Come See Us December 5th During Customer Appreciation Day

Our customers are the best!
OUR CUSTOMERS ARE THE BEST!
There are plenty of places where you could do your banking. We’d like to say “Thanks” for choosing Peoples Bank. And this year (our 102nd!), we’re taking Friday, December 5th to show you how much we appreciate you!

We’ll have refreshments all day, in every office. Please come by and let us thank you in person!

“Spending Wisely” isn’t just a slogan. You gotta do it. Here’s how.

“Spending Wisely” isn’t just a slogan. You gotta do it. Here’s how.“Economy does not lie in sparing money, but in spending it wisely.” Wise people will tell you that Thomas Henry Huxley had that much right, anyway. Spending wisely is a critical part of financial success. But how does one actually go about “spending wisely”?

Money is a useful instrument, a tool. Like any tool, the better you use it, the more effective it is. To spend money wisely, spend it according to a plan. Think about what you need and what it will take to get it, in both the short- and long-term. So, set goals and use your money to meet them.

Focus on things directly within your control (and don’t let anybody convince you otherwise):

  • Live within your means
  • Be a smart shopper, not a lazy one
  • Track your spending habits, develop a budget that allows for unexpected events
  • Plan for short-term and long-term goals

One thing that the Financial Literacy council suggests is that you set a maximum amount you will spend each week, or each month, and stick to it. There are lots of other really good suggestions on MyMoney.gov. Visit the web page for resource links and planning tools to help you spend your money wisely.

Give Your Company a Security Check on First Friday of Each Quarter

Company SecurityThe security of your company’s computers and network is too important to ignore. The Director of the FBI recently told a reporter that there are two types of companies in the United States: those that have been hacked by China, and those who don’t know they have been hacked by China. Think about that problem for a moment as you think about your company network security…

The (other) problem is that few companies have the resources, let alone the time, to make computer security a constant focus. Because doing something on a regular basis to monitor and improve security is better than doing something only when there is a problem, we have a helpful suggestion. Give your company a security check on the First Friday of Every Quarter.

What’s a Security Check?

A security check is simply making sure that the basics are covered. Some things to check:

  • That there are no obvious vulnerabilities (such as Windows XP machines that should be replaced or old Macs still running out-of-date and vulnerable systems).
  • That all computers are automatically updating their operating system and primary software (such as Microsoft Office).
  • That the updates and patches were successfully applied (sometimes they don’t finish).
  • That good passwords protect the computers.
  • That the passwords are neither shared by employees nor written on a piece of paper at the computer’s desk.
  • That the virus and anti-malware software is running on all computers and up-to-date (automatic updates are happening/happened).
  • That the computer back-ups are working well and ready to mitigate a disastrous event.
  • That the company’s network firewall is running.
  • That the company server(s) is or are running the most up-to-date and patched version of the server operating system.
  • That employees and management are familiar with key points from the security policy, compliant, and recognize their employment is contingent upon compliance. (No company is too small for a good security policy.)
  • That the company’s security policy addresses the current system(s).

Need help getting started?

You can do some of the items listed above without outside assistance, especially if you have just a couple of PCs to manage. If the items listed above are too challenging, your best option is to have a computer professional perform a preliminary assessment of your company’s computer and network environment and prioritize the next steps. It will provide a roadmap to improving the security of your company and prioritize issues. The security focus of the review is narrow enough to constrain costs. A number of solutions can automate security policy enforcement such as software update and patch management.

How long will my Security Check take? How much does a Security Assessment and plan cost?

Great questions. You should get those answers. No blog post can answer them precisely since the factors vary considerably, such as the number of computers, types of tools already in place, and the number of users. Only a professional review of your network can answer those questions. We can tell you that it’s not hard to do, and probably won’t cost a lot of money. Given today’s threats, the answers will make it worth the expense.

The fact is that no organization, unless it’s Intel or the NSA, can afford to do all they need to do, every day of the week. But it is important to stake out some time allotment at some regular interval to figure out what needs to be done, and do at least part of it every year. Once a quarter is do-able, right?

Speaking as a bank that cares, we urge you to protect the assets that generate and promote revenue. Your computers and their network are among those critical assets. Make it a priority within your company to give your company a security check at least once a quarter. Try making the Security First Friday of the Quarter a part of your corporate culture.

Here are some resources to help you get started:
Cyber-security for Small Business – Federal Communications Commission
9 Security Tips for Small Business Owners – Small Business Administration
Small business IT security checklist – GFI.com

Converting Savings to Retirement Income

Converting Savings to Retirement IncomeDuring your working years, you’ve probably set aside funds in retirement accounts such as IRAs, 401(k)s, or other workplace savings plans, as well as in taxable accounts. Your challenge during retirement is to convert those savings into an ongoing income stream that will provide adequate income throughout your retirement years.

Setting a withdrawal rate

The retirement lifestyle you can afford will depend not only on your assets and investment choices, but also on how quickly you draw down your retirement portfolio. The annual percentage that you take out of your portfolio, whether from returns or both returns and principal, is known as your withdrawal rate. Figuring out an appropriate initial withdrawal rate is a key issue in retirement planning and presents many challenges. Why? Take out too much too soon, and you might run out of money in your later years. Take out too little, and you might not enjoy your retirement years as much as you could. Your withdrawal rate is especially important in the early years of your retirement, as it will have a lasting impact on how long your savings last.

One widely used rule of thumb on withdrawal rates for tax-deferred retirement accounts states that withdrawing slightly more than 4% annually from a balanced portfolio of large-cap equities and bonds would provide inflation-adjusted income for at least 30 years. However, some experts contend that a higher withdrawal rate (closer to 5%) may be possible in the early, active retirement years if later withdrawals grow more slowly than inflation. Others contend that portfolios can last longer by adding asset classes and freezing the withdrawal amount during years of poor performance. By doing so, they argue, “safe” initial withdrawal rates above 5% might be possible. (Sources: William P. Bengen, “Determining Withdrawal Rates Using Historical Data,” Journal of Financial Planning, October 1994; Jonathan Guyton, “Decision Rules and Portfolio Management for Retirees: Is the ‘Safe’ Initial Withdrawal Rate Too Safe?,” Journal of Financial Planning, October 2004.)

Don’t forget that these hypotheses were based on historical data about various types of investments, and past results don’t guarantee future performance. There is no standard rule of thumb that works for everyone—your particular withdrawal rate needs to take into account many factors, including, but not limited to, your asset allocation and projected rate of return, annual income targets (accounting for inflation as desired), and investment horizon.

Which assets should you draw from first?

You may have assets in accounts that are taxable (e.g., CDs, mutual funds), tax deferred (e.g., traditional IRAs), and tax free (e.g., Roth IRAs). Given a choice, which type of account should you withdraw from first? The answer is—it depends.

For retirees who don’t care about leaving an estate to beneficiaries, the answer is simple in theory: withdraw money from taxable accounts first, then tax-deferred accounts, and lastly, tax-free accounts. By using your tax-favored accounts last, and avoiding taxes as long as possible, you’ll keep more of your retirement dollars working for you.

For retirees who intend to leave assets to beneficiaries, the analysis is more complicated. You need to coordinate your retirement planning with your estate plan. For example, if you have appreciated or rapidly appreciating assets, it may be more advantageous for you to withdraw from tax-deferred and tax-free accounts first. This is because these accounts will not receive a step-up in basis at your death, as many of your other assets will.

However, this may not always be the best strategy. For example, if you intend to leave your entire estate to your spouse, it may make sense to withdraw from taxable accounts first. This is because spouses are given preferential tax treatment with regard to retirement plans. A surviving spouse can roll over retirement plan funds to his or her own IRA or retirement plan, or, in some cases, may continue the deceased spouse’s plan as his or her own. The funds in the plan continue to grow tax deferred, and distributions need not begin until the spouse’s own required beginning date.

The bottom line is that this decision is also a complicated one. A financial professional can help you determine the best course based on your individual circumstances.

Certain distributions are required

In practice, your choice of which assets to draw first may, to some extent, be directed by tax rules. You can’t keep your money in tax-deferred retirement accounts forever. The law requires you to start taking distributions—called “required minimum distributions” or RMDs—from traditional IRAs by April 1 of the year following the year you turn age 70½, whether you need the money or not. For employer plans, RMDs must begin by April 1 of the year following the year you turn 70½ or, if later, the year you retire. Roth IRAs aren’t subject to the lifetime RMD rules.

If you have more than one IRA, a required distribution is calculated separately for each IRA. These amounts are then added together to determine your RMD for the year. You can withdraw your RMD from any one or more of your IRAs. (Your traditional IRA trustee or custodian must tell you how much you’re required to take out each year, or offer to calculate it for you.) For employer retirement plans, your plan will calculate the RMD, and distribute it to you. (If you participate in more than one employer plan, your RMD will be determined separately for each plan.)

It’s important to take RMDs into account when contemplating how you’ll withdraw money from your savings. Why? If you withdraw less than your RMD, you will pay a penalty tax equal to 50% of the amount you failed to withdraw. The good news: you can always withdraw more than your RMD amount.

Annuity distributions

If you’ve used an annuity for part of your retirement savings, at some point you’ll need to consider your options for converting the annuity into income. You can choose to simply withdraw earnings (or earnings and principal) from the annuity. There are several ways of doing this. You can withdraw all of the money in the annuity (both the principal and earnings) in one lump sum. You can also withdraw the money over a period of time through regular or irregular withdrawals. By choosing to make withdrawals from your annuity, you continue to have control over money you have invested in the annuity. However, if you systematically withdraw the principal and the earnings from the annuity, there is no guarantee that the funds in the annuity will last for your entire lifetime, unless you have separately purchased a rider that provides guaranteed minimum income payments for life (without annuitization).

In general, your withdrawals will be subject to income tax—on an “income-first” basis—to the extent your cash surrender value exceeds your investment in the contract. The taxable portion of your withdrawal may also be subject to a 10% early distribution penalty if you haven’t reached age 59½, unless an exception applies.

A second distribution option is called the guaranteed* income (or annuitization) option. If you select this option, your annuity will be “annuitized,” which means that the current value of your annuity is converted into a stream of payments. This allows you to receive a guaranteed* income stream from the annuity. The annuity issuer promises to pay you an amount of money on a periodic basis (e.g., monthly, yearly, etc).

If you elect to annuitize, the periodic payments you receive are called annuity payouts. You can elect to receive either a fixed amount for each payment period or a variable amount for each period. You can receive the income stream for your entire lifetime (no matter how long you live), or you can receive the income stream for a specific time period (ten years, for example). You can also elect to receive annuity payouts over your lifetime and the lifetime of another person (called a “joint and survivor annuity”). The amount you receive for each payment period will depend on the cash value of the annuity, how earnings are credited to your account (whether fixed or variable), and the age at which you begin receiving annuity payments. The length of the distribution period will also affect how much you receive. For example, if you are 65 years old and elect to receive annuity payments over your entire lifetime, the amount of each payment you’ll receive will be less than if you had elected to receive annuity payouts over five years.

Each annuity payment is part nontaxable return of your investment in the contract and part payment of taxable accumulated earnings (until the investment in the contract is exhausted).

*Guarantees are subject to the claims-paying ability of the issuing insurance company.

Contact our Peoples Investment Services, Inc. representative at 828-464-5620 or  www.raymondjames.com/PeoplesInvSvcs. 

This information, developed by an independent third party, has been obtained from sources considered to be reliable, but Raymond James Financial Services, Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results. Raymond James Financial Services, Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC, an independent broker/dealer, and are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2014