Oppenheimer & Co. Inc.A Member of the Poindexter GroupDavid Casso, CFP®, CTFADirector - Investments711 Louisiana StreetSuite 1500Houston, TX 77002713-650-2056david.casso@opco.comhttp://fa.opco.com/poindextergroup/

September 2019Five Retirement Lessons from Today'sRetirees

Social Security: Shoring Up America's SafetyNet

When should I file the FAFSA?

How can I teach my high school student theimportance of financial literacy?

Do Millennials Need Life Insurance?

See disclaimer on final page

The financial challengesmillennials face can beoverwhelming. Manyyoung adults have tofigure out how to pay offcollege loans, save tobuy a home or start afamily, and sock awaymoney for retirement.

Given these hurdles, it's no wonder that lifeinsurance as a financial asset gets little to noattention. But it should. There are manyreasons to have life insurance at a relativelyyoung age, but here are some common ones.

Leaving your debts for others to payAs a young adult, you become moreindependent and self-sufficient. While you nolonger depend on others for your financialwell-being, your death might still create afinancial hardship for those you leave behind.

You may have debts such as a mortgage orstudent loans that are jointly held with anotherperson. Or you may be paying your parents forloans they took out (e.g., PLUS loans) to helppay for your education. Your untimely deathwould leave others responsible for some or allof these debts. You might consider purchasingenough life insurance to cover your financialobligations so others don't have to.

Funeral expenses can also be a burden forthose you leave behind. Life insurance couldease the financial burden of paying for youruninsured medical bills (if any) and for costsassociated with your funeral and burial.

It's less expensivePremiums for life insurance are based on manyfactors, including age and health. Certainly, theyounger and presumably healthier you are, theless your coverage will cost. This is especiallytrue if you are at a high risk for developing amedical condition later in life.

Replacing lost incomeSomeone may be relying on your income forfinancial support. For instance, you may beproviding for a family member such as a parent,grandparent, or sibling. In each of theseinstances, how would your income be replaced

if you died? The death benefit from lifeinsurance can help replace your income afteryou're gone.

Providing for your familyAs your family grows, so do your financialresponsibilities. There is likely a hefty mortgageto pay. And there are costs associated withyoung children. If you died without lifeinsurance, how would the mortgage get paid?Could your surviving spouse or partner coverthe costs of day care and housekeeping?

And there are events you should plan for nowthat won't happen until several years in thefuture. Maybe you'll begin saving for your kids'college education while trying to save as muchas you can for your retirement. Over the nextseveral decades, think about how much youcould set aside for these expenses. If you areno longer around to make these contributions,life insurance can help fund these futureaccumulations.

Work coverage may not be enoughYou may have a job with an employer thatsponsors group life insurance. Hopefully, youtake advantage of that program, but is itenough coverage to meet your needs now andin the future? Your insurance needs maychange with time, although your employer'scoverage may not. Also, mostemployer-sponsored life insurance programsare effective only while you remain anemployee. If you change jobs or are unable towork due to illness or disability, you may loseyour employer's coverage. That's why it's agood idea to consider buying your own lifeinsurance.

The cost and availability of life insurancedepend on factors such as age, health, and thetype and amount of insurance purchased. Aswith most financial decisions, there areexpenses associated with the purchase of lifeinsurance. Policies commonly have mortalityand expense charges. In addition, if a policy issurrendered prematurely, there may besurrender charges and income tax implications.

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Five Retirement Lessons from Today's RetireesEach year for its Retirement ConfidenceSurvey, the Employee Benefit ResearchInstitute (EBRI) surveys 1,000 workers and1,000 retirees to assess how confident they arein their ability to afford a comfortable retirement.Once again, in 2019, retirees expressedstronger confidence than workers: 82% ofretirees reported feeling "very" or "somewhat"confident, compared with 67% of workers. Acloser look at some of the survey resultsreveals various lessons today's workers canlearn from current retirees.

Current sources of retiree incomeLet's start with a breakdown of the percentageof retirees who said the following resourcesprovide at least a minor source of income:

• Social Security: 88%• Personal savings and investments: 69%• Defined benefit/traditional pension plan: 64%• Individual retirement account: 61%• Workplace retirement savings plan: 54%• Product that guarantees monthly income:

33%• Work for pay: 25%

Lesson 1: Don't count on work-relatedearningsPerhaps the most striking percentage is the lastone, given that 74% of today's workers expectwork-related earnings to be at least a minorsource of income in retirement. Currently, justone in four retirees works for pay.

Lesson 2: Have realistic expectationsfor retirement ageBuilding upon Lesson 1, it may benefit workersto proceed with caution when estimating theirretirement age, as the Retirement ConfidenceSurvey consistently finds a big gap betweenworkers' expectations and retirees' actualretirement age.

In 2019, the gap is three years: Workers saidthey expect to retire at the median age of 65,whereas retirees said they retired at a medianage of 62. Three years can make a bigdifference when it comes to figuring out howmuch workers need to accumulate by their firstyear of retirement. Moreover, 34% of workersreported that they plan to retire at age 70 orolder (or not at all), while just 6% of currentretirees fell into this category. In fact, almost40% of retirees said they retired before age 60.The reality is that more than four in 10 retireesretired earlier than planned, often due to ahealth issue or change in their organizations.

Estimating retirement age is one area whereworkers may want to hope for the best butprepare for the worst.

Lesson 3: Income is largely a result ofindividual savings effortsEven though 64% of current retirees havedefined benefit or pension plans, an even largerpercentage say they rely on current savingsand investments, and more than half rely onincome from IRAs and/or workplace plans.Current workers are much less likely to havedefined benefit or pension plans, so it is evenmore important that they focus on their ownsavings efforts.

Fortunately, workers appear to be recognizingthis fact, as 82% said they expect theirworkplace retirement savings plan to be asource of income in retirement, with more thanhalf saying they expect employer plans to playa "major" role.

Lesson 4: Some expenses, particularlyhealth care, may be higher thanexpectedWhile most retirees said their expenses were"about the same" or "lower than expected,"approximately a third said their overallexpenses were higher than anticipated. Nearlyfour out of 10 said health care or dentalexpenses were higher.

Workers may want to take heed from this dataand calculate a savings goal that accountsspecifically for health-care expenses. They mayalso want to familiarize themselves with whatMedicare does and does not cover (e.g., dentaland vision costs are not covered) and thinkstrategically about a health savings account ifthey have the opportunity to utilize one at work.

Lesson 5: Keep debt under controlJust 26% of retirees indicated that debt is aproblem, while 60% of workers said this is thecase for them. Unfortunately, debt can hinderretirement savings success: seven in 10workers reported that their non-mortgage debthas affected their ability to save for retirement.Also consider that 32% of workers with a majordebt problem were not at all confident abouthaving enough money to live comfortably inretirement, compared with just 5% of workerswho don't have a debt problem.

As part of their overall financial strategy,workers may want to develop a plan to paydown as much debt as possible prior toretirement.

EBRI consistently finds thatsetting a savings goalincreases the level ofconfidence among today'sworkers. Despite that fact,just 42% of surveyrespondents have tried todetermine a total retirementsavings goal, and less thanone-third have tried tocalculate how much theymay need for medicalexpenses. Of those whohave calculated a totalsavings goal, 34% havefound they will need $1million or more to retirecomfortably.

Source: 2019 RetirementConfidence Survey, EBRI

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Social Security: Shoring Up America's Safety NetEver since a legal secretary named Ida MayFuller received the first Social Securityretirement check in 1940, Americans have beencounting on Social Security to provide much-needed retirement income. For many olderAmericans, Social Security is their main sourceof guaranteed retirement income — income thatcontinues throughout their lifetimes and isindexed for inflation every year (in 2019, thecost-of-living adjustment, or COLA, was 2.8%).

Social Security provides more than justretirement income, though. It also providesdisability and survivor insurance benefits. About62 million people — more than one in six U.S.residents — collected some type of SocialSecurity benefit in 2018, with approximately80% of these recipients receiving SocialSecurity retirement or survivor benefits.1

How Social Security worksSocial Security is a pay-as-you-go system,which means that payments from currentworkers (in the form of payroll taxes) fundbenefits for current beneficiaries. The payrolltax rate for Social Security is 12.4%, with 6.2%paid by the employee and 6.2% paid by theemployer (self-employed individuals pay theentire 12.4%). These payroll taxes aredeposited into the Old-Age and SurvivorsInsurance (OASI) trust fund (for retirement andsurvivor benefits) and the Disability Insurance(DI) trust fund (for disability payments).

Because of demographic and economic factors,including higher retirement rates and lower birthrates, there will be fewer workers perbeneficiary over the long term, worsening thestrain on the trust funds. This year, the trusteesof Social Security reported that the OASI trustfund is projected to run out in 2034. After that,payroll tax revenue alone would be sufficient topay 77% of scheduled benefits.

Ideas for reformThere has been little national consensus bypolicymakers on how to deal with SocialSecurity's looming demographic challenges.Meaningful reform will require broad bipartisansupport, and the trustees have urged Congressto address Social Security's challenges soonerrather than later, so that solutions will be lessdrastic and can be implemented gradually,lessening the impact on the public.

Some Social Security reform proposals on thetable include:

• Raising the current Social Security payroll taxrate — according to the 2019 trustees report,an immediate and permanent payroll taxincrease to 15.1% (up from the current12.4%) would be necessary to address the

long-range revenue shortfall (16.05% if theincrease started in 2035)

• Raising or eliminating the ceiling on wagescurrently subject to Social Security payrolltaxes ($132,900 in 2019)

• Raising the full retirement age beyond thecurrently scheduled age of 67 (for anyoneborn in 1960 or later)

• Reducing future benefits — to address thelong-term revenue shortfall, the trustees havenoted that scheduled benefits would have tobe immediately and permanently reduced byabout 17% for all current and futurebeneficiaries, or by approximately 20% ifreductions were applied only to those whoinitially become eligible for benefits in 2019 orlater

• Changing the formula that is used to calculatebenefits

• Changing the formula that is used to calculatethe annual cost-of-living adjustment forbenefits

Understand your retirement benefitsThe amount you'll receive from Social Securityis based on the number of years you've worked,the amount you've earned over your lifetime,and the age when you file for benefits. Yourbenefit is calculated using a formula that takesinto account your 35 highest earnings years,but you don't need to work for that long toqualify for retirement benefits. Generally, youneed to have earned a minimum of 40 workcredits, which is about 10 years of work in a jobcovered by Social Security. If you haven'tworked long enough to qualify on your own, youmay qualify for spousal benefits based on yourspouse's work record. A spousal benefitclaimed at your full retirement age is generallyequal to 50% of the primary worker's fullbenefit.

You can get an estimate of your future SocialSecurity retirement benefits by visiting theSocial Security website at ssa.gov and usingthe Retirement Estimator tool or by viewingyour Social Security Statement. Yourpersonalized statement contains a detailedrecord of your earnings history, as well asestimates of the retirement, survivor, anddisability benefits you can expect at differentages. To view your statement online, you'll firstneed to register. If you haven't registeredonline, you'll receive your Social SecurityStatement in the mail every year if you are age60 or older and not yet receiving benefits.1 Top Ten Facts About Social Security, Center onBudget and Policy Priorities, August 14, 2018

Future projections

In 2019, the trustees of SocialSecurity reported that theOld-Age and SurvivorsInsurance (OASI) trust fund isprojected to run out in 2034. Atthat time, payroll tax revenuealone would be sufficient to pay77% of scheduled benefits.

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Oppenheimer & Co. Inc.A Member of the PoindexterGroupDavid Casso, CFP®, CTFADirector - Investments711 Louisiana StreetSuite 1500Houston, TX 77002713-650-2056david.casso@opco.comhttp://fa.opco.com/poindextergroup/

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

The content herein should not beconstrued as an offer to sell or thesolicitation of an offer to buy anysecurity. The information enclosedherewith has been obtained fromoutside sources and is not theproduct of Oppenheimer & Co. Inc.("Oppenheimer") or its affiliates.Oppenheimer has not verified theinformation and does notguarantee its accuracy orcompleteness. Additionalinformation is available uponrequest. Oppenheimer, nor any ofits employees or affiliates, does notprovide legal or tax advice.However, your OppenheimerFinancial Advisor will work withclients, their attorneys and their taxprofessionals to help ensure all oftheir needs are met and properlyexecuted. Oppenheimer & Co. Inc.Transacts Business on all PrincipalExchanges and is a member ofSIPC.

How can I teach my high school student the importanceof financial literacy?Even though your child is justin high school, he or she maystill have to deal with certainfinancial challenges. Whether

this involves saving for an important purchaselike a car or learning how to use a credit cardresponsibly, it's important for your high schoolerto have a basic understanding of financialliteracy concepts in order to manage his or herfinances more effectively.

While financial literacy offerings in schools haveincreased in popularity, a recent study reportedthat only 17 states require high school studentsto take a personal finance course before theygraduate.1 Here are some ways you can teachhigh school students the importance of financialliteracy.

Advocate saving. Encourage your children toset aside a portion of any money they receivefrom an allowance, gift, or job. Be sure to talkabout goals that require a financialcommitment, such as a car, college, and travel.As an added incentive, consider matching thefunds they save for a worthy purpose.

Show them the numbers. Use an onlinecalculator to demonstrate the concept oflong-term investing and the power of compoundinterest. Your children may be surprised to seehow fast invested funds can accumulate,especially when you match or contribute anadditional amount each month.

Let them practice. Let older teens becomeresponsible for paying certain expenses (e.g.,clothing and entertainment). The possibility ofrunning out of their own money might makethem think more carefully about their spendinghabits and choices. It may also encourage themto budget their money more effectively.

Cover the basics. By the time your childrengraduate from high school, they should at leastunderstand the basic concepts of financialliteracy. This includes saving, investing, usingcredit responsibly, debt management, andprotection planning with insurance.1 Survey of the States, Council for EconomicEducation, 2018

When should I file the FAFSA?The FAFSA, which stands forFree Application for FederalStudent Aid, is the federalgovernment's financial aidapplication. The FAFSA is a

prerequisite for federal student loans, grants,and work-study. In addition, colleges typicallyrequire the FAFSA before distributing their ownneed-based aid and, in some cases,merit-based aid.

For the 2020-2021 school year, the FAFSA canbe filed as early as October 1, 2019. Whetheryou have a senior in high school or a returningcollege student, it's a good idea to file theFAFSA as early as possible to increase yourchild's chances of getting financial aid, becausesome aid programs operate on a first-come,first-served basis. (For high school seniors whohaven't yet been accepted at a particularcollege, you can list all the schools your childhas applied to on the form.)

The 2020-2021 FAFSA relies on your family'scurrent asset information and two-year-oldincome information from your 2018 tax return.The form is available online at fafsa.ed.gov.

In order to file the form, you'll need to create anFSA ID if you haven't done so already (be sureto follow the online instructions). You can savetime and minimize errors on the FAFSA byusing the built-in IRS Data Retrieval Tool, whichelectronically imports your tax data.

Even if you don't expect your child to qualify forneed-based aid, you still might considersubmitting the FAFSA. All students attendingcollege at least half-time are eligible for federalunsubsidized Direct Loans regardless offinancial need. So if you want your child to takeout a loan (or your child needs to do so), you'llneed to file the FAFSA. (Unsubsidized DirectLoan amounts are capped each year: $5,500freshman year, $6,500 sophomore year, and$7,500 junior and senior years.)

Keep in mind that you'll need to resubmit theFAFSA each year that you want your child to beconsidered for aid. Fortunately, renewalFAFSAs take less time to complete.

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