Social Security Increases Benefits by 2.8% for 2019

by | Dec 5, 2018 | Noteworthy

The pay raise for Social Security recipients is the largest since 2012, and over 67 million Americans will see the increase in their payments beginning in January.

 The Social Security Administration has announced a cost of living adjustment (COLA) to recipients’ monthly Social Security and Supplemental Security Income (SSI) benefits. More than 67 million Americans will see the 2.8% increase in their payments beginning in January of 2019. The increase – the largest seen since 2012 – is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers and was put in place to ensure the purchasing power of these benefits isn’t eroded by inflation.

This figure is an increase from last year’s 2.0% adjustment. According to the Social Security Administration, on average, retired workers currently collect $1,420 a month in Social Security payments, or roughly $17,040 a year. The 2.8% COLA will add about $50 a month to those payments, or $600 for the year.

Keep in mind, all federal benefits must be direct deposited. So, if you haven’t already started receiving benefits, you need to establish electronic transfers to your bank or financial institution.

The agency also announced that for the first time, most people who receive Social Security payments will be able to view their COLA notice online through their “my Social Security” account, which can be created online at www.socialsecurity.gov/myaccount

Happy spending!

 

 

Source: Social Security Administration

End of Year Financial Tips

by | Nov 30, 2018 | Learning

I guess I do not have to remind you that the end of the year is quickly approaching? Holiday lights are popping up around the neighborhood and retailers are rolling out their seasonal displays. And it is only a matter of time before your social media feeds are flooded with daily reminders as well.

With all this holiday cheer in mind, I have compiled a list of end of the year tips. Whether you’re currently working and saving for retirement, approaching retirement, or embarking on new post-retirement adventures, here are some core tax, planning, and financial housekeeping things to do.

  • Be sure you have taken your RMD for the year.  Remember, RMD stands for Required Minimum Distribution.  This starts when you hit 70 ½ and goes until you pass away (actually, it could go longer with inherited IRAs, but that is for another conversation).  RMDs are not terribly difficult to calculate if you want to do it yourself.  However, be sure to take it, otherwise the penalty is 50%!
  • If you have a CPA prepare your taxes, give them a call to make sure there are not any end-of-the-year tax moves they may recommend.
  • Empty out your Flexible Spending Account (FSA), unless your employer allows some of the unused funds to be rolled over.  Please don’t confuse this with a Health Savings Account (HSA), as the FSA is geared more toward immediate health-related expenses, and includes a use-it or lose-it feature for the calendar year.
  • Consider charitable giving. Keep track of your donations to charities in all forms—and consider strategies that may qualify you for larger tax deductions.
  • Just in case you inherited an IRA, you may have RMDs to deal with here as well.
  • If someone who was RMD eligible passed away during the year and did not take out all their RMDs, you need to complete this by paying them out to the beneficiaries.  Again, 50% penalty if not done.
  • If you haven’t maxed out your 401k/403b/457 this year and can afford to, reach out to your benefits department to see if you can contribute more the last few paychecks of the year so it is maxed out.
  • It is a good idea to check your credit report for errors at least once a year to help catch fraud or reporting mistakes
  • Speaking of maxing out retirement plans, be sure to increase your plan contribution rates for next year when the retirement plan savings rates bump up.
  • Charitable IRA Contributions also need to be made by the end of the year.  This is where you can take your RMD (up to $100,000), and direct it to a charity of your choice.  If fulfills your RMD requirement and is not taxed to you.  Just make sure it goes directly to the charity.  You do NOT want it to come to you first and then you give it to the charity.
  • Be sure to check the beneficiary information on your plans.  If you have not updated the beneficiary information recently, it is a best to ensure it is up to date.  This includes contingent beneficiaries also.
  • While you are on a roll, check your personal information on all of your statements too.  You know, like the home address, phone number and current email addresses.

Take the time to give your finances a year-end checkup. Do you want to feel in control of your money and on top of things?  Doing this before year-end allows you ample time to take the necessary steps to potentially save on 2018 taxes and set up your investments for success in 2019—without putting a damper on your holiday cheer.

There are important financial housekeeping tasks that you can tackle at any time of the year, like repricing your car insurance or checking your credit reports.  But December 31 only comes once a year, and there are many key financial deadlines to meet before then.  So, get started now, and use the year-end to make tax-smart moves that can help set you up for a prosperous new year.

End of Year Financial Tips, Rockville, Financial Advisor, Bethesda, Investment Advisor, Retirement, Gaithersburg, Retirement Advisor, Potomac, Retirement

Market Commentary – November 26, 2018

by | Nov 26, 2018 | Weekly Stock Market Commentary

It was a turkey of a week.
The United States and China continued to spar over trade and other issues. An expert from Moody’s told Frank Tang of the South China Morning Post (SCMP) the United States-China dispute will not be easily resolved:
“Look at the speech Vice President Pence gave in Papua New Guinea at the Apec conference. He didn’t just talk about trade, but also intellectual property, the South China Sea, forced technology transfers. So there’s a whole long list of issues the U.S. administration is now raising…”

Financial Times reported the Organization for Economic Coordination and Development (OECD) anticipates global economic growth could stumble if trade tensions escalate.

SCMP reported investors are hoping for greater clarity around trade issues when President Donald Trump meets with China’s President Xi Jinping at next week’s G-20 Summit.

The climate report added a new dimension to uncertainty about economic growth last week, reported Fortune. Black Friday shoppers may have missed it, but the U.S. government released the 4th National Climate Assessment on Friday. Ed Crooks of Financial Times summarized some of the report’s economic findings:
“The largest costs of climate change for the United States this century were expected to come from lost ability to work outdoors, heat-related deaths, and flooding…If [greenhouse gas] emissions are not curbed it warns, ‘it is very likely that some physical and ecological impacts will be irreversible for thousands of years, while others will be permanent.’”

Major U.S. stocks indices finished the week lower. It was the biggest drop during Thanksgiving week since 2011, according to CNBC.com.

Americans are hard working and generous.
Take a guess: How many hours do Americans work each year relative to Europeans?

Here are a few hints provided by The Economist and Expatica:

  • The average American has 23 vacation days each year.
  • The Spanish and the Swedes average 36 vacation days each year.
  • Workers in the European Union are guaranteed at least 20 paid days of holiday each year, excluding public holidays.
  • The United States has 10 public holidays.
  • The British have 8 public holidays.
  • Germans may enjoy as many as 13 public holidays, depending on where they live.

So, how many hours do Americans work relative to our European counterparts?
In a typical year, Americans work 100 hours more than the British, 300 hours more than the French, and 400 hours more than the Germans, on average. The Economist reported:  “In 2017 the average American took 17.2 days of vacation. That was a slight rise on the 16 days recorded in 2014 but still below the 1978-2000 average of 20.3 days. Around half of all workers do not take their full allotment of days off, which averages around 23 days. In effect, many Americans spend part of the year working for nothing, donating the equivalent of $561 on average to their firms.”

That’s pretty generous.  There is a case to be built for the importance of taking more vacation time, according to the Harvard Business Review. “Statistically, taking more vacation results in greater success at work as well as lower stress and more happiness at work and home.”

Food for thought as you consider New Year’s Resolutions.

Weekly Focus – Think About It
“When you are inspired by some great purpose, some extraordinary project, all your thoughts break their bonds: your mind transcends limitations, your consciousness expands in every direction, and you find yourself in a new, great, and wonderful world. Dormant forces, faculties, and talents become alive, and you discover yourself to be a greater person by far than you ever dreamed yourself to be.”
–Patanjali, Hindu author and philosopher

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.scmp.com/news/china/article/2174648/us-china-trade-tensions-deepen-2019-hitting-chinese-economy-moodys
https://www.ft.com/content/e563446e-ed0e-11e8-89c8-d36339d835c0
https://www.scmp.com/business/china-business/article/2174695/uncertainty-over-trade-war-likely-weigh-china-growth
http://fortune.com/2018/11/24/climate-change-report-economy/
https://www.ft.com/content/216b5ed2-ef68-11e8-89c8-d36339d835c0
https://www.cnbc.com/2018/11/23/stock-markets-dow-set-for-losses-as-trading-resumes-for-half-day.html
https://www.economist.com/business/2018/11/24/americans-need-to-take-a-break
https://www.expatica.com/de/about/Public-holidays-in-Germany_105411.html
https://hbr.org/2016/07/the-data-driven-case-for-vacation
https://www.goodreads.com/author/quotes/80565.Pata_jali

What is Thanksgiving?

by | Nov 20, 2018 | Noteworthy

Thanksgiving has always been about being thankful for what you have. Even before it was set as an official holiday, it was a centuries-old tradition to have a feast celebrating a good harvest, victory in battle, or some other momentous occasion.

The custom of celebratory feasts is almost as old as civilization itself. For most of our history, we’ve depended on good harvests to get us through tough times. Winter, famine, war, upheaval – people have long worked hard to “get ahead” of the adversity life always throws our way. These days, of course, most of us don’t have to worry so much about things like starvation. Yet the idea of “Thanksgiving” is still as important as ever.

All of us still face setbacks and obstacles, adversity and hardship. Giving thanks for what we have – for whatever good fortune we’ve enjoyed this year – helps strengthen our resolve to deal with today’s challenges and tomorrow’s trials. I think that’s why Thanksgiving has evolved from being a harvest celebration to something much grander.

It’s a celebration of life.

But what about all those who have no good fortune to celebrate?
One of the best things about Thanksgiving – both now and in the past – is that it’s also been a time for ensuring those less fortunate than us have something to celebrate as well. Even in medieval times, thanksgiving feasts gave much needed respite for beggars, debtors, widows, orphans, and all those who could not provide for themselves.

In the modern age, record numbers of people volunteer food and time to ensure others can eat. Even the President of the United States will traditionally serve a thanksgiving meal to those who can’t enjoy a feast with their families, like the members of our armed forces.

So, this Thanksgiving, please join with me in looking back on our good fortune, not just this year, but in all the years stretching back to the beginning of history. Join me in giving thanks that we have each other to build a world that makes almost every year better than the one before.

On behalf of all us of here at Research Financial Strategies, I wish you a Happy Thanksgiving!

Market Commentary – November 19, 2018

by | Nov 19, 2018 | Weekly Stock Market Commentary

Keep your eyes on the horizon.
Motion sickness happens when your body receives conflicting signals from your eyes, ears, and other body parts. One way to manage the anxiety and queasiness that accompany the condition is by keeping your eyes on the horizon.

The motion of the stock markets has been causing some investors to experience similar symptoms. Surprisingly, the remedy is the same: Keep your eyes on the horizon – your financial planning horizon.

A planning horizon is the length of time over which an investor would like to achieve his or her financial goals. For instance, perhaps you want to pay off student loans by age 30, fund a child’s college tuition when they reach age 18, or retire at age 60.

When stock markets are volatile, an investor may receive conflicting signals from various sources, which may induce anxiety and queasiness. When you start to worry about the effects of market volatility on your portfolio, remember stock markets have trended higher, historically, even after significant downturns.

For instance, in 2008, during the financial crisis, the Dow Jones Industrial Average lost about 33 percent. It finished the year at 8,776. The drop sparked tremendous anxiety among investors who wondered whether their portfolios would ever recover.

Last week, the Dow closed at 25,413.

While stock markets have trended higher historically, there is no guarantee they always will. That’s why asset allocation and diversification are so important. A carefully selected mix of assets and investments can reduce the impact of any single asset class or investment on a portfolio’s performance. Keep in mind, of course, past performance is no guarantee of future results.

Last week, stock markets finished lower. MarketWatch reported U.S. stocks moved higher on Friday after President Trump indicated he might not pursue tariffs against China.

What is an apology worth?
John List, an economist at the University of Chicago and Chief Economist for a ride-sharing app, needed to go from his house to the hotel where he was a keynote speaker. So, of course, he called his ride-sharing company. The experience was less than stellar, as he explained to Steven Dubner of Freakonomics Radio:  “So I get in the back of the car and it says I’m going to be there in 27 minutes. So I go into my own land of working on my slides, because of course I’m doing things at the last minute. I lose track of time. I look back up about 25 minutes later, and I’m back in front of my house…And I said, ‘Oh my god, what happened?’ The driver said, ‘I got really confused, and the GPS switched, and we turned around and I thought that you changed the destination, so I went back.’ So I told her immediately, ‘Turn around, go back.’ I missed part of my panel.”

List also missed an apology, which neither the driver nor the company offered.  He decided to investigate how much mistakes, like the one he experienced, cost the company and whether an apology would reduce the cost. As it turned out, the cost of 5 percent of trips that resulted in customers being 10 or 15 minutes late was 5 to 10 percent in lost revenue.

List enlisted the help of researchers Benjamin Ho of Vassar College, Basil Halperin of Massachusetts Institute of Technology, and Ian Muir of the ride-sharing company, and conducted a field experiment on clients of the ride-sharing company. They discovered apologies are not universally successful at reducing the costs associated with a bad experience. The most successful apologies had a monetary value. In their case, a $5 coupon produced a 2 percent increase in net spending.

The team discovered another important fact. Apologies lose value and can inflict reputational damage when a company has to apologize multiple times.  No surprise there.

Weekly Focus – Think About It
“When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion.”
–Dale Carnegie, American writer and lecturer

Best regards,
John F. Reutemann, Jr., CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this email with their email address and we will ask for their permission to be added.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

 

S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.

 

* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Sources:
https://www.sharp.com/health-news/does-looking-at-the-horizon-prevent-car-sickness.cfm
http://afcpe.org/assets/pdf/volume_25_2/09013_pg174-196.pdf
https://finance.zacks.com/longterm-stock-market-trends-6294.html
https://clicktime.cloud.postoffice.net/clicktime.php?U=https%3A%2F%2Ffinance.yahoo.com%2Fquote%2F&E=jim.streight%40rfsadvisors.com&X=XID420wkTXFf6103Xd1&T=RFAD&HV=U,E,X,T&H=c07add89594b427a7910f483583c7695db1d1aae^DJI/history?period1=1167631200&period2=1230789600&interval=1d&filter=history&frequency=1d
https://clicktime.cloud.postoffice.net/clicktime.php?U=https%3A%2F%2Ffinance.yahoo.com%2Fquote%2F&E=jim.streight%40rfsadvisors.com&X=XID420wkTXFf6103Xd1&T=RFAD&HV=U,E,X,T&H=c07add89594b427a7910f483583c7695db1d1aae^DJI?p=^DJI
https://www.investopedia.com/terms/s/systematicrisk.asp
https://www.marketwatch.com/story/nasdaq-poised-to-fall-1-at-the-open-as-nvidia-weighs-on-stock-market-chip-makers-2018-11-16
https://www.reuters.com/article/us-usa-trade-china/trump-says-u-s-may-not-impose-more-tariffs-on-china-idUSKCN1NL28Q
http://freakonomics.com/podcast/apologies/
http://s3.amazonaws.com/fieldexperiments-papers2/papers/00644.pdf
https://www.brainyquote.com/quotes/dale_carnegie_130727

 

6Lc_psgUAAAAAA9c7MediJBuq3wAxIyxDSt73c9j