Reports from late 2019 and early 2020 have identified numerous restaurant and food chains that either closed or plan on closing stores across the country. Although each brand has specific reasoning for closing particular stores, the status of the economy certainly has an impact. In a strong economy, increased competition and strategic marketing decisions have a large impact on the success of brands. 

According to the Restaurant Performance Index, prepared by the National Restaurant Association, restaurants have been successful during recent years. The index shows restaurants have erred on the side of expansion despite periods of contraction since 2017. Although the restaurant industry has remained successful as a whole, there are a number of brands that are rapidly closing their doors. 

Many of these brands include Starbucks, Pizza Hut, Burger King, Subway, and Taco Bell. One of the biggest reasons why stores close their doors is because of performance issues. Ultimately, performance issues can be traced back to the company’s marketing decisions – product, placement, pricing, and promotion. Executives of Red Robin have identified placement, specifically in shopping malls as an issue. One of the more obvious reasons is that malls do not filter as much traffic as they did before online shopping became mainstream. By reducing the volume of customers traveling throughout the mall, the restaurant’s location faltered in response. Other companies have identified promotion as they struggle to attract newer and younger customers. Chains that were established before the 1950’s like Roy Rogers, Perkins, and Friendly’s have all been victims of this and forced to close stores as a result. 

At the same time while some brands are closing their doors, there are a number of brands that are thriving due to a steadily increasing competitive market in the food service industry. An increase in health-conscious consumers have leveraged companies to update their menu and as a result there has been a boom in Beyond Meat products. Companies like Burger King and Dunkin have incorporated Beyond Meat into their products while bringing in spokespeople like Snoop Dogg for promotions. Similarly, the market for chicken sandwiches has expanded exponentially as companies like Chick-Fil-A and Popeyes fight for dominance while other fast food places, such as McDonald’s, struggle for a share of the market. 

Another confounding variable affecting the food service industry is the way customers place orders. Similarly to online shopping, consumers are ordering more food from their mobile devices. Apps like GrubHub, DoorDash, and UberEats are all having effects on how individuals takeout food, especially from restaurants. Rather than physically going out to eat, consumers can order food from their favorite foodery, have it delivered and eat it in the comfort of their home. When customers do physically go out to eat, middle age and younger individuals tend to prefer fast food over traditional dine-in establishments. 

Overall, while some chains close certain restaurants it is in large part a reflection of a strong, robust economy. There are countless options for individuals to choose from when they want to eat, and they are typically bunched together in populated urban areas. Health conscious consumers have flooded a saturated market and chains that have been able to adjust and offer products to fulfill their needs have performed well in recent years. Other chains that have struggled to adapt have seen their sales decline and have not been able to compete. Therefore, in a competitive market some companies are able to set themselves apart from their competitors and thrive while other brands are forced to mitigate losses, typically by shutting down stores. Considering that labor and technology costs are on the rise as well, companies that are having trouble competing are more likely to downsize. All in all, the struggles of certain brands to stay relevant is a reflection of this strong, competitive economy.  

Social Security is becoming a hot topic once again as the trust funds responsible for the benefit are set to be depleted by 2035. According to projections from a 2019 report by the Board of Trustees for the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, the cost of the OASI and DSI funds will exceed the amount of money coming into the funds. While they cited suggestions to ensure their solvency, the largest takeaway was that if nothing is done by 2035, dramatic policy changes will be necessary to maintain the payout of benefits. 

If no action is taken on Social Security, the report provided several examples of what would need to be done once the funds are depleted. As anticipated, their suggestions consisted of raising taxes, specifically payroll taxes, and reducing the payout of benefits to recipients. In the conclusion of their findings, a combination of their suggestions would ensure 80% solvency in the Social Security program in 2035, meaning recipients would see a 20% decrease in their scheduled benefits. In response to this report, members of Congress in both chambers introduced companion legislation to address this issue. 

In October 2019, the Time to Rescue United States’ Trust (TRUST) Act was introduced in the House of Representatives, as well as the Senate. The basis of this bill was to establish a committee that would oversee ways to increase revenue into the funds while keeping up with increasing costs. This isn’t the first time Congress has attempted to make progress on the Social Security issue. In years past, multiple bills have been presented like the Social Security 2100 Act, the Conrad-Lockhart Plan, and the Social Security Reform Act of 2016. These bills all sought to increase revenues, expand benefits, cut taxes, or some combination of the three. None of these plans have made their way to becoming law and with the current tension between parties in Congress, Americans are faced once again with the possibility of stalemate on the issue of Social Security. 

Luckily, according to the 2019 report, requiring businesses to increase their payroll taxes would not be necessary until 2035 if no action is taken until that point. Ultimately however, as government agencies update their life expectancy tables the possibility of lawmakers offering to raise the retirement age may become popular once again. This would increase revenue in the funds as individuals would be forced to work longer, thus contributing more, but Americans are also living longer. In addition to raising the retirement age, benefit payouts may be reduced to account for expanding life expectancies. 

Due to increased political tensions and years of neglect, seniors and individuals nearing retirement may want to start considering alternatives to their retirement benefits. While the potential pitfall of Social Security is projected fifteen years in the future, those years can be spent growing savings rather than worrying whether or not lawmakers can ensure solvency in the Social Security program. For many, Social Security benefits alone are not enough to make ends meet during retirement. If the funds will only be able to pay out 80% of the scheduled benefits by 2035 that will make it even more difficult for individuals who do rely on those monthly payments. 

What makes Social Security even more vexatious for retirees is that the government double-dips into recipients benefits by taxing it as income. Depending on the situation and the state of residency, seniors who work and collect a Social Security check will have their benefit taxed. Additionally, the benefit will be taxed if an individual surpasses a certain threshold of income. In essence, individuals work for a majority of their life paying into the Social Security system and face the possibility of having to deal with a depleted system not paying out a full 100% of their benefits on top of the government taxing their received benefit.  

In the end, a volatile political climate combined with the potential for a Social Security nightmare does not lend confidence that Social Security will remain solvent. Individuals nearing retirement, or in retirement shouldn’t have to worry about whether or not their money will be there for them when the government pays out the benefit. Nor should seniors be faced with the situation of having too much income that their Social Security benefits get taxed. Therefore, securing safe investment options that will ensure security long into retirement can save retirees from a massive headache in the future. 

When President Trump signed the SECURE Act into law in December of 2019, saving for retirement received a boost from Washington’s legislators. While some aspects of the law adversely affect seniors and their beneficiaries, the law is seen as a victory for the working class. Similarly to IRAs and other retirement plans, 401(k) plans have a number of updated rules and regulations due to the SECURE Act. 

First and foremost, many of regulations that specifically applied to individual retirement accounts also apply to 401(k) plans. This includes raising the required minimum distribution age to 72 years old – a 1 ½ year increase from the previous RMD age. The SECURE Act also made updates to how an individual can pass a retirement account onto a beneficiary. Individuals with a 401(k) beneficiary will have to follow the new 10-year rule depending on their classification as a beneficiary. 401(k) plans typically operate differently than IRA accounts when naming a beneficiary, such as, a married individual must name their spouse as their beneficiary. 

Under the rules of the SECURE Act, a spouse is considered an eligible designated beneficiary so long as they are no more than 10 years younger than the owner. Leaving a 401(k) to a non-spouse beneficiary would require the benefactor to remove the funds within ten years following the account owner’s year of death – if the owner dies in 2020, the non-eligible beneficiary would have until 2031 to close the account. 

The SECURE Act also made changes to 401(k) contributions. After the first year of enrollment, an individual can invest up to 15% of their paycheck into a 401(k) plan. This is an increase from the original 10% contribution cap that was in place prior to the SECURE Act becoming law. Therefore, an individual may contribute 10% of their paycheck in the first year of employment, and 15% in each year following. This extra 5% for contributions is a significant benefit for working class individuals. 

On top of increasing the contribution cap for 401(k) investments, the SECURE Act also expands access for employers to offer retirement plans to their employees. This includes individuals who work part-time for a company andreach a certain threshold of hours each year over a determined period of time. Currently, a part-time employee would have to work a minimum of 500 hours consistently for three years, while also being above the age of 21; or, work a minimum of 1,000 hours for one year while being 21 or older. When meeting that criteria, they would be eligible for a 401(k) plan through their place of employment. With that said, if an individual meets the requirements by working a minimum of 500 hours for 3 years, the employer may elect not to make matching contributions to the part-time employee’s plan. 

Seen as a victory for small businesses, unrelated employers can elect to join together to offer a pooled employer plan, which would allow them to offer retirement benefits such as a 401(k) to their employees. Further, for employers who offer lifetime generating income annuities – of which there are few – safe-harbour regulations in the SECURE Act eliminates the liability of the employer for offering in-plan annuities in 401(k) plans and places the fiduciary responsibility on the group providing the annuity. While in-plan annuities are often viewed as controversial, the act seeks to expand access for individuals who want to provide them as benefits for their employees. 

Finally, the SECURE Act allows parents to withdraw funds from a retirement account, such as a 401(k), up to $5,000 in the first year of giving birth to a child, or adopting. This money may be subject to taxes, but the money will not be penalized to cover expenses. The money that is withdrawn can also be paid back into the retirement account. 

Ultimately, the SECURE Act has beneficial aspects that aim to assist the working class, part-time employees, and parents with expenses by expanding access to retirement accounts. Some of the provisions in the law, such as regulations for part-time employees do not go into effect until the 2020 calendar year is over. Thus beginning in 2021, part-time employees can start accumulating the necessary hours to meet the criteria to be eligible for a retirement 401(k) plan through their employer. Most of the SECURE Act has only been in effect for one month, so there is much left to be seen about how the law will shape retirement planning. 

During the last ten years, studies from Merrill Lynch, LexisNexis, and others have consistently shown that a majority of adults do not have any form of estate planning set up in the event of their death. This means that the bulk of Americans do not have a written will and testament to determine how their estate is to be handled upon their passing. Estate planning should be one of the most important to-do list items for every retiree or individual nearing retirement. 

Having a written will is an integral part of retirement. It ensures that when an individual passes away, certain items are in place to properly manage the estate. This includes funeral arrangements, the listing of assets, and the treatment of their estate. An individual may dictate where their funeral will take place and whether or not they will be buried or cremated. Assets include anything of value that is in the possession of the principal (owner of the will). A written will determines how assets will be divided up between heirs or next of kin and is legally enforceable in probate court once the principal passes away. An executor must take the will to a judge in probate court in order to have the will executed, a process that can take up to six years.  

Naming a power of attorney and or an executor for the principal’s will is another important aspect for an estate owner. In many cases, the power of attorney and executor are the same person. The difference however, is that the power of attorney effectively loses their attorney-in-fact status when the principal dies and the executor obtains authority over the principal estate. Appointing a power of attorney gives full or limited authority to the appointed to make critical decisions on behalf of a living appointee in terms of finances, medical care, and signing legal documents for the principal. An executor on the other hand handles the will upon the death of the principal, which is typically brought to probate court to authenticate the final will of the deceased and value their assets. 

A principal may divert their assets into trusts to be paid out after death in order to avoid a lengthy execution of their will in probate court. In doing so, the principal can name the beneficiaries in the account and dictate how the money is to be paid out rather than an executor having the authority to act on the deceased’s behalf. Opening a trust may also have tax incentives for beneficiaries or next of kin. Typically, taxes must be paid on the deceased’s estate – these are commonly referred to as death taxes, or estate taxes.

Other features of estate planning include information about savings plans, stocks, bonds, real estate, and other investments if applicable. All of these items have to be listed in a will in order for the probate court to execute the will in its full capacity and value the estate accurately. Life insurance is another interesting component that affects an individual’s will and testament. The death benefit that is paid out on some life insurance policies can go a long way in assisting the executor cover expenses related to the deceased; such as funeral expenses, paying down debt, and other costs associated with the principal’s estate. 

If an individual does not write a will, then the division and valuation of assets is left entirely up to the state in which the principal resides. Unless in the case of real estate – which is dealt with by the state where the real estate is located – the assets of the principal typically will be divided between who the state considers to be the next of kin. Despite a majority of Americans not having an estate plan in place, such as a will, an overwhelming majority have stated in recent studies that they are willing to discuss estate planning with family, friends, and loved ones. Even so, some estate owners have claimed that they do not feel like they have someone they can trust to make decisions on their behalf either as an executor or power of attorney. 

One of the most common mistakes an individual can make is not updating their will as time goes by. As an individual ages their assets grow and that should be reflected in an updated will and testament. If they changed their state of residency that too should be taken into account, because each state has different regulations. Therefore, it is important to keep a written will updated and reflective of the principal’s state of residency. Otherwise this mistake may drag out the process of executing the will in probate court after the principal passes; or worse, the will may be deemed invalid. 

Estate planning provides peace of mind not only for the principal of the estate, but also for the beneficiaries and next of kin. Not having a will can cause numerous problems once the principal passes and may end up leading to a lengthy stay in probate court while the state divides up the assets and estate. Having a will in place provides structure so that when the principal dies the executor can properly manage the division of assets and the process of executing the will in probate court. Ultimately, the benefits of having a will significantly outweigh not having one in place. In doing so however, it is important to meet with an attorney and retirement phase experts to make sure all of the principal’s assets are accounted for as well as naming trusted individuals to serve as power of attorney (if needed) and executor of their will.