Insurance Insights: The Cleary Insurance Blog
The Cleary Insurance blog covers insurance, risk management, and financial planning for New England businesses and individuals. Our team of licensed advisors and specialists publishes regular articles on commercial and personal coverage, employee benefits, life and financial planning, and insurance compliance. Browse recent articles below, or use the category filters to find topics relevant to your business or personal situation.
DOL Audits
Over the past year a number of contractors have been subjected to audits by Department Of Labor (DOL) Investigators. ARRA (American Recovery and Reinvestment Act) funding has reinvigorated enforcement activities. It has also become apparent that these audits are becoming more complicated to resolve.
In some cases the audits have increased in complexity; with the DOL Investigators asking for a myriad of company records, and then leaving for several weeks or months without finalizing the audit. This leaves the contractor in limbo and causes apprehension with their various customers. We recommend that in these cases the contractor send a letter to the DOL Investigator’s Supervisor and include a copy to the Regional Wage Specialist, asking for closure on the audit.
Some DOL Investigators threaten to withhold contract funds if compliance is in question. On Form WH-56 “Summary of Unpaid Wages”, the investigator will list all of the employees whom the investigator determines are due back wages. Investigators may also threaten debarment if contractors do not pay all the employees noted in the Summary of Unpaid Wages.
The Professional Service Council met with DOL officials last December at The Wage and Hour Division in Washington, DC due to the vast number of complaints regarding DOL Audits. The DOL agreed to send some representatives from their Wage and Hour staff to the PSC- SCA Training program in Wash DC. This program was held in March 2013 and has an upcoming session in October.
Any contractors, who do not have experienced personnel capable of handling DOL audits, may benefit by sending some of their employees to the next SCA training class that covers DOL audits.
If you would like additional information on SCA training programs, you may contact Albert Corvigno at acorvigno@marallc.com or call him directly at 252-312-4853.
For additional information relating to SCA compliance please click here to read “Avoiding the Compliance Pitfalls of the Service Contract Act” co-authored by Al Corvigno.
SCA Update
Effective June 19, 2013, the SCA health and welfare benefit increased to $3.81. Please click here to read the All Agency Memorandum Number 214.
At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.
Client Spotlight: Captain Al’s Restaurant
If you are looking for a way to beat the heat this summer we suggest a visit to Captain Al’s Restaurant & Tiki Bar. Captain Al’s is a casual, family style seafood restaurant located adjacent to Continental Marina in Buzzards Bay on the Upper Cape.
In addition to an extensive menu with delicious food and drink choices, Captain Al’s features a spacious water-side deck with breath-taking views of Buttermilk Bay.
Captain Al’s is open daily from 12 noon to 12 midnight, please click here for directions. The summer season passes quickly so plan a visit to Captain Al’s soon.
Retirement Income Planning: The Total Return Approach Vs. the Bucket Approach
Presented by John B. Steiger
Most working Americans have only one source of steady income before they retire: their jobs. When you retire, however, your income will likely come from a number of sources, such as retirement accounts, social security benefits, pensions, and part-time work. When deciding how to manage your various assets (whether personally or with the help of a professional wealth manager) to ensure a steady retirement income stream, there are two main strategies to consider: the total return approach and the investment pool-or bucket-approach.
The total return approach
With a total return approach, you invest your assets in a diversified portfolio of investments with varying potential for growth, stability, and liquidity. The percentage you allot to each type of investment depends on your asset allocation plan, time horizon, risk tolerance, need for income, and other goals.
The objectives of your investment portfolio generally change over time, depending on how close you are to retirement:
Accumulation phase. During the accumulation phase, your portfolio’s objective is to increase in value as much as possible, with a focus on investments with growth potential.
Approaching retirement-age phase. As you near retirement, your portfolio becomes more conservative, moving toward more stable and liquid assets in order to help preserve your earnings.
Retirement phase. Once you retire, the idea is to withdraw from your portfolio at an even rate that allows you to enjoy a sustainable lifestyle.
Traditionally, the widely quoted withdrawal rate for the first year of retirement is 4 percent. Ideally, that 4 percent should be equal to the amount left over after you subtract your yearly retirement income (e.g., pensions, social security, and so on) from your total cost of living, including investment management fees. Each year, you will most likely increase your withdrawal percentage to keep up with inflation. Keep in mind, however, that the appropriate withdrawal rate for you will depend on your personal situation as well as the current economic environment.
The bucket approach
The bucket approach also begins with a diversified portfolio, following the total return approach throughout most of the accumulation period. Then, as retirement approaches, you divide your assets into several smaller portfolios (or buckets), each with different time horizons, to target specific needs.
There is no “right” number of buckets, but they are fairly common. In a three-bucket scenario:
The first bucket would cover the three years leading up to retirement and the two years following retirement, providing income for near-term spending. It would likely include investments that have historically been relatively stable, such as short-term bonds, CDs, money market funds, and cash.
The second bucket would be used in years three through nine of retirement. Designed to preserve some capital while generating retirement income, it would include more assets with growth potential, such as certain mutual funds and dividend-paying stocks.
The third bucket, designated to provide income in year 10 and beyond, would contain investments that have the most potential for growth, such as equities, commodities, real estate, and alternatives. Although the risk profile of this bucket is typically higher than the other two, its longer time horizon can help provide a buffer for short-term volatility.
As you enter the distribution phase, you draw from these buckets sequentially, using a withdrawal rate based on your specific lifestyle goals in a particular year.
The big picture
Many people are familiar with the total return approach, but the bucket approach has been gaining popularity recently, thanks in large part to its simplicity. It also accounts for different time periods during retirement, potentially allowing you to allocate money more effectively based on your personal situation.
Perhaps the greatest benefit of the bucket approach is that it can help provide a buffer during times of market volatility. For example, if the value of the investments in buckets two and three suddenly fluctuates due to market conditions, your immediate cash income is coming from bucket one, which is likely to be less volatile. This may also alleviate the need to sell investments that have lost money in order to generate retirement income.
Of course, while the bucket approach has its advantages, some investors simply feel more comfortable using the total return approach. Remember, the best strategy for your retirement is unique to you and your personal preferences and needs. However you choose to pursue your retirement dreams, it’s important to work with a financial professional who can help you create the most appropriate strategy based on your goals and situation.
Contact us today to learn more about the different paths you may take to pursue a sustainable and enjoyable retirement.
Diversification does not assure against market loss, and there is no guarantee that a diversified portfolio will outperform a non-diversified portfolio.
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John B. Steiger is a financial consultant located at (460 Totten Pond Road Suite 600 Waltham, MA 02451. He offers securities as a Registered Representative of Commonwealth Financial Network , Member FINRA/SIPC. He can be reached at 781-547-5621 or at john@financialconnector.com.
2013 Commonwealth Financial Network
At Cleary, we are committed to a holistic approach of protecting and preserving our clients’ financial assets. Give us a call today at 617-723-0700 and let us know how we can help you.