Bell FinancialJesse Bell, CFP®, AIF®, ChFC®President312 N FirstIshpeming, MI 49849906-485-1400800-439-0969jbell@bellfs.comwww.bellfs.com

October 2017Managing Debt While Saving for Retirement

Test Your Investing IQ

Is the Social Security Administration stillmailing Social Security Statements?

Chart: Young Adult Milestones, 1975 vs. 2016

From Data Breaches to Ransomware: How to Avoid Becomingthe Victim of a Cybercrime

See disclaimer on final page

Dear Friends:

As summer wanes, I happily reflecton the season gone by. It was abusy and exciting summer for meboth professionally and personally.The highlight was certainly gettingmarried to my long-time partner,Christina. We were wed in a small,beautiful ceremony overlooking LakeSuperior surrounded by family andfriends. I feel very fortunate to haveher as a partner in life and look tothe future with optimism andexcitement.

Jesse

"You may delay, but time will not".

-Benjamin Franklin

Each time youconnect to theInternet, you riskbecoming the victimof a cybercrime. It'sthe price we pay forliving in a digitalworld — whether it'sat home, at work, oron your smartphone.

According to theIdentity Theft Resource Institute, the number ofU.S. data breaches in 2016 increased by 40%.And as recently as May 2017, a widespread"ransomware" attack targeted personalcomputers across the globe. While softwarecompanies are continually developingstrategies to combat the latest cybercrimes,there are some steps you can take to helpprotect yourself online.

The stronger, the betterIt's a scary thought — most of us have a largeamount of financial and personal informationthat's readily accessible through the Internet, inmost cases protected by nothing more than ausername and password.

Create a strong password by using acombination of lower- and upper-case letters,numbers, and symbols or by using a randomphrase. Avoid using a password with yourpersonal information such as your name andaddress. In addition, have a separate andunique password for each account or websitethat you use.

If you have trouble keeping track of all yourpassword information or you want an extra levelof password protection, consider usingpassword management software. Passwordmanager programs generate strong, uniquepasswords that you control through a singlemaster password.

Follow the 3-2-1 ruleBacking up your online data is critical to avoidlosing valuable information due to a cyberattack. If you have digital assets that you don'twant to risk losing forever, you should back

them up regularly. This pertains to data storedon both personal computers and mobiledevices.

When backing up data, a good rule to follow isthe 3-2-1 rule. This rule helps reduce the riskthat any one event — such as a computer hackergaining access to your computer — willcompromise your primary data and backups. Inorder to follow the 3-2-1 rule:

• Have at least three copies of your data (thismeans a minimum of the original plus twobackups)

• Use at least two different formats (e.g., harddrive and cloud-based service)

• Ensure that at least one backup copy isstored in a separate location (e.g.,safe-deposit box)

Stay one step aheadFinally, the best way to avoid becoming thevictim of a cybercrime is to stay one step aheadof the cybercriminals. Here are some extraprecautions you can take before you go online:

Consider using two-step authentication.Two-step authentication, which involves using atext or email code along with your password,provides another layer of protection for yoursensitive data.

Keep an eye on your accounts. Notify yourfinancial institution immediately if you seesuspicious activity. Early notification not onlycan stop the cyber thief but may limit yourfinancial liability.

Think twice before clicking. Beware of emailscontaining links or asking for personalinformation. Never click on a link in an email ortext unless you know the sender and have aclear idea where the link will take you.

Be careful when you shop. When shoppingonline, look for the secure lock symbol in theaddress bar and the letters https: (as opposedto http: ) in the URL. Avoid using public Wi-Finetworks for shopping, as they lack secureconnections.

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Managing Debt While Saving for RetirementIt's a catch-22: You feel that you should focuson paying down debt, but you also want to savefor retirement. It may be comforting to knowyou're not alone.

According to an Employee Benefit ResearchInstitute survey, 18% of today's workersdescribe their debt level as a major problem,while 41% say it's a minor problem. Andworkers who say that debt is a problem are alsomore likely to feel stressed about theirretirement savings prospects.1 Perhaps it's nosurprise, then, that the largest proportion (21%)of those who have taken a loan from theiremployer-sponsored retirement plans havedone so to pay off debt.2 Borrowing from yourplan can have negative consequences on yourretirement preparedness down the road. Loanlimits and other restrictions generally apply aswell.

The key in managing both debt repayment andretirement savings is to understand a few basicfinancial concepts that will help you develop astrategy to tackle both.

Compare potential rate of return withinterest rate on debtProbably the most common way to decidewhether to pay off debt or to make investmentsis to consider whether you could earn a higherrate of return (after accounting for taxes) onyour investments than the interest rate you payon the debt. For example, say you have a creditcard with a $10,000 balance that carries aninterest rate of 18%. By paying off that balance,you're effectively getting an 18% return on yourmoney. That means your investments wouldgenerally need to earn a consistent, after-taxreturn greater than 18% to make saving forretirement preferable to paying off that debt.That's a tall order for even the most savvyprofessional investors.

And bear in mind that all investing involves risk;investment returns are anything butguaranteed. In general, the higher the rate ofreturn, the greater the risk. If you makeinvestments rather than pay off debt and yourinvestments incur losses, you may still havedebts to pay, but you won't have had the benefitof any gains. By contrast, the return that comesfrom eliminating high-interest-rate debt is a surething.

Are you eligible for an employer match?If you have the opportunity to save forretirement via an employer-sponsored plan thatmatches a portion of your contributions, thedebt-versus-savings decision can become evenmore complicated.

Let's say your company matches 50% of yourcontributions up to 6% of your salary. Thismeans you're essentially earning a 50% returnon that portion of your retirement accountcontributions. That's why it may make sense tosave at least enough to get any employermatch before focusing on debt.

And don't forget the potential tax benefits ofretirement plan contributions. If you contributepre-tax dollars to your plan account, you'reimmediately deferring anywhere from 10% to39.6% in taxes, depending on your federal taxrate. If you're making after-tax Rothcontributions, you're creating a source oftax-free retirement income.3

Consider the types of debtYour decision can also be influenced by thetype of debt you have. For example, if youitemize deductions on your federal tax return,the interest you pay on a mortgage is generallydeductible — so even if you could pay off yourmortgage, you may not want to. Let's say you'repaying 6% on your mortgage and 18% on yourcredit card debt, and your employer matches50% of your retirement account contributions.You might consider directing some of youravailable resources to paying off the credit carddebt and some toward your retirement accountin order to get the full company match, whilecontinuing to pay the mortgage to receive thetax deduction for the interest.

Other considerationsThere's another good reason to explore ways toaddress both debt repayment and retirementsavings at once. Time is your best ally whensaving for retirement. If you say to yourself, "I'llwait to start saving until my debts arecompletely paid off," you run the risk that you'llnever get to that point, because your goodintentions about paying off your debt may falter.Postponing saving also reduces the number ofyears you have left to save for retirement.

It might also be easier to address both goals ifyou can cut your interest payments byrefinancing debt. For example, you might beable to consolidate multiple credit cardpayments by rolling them over to a new creditcard or a debt consolidation loan that has alower interest rate.

Bear in mind that even if you decide to focus onretirement savings, you should make sure thatyou're able to make at least the minimummonthly payments on your debt. Failure to doso can result in penalties and increased interestrates, which would defeat the overall purpose ofyour debt repayment/retirement savingsstrategy.

1 Employee BenefitResearch Institute, 2017Retirement ConfidenceSurvey2 Employee BenefitResearch Institute, 2016Retirement ConfidenceSurvey3 Distributions from pre-taxaccounts will be taxed atordinary income tax rates.Early distributions frompre-tax accounts andnonqualified distributions ofearnings from Rothaccounts will be subject toordinary income taxes and a10% penalty tax, unless anexception applies. Employercontributions will always beplaced in a pre-tax account,regardless of whether theymatch pre-tax or Rothemployee contributions.

Page 2 of 4, see disclaimer on final page

Test Your Investing IQHow much do you know about market basics?Put your investing IQ to the test with this quizon stocks, bonds, and mutual funds.

Questions1. What does it mean to buy stock in acompany?

a. The investor loans money to the company

b. The investor becomes a part owner of thecompany

c. The investor is liable for the company's debts

2. Which of the following statements aboutstock indexes is correct?

a. A stock index is an indicator of stock pricemovements

b. There are many different types of stockindexes

c. They can be used as benchmarks tocompare the performance of an individualinvestment to a group of its peers

d. All of the above

3. What is a bond?

a. An equity security

b. A nonnegotiable note

c. A debt investment in which an investor loansmoney to an entity

4. What kind of bond pays no periodicinterest?

a. Zero-coupon

b. Floating-rate

c. Tax-exempt

5. What is a mutual fund?

a. A portfolio of securities assembled by aninvestment company

b. An investment technique of buying a fixeddollar amount of a particular investmentregularly

c. A legal document that provides details aboutan investment

6. What is the difference between mutualfund share classes?

a. The investment advisers responsible formanaging each class

b. The investments each class makes

c. The fees and expenses charged by eachfund class

Answers1. b. The investor becomes a part owner ofthe company. Stocks are often referred to asequities because they represent an ownershipposition. As part owners, shareholders assumeboth the potential financial risks and benefits ofthis position, but without the responsibility ofrunning the company.

2. d. All of the above. A stock index measuresand reports value changes in representativestock groupings. A broad-based stock indexrepresents a diverse cross-section of stocksand reflects movements in the market as awhole. The Dow Jones Industrial Average,NASDAQ Composite Index, and S&P 500 arethree of the most widely used U.S. stockindexes. There are also more narrowly focusedindexes that track stocks in a particular industryor market segment.

3. c. A debt investment in which an investorloans money to an entity. Unlikeshareholders, bondholders do not haveownership rights in a company. Instead,investors who buy bonds are lending theirmoney to the issuer (such as a municipality or acorporation) and thus become the issuer'screditors.

4. a. Zero-coupon. Unlike many types ofbonds, zero-coupon bonds pay no periodicinterest. They are purchased at a discount,meaning the purchase price is lower than theface value. When the bond matures, thedifference between the purchase price and thatface value is the investment's return.

5. a. A portfolio of securities assembled byan investment company. A mutual fund is apooled investment that may combine dozens tohundreds of stocks, bonds, and other securitiesinto one portfolio shared by many investors.

6. c. The fees and expenses charged byeach fund class. A mutual fund may offervarious share classes to investors, mostcommonly A, B, and C. This gives an investorthe opportunity to select a share class bestsuited to his or her investment goals.

Mutual funds are sold by prospectus. Pleaseconsider the investment objectives, risks,charges, and expenses carefully beforeinvesting. The prospectus, which contains thisand other information about the investmentcompany, can be obtained from your financialprofessional. Be sure to read the prospectuscarefully before deciding whether to invest.

All investing involves risk,including the possible loss ofprincipal, and there can be noassurance that any investmentstrategy will be successful.Generally, the more potentialfor growth offered by aninvestment, the more risk itcarries.

The performance of anunmanaged index is notindicative of the performance ofany specific security.Individuals cannot investdirectly in such an index.

Because zero-coupon bondsdo not pay interest untilmaturity, their prices tend to bemore volatile than bonds thatpay interest regularly. Interestincome is subject to ordinaryincome tax each year, eventhough the investor does notreceive any income payments.

The return and principal valueof stocks, bonds, and mutualfunds may fluctuate withmarket conditions. Shares,when sold, and bondsredeemed prior to maturity maybe worth more or less thantheir original cost.

Page 3 of 4, see disclaimer on final page

Bell FinancialJesse Bell, CFP®, AIF®,ChFC®President312 N FirstIshpeming, MI 49849906-485-1400800-439-0969jbell@bellfs.comwww.bellfs.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

The accompanying pages havebeen developed by an independentthird party. CommonwealthFinancial Network is notresponsible for their content anddoes not guarantee their accuracyor completeness, and they shouldnot be relied upon as such. Thesematerials are general in nature anddo not address your specificsituation. For your specificinvestment needs, please discussyour individual circumstances withyour representative.Commonwealth does not providetax or legal advice, and nothing inthe accompanying pages should beconstrued as specific tax or legaladvice. Securities and advisoryservices offered throughCommonwealth Financial Network,member FINRA/SIPC, a registeredinvestment adviser. FixedInsurance products and servicesoffered by Bell Financial areseparate and unrelated toCommonwealth.

Chart: Young Adult Milestones, 1975 vs. 2016The following pie charts compare four common milestones of adulthood — getting married, havingchildren, working, and living independently — achieved by young adults ages 25 to 34 in 1975 and2016. The data indicates that the experiences of young people today are more diverse, withfewer accomplishing all four milestones in young adulthood. Instead, many young adults aredelaying or forgoing some experiences (marrying and having children) in favor of others (livingindependently and gaining work experience).

Source: U.S. Census Bureau, "The Changing Economics and Demographics of Young Adulthood:1975-2016," April 2017

Is the Social Security Administration still mailing SocialSecurity Statements?Your Social SecurityStatement provides importantinformation about your SocialSecurity record and future

benefits. For several years, the Social SecurityAdministration (SSA) mailed these statementsevery five years to people starting at age 25,but due to budgetary concerns, the SSA hasstopped mailing Social Security Statements toindividuals under age 60.

Workers age 60 and over who aren't receivingSocial Security benefits will still receive paperstatements in the mail, unless they opt to signup for online statements instead. If you're age60 or older, you should receive your statementevery year, about three months before yourbirthday. The SSA will mail statements uponrequest to individuals under age 60.

However, the quickest way to get a copy ofyour Social Security Statement is to sign up fora my Social Security account at the SSAwebsite, ssa.gov. Once you've signed

up, you'll have immediate access to yourstatement, which you can view, download, orprint. Statement information generally includesa projection of your retirement benefits at age62, at full retirement age (66 to 67), and at age70; projections of disability and survivorbenefits; a detailed record of your earnings; andother information about the Social Securityprogram.

The SSA has recently begun using a two-stepidentification method to help protect my SocialSecurity accounts from unauthorized use andpotential identity fraud. If you've neverregistered for an online account or haven'tattempted to log in to yours since this change,you will be prompted to add either your cellphone or email address as a secondidentification method. Every time you enter youraccount username and password, you will thenbe prompted to request a unique security codevia the identification method you've chosen,and you need to enter that code to completethe log-in process.

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