G. Ward Keever, IVCLU, ChFC, RHU, AEP, CFS, AIF®

HELPING YOUNGER GENERATION BRINGS CHALLENGES

As the American population ages into retirement, younger generations may be the ones responsible for picking up the pieces. There’s only one problem: the younger generation is in no position to do so.

A recent study by the Urban Institute, published on March 15, 2013, found Americans from young adulthood up to about age 40 have accrued less wealth than their parents at the same age even as the average wealth has doubled over the last quarter-century.

So, what is to blame? The truth is, it’s not a single issue. A broad range of economic factors has conspired to suppress wealth-building for younger American workers. According to the study, they face a number of issues such as stagnant pay, declining median incomes, a housing collapse, and soaring student debt.

The cost of college tuition today is just one of those economic

factors. “Rising tuition threatens to discourage all, but the well-off, from going to and finishing college, restraining future economic growth, and widening the gap between winners and losers in the U.S. economy,” wrote David Wessel, economics editor and columnist for The Wall Street Journal. “The College Board says over the past 20 years, the inflation-adjusted average published cost of tuition and fees at a four-year state university have more than doubled. Factor in scholarships and tax breaks and it’s still up more than 50 percent. “Over the same period, the income of the typical family in the middle class has risen only seven percent. That’s one reason student borrowing is up so much,” he noted in the same recent article.

In addition to these challenges, public policy now burdens the young with ever-increasing interest payments on the federal debt. The study says the cost of preserving retirement and health benefits for older Americans and baby boomers should not be passed on to younger generations that have already been losing out on their share of private wealth. If current trends are not reversed, today’s younger Americans may be more dependent when they retire on safety net programs that are less capable of providing basic support, according to the study. “In this country, the expectation is that every generation does better than the previous generation,” said Caroline Ratcliff, an author of the study. “This is no longer the case. This generation might have less.”

Over the years, we have seen increasing numbers of parents and grandparents spending more than

they anticipated for their children and grandchildren. And, with increased longevity, this may affect their own retirement plans in the years ahead.

Take the first step to ensure your retirement by doing a financial plan. It’s crucial to helping you decide the amount you can contribute, if any, and how it might affect your own retirement. No matter what issues either generation face, having a plan helps ensure you’ve done everything you can to prepare yourself for the challenges of the future. And, that is a responsibility both generations must realize.

Study Source: http://www.urban.org/publications/412766.html

If you’re interested in learning more, please contact us at 302-234-5655, option 1, or send an e-mail to ward@covenantwealthstrategies.com

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Identity theft is a crime in which an individual illegally obtains and wrongfully uses another person’s personal information - such as a Social Security number, bank account number, or credit card number - generally for financial gain. Once a thief has possession of your personal information, it may be used to obtain a loan, run up credit card debt, or commit other crimes. The U.S. Department of Justice recommends that individuals take four steps to help protect themselves against identity theft. These steps are represented by the acronym SCAM.³

S — Be stingy when it comes to giving out your personal information. Make sure the person requesting the information is on a “need-to-know” basis. For example, someone who claims to be calling from your bank does not need to know your mother’s maid-en name if it’s already on file with the bank.

C — Check your financial information periodically. If you get hard-copy credit card or bank statements mailed to you, consider keep-ing these documents in a safe, secure location. Be skeptical if it appears the financial institution missed a month. Identity thieves may try to change the address on your accounts to keep their actions hidden from you for as long as possible.

A — From time to time, ask for a copy of your credit report. This report shows bank and financial accounts in your name and may help provide evidence if someone has used your name to open another account. To obtain a report, contact any of the three major credit bureaus, Equifax, Experian, or Transunion.

M — Maintain good records of your financial accounts and obligations. Experts recommend that you keep hard copies or electronic versions of monthly bank and credit card statements. Easy access to this information may make it easier to dispute a transaction, especially if your signature has been forged.

Ward, Chris, Randy and the team at Covenant Wealth Strategies are pleased to announce and welcome our newest team member, Keva Ann Mendola. Keva began her career at Wilmington Trust Company working her way from a customer service representative to a branch sales manager in five years. She managed three different offices and became registered Series 6 & 63 before leaving after 13 years to pursue other interests. After working sever-al sales positions, she landed a contracting job with Grace Consulting which resulted in a long term project at Johnson & Johnson. She is pleased to now join the Covenant Wealth Strategies team.

COVENANT WELCOMES KEVA ANN MENDOLA,DIRECTOR OF OPERATIONS

Keva grew up in Wilmington, Delaware. She received her BS in Business Management from Widener University. She lives in Hockessin with her husband, Chuck and Beasley the cat. She enjoys reading, exercising, riding her bike, try-ing new restaurants, going to the beach, traveling, meeting new people and spending time with family and friends. Welcome Keva!

STONE BARN SPEAKER SERIESIdentity TheftThursday, September 18, 2014 Time: 6:30-8:30 pmSave the date -we hope you can join us!

Christopher Vincent AIF®Financial Consultant

Some retirement plans are allowing Roth conversionsForty years ago, the Stanford marshmallow experiment explored self-control by offering preschool-ers a choice: Take a marshmallow immediately and get only one or wait to take a marshmallow and get two. Some chose the first option; others the second. Soon, partici-

pants in some 401(k), 403(b), and 457 plans may be faced with a com-parably difficult choice. In its most abbreviated form the decision boils down to this: Do you want taxable or tax-free income when you retire?

Recent legislation has made it pos-sible for plan sponsors to allow plan participants to convert their Traditional employer-sponsored retirement plan accounts into Roth accounts. Participants may either continue to make Traditional pre-tax contributions to their plans, let their assets grow tax-deferred, and receive taxable distributions during retirement or they can pay taxes to-day, let their assets grow tax-free, and take tax-free distributions as long as certain requirements are met.

Traditional and Roth 401(k) Plan Options

The type of employer-sponsored retirement plan account you have – Traditional or Roth – determines how the money you save in the plan may be taxed today and in the fu-ture. Typically, contributions to Tra-ditional retirement plan accounts are made with before-tax dollars so these contributions can reduce your current taxable income. Any earnings in Traditional accounts grow tax-deferred until withdrawn, which generally is at retirement. Currently, distributions from Tradi-tional retirement plan accounts are taxed as ordinary income. Savings in Roth retirement plan accounts, on the other hand, are made with after-tax dollars so they do not re-duce taxable income today. Howev-er, any earnings in these accounts grow tax-free and qualified distri-butions are federally tax-free.

Roth retirement plan contributions have been around for less than a decade and were relatively slow to catch on when they were first in-troduced. As a result, if you started saving in a retirement plan at work more than five years ago, it’s like-ly all or most of your contributions were made to a Traditional plan account. Since 2007, the number of employers allowing Roth contri-butions has grown from 11 to 50 percent, according to a 2013 study from Aon Hewitt. In 2013, about 30 percent of plans that offered Roth contribution options also allowed in-plan Roth rollovers or conver-sions. Another 16 percent of plan sponsors are expected to add the feature by the end of 2014.

Roth In-plan Conversions

In-plan Roth conversions are not new. Since the Small Business Jobs Act passed in 2010, plan partici-pants who qualified to take distri-butions – generally meaning they had reached retirement age, were retiring, or were leaving their em-ployer – were eligible to convert all or part of a Traditional plan account into a Roth account. That changed with the American Taxpayer Relief Act of 2012 (ATRA) which makes it possible for full or partial conver-sions to take place without a qual-ifying event, as long as the plan sponsor allows it.

Is a Roth Conversion Right for You?

The idea of having tax-free income in retirement can be appealing, but Roth conversions are not right for everyone. Here are some things to consider when weighing the pros and cons:

A CHOICE: TAXABLE OR TAX-FREE INCOME IN RETIREMENT?

• Current and future tax brack-ets: If you’re young and expect your tax bracket will increase over time, a Roth may make sense, es-pecially if your tax bracket in retire-ment is likely to be higher than it is now. If you expect to be in a lower tax bracket in retirement, a Roth may not be for you.

• Higher tax bill this year: Roth conversions require you to pay income taxes on any amounts converted in the year of the con-version. You should have non-re-tirement plan savings available to pay these taxes so you don’t incur withdrawal penalties.

• Required Minimum Distribu-tions (RMDs): If you won’t need the assets in your plan account and would like to avoid RMDs after you reach age 70½, a rollover into a Roth Individual Retirement Ac-count (IRA) may be a good choice since Roth IRAs do not require withdrawals until after the death of the owner. Roth 401(k) accounts are subject to RMDs.

• Inheritance and estate plans: Since RMDs are not required if you have a Roth IRA, rolling Roth plan assets into a Roth IRA may allow you to provide your heirs with tax-free income over their lifetimes, as well as years and years of potential tax-free growth.

If you’re intrigued by the idea of a Roth conversion and would like to learn more, talk with your finan-cial advisor and/or tax profession-al. They can help you determine whether an in-plan conversion makes sense for you.

Sources:http://www.aon.com/attachments/human-capital-consult-ing/2013_report_Trends-Experience-DC-Plans_Highlights.pdfhttp://www.forbes.com/sites/ashleaebeling/2014/01/03/the-in-plan-401k-roth-conversion-strategy/http://www.irs.gov/pub/irs-drop/n-13-74.pdfhttp://www.forbes.com/pictures/mjh45kmmj/1-your-feder-al-rate-is-headed-up-4/http://www.forbes.com/pictures/mjh45kmmj/3-you-wont-need-your-ira-at-70-12-4/h t t p : / / w w w. i r s . g o v / R e t i r e m e n t - P l a n s / R e t i r e -ment-Plans-FAQs-regarding-Required-Minimum-Distributionshttp://www.forbes.com/pictures/mjh45kmmj/4-youre-leav-ing-money-to-grandkids-4/http://www.reuters.com/article/2013/01/24/us-col-umn-mer-rothconversion-idUSBRE90N0P520130124

The opinions voiced in this material are for general informa-tion only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your fi-nancial advisor prior to making an investment decision.

Roth account distributions may be tax-free and penalty-free as long as you’ve had the account for five or more years and you are age 59½ or older, disabled, making a qualified first-time home purchase, or deceased.

The above material was prepared by Peak Advisor Alliance.

DOCUMENT HOW LONG TO KEEP ITBank Statements 1 year, unless needed to support

tax filingsBirth Certificate, Marriage License, Divorce Decrees, Passport, Education Record, Military Service Record

Forever

Contracts Until updatedCredit Card Records Until paid, unless needed to sup-

port tax filingsHome Purchase & Improvement Records

As long as you own the property

Household Inventory Forever; update as neededInsurance: Life ForeverInsurance: Car, Home, etc Until you renew the policyInvestment Statements Shred your monthly statements;

keep annual statements until you sell the investments

Investment Certificates Until you cash or sell the itemLoan Documents Until you sell the item the loan

was forReal Estate Deeds As long as you own the propertyReceipts for Large Purchases Until you sell or discard the itemService Contracts & Warranties Until you sell or discard the itemSocial Security Card ForeverSocial Security Statement When you get your new state-

ment online, shred the old oneTax Records 7 years from the filing dateVehicle Titiles Until you sell or dispose of the carWill Until updated

HOW LONG SHOULD YOU KEEP DOCUMENTS?

Source: http://www.USA.gov/Topics/Money/Personal-Finance/Managing-Household-Records.shtml

Social Security is one of the most popular programs the federal gov-ernment has ever put into place. In total, about 57 million Americans received retirement, disability, or survivors’ benefits during 2012 at a cost of about $786 billion. Social Security retirement benefits were received by nine of 10 people age 65 or older during 2012 and were a major source of income for more than two-thirds of retirees.

It may not be surprising in light of the financial challenges Americans have faced during the past few years, but the percentage of peo-ple claiming Social Security retire-ment benefits at the earliest pos-sible age increased by more than

2 pecentage points between 2007 and 2009. According to one expert, 41 percent of men and 46 percent of women receive the smallest pos-sible retirement benefit available to them because they claimed early at age 62.

While some Americans may have had little choice about when to claim benefits, it’s important for those who do claim these benefits to plan and make informed deci-sions because Social Security retire-ment benefits are more complex than many understand. On his web-site, Boston University Economics Professor Laurence Kotlikoff point-ed out:

“Social Security offers retirement, spousal, widow, widower, child, mother and father, and divorcee benefits. It has highly complex ben-efit formulas which include wage indexation of past covered earn-ings, benefit-specific reduction for-mulas for collecting benefits early, an earnings test, deeming provi-sions that limit when married and divorced people can take particular benefits, delayed retirement cred-its, credits for getting hit by the earnings test, indexation of ben-efits to inflation, a family benefit maximum, a “file and suspend” op-tion permitting you to collect free spousal benefits while you defer your retirement benefit, the option to start your benefits early, suspend them, and restart them later, Wind-fall Elimination and Government Pension Offset provisions that lim-it retirement and spousal benefits available to workers with non-cov-ered employment histories, and the list goes on.”

Is it worth the effort?Some Americans are skeptical about

whether Social Security benefits will be available when they reach retirement age. Social Security’s reserves, which were built up over three decades when the system took in more revenue than it paid out, are expected to be depleted sometime in the early 2030s. Once reserves run out, the tax revenue that funds Social Security will cov-er just three-fourths of scheduled benefits.

There are a variety of options that might help keep Social Security vi-able including revising benefit for-mulas, raising taxes, raising the cap on taxable income, increasing re-tirement age, or some combination of all of these. Regardless of the challenge and the expense, the vast majority of Americans want to see the program continue, according to a 2013 study by the Pew Research Center. In fact, 90 percent of Ameri-cans want spending on Social Secu-rity to remain as it is or increase.

Americans’ reasons for wanting to preserve Social Security often are personal; however, the AARP (for-merly the American Association of Retired Persons) recently argued there are economic reasons for keeping the program in place, as well. A study released by the AARP Public Policy Institute suggested So-cial Security payments during 2012 supported about:

• 9.2 million jobs• $1.4 trillion in economic output (goods and services)• $774 billion in value added (gross domestic product)• $370 billion in salaries, wages, and other compensation• $222 billion in tax revenues for lo-cal, state, and federal governments

SOCIAL SECURITY PLANNING:IS IT NECESSARY?

Randy Eveland CFP®

Financial Consultant

The study also pointed out a sig-nificant portion of these benefits might be offset if the Social Secu-rity program was modified. In that circumstance, payroll taxes that are currently withheld from work-ers’ paychecks would drop and the take-home pay of many Amer-icans would increase. It is uncertain whether the money would be spent or saved.

Social Security PlanningWhether you believe Social Secu-rity retirement benefits could or should be modified, it’s important to understand the options available to you, as well as the role benefits may play in your overall retirement plan. In some cases, particularly when it comes to spousal bene-fits, maximizing social security in-come can be quite complex. Here are some basic questions you may need to answer before you make any decisions:

• At what age can you receive full Social Security retirement benefits? (Hint: If you were born after 1943, it’s not age 65.)• How much will your potential retirement income change if you choose to receive benefits early or late? (If you had maximum taxable earnings and live to age 85, the dif-ference between early and full ben-efits received over a lifetime is tens of thousands of dollars. The differ-ence between early and late bene-fits is more than $150,000.)• Can your spouse, who doesn’t work outside the home, receive So-cial Security benefits while you’re alive?• If you and your spouse both work, when should you apply to re-ceive the highest benefits possible?• How will earnings from work during retirement affect my bene-

fits? (Hint: It depends on the age at which you take benefits.)

Recent studies have found few peo-ple understand the dollar value of the decisions they make about So-cial Security benefits. Social Securi-ty planning ensures you understand the amount of income Social Secu-rity may provide in various circum-stances and develop strategies that can help maximize the benefits you receive. For couples, making the most of spousal retirement ben-efits generally requires decisions about when to collect Social Securi-ty benefits be coordinated and con-sidered within the context of other retirement income sources.

Financial planning is a processThe pursuit of financial security is an ongoing activity. If your goal is to maximize retirement income, then Social Security planning should be a component of your retirement strategy and overall financial plan. Of course, like any other plan, it may need to be modified as your personal circumstances change or as government regulations are al-tered.

If you would like to learn more about maximizing Social Security retirement benefits or developing a plan for your financial future, please contact our office.

Sources:h t t p : / / w w w . p e w r e s e a r c h . o r g / f a c t -tank/2013/10/16/5-facts-about-social-security/http://www.aarp.org/content/dam/aarp/research/public_policy_institute/econ_sec/2013/social-securi-ty-impact-national-economy-AARP-ppi-econ-sec.pdfhttp://www.ebri.org/pdf/surveys/rcs/2013/Final-FS.RCS-13.FS_2.Expects.FINAL.pdf (Page 5)http://www.socialsecurity.gov/retirementpolicy/re-search/early-claiming.htmlhttp://www.aarp.org/work/social-security/info-10-2013/when-to-claim-social-security-benefits.htmlhttp://www.fa-mag.com/news/many-amer i -cans-to-take-social-security-at-age-62-3589.htmlhttp://www.maximizemysocialsecurity.com/content/abouthttp://www.financial-planning.com/30-days-

30-ways-2013/soc ia l -secur i ty-how-to-maxi -mize-both-spouses-benefits-2686723-1.htmlhttp://www.gallup.com/poll/1693/social-security.aspxhttp://assets.aarp.org/rgcenter/general/social-secu-rity-assessing-knowledge-of-benefits.pdf (Pages 7, 8, 10, 11, and 76)http://www.ssa.gov/retire2/agereduction.htmhttp://www.ssa.gov/retire2/whileworking3.htmhttp://www.ssa.gov/oact/cola/examplemax.html

The above material was prepared by Peak Advisor Al-liance.

Covenant Welcomes Jeffrey KleintopCovenant was pleased to host and welcome Jeffrey Kleintop to the Stone Barn. Jeffrey is the Chief Market Strategist for LPL Fi-nancial. He provided commentary on the market and forecasts for 2014. We had a full house and all the clients in attendance en-joyed the evening and Jeffrey’s captivating presentation. Please join us for our 2014 Stone Barn Speaker Series events!

2014 LPL Financial Summit in MonacoWard recently attended the 2014 LPL Financial Summit Meeting in Monaco. Ward was invited to attend this conference as he re-cently achieved Chairman’s Council within LPL Financial. This rec-ognized Ward as being in the top 2% of all the financial advisors in the nation based on total production. Ward had the opportu-nity to meet and discuss market trends with several lead market strategists for LPL Financial including Burt White, Chief Invest-ment Officer for LPL Financial, and Robert Moore, President of LPL Financial.

NEWS & EVENTS

Randy, Chris, Jeffrey Kleintop & Ward at the Stone Barn Speaker Series

Dan Keever, Mario Andretti & Ward at the Summit Conference

Ward & Dan at the marina in Monaco

Ward brought his youngest son, Dan, on the trip. They had the honor of meeting several guests including Mario Andretti. During their trip, Ward and Dan had an opportunity to tour the city and see the sights. It is not sur-prising that one of Ward’s favorite sights was the marina!

Eileen, Randy, Chris, Ward & Dan Keever at Shred Day.

SHRED DAYOn Saturday April 12, 2014, Covenant hosted our third annual Shred Day event. We had over 75 people who attended the event, and they brought bags and boxes of material to shred. It was a beautiful sunny spring day and we had an opportunity to visit with our clients and with our neighbors in Limestone Hills and the surrounding area. We plan to have Shred Day again next year so look for more information in the spring of 2015!

NEWS & EVENTS

John Hancock Investment SymposiumChris and Peter recently traveled to Boston to attend the John Han-cock Investment Symposium. They met with portfolio Managers and top executives from LPL Financial for a two day investment conference. They were able to obtain updates from managers regarding the John Hancock 529 and the John Hancock Lifestyle portfolios.

LPL Alternative Investments SymposiumIn February, Ward and Peter attended the LPL Alternative Investments Symposium in New York City. Several keynote speakers addressed the audience of top LPL Financial advi-sors and discussed various alternative investment strategies and global economic and market outlooks. Ward had the opportunity to meet and talk with J. Kyle Bass, founder and principal of Hayman Capital Management, as well as Leon David Black, an American businessman who specializes in leveraged buyouts and private equity and the founder of the private equity firm Apollo Global Management. Ward also spoke with Wilbur Ross, a private investor known for re-structuring failed companies in industries in addition to lev-eraged buyouts and distressed businesses. He was named in Forbes in the fall of 2013 as one of the 400 Richest People in America. By attending this symposium, Ward and Peter heard economic updates and gained new insights regarding the growing popularity of alternative products and strate-gies from some of the most respected leaders in the invest-ment industry.

Ward and Leon Black

Ward and Wilbur Ross

Chris & Peter at the John Hancock Symposium

Coming soon…. Our New Website: Our new website will be released very soon. It offers new features and tools as well as an expanded resource library of valuable articles and vid-eos on various financial and lifestyle topics. An app will also be available for your mobile devices.

CONTACT OUR TEAM

15 Middleton DriveWilmington, DE 19808

302.234.5655 (option 1)www.covenantwealthstrategies.com

Tina NorcrossDirector of Special Servicestina@covenantwealthstrategies.com

Eileen G. RogersDirector of Client Serviceseileen@covenantwealthstrategies.com

Peter BawuahResearch Assistantpeter@covenantwealthstrategies.com

G. Ward Keever, IVCLU, ChFC, RHU, AEP, CFS, AIF®President and CEOward@covenantwealthstrategies.com

Christopher Vincent, AIF®Financial Consultantchris@covenantwealthstrategies.com

Randy Eveland, CFP®Financial Consultantrandy@covenantwealthstrategies.com

Cathy BlilerAdministrative Assistantcathy@covenantwealthstrategies.com

Keva Ann MendolaDirector of Operationskeva@covenantwealthstrategies.com