WRS), WRS is not enough. And don’t count on Social Security to fill in the gap. On average, Social Security payments make up only about 14%–28% of retirement income for those who receive WRS. To build a secure retirement, you need three things: WRS, Social Security, and your personal savings.

Personal savings options

You can save with a 403(b) through your district, and if eligible, you can also open an Individual Retirement Account (IRA). With an IRA, and sometimes with the 403(b), you can choose between a pretax or Roth account (see below).

If your employer (or your spouse’s employer) offers a match in your 403(b) plan, take it. It’s free money. Added bonus: The match effectively increases your income without increasing your tax bill, since you pay no taxes on matching contributions until you withdraw them in retirement.

Most Wisconsin public school employees can expect their retirement income to come from:

Start sooner than later

The earlier you start, the more you can benefit from compound earnings. Compounding is when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings, and then those earnings are reinvested, and so on. This means that contributing a small amount now could benefit you more in the long run than any larger amount you contribute later on. Even modest monthly contributions can grow to several hundred thousand dollars over three or four decades.

Make it automatic

If you have an IRA, making contributions directly from your savings or checking account will make it much easier to save. With Member Benefits, you can set up SmartPlan, or you can use payroll deduction if your district offers it.

If you haven’t started saving for retirement yet, give us a call. We can help you open an account or simply answer any questions you may have.

Brush up on investing terms

Now that you’ve decided to start saving for retirement, what do you need to know? Here are a few investing terms to familiarize yourself with.

Pretax vs. Roth (after-tax)

Traditional (pretax) accounts allow you to defer the taxes on your contributions and at the same time reduce your taxable income. The earnings grow tax-deferred but both the earnings and initial investment will be taxed when withdrawn.

Roth accounts allow for after-tax contributions. You pay taxes now in exchange for tax-free treatment of earnings on qualified withdrawals.

Diversification

Having a variety of investments in your portfolio helps manage risk. Historically, it also yields higher returns as the positive performance of some investments offset the negative performance of others.

Risk

Before you consider any investment, you need to understand risk and determine your personal risk tolerance. Lower risk investments have averaged modest long-term historical returns. Higher-risk investments, such as large company, small company, and foreign stocks, have averaged higher returns historically, but with more volatility or fluctuation in value. Learn your risk tolerance by using our “What kind of investor are you?” calculator.

Asset allocation

This is how you divide your money among stocks, bonds, and short-term reserves. The aim is to control risk by diversifying your portfolio. Your allocation should be based on your tolerance for risk.

Fees

The impact of fees over time on your IRA or 403(b) account can significantly reduce your nest egg. Pay attention to all of the costs, including plan fees and mutual fund expense ratios. Not all providers or funds charge the same fees. Visit weabenefits.com/fees to learn more.

Member Benefits’ investment options include plug-and-play options for those with less time or inclination to monitor their portfolio allocation, as well as do-it-yourself investing for a more hands on approach. Visit our investment choices page for more information.

Investors should understand the fees and risks involved in making investments, including interest rate risk, credit risk and market risk. The value of market investments can vary; investors can lose some or all of their principal

Retirement FAQ

While we talk with members about a number of retirement savings topics, there are some questions that our financial planners often hear that we’d like to share with you, along with suggestions to consider.

Remember, as a Wisconsin public school employee, you have access to our financial planning services, where you can explore these questions or others you may have.

Most asked retirement questions at Member Benefits
I just opened a 403(b) / IRA. How do I access my info?
If I want to make both pretax and Roth (after-tax) contributions to my 403(b), do I need to open two accounts?
Can I retire?
Is my account invested the right way?
Should I keep my life insurance?
When should I start Social Security?
How should I draw my Wisconsin Retirement System (WRS) pension?
How can I reduce my taxes on my required minimum distributions (RMDs) at age 70½?
Can I access my retirement accounts before age 59 ½ without penalty?

I just opened a 403(b) / IRA. How do I access my info?

The first time you sign in to yourMONEY to manage your retirement account(s), your login ID will be your Social Security number and your password will be your date of birth. You will then be asked to change your login ID and password before you can move forward in the site.

Visit yourMONEY to learn how to create an online account.

If I want to make both pretax and Roth (after-tax) contributions to my 403(b), do I need to open two accounts?

No. If allowed by your district, a 403(b) can house both pretax and after-tax contributions.

Can I retire?

The answer is complex and depends on many factors, but a few basics to consider from a financial standpoint include:

For more in-depth assistance, consider taking advantage of our fee-based financial planning services. You can get a comprehensive analysis of your investment portfolio or determine whether you’re on track to meet your retirement goals. If you’re within ten years of retirement, we’ll guide you step by step using our highly focused retirement planning tool.

Is my account invested the right way?

Member Benefits offers three different ways you can invest your funds to help meet your investment needs. These options include a target retirement fund option, “do-it-yourself” option, and model portfolio option. A few years ago, Member Benefits developed model portfolios to help reduce the fear of making poor investment choices. After completing an “Investor Suitability Profile Questionnaire” meant to determine your tolerance for risk, you can select one of the five predefined portfolios based on the results of your assessment. The model portfolios are selected from pre-vetted mutual funds offered by Member Benefits, require a small investment of time, are low maintenance, and auto-rebalance each year so your investment mix aligns with your investment goals. Learn more about our model portfolios or speak with one of our RIS Specialists for additional information about our model portfolios and other investment options available to you.

Should I keep my life insurance?

Sometimes it makes sense to keep it, and sometimes not as much. A few questions to help guide your decision include:

When should I start Social Security?

According to the Social Security Administration, you can start benefits as early as age 62 or as late as age 70. You either collect a smaller amount per month over a longer period of time, or draw a larger amount per month over a shorter period of time.

One main factor to consider when making the decision is how your taxes may be affected. Social Security is not taxed on the Wisconsin income tax return, and up to 15% is not taxed on your federal income tax return.

However, if you want to wait to take your benefit and draw from pretax retirement accounts to make up the difference you could be drawing from Social Security, 100% of that will be taxable on both your federal and state income tax returns. In addition, you’ll be giving up potential growth on the funds you drew from your retirement savings accounts. Many people don’t consider this when deciding on what age to begin drawing their benefits.

How should I draw my Wisconsin Retirement System (WRS) pension?

Keep in mind when talking to your peers that everyone’s situation is unique, so basing your decisions on theirs may not be what is best for you in the long run. Further, Employee Trust Funds (ETF) employees are not allowed to make specific recommendations.

Fortunately for you, Member Benefits’ planners are trained and licensed to help you decide which options work best for you, and we test various options (including the accelerated method) when we do the fee-based Retirement Income Analysis for those within ten years of retirement.

How can I reduce my taxes at age 70½?

Prior to the new changes in tax law, you may have deducted charitable contributions on your itemized deduction form Schedule A. However, for tax year 2018, your standard deduction might be greater than your total itemized deductions, leaving your charitable contributions “on the table,” so to speak. This means 100% of your RMD (including the amount you gave away as a charitable contribution) will be included in taxable income.

Alternatively, once you are required to start taking RMDs from your pretax retirement accounts, you could choose to have your Traditional IRA RMDs contributed directly to charity. This is known as a Qualified Charitable Distribution (QCD). The QCD is excluded from taxable income.

QCDs only apply to age 70½ distributions from Traditional IRAs. However, you may still be able to take advantage of this if you only have a 403(b), or if your spouse has a 401(k). Our financial planners can help you calculate how much you might want to rollover to a Traditional IRA that will generate a QCD equal to the amount you intend to gift each year. You will still have an RMD from your 403(b), but it will be a smaller amount.

Another option is to take your full RMD at the beginning of the year instead of at the end of the year. If you don’t need the money and are looking for a place to reinvest, consider the Personal Investment Accounts (PIAs) offered through WEA Member Benefits. By reinvesting your RMD outside of retirement accounts early in the year, growth during those twelve months would not be included in future years’ RMDs.

If you have not yet reached age 70½, we might be able to take some strategic steps now, such as Roth conversions, gifting, or distributions reinvested in a PIA to reduce your RMDs in the future. The lower tax rates passed by Congress are due to sunset in 2025. Talk to your tax advisor to determine the best action for you.

Can I access my retirement accounts before age 59 ½ without penalty?

Maybe. If you want to retire before age 59½ and begin taking distributions from your 403(b) or 401(k), you will generally be subject to not only income tax, but a 10% early distribution penalty. However, the “Rule of 55” is an exception. If you leave the employer under which your retirement plan is held during or after the year you turn age 55, you are not subject to the penalty for withdrawals. If you have a retirement account with a former employer, it may make sense to move it into your current employer’s plan if you plan to use the Rule of 55.

This exception does not apply to Traditional IRAs. You have to wait until 59½. This is a word of caution should you be approached by an outside broker recommending you move your 403(b) or 401(k) to a Traditional IRA.

Take advantage of our financial planning services

Visit weabenefits.com/fps or call 1-800-279-4030.

*Consultation is free; however, if you choose to invest in the WEA Tax Sheltered Annuity or WEAC IRA program, fees will apply. Consider all expenses before investing. Must meet eligibility rules to participate.
**Fee-based service. Must meet eligibility rules to participate. Family members may also be eligible. Call for details. Wisconsin residency required.
Fees and services subject to change. Terms controlled by signed service agreement.