Newsletter

Fixed income is something many Americans don’t understand, according to the 2019 survey, “Fixed Income, Not Fixed Thinking,” by BNY Mellon Investment Management, one of the largest asset managers in the world. The study revealed that the majority of Americans surveyed have a limited understanding of fixed income investments, regardless of age, income, education level, and other demographics. The lack of understanding ranged from bonds, different fixed-income solutions including fixed-income insurance products, comprehending how fixed-income plays into retirement planning, and understanding its risk in comparison to other asset classes.

The same study revealed that Americans think fixed income is important solely in the immediate run-up to retirement, or during the decumulation phase when investors start to draw from their retirement nest egg. However, fixed-income solutions can play a part in anyone’s portfolio at any age.

Fixed-Indexed Annuities

One such fixed-income solution, fixed-indexed annuities, offer protection of principal, growth based on the performance of the index it follows and provides fixed payments for the insured’s life during the decumulation phase. Interested is credited when the index value increases, but the interest rate is guaranteed never to be less than zero, even if the market goes down. All annuities are insurance products and not traded on public markets. Annuities are guaranteed by the claims-paying ability of the insurance company issuing them.

A secondary 2019 study by WealthManagement.com Research, “How Advisors are Using Fixed-Income Annuities,” reports that two-thirds of advisors surveyed are very familiar with these products and have incorporated them into client portfolios to obtain these key objectives:

• Principal protection
• Tax-deferred growth
• Retirement income planning
• Avoid Social Security income offset
• Current income
• Estate/Legacy planning

Before purchasing a fixed-indexed annuity, it is important to understand all fees associated with the annuity, if your money is available right away, and the surrender fees, if any. Secondly, there are pros and cons to purchasing a fixed-indexed annuity:

Pros:

• Your principal is protected from a down market, and you won’t lose your initial investment or accumulation.
• Grow on a tax-deferred basis.
• The return is based on an index (ex. The S&P 500), which grows the annuity’s value over time.
• Provides a guaranteed lifetime income and protection against longevity risk; you receive annuity payments for life.

Cons:

• Some are complex, costly, and aren’t always necessary for the investor.
• A Fixed-income annuity is not a growth-market product and is unregulated. Ask for written information from the insurer about the annuity product and don’t just accept the ‘sales-hype.’

If you have questions regarding fixed income options or fixed-indexed annuities as a way to protect the premature depletion of your assets during a down market in retirement, contact our office.

Additional Disclosure: The newsletter and links are being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions. Nor should it be construed as advice designed to meet the particular needs of an individual’s situation.

Additional Disclosure: An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax-qualified plans, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income. Taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

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Our philosophy is not to simply provide financial services, but to provide partnership and council every step of the way. We seamlessly coordinate the many components of your wealth management plan and are committed to providing financial clarity. This plan allows you to focus on the things you care about most. In addition, we truly enjoy helping people make smart financial decisions and look forward to learning more about you, your priorities, and your goals Contact us today to begin your wealth management journey.

In November 2019, the Internal Revenue Service (IRS) announced the cost of living adjustments for 2020 for most retirement savings plans. However, IRA contribution limits will stay the same. If you plan to make the maximum contributions to your retirement plan in 2020, here’s what you need to know:

• The limit on annual employee contributions to 401(k)s, 403(b)s, most 457 plans, and the Federal government’s Thrift Savings Plan will rise to $19,500 in 2020, up from $19,000 in 2019.
• The retirement plan ‘catch-up’ provision for savers age 50+ will be $6500 for 2020. Super-savers who want to max their retirement savings contributions can save $33,000 into these tax-advantaged accounts in 2020.
• The limitation regarding SIMPLE retirement accounts for 2020 increases to $13,500 (up to $500 from 2019).
• You can save even more if your employer allows after-tax contributions. The defined contribution plan limit moves up to $57,000 in 2020.

Traditional IRA

Taxpayers can deduct contributions into a traditional IRA if they meet certain conditions. The deduction may reduce if during the year either the taxpayer or their spouse were covered by a workplace retirement plan. The deduction may also phase out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor spouse are covered by a workplace retirement plan, the phase-outs don’t apply.) Here are the phase-out income ranges for 2020, up slightly from 2019:

• Single taxpayers covered by a workplace retirement plan, the phase-out income range is $65,000 to $75,000, up from $64,000 to $74,000.
• Married couples filing jointly, where the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $104,000 to $124,000, up from $103,000 to $123,000.
• An IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered. The deduction is phased out if the couple’s income is between $196,000 and $206,000, up from $193,000 and $203,000.
• In addition, a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

Other income phase-outs to be aware of:

The income phase-out for Roth IRAs is $124,000 to $139,000 for singles and heads of household. For married couples filing jointly, the income phase-out range is $196,000 to $206,000. In addition, the phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.

The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $65,000 for married couples filing jointly, $48,750 for heads of household, and $32,500 for singles and married individuals filing separately.

For instance, you’re not able to save the maximum into your retirement accounts, now is a great time to increase your contributions anyway. If you have any questions regarding contribution limits or setting up IRAs, contact our office.

Additional Disclosure: This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice. It cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor or attorney.

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Our philosophy is not to simply provide financial services, but to provide partnership and council every step of the way. We seamlessly coordinate the many components of your wealth management plan and are committed to providing financial clarity. This plan allows you to focus on the things you care about most. In addition we truly enjoy helping people make smart financial decisions and look forward to learning more about you, your priorities, and your goals Contact us today to begin your wealth management journey.

Here we are, already to the end of 2019! The end of a year and the start of a new one is when most people decide to clean up and implement changes in some areas of their lives. Whether it is financial or health-related, starting the New Year off with tasks completed feels good! Here are ten financial tasks that can make a difference to you now, and later:

Task #1- Increase Retirement Savings Contributions

Increasing or maximizing your pre-tax and after-tax retirement savings contributions helps in two ways; first, it helps to ensure you will have more money in retirement. Second, contributions into pre-tax retirement savings accounts help to lower your taxable income in the year the contributions made.

Task #2- Take your Losses

If you decide to sell losing assets before 2020, you may be able to use those losses to offset your taxable capital gains. Make sure to consult your tax professional to understand if tax-loss harvesting will benefit you or not.

Task #3- Consider Converting to a Roth IRA

Since contributions and earnings in a Roth IRA grow tax-free, converting your tax-deferred retirement savings into a Roth may make sense for you. Although you are required to pay taxes on the entire contributions and earnings, the conversion in 2019 may be a tax-smart move in the long term.

Task #4- Prepare for 2019 Tax Reporting

You don’t need to wait until 2020 to meet with your tax professional. Having an idea of how much you may need to pay in taxes for 2019 can benefit you when you still have time to contribute to tax-sheltered investment accounts opened by December 31st, 2019, to off-set personal income and capital gains. Especially if you’ve made more money in 2019 than in previous years, having an idea of taxes due in the 4th quarter and pre-paying taxes can save you stress later. 

Task #5- Evaluate Health Savings Account (HSA) Contributions

HSAs allow pre-tax contributions, much like your pre-tax retirement savings. However, when used at a later date for health-related expenses, including future long-term care expenses, the contributions and accumulation are tax-free upon withdraw. Make sure you are maximizing your contributions to enjoy the benefits of using the account later and lowering your taxable income for 2019!

Task #6- Contribute to your Children’s or Grandchildren’s 529 College Savings Plan

Many states offer a state income tax credit or deduction up to a certain amount for parents or grandparents that contribute.

Task #7- Rebalance, Rebalance, and Rebalance

Market swings cause portfolio allocations to change over time. The end of the year is a great time to rebalance all of your investment accounts.

Task #8- Spread Your Wealth to Benefit Non-Profits

Donor-Advised Funds allow you to deduct your contributions to a non-profit. Due to the Tax Cuts and Jobs Act, contributions must be made into a donor-advised fund in 2019 to be itemized and deducted on your 2019 tax return.

Task #9- Check and Update Beneficiaries

Check and update beneficiary information on your employer retirement plan and all life insurance policies. Has there been a marriage, divorce, or name change for any beneficiary? Keeping beneficiary information and your information current is essential to help avoid problems later if there is a death claim.

Task #10- Schedule Your Annual Review for 2020

The beginning of a new year is a great time to schedule an annual investment review, complete or update your financial plan.

If you have questions regarding any of the above financial tasks, contact our office to complete these before we say goodbye to 2019 and welcome 2020!

Additional Disclosure: Diversification and asset allocation strategies do not assure a profit or protect against loss.

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Our philosophy is not to simply provide financial services, but to provide partnership and council every step of the way. We seamlessly coordinate the many components of your wealth management plan and are committed to providing financial clarity. This plan allows you to focus on the things you care about most. One of our greatest strengths is the collaborative team of specialists that we have assembled to serve and support each client. We truly enjoy helping people make smart financial decisions and look forward to learning more about you, your priorities, and your goals Contact us today to begin your wealth management journey.

Dreaming and goal setting are interrelated; first, you dream about what you want, then you determine how to obtain it. Our dreams should help guide us to make the right choices at the right time and in the proper manner. But merely dreaming about something is not enough; we must set goals to achieve it. In psychology, goal setting refers to a successful plan of action that we set for ourselves.

Psychologist Frank L. Smoll, a Ph.D. and working psychologist at the University of Washington, emphasized through his studies the three essential features of goal-setting, which he calls the A-B-Cs of goals. Smoll said that effective goals are:

A-Achievable

B-Believable

C-Committed

Others in the field of psychology have determined that goal-setting for productivity involves five criteria; it must be specific, measurable, achievable, realistic, and time-sensitive. Whether your dream is buying a larger house, completing a degree, losing weight, or saving a specific amount for retirement, all of these criteria must be included in your planning to achieve success.

If dreaming and ‘goal-setting psychology’ sounds a lot like financial planning, it is. Financial plans develop with all of these productivity criteria in mind. Financial advice is then executed to help make a dream a reality. Achieving more significant goals, such as saving for retirement to live in retirement as one envisions, takes longer. Throughout a client’s life, they may change their retirement dream or adjust their goals to the evolving criteria.

Dreams are Like a Destination

Remember that dreams are like a destination- if you want to go somewhere, you need to visualize where you want to be, recognize where you are at now, and make a plan to get there. You must also stay motivated and keep dreaming! I can help you do all of this; all you need to do is ask.

Additional Disclosure: The newsletter and links are being provided as a service to you. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Planning services are generally available at additional cost and can only be offered only by appropriately licensed registered investment advisors.

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Our philosophy is not to simply provide financial services, but to provide partnership and council every step of the way. We seamlessly coordinate the many components of your wealth management plan and are committed to providing financial clarity. This plan allows you to focus on the things you care about most. One of our greatest strengths is the collaborative team of specialists that we have assembled to serve and support each client. In addition, we truly enjoy helping people make smart financial decisions and look forward to learning more about you, your priorities, and your goals Contact us today to begin your wealth management journey.

In this article we look at the effect lowering interest rates can have on the economy and the markets. Interest rates can have a positive or a negative effect on the U.S. economy, the stock markets, and your investments. When The Fed changes the Federal Funds Rate (the rate at which banks can borrow money to lend to businesses or you), it creates a ripple effect. 

The raising and lowering of the Fed Funds Rate is the role the Fed plays in stimulating the economy. In theory, the lowering of interest rates should help boost the U.S. economy by encouraging borrowing and spending. Therefore consumers and businesses are more willing to make big purchases. Whereas higher interest rates slow down borrowing and restrict the flow of money into the economy.

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In a recent study conducted by the ‘National Retail Federation and Prosper Insights and Analytics’, it was found that the average American family will spend just south of $700 for back-to-school costs in 2019. Is your child soon to be a college student? The same survey reported you should be ready to spend a little less than $1,000 alone for start-up school supplies. While this cost seems large, it’s just a part of your financial portfolio. Back-to-school time is not only a great time to plan a scholastic budget, but also reviewing and reassessing your financial plan. Below is your Official 2019 Back-To-School Financial Guide to make sure your student, and your financial goals, stay on track:

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What does Summer remind you of? Maybe it’s the feeling of jumping into a cool pool after a day in the summer heat; or maybe it’s the sound of the ice cream truck as you are bolting out the door with whatever change you could get your hands on. From lazy days in air conditioning to random road trips and more; summer is full of memories, and more importantly, choices.

In Part 3 and the final installation of ‘SIZZLIN SUMMER SERIES’, we will go into the top 3 financial choices you should research before making a decision:

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The official start of Summer – June 21^st – is right around the corner. As we cruise into part two or our Sizzlin’ Summer Series, we will make a splash with the best cities to retire in 2019.

Get your Hawaiian shirts on, coolers filled, and beach towels ready, because here come the Top 4 Places To retire!

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This last Winter was one for the books. With record snowfall, rain, and cold temperatures, it’s safe to say that most of us are ready for warmer weather. What better way to celebrate the onset of sunshine and warm temps than with a three-part newsletter series to help you enjoy Summer!

In this month’s newsletter, we will dive into the top 3 places to travel, based on the Summer months:

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Do you consider yourself financially literate? According to a study by S&P Global, 57% of American adults are financially literate, ranking the U.S. 14^th in the world. As a way to increase financial understanding, April is considered Financially Literacy month!

Whether you’re a financial guru or consider yourself a newbie, here’s 3 ways to make a difference in your finances this April!

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