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Archives for April 2018

Financial Strategies in 2018

One philosophy of investing, as opined by Warren Buffett, is to be “fearful when others are greedy and greedy when others are fearful.”1 The nation’s eight-year bull market, however, has tested that philosophy. Most market analysts would agree that it was more important to be in the market and taking advantage of gains than to be “fearful” on the sideline.

But as 2018 moves forward, no one can predict the markets from one day to the next. A good bit of volatility has returned, relatively speaking, and many “greedy” investors may be feeling a little less confident. It’s during this late-stage business cycle that the seasoned investor is often distinguished from the seasonal investor.

Can you hold steady during performance freefalls? Moreover, can you afford to invest new money when the market is experiencing extreme fluctuation?

Those answers may lie less in your portfolio and more in your mindset and place in life. If you’re inching close to a certain financial milestone, such as retirement, it’s usually a good idea to seek to preserve assets by moving them into less volatile financial vehicles. However, if you’ve got a substantial time horizon before needing to tap your portfolio and can stomach a bit of volatility, investing when prices drop can position your money for greater opportunities for gains in the future.

Every day, we help our clients make these types of financial decisions based on their personal goals, timeline and tolerance for risk. There is no one-size-fits-all strategy for every individual. If you would like help assessing your current financial strategy against your short- and long-term goals, please give us a call.

When analyzing the economic situation for 2018, it may be helpful to study market analyst recommendations. For example, two themes Credit Suisse is focusing on in 2018 are global economic growth and the rise of the millennial generation as a major player in the workforce.2

At J.P. Morgan Chase, analysts are looking at more normalization in monetary policy in the developed world, while earnings, inflation and interest rates in the U.S. all could affect equity performance. Further, they see potential growth in international equities.3

BlackRock also is looking globally for growth, citing above-trend economic progress in Japan and emerging markets. Domestically, their strategists see outperformance in the technology and financial sectors, and cautions that inflation is poised to make a modest comeback.4

Meanwhile, Goldman Sachs Asset Management warns that investors will need to weigh the potential for more risks this year, including the possibility of interest rate hikes and escalating geopolitical developments.5

Specifically, asset managers at Columbia Threadneedle Investments cite threats from North Korea, the political situation in Saudi Arabia and conditions in Venezuela — one of the world’s largest producers of crude oil — as their biggest geopolitical concerns for 2018.6

Content prepared by Kara Stefan Communications.

1 Adam Brownlee. Investopedia. Jan. 21, 2016. “Warren Buffett: Be Fearful When Others are Greedy.” https://www.investopedia.com/articles/investing/012116/warren-buffett-be-fearful-when-others-are-greedy.asp. Accessed Feb. 15, 2018.

 2 Credit Suisse. “Investment Outlook 2018.” https://www.credit-suisse.com/microsites/private-banking/investment-outlook/en.html. Accessed Feb. 5, 2018.

3 J.P. Morgan Chase. 2017. “The investment outlook for 2018.” https://am.jpmorgan.com/blob-gim/1383507154112/83456/MI-MB_2018%20Outlook.pdf. Accessed Feb. 5, 2018.

4 BlackRock. 2017. “Global Investment Outlook 2018.” https://www.blackrock.com/corporate/en-us/literature/whitepaper/bii-2018-investment-outlook-us.pdf. Accessed Feb. 5, 2018.

5 Goldman Sachs Asset Management. Dec. 4, 2017. “2018 Investment Outlook.” https://www.gsam.com/content/gsam/us/en/outlook/annual-investment-outlook-2018.html?sc_cid=np-2018/nttbne/vboevvx84#question-1. Accessed Feb. 5, 2018.

6 Columbia Threadneedle Investments. Jan. 22, 2018. “Ted Truscott: Q&A on financial markets.” https://blog.columbiathreadneedleus.com/ted-truscott-qa-on-financial-markets?cid=twitter&sf179937211=1. Accessed Feb. 5, 2018.

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 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.

Traveling on a Fixed Income

Oh, the places you’ll go! Renowned author Dr. Seuss wrote a children’s book in 1990 that has become a popular graduation gift for young adults. Part of its message:1

“You’re off to Great Places!

Today is your day!

Your mountain is waiting.

So … get on your way!”

Perhaps for some people, the time to travel is when they’re young — before they get enmeshed in a job or career, before they get married and have children, before their lifestyle becomes defined by the amount of their first mortgage. Some young adults have the means for planned travel, while others just throw a few things in a backpack and head out.

Other people spend their working lives dreaming of going off to Great Places once they retire. But whether you had the opportunity to travel when you were younger or are looking forward to the prospect in retirement, there’s no denying that it’s going to cost more than a few bucks. In fact, the older we get, the more some of us may expect a certain standard for travel (no youth hostels).

To make travel plans a part of your retirement, make it a part of your retirement strategy. In addition to calculating household expenses, consider incorporating a discretionary fund for vacationing away from home. We can help. Schedule time with us to review your current retirement income strategy and help you figure out ways to budget for your retirement travel plans.

Traveling once you’re on a fixed income can be a challenge, but it’s by no means impossible. Consider these tips to help you pursue your retirement travel dreams.2

  • Travel in the off-peak season, such as October or April for a popular beach locale. However, if you vacation during hurricane season (June 1 through Nov. 30), consider buying travel insurance.
  • Don’t rely solely on internet search-and-compare websites. If you have a specific hotel in mind, call it directly to request its best rate.
  • Use your credit card rewards points, a perk that many people don’t use. Rewards points may be used to pay for all or part of vacation expenses.
  • Be sure to ask whether a hotel, airline or other venue offers a discount for any memberships to which you belong, such as veterans groups, teacher associations or AAA.
  • The best time to book domestic flights is about 54 days out from the date you want to travel.3

Two of the biggest expenses in travel are transportation and lodging. Many retirees tackle both with a recreational vehicle (RV). By driving and sleeping in the same vehicle, it’s possible to see America on a reasonable budget. Plus, there are perks, such as being able to cook at home instead of dining out, sleeping on your own sheets and pillows, and not having to pack and unpack at every destination.

The federal government offers a lifetime “America the Beautiful – The National Parks and Federal Recreational Lands Senior Pass” for only $80. This pass gains admittance to more than 2,000 federal recreation sites throughout the United States.4 Also good to know: You can camp anywhere in a national forest unless posted otherwise (a practice called “dispersed camping”).5 In other words, if you don’t mind roughing it (no services will be available), you don’t have to book a campsite ahead of time.

RV travel can offer a wide range of experiences from rustic to luxurious. You can buy or rent an RV, depending on the scenario that best meets your travel and financial needs. However, renting an RV you’re considering purchasing may be a good way to take the vehicle — and this mode of vacationing — out for a test drive.6

When it comes to finding inexpensive ways to afford travel costs on a fixed income, remember these wise words from Dr. Seuss:7

“So be sure when you step.

Step with care and great tact

And remember that Life’s

A Great Balancing Act.”

Content prepared by Kara Stefan Communications.

1 Dr. Seuss. Genius.com “Oh, the Places You’ll Go!” https://genius.com/Dr-seuss-oh-the-places-youll-go-excerpt-annotated. Accessed Jan. 23, 2018.

2 Brighthouse Financial. Nov. 17, 2017. “Travel More, Spend Less.” https://www.brighthousefinancial.com/education/living-in-retirement/travel-more-spend-less/?cid=paidsocial_twitter_relocation_12212017_701f10000024ukt. Accessed Jan. 23, 2018.

3 Suzy Strutner. HuffPost. May 11, 2017. “The Best Time To Book A Plane Ticket, According To A New Study.” https://www.huffingtonpost.com/entry/best-day-to-book-plane-ticket_us_56cf1648e4b03260bf759b79. Accessed Feb. 20, 2018.

4 U.S. Geological Survey. “Frequently Asked Questions – Recreational Passes.” https://store.usgs.gov/faq#New-Senior-Pass-Update. Accessed Feb. 7, 2018.

5 U.S. Forest Service. “Dispersed Camping Guidelines.” https://www.fs.usda.gov/detailfull/fishlake/recreation/?cid=stelprdb5121831. Accessed Feb. 7, 2018.

6 GoRVing. “Buying an RV.” https://gorving.com/affordability/buying-renting. Accessed Jan. 23, 2018.

7 Dr. Seuss. Genius.com “Oh, the Places You’ll Go!” https://genius.com/Dr-seuss-oh-the-places-youll-go-excerpt-annotated. Accessed Jan. 23, 2018.

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.

The New Tax Law: Things to Consider

Who will be affected by the new tax legislation that went into effect Jan. 1? That is a question many are asking.

While “everyone” is likely to see some changes, here’s an idea of how many people fell into each income group. In 2015:1

  • About 1.4 million Americans accounted for the top 1% of income earners. These Americans earned at least $480,930 of adjusted gross income that year and paid about 40% of all federal income taxes.
  • The top 50% of taxpayers earned at least $39,275.
  • 71 million taxpayers earned less than $39,275 and paid 2.8% of all the income taxes.

Our tax liability is about as personal as our investment choices, career path, favorite foods and what we wear to work in the yard. In short, no matter what’s in the new tax law, it’s likely to affect your tax return differently from your neighbor’s. If you anticipate significant changes, we suggest you seek the counsel of an experienced tax advisor. We can help you find one if you’d like a recommendation.

By the same token, it’s a good idea to work with your financial professional when strategizing a tax-efficient plan, because most financial decisions are intertwined. It’s good for the left hand to know what the right hand is doing.

According to a survey from Willis Towers Watson, two-thirds of employers surveyed say they’ve either made or are considering making enhancements to their employee benefits as a result of the Tax Cuts and Jobs Act. Among them:2

  • 26% are increasing contributions to their sponsored retirement plans.
  • 34% are considering expanding personal financial planning programs for workers.
  • 19% are considering increasing or accelerating contributions to defined benefit plans.

Social Security recipients also may see a change. The new tax law will make cost-of-living adjustments using the Chained Consumer Price Index (CPI) rather than the traditional CPI.3 The difference is that growth of the Chained CPI is generally a few tenths of a percentage point lower the traditional CPI. This could mean slower growth in Social Security benefits.4

Homeowners who take the state and local tax deduction (SALT) as a part of their itemized deductions are going to see a cap ($10,000) on the amount of interest they can deduct from their 2018 return. This mostly is expected to affect residents of states with high income taxes.5

The new law also caps the mortgage interest deduction on home purchases made after Dec. 14, 2017, at $750,000 in mortgage debt, a decrease from the previous cap of $1 million. Further, it eliminated the deduction for interest paid on a home equity loan, for both current accounts and new ones opened in the future.6

Content prepared by Kara Stefan Communications.

1 Kevin McCormally. Kiplinger. Nov. 1, 2017. “Where You Rank as a Taxpayer.” https://www.kiplinger.com/article/taxes/T054-C000-S001-how-you-rank-as-a-taxpayer.html. Accessed Feb. 22, 2018.

2 Nasdaq. Jan. 25, 2018. “Tax law fueling changes to employer benefits and compensation programs, Willis Towers Watson survey finds.” https://globenewswire.com/news-release/2018/01/25/1305044/0/en/Tax-law-fueling-changes-to-employer-benefits-and-compensation-programs-Willis-Towers-Watson-survey-finds.html. Accessed March 6, 2018.

3 Robert Powell. The Street. Jan. 26, 2018. “How the New Tax Law Affect Tax Brackets and Roth Conversions.” https://www.thestreet.com/story/14463562/1/how-the-new-tax-law-affect-tax-brackets-and-roth-conversions.html. Accessed Feb. 22, 2018.

4 Sho Chandra. Bloomberg. Dec. 19, 2017. “What You Need to Know About ‘Chained CPI’” https://www.bloomberg.com/news/articles/2017-11-20/why-chained-cpi-has-links-to-u-s-tax-debate-quicktake-q-a. Accessed Feb. 22, 2018.

5 Amelia Josephson. SmartAsset. Jan. 18, 2018. “Changes to State and Local Tax Deduction — Explained.”https://smartasset.com/taxes/trumps-plan-to-eliminate-the-state-and-local-tax-deduction-explained. Accessed March 6, 2018.

6 Samantha Sharf. Jan. 9, 2018. “How the New Tax Law Will Impact Your Housing Costs.” https://www.forbes.com/sites/samanthasharf/2018/01/09/what-in-the-final-tax-bill-could-impact-your-housing-costs/#243c76c32c08. Accessed Feb. 22, 2018.

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 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. 

Digital Tools for Tax Season

Tax season is upon us. According to the IRS, about 90 percent of taxpayers now file their taxes electronically. The agency touts the service as more accurate, convenient and secure than paper claims, and people usually receive their tax refunds faster.

The IRS offers free tax filing assistance to filers who earn $54,000 a year or less, and people age 60 or older.1 For those who prefer to complete their own returns, there are several helpful resources at IRS.gov.

At the website, you can find an electronic copy of Publication 17, which provides the general rules for filing a federal income tax return. There also is an “Interactive Tax Assistant” that provides answers to frequently asked questions on a variety of topics, such as whether you need to file a return, who you can claim as a dependent and whether you’re eligible to claim an education credit.2

Once you’ve filed a return, you can monitor the status of a refund within 24 hours of IRS receipt using the “Where’s My Refund?” tool. It is located at the IRS.gov website, or you can download the IRS2Go mobile app.3 For a general idea of when you’ll receive a refund based on when you submitted your return, check out the table here.4

If you have questions or would like help completing your taxes, we can refer you to one of the experienced tax professionals within our network. It’s a good idea to work collaboratively with your tax professional and your financial professional in order to help maximize opportunities for tax savings.

For a comparison and ratings of some of the most popular online tax services, check out PC magazine’s review of the “Best Tax Software of 2018.” The rundown includes H&R Block, TaxAct, TaxSlayer and Intuit TurboTax Deluxe, among others.5

While working to complete your tax return by the April 17 deadline, it’s a good time to start considering rules that will be changing for 2018. For example, deductibility of interest on home equity loans and lines of credit (HELOCs) will apply only on loans used to buy, build or substantially improve a home.6

Content prepared by Kara Stefan Communications.

1 IRS.gov. Feb. 6, 2018. “Six Reasons to E-file.” https://www.irs.gov/newsroom/six-reasons-to-e-file. Accessed Feb. 6, 2018.

2 IRS.gov. Jan. 29, 2018. “IRS Tax Tips 2018-14: Check Out These Three Tools on IRS.gov.” https://content.govdelivery.com/accounts/USIRS/bulletins/1d6b25e. Accessed Feb. 5, 2018.

3 Ibid.

4 Isaac M. O’Bannon. CPA Practice Advisor. Dec. 28, 2017. “2018 IRS Income Tax Refund Chart – When Will I Get My Tax Refund?” http://www.cpapracticeadvisor.com/news/12370552/2018-irs-income-tax-refund-chart-when-will-i-get-my-tax-refund. Accessed Feb. 5, 2018.

5 Kathy Yakal. PC. Feb. 9, 2018. “The Best Tax Software of 2018.” https://www.pcmag.com/article2/0,2817,1904319,00.asp. Accessed Feb. 5, 2018.

6 Suzanne Woolley. Bloomberg. Jan. 29, 2018. “How to Game Next Year’s Taxes Now.” https://www.bloomberg.com/news/articles/2018-01-29/eight-ways-to-prepare-for-the-new-tax-law. Accessed Feb. 5, 2018.

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.

Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!