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Stay abreast of the stories and headlines that may impact you.
The U.S. has enjoyed 10 years of a booming stock market and a growing economy. It’s too early to tell how 2020 will look, but there are some signs that it doesn’t look quite as promising. Between warnings of a possible economic pullback and a contentious presidential election year, investors may want to consider financial moves designed to help protect gains and optimize future opportunities.
For example, while domestic securities were global leaders in 2019, Morgan Stanley believes U.S. stocks and bonds will underperform other developed countries in 2020. The wealth manager predicts the S&P 500 Index will have a small decline to 3,000 points by the end of the year as the dollar weakens, corporate earnings edge downward and “unique” political risks are expected in the run-up to Election Day.1
We recommend that individuals take a long view when it
comes to investing, particularly in relation to retirement planning. However,
as we approach this new decade, it may be important to review your portfolio’s
overall asset allocation, not just within the context of 2020, but for your
long-term financial objectives. Please give us a call if we can help you make
this assessment.
As for retirement planning, be aware of three changes scheduled to impact
Social Security benefits in 2020: 2
- The earnings limit subject to FICA payroll taxes is scheduled to increase by $4,800, to $137,700. This means employees who earn at or above that threshold will pay an additional $367 in payroll taxes during 2020.
- Retirees received a 1.6 percent boost in Social Security benefits, which translates to roughly $288 (on average) more for the year.
- Social Security recipients who haven’t reached full retirement age can earn $600 more in 2020 without a benefits reduction — up to $18,240. Beyond that limit, every $2 in earnings will result in $1 withheld in benefits.
It’s a good idea to consider your income tax status early in the year. A lot of people did not expect the Tax Cuts and Jobs Act to negatively impact their taxes and received an unpleasant surprise when they filed returns last year. You can help prevent having to owe additional taxes on filing day by adjusting your Form W-4 exemptions with your employer so that more income is withheld throughout the year.3
Also consider making your 2020 contributions to tax-advantaged accounts as early in the year as you can. That’s because any contributions you make to accounts such as IRAs, 529s and workplace retirement plans will have more time to take advantage of tax-deferred compounding growth.4
Fresno Financial Consultant Takeaways
Soutas Financial your Fresno financial planner would like to remind you of the following points. It’s too early to tell how 2020 will look, but there are some signs that it doesn’t look quite as promising. With that in mind, investors may want to consider financial moves designed to help protect gains and optimize future opportunities. It’s a good idea to consider your income tax status early in the year. You can help prevent having to owe additional taxes on filing day by adjusting your Form W-4 exemptions with your employer so that more income is withheld throughout the year.
Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 Joanna Ossinger. Bloomberg. Nov. 17, 2019. “Morgan Stanley Sees U.S. as a Laggard in 2020 Across Markets.” https://www.bloomberg.com/news/articles/2019-11-18/morgan-stanley-sees-u-s-underperforming-in-2020-across-markets. Accessed Dec. 18, 2019.
2 Kenneth Terrell. Oct. 28, 2019. “What to Know About Social Security Changes for 2020.” https://www.aarp.org/retirement/social-security/info-2019/social-security-changes-look-ahead.html. Accessed Jan. 15, 2020.
3 Kiplinger. Oct. 29, 2019. “27 Money Moves to Make Now to Prepare for 2020.” https://www.kiplinger.com/slideshow/saving/T023-S002-money-moves-to-make-now-to-prepare-for-2020/index.html. Accessed Dec. 18, 2019.
4 Business Wire. Dec. 16, 2019. “20 Financial Resolutions for 2020 from the AICPA.” https://www.businesswire.com/news/home/20191216005073/en/20-Financial-Resolutions-2020-AICPA. Accessed Dec. 18, 2019.
Our firm is not affiliated with or endorsed by the U.S. government or any governmental agency and does not provide tax advice.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 555556
1053047C
The investment world is like the weather: constantly changing. Financial vehicles are tweaked and improved upon, particularly when there are changes to tax law or compliance rules. The world of finance is fluid, and so are we. As our lives evolve, it’s important to review and sometimes make adjustments to our investment and insurance goals and strategies.
The difficult part can be keeping up with all the changes. We believe one of the best ways to do that is to work with a financial advisor and meet with him or her regularly. At least once a year, it’s good to review your current situation, find out what changes or new products are available, and determine if you should make any alterations to your financial portfolio. Contact us if you are interested in such a consultation.
Following is a roundup of news and timely reminders from the investment industry.
Impact Investing
What may have started as an environmentalist movement to effect change by tapping invested assets, the sustainable investment industry has grown into a mainstream strategy. The share of assets invested in funds focused on environmental, social and governance (ESG) issues increased 40% from 2000 to 2017.1
This is no longer simply a “do-gooder” motivation. Studies have revealed that companies focused on environmental efficiency — meaning they minimize the use of natural resources and generate less production waste — tend to enjoy economic advantages over less environmentally sensitive competitors. These advantages can include lower costs; higher flexibility and efficiency in their supply chains; increased productivity; reduced regulatory risk; and fewer costly fines, recalls or mitigation requirements. As a result, recent studies found, the stocks of these companies tended to be less volatile — particularly in manufacturing and other resource-intensive industries.2
E-Commerce Update
Online sales are starting to have a more profound effect in some sectors of the investment market. For example, in 2018, Amazon surpassed Walmart as the top apparel retailer in the United States, claiming more than 9% of the market. But not all traditional retailers have been hit as hard by e-commerce; for example, some investment analysts say retailers like QVC and those in the business‑to‑business e-commerce market — notably in the home improvement and auto parts industries — remain competitive because they are more insulated from Amazon or other online competitors. 3
And there’s another angle to consider with e-commerce. While we normally associate online retailers with low overhead, overall the industry requires three times the warehouse space of primarily brick‑and‑mortar retailers. In turn, this has created opportunities in the Real Estate Investment Trust (REIT) market that focuses on commercial properties.4
Investment trends
According to Bank of America, some of the economic and societal changes to watch over the next 10 years include:5
- More disruptions in the global flow of goods, ultimately leading to a rebalancing that will increase productivity and lead to a more sustainable global economy
- A focus on high-quality companies in sectors with low political risk, such as utilities, national defense, waste management, data processing and payments, and global beverages
- Markets responding to demographic shifts, such as the rise of the middle class in emerging market countries and millennials’ preference for tech compatibility and sustainability
- Continued growth of energy-efficient, renewable, sustainable and green initiatives
Fresno Financial Advisor Takeaways
As your Fresno financial advisor we thought this was a good takeaway. One of the best ways to keep up with all of the changes is to do that is to work with a financial advisor and meet with him or her regularly. It is also good to note that online sales are starting to have a more profound effect in some sectors of the investment market. Last, but not least. Always remember to keep track of current investment trends. You might see more disruptions in the global flow of goods, leading to a rebalancing that may increase productivity and lead to a more sustainable global economy.
Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 Merrill Lynch. Sept. 10, 2019. “Can You Do Well by Investing in What’s Good for the World?” https://www.ml.com/bulletin/can-you-do-well-by-investing-in-whats-good-for-the-world.recent.html. Accessed Nov. 13, 2019.
2 Merrill Lynch. June 2019. “Investing in a Low Carbon Economy.” https://mlaem.fs.ml.com/content/dam/ML/bulletin/can-you-do-well-by-investing-in-whats-good-for-the-world/ml_investing-in-a-low-carbon-economy.pdf. Accessed Nov. 13, 2019.
3 T. Rowe Price. Oct. 4, 2019. “E-commerce Disrupts Retail-Related Bonds.” https://www.troweprice.com/personal-investing/planning-and-research/t-rowe-price-insights/investments/fixed-income/e-commerce-disrupts-retail-related-bonds.html. Accessed Nov. 13, 2019.
4 Ibid.
5 Pippa Stevens. CNBC. Nov. 11, 2019. “Here are Bank of America’s top 10 investing themes to watch over the next decade.” https://www.cnbc.com/2019/11/11/bofa-says-these-are-the-10-biggest-investing-themes-for-the-next-decade.html. Accessed Nov. 13, 2019.
We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference. 555556
1020692C
Overview
Today, Iran is the seventh-largest crude oil producer in the world. It is reported to possess about 13% of the world’s oil reserves and currently generates more than 4 million barrels per day. However, that represents only 4% of the world’s total production. The sanctions that President Donald Trump re-imposed on the country last year continue to hamper Iran’s ability to ramp up oil production. 1
However, Iran is a member of the Organization of Petroleum Exporting Countries (OPEC); the U.S. is not. OPEC is the reigning body with the power to increase or limit production by member countries. Production levels are what determine the price of a barrel of oil — when supply is lower than demand, the price increases; when there is excess supply, the price drops.
Therefore, despite its limited production capacity, Iran does wield a level of power that the U.S. can offset primarily through its own independent oil production. Over the past decade, the U.S. has become an efficient producer of domestic oil through the increase of shale production and other processes.
“The U.S.-Iran conflict [is] unlikely to be a ‘one-and-done’ event.”2
U.S. Conflict
In January, a U.S. airstrike in Baghdad killed the top military commander in Iran, Gen. Qasem Soleimani. This was a preemptive measure to thwart perceived plans to attack American diplomats and service members in the region.
However, the attack intensified already strained U.S.-Iran relations and ratcheted up the potential for elevated military conflict and geopolitical turmoil. In terms of the initial market response:3
• Oil prices jumped 3%.
• The S&P 500 dropped by about 0.7%.
• The Dow Jones Industrial Average lost 0.8%.
• Investments were redirected into defensive assets like gold and Treasurys.
Less than a week later, Iran retaliated with a comparatively muted attack on two Iraqi air bases housing U.S. forces, yielding minimal damage and casualties. However, the threat of subsequent attacks by Iran via covert and/or diplomatic action remain a top concern.
Market Volatility
While stocks ended 2019 on a high note, the New Year has been plagued with uncertainty as the markets await any further retaliation from Iran and subsequent disruption in global oil markets. Investment analysts have cautioned that the stock market’s exuberance, paired with expectations of further action from Iran, could lead to increased volatility and a 7% to 10% correction in global equity markets.4
However, with that said, history shows that conflicts impacting oil prices are often short-lived. According to an analysis by CNBC, in the months following a crisis in the Middle East, stocks and oil tend to outperform safe haven assets like gold and Treasurys. 5
Long-Term Prognosis
One of the fortunate components to our modern economy is that the U.S. is far less reliant on fossil fuels as a contributor to gross domestic product than back in the 1970s, when the high price and low supply of gas created a national crisis.
The increase in shale production has catapulted the U.S. as a major global oil exporter, and domestic production means that higher oil prices have less impact on our economy. From a historical perspective, even military conflicts do not tend to have a long-term impact on U.S. business and market cycles. As demonstrated in the accompanying chart, market returns have been generally positive in the 12 months following a major geopolitical event. 6
Despite these positive long-term results, it’s important not to underestimate the impact of short-term oil price shocks. According to an economist at Credit Suisse, a sharp increase in oil prices preceded five of the past six recessions. 8
Rocket Man and the Dotard: Additional Geopolitical Risks
Bear in mind that Iran isn’t the only country that has expressed ire against the U.S. in recent years. Exchanges between North Korean leader Kim Jong Un and President Trump have been threatening, accompanied by ongoing missile tests. During the initial round of contentious barbs traded between the two leaders, the markets responded with a major sell-off in global stocks and a 1.1% decline in the Dow Jones Industrial Average. 9
There is, however, an interesting market dynamic when it comes to U.S. military conflicts. The stock market does not like uncertainty. Concern over what might happen makes growing businesses reluctant to expand and hire, while a less stable employment environment causes consumers to delay making big purchases and investors to refrain from buying stocks (or selling them as a precaution).
On the other hand, once the U.S. is engaged in war, much of the reverse happens. There is no longer uncertainty; everyone knows that certain industries will thrive and thus investments, jobs and growth tend to thrive — as illustrated in the accompanying table.
Sources: The indices used for the total return of each asset class are as follows: the S&P 500 Index for large-cap stocks; CRSP Deciles 6-10 for small-cap stocks; long-term U.S. government bonds for long-term bonds; five-year U.S. Treasury notes for five-year notes; long-term U.S. corporate bonds for long-term credit; one-month Treasury bills for cash; and the Consumer Price Index for inflation. Returns for a wartime period are calculated as the returns of the index four months before the war and during the entire war itself. Past performance is not indicative of future results.
It is worth noting that the U.S. economy has changed significantly since the last major war. Historically, the economy was driven by the need for increased capital goods and natural resources. Since then, the U.S. has fostered a more service-oriented and “knowledge-based” economy with less reliance on industrials and manufacturing sectors. For better or for worse, what this means is that military demands in times of war are less likely to negatively impact domestic economic growth.
Final Thoughts
While it is true that markets hate uncertainty, it is perhaps that lack of confidence that has kept the U.S. economy in check for so long — when it might have otherwise overheated and caused higher inflation. The result is that growth remains in check, employment is steady, inflation is neutral and central banks have adopted accommodative monetary policies. All of these factors have contributed to the longest economic expansion in U.S. history. 11
It is also important to recognize that while military conflicts will likely always trigger a short-term reaction in the markets, there is a wide range of factors that impact stock and bond market performance — including economic growth, earnings, valuation and interest rates. Tensions with Iran and North Korea are but pieces in a large puzzle that contribute to economic disruption. Isolated events are not likely to have a devastating or long-term impact.
In fact, one of the reasons financial advisors tout diversification is for situations just like Iran: When one portion of the market takes a hit, there are generally others that benefit. As always, we recommend you consult with an experienced financial advisor to help you structure an all-weather and wartime-resilient portfolio designed to meet your financial goals within your range for market risk.
Fresno Financial Consultant Takeaways
As your Fresno retirement plan consultant we felt the following points were top notch. Today, Iran is one of the largest crude oil producers in the world. And despite its limited production capacity, Iran does wield a level of power that the U.S. can offset primarily through its own independent oil production. However, one of the fortunate components to our modern economy is that the U.S. is far less reliant on fossil fuels as a contributor to gross domestic product than back in the 1970s, when the high price and low supply of gas created a national crisis. While it is true that markets hate uncertainty, it is perhaps that lack of confidence that has kept the U.S. economy in check for so long — when it might have otherwise overheated and caused higher inflation. The result is that growth remains in check, employment is steady, inflation is neutral and central banks have adopted accommodative monetary policies.
Soutas Financial & Insurance Solutions Inc. your Fresno financial advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
1 Eric Rosenberg. Investopedia. Jan. 6, 2020. “How Iran Impacts The Price and Supply of Oil.” https://www.investopedia.com/articles/investing/073115/how-iran-impacts-priceand-supply-oil.asp. Accessed Feb. 3, 2020.
2 William Watts. MarketWatch. Jan. 6, 2020. “What stock market investors need to know about intensifying U.S.-Iran tensions.” https://www.marketwatch.com/story/what-stock-market-investors-need-to-know-about-intensifying-us-irantensions-2020-01-04/print. Accessed Feb. 3, 2020.
3 Jesse Pound. CNBC. Jan. 3, 2020. “Here’s what typically happens to the financial markets after major Middle East crisis events.” https://www.cnbc.com/2020/01/03/heres-what-happens-to-the-markets-after-major-middle-east-events.html. Accessed Feb. 3, 2020.
4 William Watts. MarketWatch. Jan. 6, 2020. “What stock market investors need to know about intensifying U.S.-Iran tensions.” https://www.marketwatch.com/story/what-stock-market-investors-need-to-know-about-intensifying-us-irantensions-2020-01-04/print. Accessed Feb. 3, 2020.
5 Jesse Pound. CNBC. Jan. 3, 2020. “Here’s what typically happens to the financial markets after major Middle East crisis events.” https://www.cnbc.com/2020/01/03/heres-what-happens-to-the-markets-after-major-middle-east-events.html. Accessed Feb. 3, 2020.
6 William Watts. MarketWatch. Jan. 6, 2020. “What stock market investors need to know about intensifying U.S.-Iran tensions.” https://www.marketwatch.com/story/what-stock-market-investors-need-to-know-about-intensifying-us-irantensions-2020-01-04/print. Accessed Feb. 3, 2020.
7 Ibid.
8 Sam Ro. Yahoo! Finance. Jan. 7, 2020. “The Iran crisis could bring a bigger economic problem than surging oil prices.” https://finance.yahoo.com/news/iran-crisis-couldbring-bigger-problem-than-surging-oil-prices-morning-brief-110442656.html. Accessed Feb. 3, 2020.
9 Mark Armbruster. CFA Institute. Aug. 29, 2017. “What Happens to the Market if America Goes to War?” https://blogs.cfainstitute.org/investor/2017/08/29/u-s-capitalmarket-returns-during-periods-of-war/. Accessed Feb. 3, 2020.
10 Ibid.
11 Sam Ro. Yahoo! Finance. Jan. 7, 2020. “The Iran crisis could bring a bigger economic problem than surging oil prices.” https://finance.yahoo.com/news/iran-crisis-couldbring-bigger-problem-than-surging-oil-prices-morning-brief-110442656.html. Accessed Feb. 3, 2020.
Investment advisory services offered only by duly registered individuals through AE Wealth Management LLC. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management LLC. Neither AEWM nor the advisory firm providing this report provide tax or legal advice. All individuals are encouraged to seek guidance from a qualified tax professional regarding their own situation. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. Past performance is no guarantee of future results. This 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. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product. 555556
1080498
Overview
In November 2019, the Internal Revenue Service announced inflation adjustments for more than 60 provisions for the 2020 tax year. The following is a guide for changes that will affect the greatest number of taxpayers.
“While it’s been more than a year since the Tax Cuts and Jobs Act went into full effect, many Americans are still relatively uncertain of how these changes impact them. The 2020 tax season could be the season that we see old problems resurface and a set of new issues emerge.” 1
Income Brackets 2
In 2020, the top income tax rate remains 37%. Here are 2020 income brackets:
Alternative Minimum Tax 3
The Alternative Minimum Tax (AMT) was created to ensure that high-income taxpayers couldn’t use too many loopholes to avoid paying taxes altogether. However, a certain amount of income is exempted from the AMT, which phases out for higher-income taxpayers. Here are the amounts for 2020:
Capital Gains Income Threshold 4
The 2020 income thresholds for long-term capital gains rates increased:
Deductions 5
The standard deduction for single taxpayers and married individuals filing separately in 2020 is $12,400, a $200 increase. The married filing jointly deduction is $24,800 — up by $400, while heads of household enjoy a $300 increase at $18,650.
You may be better off itemizing your deductions if their sum total is more than the standard deduction for your filing status. While eligible deductions are not changing in 2020, be sure to consider the wide range of options available, from student loan interest to medical expenses to charitable donations. Speak with your tax advisor to explore the itemized deduction option more fully.
Credits 6
For 2020, the maximum earned income credit (EIC) is $6,660 (a $103 increase).
The threshold for claiming the Lifetime Learning Credit has increased in 2020 to $118,000 and phases out at $138,000 (a $2,000 increase on both ends) for married taxpayers filing jointly. For single filers and heads of household, the modified adjusted income range is $59,000 to $69,000, up $1,000 for each amount. Married individuals who file separately may not claim the credit.
Retirement Plans 7
The contribution limit for employer-sponsored retirement plans has increased to $19,500. The catch-up contribution for employees age 50 and older increased by another $500 to $6,500, which means they may contribute a total of $26,000 per year.
While contribution limits for traditional and Roth IRAs remain the same as last year ($6,000; $7,000 for age 50 and older), the limit for SIMPLE retirement accounts increased to $13,500 (a $500 increase). The phase-out ranges for IRA contributions by people covered by a workplace retirement plan also increased for 2020:
• Single taxpayers: $65,000 to $75,000
• Married filing jointly: $104,000 to $124,000
• IRA contributor not covered by a workplace retirement plan but married to someone who is: The deduction is phased out if the couple’s combined income is between $196,000 and $206,000
• Married individual filing separately: Remains $0 to $10,000
The income phase-out ranges for Roth IRA contributions increased and are now:
• Single and head of household: $124,000 to $139,000
• Married couples filing jointly: $196,000 to $206,000
The 2020 income limit for the saver’s credit (also called the retirement savings contributions credit) is $65,000 for married couples filing jointly; $48,750 for heads of household; and $32,500 for singles and married individuals filing separately.
SECURE Act 8
The Setting Every Community Up for Retirement Enhancement (SECURE) Act went into effect on Jan. 1. The bill’s provisions that impact individual retirement plans include the following:
• Eliminates the age limit for traditional IRA contributions
• Delays required minimum distributions (RMD) until age 72; applies only to people who turn 70½ in 2020 and beyond
The SECURE Act also limited to 10 years the amount of time a non-spouse IRA beneficiary can spread out distributions following the death of the account owner.
Estate Plans 9
The estate exemption in 2020 increases to $11.58 million, up from $11.4 million.
The exclusion for gifts remains the same at $15,000 per year per person.
Final Thoughts
There are also 2020 tax law changes in 35 states, so it’s important to work with a local tax advisor to find out what may affect your state tax return. For example: 10
• Individual income tax rates are reduced in Arkansas, Tennessee and Massachusetts.
• There are notable changes to individual income tax bases in Iowa, Kansas, Maine, North Carolina and Ohio.
• Connecticut, Minnesota, Vermont and New York have increased their estate tax exemptions, while Hawaii’s estate tax will become more burdensome.
Despite the fact that no major tax bill passed last year, clearly there are quite a number of changes that can create complications in filing returns. It’s a good idea to meet with a professional advisor early in the year so you can position your finances to minimize the impact on your 2020 tax obligations.
Fresno Financial Planner Takeaways
When it comes to Fresno retirement planning Soutas Financial puts your future first. Don’t forget these great reminders. In 2020, the top income tax rate will continue to remain at 37%. Regarding deductions, you may be better off itemizing your deductions if their total is more than the standard deduction for your filing status. As always, please remember that it always a good idea to meet with a professional advisor early in the year in order to develop a plan tailored to your personal needs.
Soutas Financial & Insurance Solutions Inc. your Fresno retirement plan consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
1 Ralph Carnicer. Accounting Today. 2019. “The most common tax problems for 2020.”
Accessed Jan. 21, 2020.
2 Libby Wells. Bankrate. Jan. 6, 2020. “2019-2020 federal income tax brackets.” https://www.bankrate.com/finance/taxes/tax-brackets.aspx. Accessed Jan. 29, 2019.
3 Jeff Stimpson. Investopedia. Jan. 28, 2020. “What You Need to Know About Your 2020 Taxes.” https://www.investopedia.com/everything-to-know-about-individual-2020-taxes-4775907. Accessed Jan. 29, 2020.
4 Ibid.
5 Ibid.
6 Ibid.
7 Ibid.
8 Stephen Miller. Society for Human Resource Management. Jan. 7, 2020. “SECURE Act Alters 401(k) Compliance Landscape.” https://www.shrm.org/ResourcesAndTools/hrtopics/benefits/Pages/SECURE-Act-alters-401k-compliance-landscape.aspx. Accessed Jan. 21, 2020.
9 IRS. Nov. 6, 2019. “IRS provides tax inflation adjustments for tax year 2020.” https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2020. Accessed Jan. 21, 2020.
10 Katherine Loughead. Tax Foundation. Dec. 20, 2019. “State Tax Changes as of January 1, 2020.” https://taxfoundation.org/2020-state-tax-changes-january-1/. Accessed Jan. 21, 2020.
Investment advisory services offered only by duly registered individuals through AE Wealth Management LLC. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management LLC. Neither AEWM nor the advisory firm providing this report provide tax or legal advice. All individuals are encouraged to seek guidance from a qualified tax professional regarding their own situation. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management. This 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. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product. 555556
1068067
Here’s an idea for restless young adults and adventurous retirees alike: Get paid to live in Italy.
The region of Molise, east of Rome, has more than 100 underpopulated villages that are fading away due to migration to larger cities. These communities — some are walled, medieval towns set among olive groves and green pastures — have put out a global offer to recruit new residents. The region will pay people the equivalent of $770 a month (for up to three years) to move there and start up a small business to contribute to the local economy.1 Ever dreamed of owning an inn, restaurant, book or boutique store?
If that region of Italy doesn’t appeal, several others are willing to sell you an Italian villa for about $1; you just need to agree to renovate your new home within a certain time frame.2
If you’re not interested in relocating permanently, but you would like to stay somewhere long enough to live like a local, check out the residential options at Airbnb.com. Some rentals offer up to a 50% discount if you book for at least a month, while others may drop another 5% if you book at least two months in advance.3
Staying longer in fewer places eliminates many of the hassles of traveling. You can stop living out of a suitcase and avoid spending half a day or more catching planes, trains or buses or driving place to place. You can develop favorite cafés and stores, getting to know the proprietors and locals for tips on the best places to eat, shop and tour. By staying in one location, you may save money on accommodations, travel lighter by washing and re-wearing clothes, and even save on your food budget by eating “at home.”4
Of course, if you’re inclined to stay a spell in another location, you might as well volunteer to do some good. One of the latest trends is “environmental travel,” where visitors spend time helping clean, plant or build in natural areas such as farms, wildlife habitats or national parks.5
Another travel industry trend is themed trips. For example, culinary travel involves exploring the local cuisine via cooking classes, eating in private homes or at farm-to-table venues, or trying activities like truffle hunting. Other popular themes include the expansion of the “Girls Night Out” into a longer getaway, or “untouristed” excursions to remote, unpopulated regions in such places as Borneo, Greenland or Oman.6
Not everyone can afford an extensive vacation, particularly if you live on a fixed income. If that isn’t an option, consider other ways you can enjoy luxury without the travel. For example, glam up the thrifty “staycation” option.
Save up a specific amount of money and choose a long weekend one or more times a year when you indulge at home like you’re on vacation. Go to the most expensive restaurant in town. Have a spa day. Spring for a tee time at an upscale golf resort. And don’t skimp when you’re dining at home on staycation, either; buy things that don’t usually fit into your grocery budget, like crab legs, expensive cheeses, berries and fine wine.7
Then revel in how much you’re saving by not paying for travel or accommodations.
Fresno Financial Advisor Takeaways
Fresno portfolio advisor – Soutas Financial appreciated these points, which will be of great benefit if you enjoy your vacation days and downtime. Relaxing and refreshing vacations don’t have to break the bank. Remember some of these easy ways to enjoy a vacation without taking on loads of debt. Some rentals offer up to a 50% discount if you book for at least a month, while others may drop another 5% if you book at least two months in advance. If you would like to stay closer to home, you might consider saving up a specific amount of money and going to the most expensive restaurant in town and having a relaxing spa day. Enjoy yourself and splurge a little!
Soutas Financial & Insurance Solutions Inc. your Fresno portfolio advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 Silvia Marchetti. CNN. Sept. 12, 2019. “These Italian towns in Molise will pay you $27,000 to move there.” https://www.cnn.com/travel/article/molise-italy-pay-to-move/index.html. Accessed Nov. 7, 2019.
2 Silvia Marchetti. CNN. April 18, 2019. “Buying a $1 Italy dream house just got even easier.” https://www.cnn.com/travel/article/italy-one-euro-home-websites/index.html. Accessed Nov. 7, 2019.
3 Airbnb.com. https://www.airbnb.com. Accessed Nov. 7, 2019.
4 Craig Makepeace. Y Travel. Oct. 4, 2018. “52 ways to save money on travel.” https://www.ytravelblog.com/how-to-save-money-on-travel/#3_Spend_More_Time_in_Fewer_Places. Accessed Nov. 7, 2019.
5 Adventure Student Travel. “10 Most Important Travel Trends for 2020.” https://www.adventurestudenttravel.com/10-most-important-travel-trends-for-2020/. Accessed Nov. 7, 2019.
6 Lea Lane. Forbes. Oct. 18, 2019. “6 Emerging Trends For 2020 Upscale Travelers Among Key Findings In New Virtuoso Report.” https://www.forbes.com/sites/lealane/2019/10/18/6–emerging-trends-for-2020-upscale-travelers-among-key-findings-in-new-virtuoso-report/. Accessed Nov. 7, 2019.
7 Valerie Lai. NerdWallet. Oct. 12, 2018. “Your Money-Saving Guide to Holiday Vacations (or Staycations).” https://www.nerdwallet.com/blog/travel/money-saving-guide-holiday-vacation/. Accessed Nov. 7, 2019.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
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Sometimes it feels as though we don’t learn from our past financial mistakes. Back in 2008, as a contributor to the recession, consumer debt reached a record high of $12.68 trillion. As of the end of the second quarter in 2019, Americans surpassed that number by $1.2 trillion; we now stand at $13.86 trillion in total household debt.1
A significant part of that debt comes from credit cards, which reached $1.08 trillion this year. Perhaps that’s not surprising, given that:2
- More than 189 million Americans have credit cards.
- The average credit card holder has at least four cards.
- The average credit card debt per household is $8,398.
Here’s the thing. While debt, when used correctly, can allow us to buy homes and pay for other big-ticket items, it’s important to not get over one’s head. If you’re concerned about whether you can cover your expenses in retirement, give us a call. We can look at your household budget and help you create a retirement income strategy that’s right for you.
One of the disquieting factors about credit cards is their relationship with interest rates. Despite a decline of 50 basis points in the U.S. 10-year note yield since last summer, the average interest rate on credit cards is still near record levels. This suggests credit card companies are not adjusting rates in relation to the target federal funds rate dictated by the Federal Reserve. Issuers appear more focused on using rewards points and other value-added benefits to appeal to customers than on lowering interest rates.3
Given that high interest rates are a key reason consumers get in debt trouble, here are few tips to keep in mind:
- Introductory rates are designed to attract new credit card customers but they usually don’t last. Check the current annual percentage rate for a card before applying or making higher-priced purchases than you can pay off by the end of the introductory rate period.
- If you open a card for its rewards (hotel and travel points, etc.), be sure to pay off your purchases each month; otherwise, the interest you accrue could outweigh any rewards you receive.
- It’s important to note that there may be annual fees associated with a credit card. Be sure to review the terms before signing up.
Fresno Financial Consultant Takeaways
Fresno financial planning is our utmost concern here at Soutas Financial and we thought these takeaways were worth mentioning again. We do have the power to learn from our past financial mistakes. When debt is used correctly, it can be a powerful tool which can help us to buy a home or other big-ticket items. But it is important to remember not to let our credit card usage to get out of control. So when deciding to use credit cards, always remember to do your research and read the fine print.
Soutas Financial & Insurance Solutions Inc. your Fresno financial planning consultant is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 Federal Reserve Bank of New York. Aug. 13, 2019. “Total Household Debt Climbs for 20th Straight Quarter as Mortgage Debt and Originations Rise.” https://www.newyorkfed.org/newsevents/news/research/2019/20190813. Accessed Oct. 24, 2019.
2 Debt.org. Bill Fay. “Key Figures Behind America’s Consumer Debt.” https://www.debt.org/faqs/americans-in-debt/. Accessed Nov. 7, 2019.
3 Brian Riley. Payments Journal. Oct. 9, 2019. “In Credit Cards, Bigger is Often Better.” https://www.paymentsjournal.com/in-credit-cards-bigger-is-often-better/. Accessed Oct. 24, 2019.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
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According to the United Nations, across the globe, people older than 65 now outnumber children under five for the first time in history. In 1960, the average woman gave birth to five children in her lifetime; by 2017, that ratio had dropped to 2.4 children per woman. Meanwhile, our life expectancy has increased around the world. In 1960, the average lifespan was just over 52 years of age; in 2017 the life expectancy was 72.1
Today, more than 60 percent of married households with children have two income earners.2 Yet many still struggle to make ends meet. That makes it difficult to save for both the exponentially rising cost of college and retirement. With fewer children in subsequent generations to contribute to the economy and bolster Social Security and Medicare programs, there may be fewer resources available to support the number of older adults in the future.3
It’s worth remembering that 2019 began with the longest U.S. government shutdown in history.4 On top of that challenging start to the year, some economists and media pundits have been suggesting we may be headed for a recession in the future.5 If you’d like to discuss your specific situation, and the potential role of insurance products in your retirement income strategy, please contact us.
One strategy for retirement income planning during uncertain times is to create multiple income streams. For example, you could purchase an annuity contract for an insurer-guaranteed stream of lifetime income. In one recent report, several Brookings Institution fellows noted, “For many people, acquiring an appropriately consumer protective and reasonably priced income annuity with at least a portion of their savings will still be the best choice for retirement income, and for many others it will play a key role in a broader post-retirement financial strategy.”6
One reason an annuity can help address uncertainty is because none of us knows how long we are going to live. Therefore, it’s difficult to know how much money to save or how much you can afford to spend each year in retirement. An annuity can help address these financial uncertainties because it offers an option for income for life — as well as the life of your spouse. It’s important to remember that annuities are insurance contracts designed for retirement or other long-term needs. They provide guarantees of principal and credited interest, subject to surrender charges.
As for how much income you’ll need in retirement, be aware that it will likely change as you get older. According to recent research from the National Bureau of Economic Research, people age 70 to 75 spend 10.17% of their household income on health care; after age 80, that share rises to 15.25%. Money spent on domestic services increases from 1.28% to 5.22% during those same time periods.7
Fresno Financial Planner Takeaways
Soutas Financial your Fresno financial planner would like to remind you of the following points. We are living in uncertain times. Many are struggling to make ends meet. With that in mind, what can you do? One strategy that has the potential to be successful, especially during uncertain times is to create multiple income streams. Because it’s difficult to know how much money to save or how much you can afford to spend each year in retirement, annuities can be the way to go.
Soutas Financial & Insurance Solutions Inc. your Fresno financial planner is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 Fernando Duarte. BBC. April 8, 2019. “Why the world now has more grandparents than grandchildren.” https://www.bbc.com/worklife/article/20190405-why-the-world-now-has-more-grandparents-than-grandchildren. Accessed Oct. 18, 2019.
2 U.S. Bureau of Labor Statistics. April 27, 2017. “Employment in families with children in 2016.” https://www.bls.gov/opub/ted/2017/mobile/employment-in-families-with-children-in-2016.htm. Accessed Oct. 18, 2019.
3 Kathleen Romig, Matt Broaddus and Aviva Aron-Dine. Center on Budget and Policy Priorities. April 22, 2019. “Financial Challenges Facing Social Security and Medicare Largely Unchanged From Last Year, Except for Improvement in Disability Insurance.” https://www.cbpp.org/research/social-security/financial-challenges-facing-social-security-and-medicare-largely-unchanged. Accessed Oct. 31, 2019.
4 Tobias Salinger. Financial Planning Magazine. Jan. 18, 2019. “How wealth management is stepping up to help during the shutdown.” https://www.financial-planning.com/news/financial-advisors-help-clients-through-government-shutdown. Accessed Oct. 18, 2019.
5 Reade Pickert, Yue Qiu and Alexander McIntyre. Bloomberg. Nov. 6, 2019. “U.S. Recession Chances Inch Down to 26% Within Next 12 Months.” https://www.bloomberg.com/graphics/us-economic-recession-tracker/. Accessed Nov. 7, 2019.
6 David John, William Gale, J. Mark Iwry and Aaron Krupkin. Brookings Institution. July 2019. “From saving to spending: A proposal to convert retirement account balances into automatic and flexible income.” https://www.brookings.edu/wp-content/uploads/2019/07/ES_201907_JohnGaleIwryKrupkin.pdf. Accessed Oct. 18, 2019.
7 Retirement Income Journal. Oct. 18, 2019. “Differences in Expenditures between Young and Old Adults.” https://retirementincomejournal.com/article/differences-in-expenditures-between-young-and-old-adults/. Accessed Oct. 18, 2019.
Guarantees and protections provided by annuities are backed by the financial strength and claims-paying ability of the issuing insurer.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
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If you are retired or planning to retire soon, you may still have some work to do.
For example, it’s smart to have a readily accessible emergency savings fund that can pay for three to six months’ worth of living expenses, if necessary. You should also consider what insurance policies you may need to help pay for big-ticket items that may otherwise deplete your savings and retirement portfolio. These may include damage to your home, an unexpected medical expense or long-term care. Please give us a call if you’d like to learn what options are available.
Retirement planning isn’t just about saving enough money — it’s about staying out of debt so your cost of living doesn’t increase because you’re paying high bills. There’s a recent trend of older Americans retiring with a more substantial amount of debt. Some of the causes include larger home mortgages, medical debt and overspending on credit cards — exacerbated by late-payment penalties and higher interest rates.1
However, there’s more to retirement than being financially prepared. You need to be mentally and emotionally prepared as well. One challenge is to learn how to relax. In the Netherlands, they have a word to describe a growing trend among the Northern European population: niksen. It means doing nothing; being completely idle — staring out a window or listening to music — with no particular purpose. It is the opposite of mindfulness, as your mind can wander wherever it wants. The practice has been shown to promote creativity, problem solving and a sense of happiness.2 That’s a good place to start in learning how to chill in retirement.
It helps, too, if you have goals, of perhaps an expansive “bucket list,” to keep you occupied and have something specific you want to accomplish each day.
If you do have specific goals for retirement, it can be difficult to stay focused on them. If you’re used to working a 40-hour week, you might have looked forward to having more free time to get things done. However, many retirees can’t figure out where the time goes. They get so bogged down in day-to-day chores they forget about working toward long-term goals. Researchers say one of the biggest detriments to getting things done is a lack of focus.3 We check our emails but then get drawn into social media posts and news stories. We turn on the television, and suddenly half the day is gone. The way to promote focus is to limit, block and tune out other distractions. It can help to assign a particular time of day when you focus solely on your chosen task and let everything else fall outside those designated hours.
In her book, “How to Be an Epicurean: The Ancient Art of Living Well,” author Catherine Wilson explains that the Greek philosopher Epicurus believed that the greatest source of pleasure in life was close human relationships.4 Therefore, if you don’t have a material goal in mind, focus on establishing and maintaining key personal relationships in your life as a fulfilling way to spend your time in retirement.
If you find yourself preoccupied with the idea of your own mortality, some researchers suggest getting a dog. A recent study encompassing 4 million people worldwide discovered a correlation between dog ownership and mortality. Specifically, dogs provided their owners with 24% higher protection against all types of causes of death. For example, people who had already experienced a heart attack or stroke were 31% less likely to die from cardiovascular disease if they had a dog.5
Fresno Financial Advisor Takeaways
As your Fresno financial advisor we thought this was a good takeaway. Always remember that retirement planning involves much more than just saving the right amount of money. To be “successful”, it is crucial to stay out of debt. This means avoiding overspending on credit cards, medical debt, and larger home mortgages. Two other key components to enjoy a successful retirement are to be mentally and emotionally prepared. If you start preparing now, there is a good chance you too will be able to feel confident in retirement.
Soutas Financial & Insurance Solutions Inc. your Fresno financial advisor is committed to helping take the complexity out of retirement planning. By using a variety of insurance and investment products such as trusts, probates, charitable giving, estate planning, or tax-efficient strategies, we can help you develop an overall retirement income strategy specific to you and your family. We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!
Content prepared by Kara Stefan Communications.
1 Annamaria Lusardi, Olivia S. Mitchell and Noemi Oggero. Global Financial Literacy Excellence Center. June 8, 2019. “Debt Close to Retirement and Its Implications for Retirement Well-being.” Page 3. https://gflec.org/wp-content/uploads/2019/06/Lusardi_Mitchell_Oggero-Working-Paper-6-8-19.pdf?x70028. Accessed Oct. 9, 2019.
2 Sophia Gottfried. Time. July 12, 2019. “Niksen Is the Dutch Lifestyle Concept of Doing Nothing – And You’re About to See It Everywhere.” https://time.com/5622094/what-is-niksen/. Accessed Oct. 9, 2019.
3 Nir Eyal. CNBC. Oct. 9, 2019. “Stanford psychology expert: This is the No. 1 work skill of the future – but most fail to realize it.” https://www.cnbc.com/2019/10/09/stanford-psychology-expert-most-important-work-skill-of-the-future.html?sf110405650=1. Accessed Oct. 9, 2019.
4 Catherine Wilson. Thrive Global. Sept. 25, 2019. “Meaningful Friends Are Essential for Your Well-being – This Is Why.” https://thriveglobal.com/stories/meaningful-friends-essential-for-well-being/. Accessed Oct. 9, 2019.
5 Sandee LaMotte. CNN. Oct. 8, 2019. “Owning a dog tied to lowering your risk of dying early by 24%, says science.” https://www.cnn.com/2019/10/08/health/dogs-help-us-live-longer-wellness/index.html. Accessed Oct. 9, 2019.
We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.
The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.
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Talk to your financial professional and your tax advisor about how Social Security benefits can fit into a complete retirement income strategy. Financial professionals are able to provide you with information but not guidance or advice related to Social Security benefits. We are not affiliated with the U.S. government or any governmental agency.
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