Your Emergency Fund: How Much is Enough?

Presented by Beacon Financial Group

An emergency fund may help alleviate the stress associated with a financial crisis.

Have you ever had one of those months? The water heater stops heating, the dishwasher stops

washing, and your family ends up on a first-name basis with the nurse at urgent care. Then, as

you’re driving to work, giving yourself your best, “You can make it!” pep talk, you see smoke

seeping out from under your hood.

Bad things happen to the best of us, and instead of conveniently spacing themselves out, they

almost always come in waves. The important thing is to have a financial life preserver, in the

form of an emergency cash fund, at the ready.

Although many people agree that an emergency fund is an important resource, they’re not sure

how much to save or where to keep the money. Others wonder how they can find any extra

cash to sock away. One recent survey found that 29% of Americans lack any emergency savings

whatsoever. 1

How Much Money? When starting an emergency fund, you’ll want to set a target amount. But

how much is enough? Unfortunately, there is no “one-size-fits-all” answer. The ideal amount

for your emergency fund may depend on your financial situation and lifestyle. For example, if

you own your home or provide for a number of dependents, you may be more likely to face

financial emergencies. And if the crisis you face is a job loss or injury that affects your income,

you may need to depend on your emergency fund for an extended period of time.

Coming Up with Cash. If saving several months of income seems an unreasonable goal, don’t

despair. Start with a more modest target, such as saving $1,000. Build your savings at regular

intervals, a bit at a time. It may help to treat the transaction like a bill you pay each month.

Consider setting up an automatic monthly transfer to make self-discipline a matter of course.

You may want to consider paying off any credit card debt before you begin saving.

Once you see your savings begin to build, you may be tempted to use the account for

something other than an emergency. Try to budget and prepare separately for bigger expenses

you know are coming. Keep your emergency money separate from your checking account so

that it’s harder to dip into.

Where Do I Put It? An emergency fund should be easily accessible, which is why many people

choose traditional bank savings accounts. Savings accounts typically offer modest rates of

return. Certificates of Deposit may provide slightly higher returns than savings accounts, but

your money will be locked away until the CD matures, which could be several months to several

years.

The Federal Deposit Insurance Corporation (FDIC) insures bank accounts and certificates of

deposit (CD’s) up to $250,000 per depositor, per institution in principal and interest. CD’s are

time deposits offered by banks, thrift institutions, and credit unions. CD’s offer a slightly higher

return than a traditional bank savings account, but they also may require a higher amount of

deposit. If you sell before the CD reaches maturity, you may be subject to penalties. 2

Some individuals turn to money market accounts for their emergency savings. Money market

funds are considered low-risk securities, but they’re not backed by the federal government like

CD’s, so it is possible to lose money. Depending on your particular goals and the amount you

have saved, some combination of lower-risk investments may be your best choice. 2

Money held in money market funds is not insured or guaranteed by the FDIC or any other

government agency. Money market funds seek to preserve the value of your investment at

$1.00 a share. However, it is possible to lose money by investing in a money market fund.

Money market mutual funds are sold by prospectus. 2

Please consider the charges, risks, expenses, and investment objectives carefully before

investing. A prospectus containing this and other information about the investment company

can be obtained from your financial professional. Read it carefully before you invest or send

money.

The only thing you can know about unexpected expenses is that they’re coming – for everyone.

But having an emergency fund may help alleviate the stress and worry associated with a

financial crisis. If your emergency savings are not where they should be, consider taking steps

today to create a cushion for the future.


Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - cnbc.com/2018/07/02/about-55-million-americans-have-no-emergency-savings.html [7/6/18]

2 - investor.vanguard.com/investing/cash-investments [12/13/18]

Monthly Economic Update for January 2019

Presented by Beacon Financial Group

In this month’s recap: equities rally here and around the world, economic fundamentals look solid, the pace of home sales slows, and oil surges.

THE MONTH IN BRIEF

During a month marked by political impasses in the United States and United Kingdom, equities performed well around most of the world. On Wall Street, the S&P 500 advanced 7.87% in January, with a new earnings season as well as trade and monetary policy developments providing tailwinds. Most of the economic data that rolled in was good; the partial federal government shutdown may have negatively impacted some of the numbers. Home sales fell off abruptly. Many commodities advanced. All in all, investors focused on the potential of the markets more than disputes. 1

DOMESTIC ECONOMIC HEALTH

The Congressional Budget Office believes that the 35-day federal government shutdown cost the economy about $11 billion. The silver lining is that roughly $8 billion of that loss is potentially recoverable, presuming federal spending and consumer spending bounce back in the coming months. 2

Due to the length and breadth of the shutdown, a few key economic reports did not appear last month. Nevertheless, there were plenty of attention-getting news items.

As expected, the Federal Reserve left interest rates alone in January. What really intrigued investors was the dovish tone of the Fed’s latest policy statement. It noted that the Federal Open Market Committee would be “patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate” for the economy. The central bank appeared newly cautious: language implying that rate hikes might be merited was now absent. 3

In mid-January, China made a move in the U.S.-China trade dispute. It offered a plan to address the U.S. trade deficit, with an objective of cutting it to $0 by 2024. China would undertake a strategy to buy greater amounts of American goods: $45 billion more during 2019, and gradually, more in each of the following five years, with the multiyear increase reaching $1 trillion. Bloomberg News reported that U.S. negotiators wanted China to try and wipe out the trade imbalance within two years, not six. American demand for Chinese-made products is so strong, however, that making any real dent in the trade deficit might be a tall order, given current free market conditions. 4

Main Street seemed a bit unsettled by the shutdown and recent stock market volatility. The most respected U.S. monthly consumer confidence gauge, maintained by the Conference Board, fell sharply in January to 120.2, a good reading that still represented its lowest level since July 2017. Its future expectations sub-index hit a 27-month low. At mid-month, the University of Michigan’s consumer sentiment index slipped from its final December mark of 98.3 to 90.7. 5,6

The Institute for Supply Management’s twin purchasing manager indices also fell; those numbers exclusively concerned December. In the last month of 2018, ISM’s manufacturing sector index slipped 5.2 points to 54.1; its services sector PMI declined 3.1 points to 57.6. Both readings indicated solid sector expansion, just to a lesser degree than a month before. 7

One word summed up the latest jobs report from the Department of Labor: fantastic. In December, employers added 312,000 net new workers to their payrolls. The main unemployment rate rose 0.2% to 3.9%, but that was an effect of more Americans looking for work. The U-6 rate, counting both the unemployed and underemployed, held at 7.6%. Wages were up 3.2% year-over-year, the best annual advance in a decade. 8

The Consumer Price Index retreated 0.1% during December after a flat November; the core CPI rose 0.2% in the final month of 2018, replicating its November move. December also brought a slight slip for both the headline (0.2%) and core (0.1%) Producer Price Index. 6

As January drew to a close, some significant data was still pending: the first estimate of Q4 Gross Domestic Product (GDP), plus the latest reports on personal spending as well as income and durable goods orders. This backlogged data could appear in the first half of this month.

GLOBAL ECONOMIC HEALTH

Would the Brexit be delayed? After the crushing 230-vote defeat of Prime Minister Theresa May’s withdrawal deal in Parliament, the United Kingdom faced six possible options: an extension of the March 29 Brexit deadline set by the European Union, a renegotiation of May’s withdrawal deal, a general election that could bring about a change in U.K. leadership, a “hard” Brexit with no trade agreements with the E.U., another national vote on the matter, or no Brexit at all with the U.K. staying in the E.U. As January ended, May faced a February 13 deadline to return to Parliament with either an altered deal or a statement of which other course of action she wanted the U.K. to pursue. While European Council President Donald Tusk tweeted that the Brexit agreement was “not open for renegotiation,” U.K. Foreign Secretary Jeremy Hunt said that a delayed Brexit could be in order. One key sticking point has been the flow of trade between Ireland and Northern Ireland, which could be disturbed if Northern Ireland leaves the E.U. 9,10

China’s factory sector shrunk for a second straight month in January; the reading on the nation’s official manufacturing PMI improved 0.2 points to 49.5. The Chinese economy grew 6.6% in 2018 – a striking advance by global standards, but its smallest expansion since 1990. The effect of that slowdown was being felt in America (where major tech and heavy equipment firms reported declining sales in China) and in Japan, South Korea, and Australia, three of its other major trading partners. (Tariffs on a variety of Chinese imports to the U.S. are slated to rise from 10% to 25% before the end of the first quarter.) 11,12

WORLD MARKETS

Investors felt bullish around the world last month, and the performance numbers of major equity benchmarks reflected their optimism. Europe saw broad gains: Russia’s MICEX improved 6.41% in January; Spain’s IBEX 35, 6.05%; the FTSE Eurofirst 300, 5.99%; Germany’s DAX, 5.82%; France’s CAC 40, 5.54%. Even in London, the FTSE 100 gained 3.58%. 13

Indices in the Asia-Pacific region, Canada, and South America recorded even larger monthly jumps. Canada’s TSX Composite outperformed the Dow and S&P 500, surging 8.50%. The MSCI Emerging Markets index climbed 8.71% for the month, and MSCI’s World index added 7.68%. Look what two South American benchmarks did: Brazil’s Bovespa soared 11.14%, and Argentina’s Merval, 18.97%. Mexico’s Bolsa posted a monthly advance of 5.64%. Hong Kong’s Hang Seng and South Korea’s Kospi set the pace in the east, with respective gains of 8.11% and 8.03%. Australia’s All Ordinaries rose 3.99%; China’s Shanghai Composite, 3.96%; Japan’s Nikkei 225, 3.79%. The only notable retreats were minor: India’s Nifty 50 lost 0.29%; Malaysia’s KLSE Composite, 0.42%. 13,14

COMMODITIES MARKETS

Oil got off to a great start for 2019. By the closing bell on January 31, a barrel of WTI crude was worth $54.04 on the NYMEX, after a 17.94% YTD gain. While natural gas futures lost 4.53% last month, unleaded gasoline improved 4.94%, and heating oil soared 11.71%. 15

Among the softs, while cocoa took a 10.50% drop, other major crops rose. Sugar gained 4.16%; soybeans, 3.83%; cotton, 2.99%; wheat, 2.68%; corn, 0.47%; coffee, 0.34%. Copper led the key metals, rising 5.75%. Platinum advanced 4.35%, and silver and gold respectively added 4.05% and 3.03%. Gold ended the month at $1,319.50 on the COMEX; silver, at $16.06. The U.S. Dollar Index lost 0.80% in January. 15,16

REAL ESTATE

First, the good news. January brought a significant dip in mortgage rates. In Freddie Mac’s last Primary Mortgage Market Survey of 2018 (December 27), a conventional home loan carried 4.55% interest on average. By January 31, that average interest rate had declined to 4.46%. The trend carried over to 15-year, fixed rate loans (4.01% to 3.89%) and 5/1-year, adjustable loans (4.00% to 3.96%). 17,18

Additionally, delayed new home sales data from the Census Bureau showed a 17.0% jump in November to an 8-month high. (The Bureau’s report on January housing starts is still pending as a result of the shutdown.) 19

Now, the bad news: existing home sales slowed. The National Association of Realtors announced that resales were down 6.4% month-over-month in December, after improving 2.1% in November. In 2018, existing home sales lagged 3.1% behind their 2017 pace; last year was the poorest year for home buying since 2015. 6,20

In other real estate news, the 20-city composite S&P CoreLogic Case-Shiller home price index showed 4.7% annual appreciation in its latest edition (November), which was the slimmest gain in almost four years. The yearly advance had been 5.0% a month earlier. The NAR’s pending home sales index, which measures monthly housing contract activity, fell 2.2% to 99.0 in December; that was its worst reading since April 2014. 5,20

T I P O F T H E M O N T H

Recent college graduates are certainly challenged to save for the future, what with student loans, rent, and entry-level jobs. It can be tough to set anything aside. Still, saving and investing something is better than nothing, and the effort must be made. Given the power of compounding over time, starting early is smart.

LOOKING BACK, LOOKING FORWARD

Equities got off to a flying start this year. While the big three all gained 7% or better last month, the small caps outran those bullish starts: the Russell 2000 soared 11.19% in January. At the closing bell on January 31, their settlements were: Dow Industrials, 24,999.67; Nasdaq Composite, 7,281.74; S&P 500, 2,704.10; Russell 2000, 1,499.42. Leading the pack among U.S. benchmarks in terms of monthly performance, the PHLX Oil Service Sector index climbed 19.28%. The CBOE VIX declined 34.82% in January, down to 16.57 at the end of the month. 1

Patient investors sighed with relief at January’s major Wall Street advance. The S&P 500 had not rallied so strongly in January since 1987. It just goes to show that when the bears come out, the bulls are quite capable of coming right back. Going into February, investors have three preoccupations: earnings, the rate of progress in the trade negotiations between the U.S. and China, and the lingering risk of a shutdown in Washington. In the best-case scenario, this month would see a return to business as usual on Wall Street: a leveling out of extreme volatility, a fading memory of December and its anxieties. With luck, maybe we will see that this month instead of a retreat inspired by poor quarterly results or sudden headlines. 23

Q U O T E O F T H E M O N T H

“Cherish all your happy moments: they make a fine cushion for old age.”

CHRISTOPHER MORLEY

UPCOMING RELEASES

What will investors interpret during the rest of 2019’s shortest month? Besides earnings, they will look at the January Consumer Price Index (2/13), the January Producer Price Index (2/14), the preliminary February University of Michigan consumer sentiment index, recent retail sales data, and January industrial output (2/15), minutes from the January Federal Reserve policy meeting as well as new and delayed reports on homebuilding activity (2/20), January existing home sales and leading indicators (2/21), a new Conference Board consumer confidence index, January new home sales, and the December S&P CoreLogic Case-Shiller home price index (2/26), January pending home sales and hard goods orders (2/27), and then, an estimate of Q4 growth (2/28). January personal spending data, the January Personal Consumption Expenditures price index, and the final February University of Michigan consumer sentiment index are slated to appear on March 1.

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - markets.wsj.com/us [1/31/19]

2 - tinyurl.com/ybuyqd79 [1/28/19]

3 - nbcnews.com/business/economy/federal-reserve-leaves-interest-rate-unchanged-first-meeting-2019-n964726 [1/30/19]

4 - bloomberg.com/news/articles/2019-01-18/china-is-said-to-offer-path-to-eliminate-u-s-trade-imbalance [1/18/19]

5 - reuters.com/article/us-usa-economy/us-consumer-morale-at-one-and-a-half-year-low-house-price-gains-slow-idUSKCN1PN271 [1/29/19]

6 - investing.com/economic-calendar/ [1/31/19]

7 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [1/7/19]

8 - time.com/5493913/december-jobs-numbers/ [1/4/19]

9 - cnbc.com/2019/01/15/theresa-may-loses-brexit-vote-what-happens-next.html [1/15/19]

10 - apnews.com/dcaa3bafbc474b0ca2f1a2ef43b450fd [1/31/19]

11 - cnbc.com/2019/01/31/china-economy-manufacturing-january-pmi-.html [1/31/19]

12 - hawaiipublicradio.org/post/asia-minute-slowing-chinese-economy-hits-neighboring-countries [1/29/19]

13 - markets.on.nytimes.com/research/markets/worldmarkets/worldmarkets.asp [1/31/19]

14 - msci.com/end-of-day-data-search [1/31/19]

15 - money.cnn.com/data/commodities/ [1/31/19]

16 - marketwatch.com/investing/index/dxy/historical [1/31/19]

17 - freddiemac.com/pmms/archive.html [1/31/19]

18 - freddiemac.com/pmms/archive.html?year=2018 [1/31/19]

19 - marketwatch.com/story/new-home-sales-soar-17-in-november-hit-an-8-month-high-2019-01-31 [1/31/19]

20 - tinyurl.com/yd25wvyd [1/30/19]

21 - markets.wsj.com/us [12/31/18]

22 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]

23 - marketwatch.com/story/what-does-the-stock-markets-monster-january-rally-mean-for-february-2019-01-31 [1/31/19]

Weekly Economic Update 2/4/2019

Presented by Beacon Financial Group

In this week’s recap: a hiring surge, a noteworthy remark from Jerome Powell, a dip for a respected household confidence index, and gains on Wall Street.

February BEGINS WITH SOME EXCELLENT ECONOMIC DATA

Payrolls swelled with 304,000 net new jobs last month, according to the Department of Labor’s February employment report. (A Bloomberg survey of economists had projected a gain of 165,000.) The number of Americans temporarily laid off or working part time for economic reasons increased greatly in January as a consequence of the partial federal government shutdown; that left the unemployment rate (4.0%) and underemployment rate (8.1%) higher. Average hourly wages were up 3.2% year-over-year. Additionally, the factory sector expanded at a faster pace last month: the Institute for Supply Management’s purchasing manager index improved 2.5 points to a mark of 56.6. 1,2

       

FED HINTS AT THE POSSIBILITY OF PAUSING RATE HIKES

The Federal Reserve made no interest rate move last week, but at its January 30 press conference, Fed chairman Jerome Powell had an interesting comment for the media: “We believe we can best support the economy by being patient before making any future adjustment to policy.” To investors large and small, that remark sounded like a declaration that the central bank was ready to exercise extra caution in considering future rate increases. Powell noted the recent emergence of “some crosscurrents and conflicting signals about the [economic] outlook” as a factor. 3

     

HOW ARE CONSUMERS FEELING?

The latest readings on the country’s two most-watched consumer confidence indices look good, but one just took a major fall. The Conference Board’s monthly index went from a December mark of 126.6 to 120.2 in January. In its final January edition, the University of Michigan’s consumer sentiment gauge displayed a 91.2 reading, up 0.5 points from its preliminary version. 2

     

MAJOR INDICES MAKE ANOTHER WEEKLY ADVANCE

Last week, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all gained more than 1.3%, thanks in part to some of the developments mentioned above. The S&P rose 7.87% during January. Oil ended the week at $55.31 on the NYMEX; gold, at $1,322.60 on the COMEX. 4,5

T I P   O F   T H E   W E E K

Does your employer offer long-term disability coverage in its benefits package? Do you know how much income that coverage would pay out if you become disabled? Check to see if the income would be adequate; if it appears inadequate, consider arranging supplemental coverage.

THIS WEEK

Alphabet, Beazer Homes, Clorox, Gilead Sciences, Panasonic, Seagate Technology, Sysco, and The Hartford release earnings news Monday. | On Tuesday, ISM’s January non-manufacturing PMI complements earnings from Allstate, AmeriGas, Anadarko Petroleum, Archer Daniels Midland, BP, Chubb, Electronic Arts, Estee Lauder, Genworth Financial, Mitsubishi, Pitney Bowes, Ralph Lauren, Snap, Viacom, Voya Financial, and Walt Disney Co. | Wednesday, earnings arrive from Chipotle, Cummins, Eli Lilly, General Motors, GlaxoSmithKline, Humana, MetLife, Prudential Financial, Spotify, Take-Two Interactive, and Valvoline; in the evening, Federal Reserve chair Jerome Powell takes questions at a Washington, D.C. town hall meeting. | On Thursday, the earnings roll call includes news from ArcelorMittal, Dunkin’ Brands, Fiat Chrysler, Kellogg, L’Oréal, Marathon Petroleum, Mattel, Motorola Solutions, News Corp., Philip Morris, Twitter, Tyson Foods, and Yum! Brands. | Friday, Exelon, Hasbro, and Phillips 66 present Q4 results.

Q U O T E    O F    T H E    W E E K

“Have patience with all things, but chiefly have patience with yourself.”

St. Francis de Sales

Know someone who could use information like this?

Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

CITATIONS:

1 - fortune.com/2019/02/01/jobs-numbers-january/ [2/1/19]

2 - marketwatch.com/economy-politics/calendars/economic [2/1/19]

3 - washingtonpost.com/business/2019/01/30/federal-reserve-says-it-will-be-patient-rate-hikes-change-likely-please-trump/ [1/30/19]

4 - markets.wsj.com [2/1/19]

5 - us.spindices.com/indices/equity/sp-500 [1/31/19]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [2/1/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [2/1/19]

Are Your Beneficiary Designations Up to Date?

Presented by Beacon Financial Group

Who should inherit your IRA or 401(k)? See that they do

Here’s a simple financial question: who is the beneficiary of your IRA? How about your 401(k) or annuity? You may be saying, “I’m not sure.” It is smart to periodically review your beneficiary designations.

Your choices may need to change with the times. When did you open your first IRA? When did you buy your life insurance policy? Was it back in the Nineties? Are you still living in the same home and working at the same job as you did back then? Have your priorities changed?

While your beneficiary choices may seem obvious and rock‐solid when you initially make them, time has a way of altering things. In a stretch of five or ten years, some major changes can occur in your life and may warrant changes in your beneficiary decisions.

In fact, you might want to review them annually. Here’s why: companies frequently change custodians when it comes to retirement plans and insurance policies. When a new custodian comes on board, a beneficiary designation can get lost in the paper shuffle. (It has happened.) If you don’t have a designated beneficiary on your retirement accounts, those assets may go to the “default” beneficiaries when you pass away, which might throw a wrench into your estate planning. An example: under ERISA, your spouse receives your 401(k) assets if you pass away. Your spouse must waive that privilege in writing for those assets to go to your children instead. 1

How your choices affect your loved ones. The beneficiary of your IRA, annuity, 401(k), or life insurance policy may be your spouse, your child, maybe another loved one, or maybe even an institution. Naming a beneficiary helps to keep these assets out of probate when you pass away.

Many people do not realize that beneficiary designations take priority over bequests made in a will or living trust. For example, if you long ago named a son or daughter who is now estranged from you as the beneficiary of your life insurance policy, he or she will receive the death benefit when you die, regardless of what your will states. 2

You may have even chosen the “smartest financial mind” in your family as your beneficiary, thinking that he or she has the knowledge to carry out your financial wishes in the event of your death. But what if this person passes away before you do? What if you change your mind about the way you want your assets distributed and are unable to communicate your intentions in time? And what if he or she inherits tax problems as a result of receiving your assets?

How your choices affect your estate. If you are naming your spouse as your beneficiary, the tax consequences are less thorny. Assets you inherit from your spouse aren’t subject to estate tax, as long as you are a U.S. citizen. 3

When the beneficiary isn’t your spouse, things get a little more complicated – for your estate and for your beneficiary’s estate. If you name, for example, your son or your sister as the beneficiary of your retirement plan assets, the amount of those assets will be included in the value of your taxable estate. (This might mean a higher estate tax bill for your heirs.) And the problem will persist: when your non‐spouse beneficiary inherits those retirement plan assets, those assets become part of their taxable estate, and their heirs might face higher estate taxes. Your non‐spouse heir might also have to take required income distributions from that retirement plan someday and pay the required taxes on that income. 4

If you properly designate a charity or other 501(c)(3) non‐profit organization as a beneficiary of your retirement account assets, the assets can pass to the charity without your estate being taxed, and the gift will be deductible for estate tax purposes. 5

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)


This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note ‐ investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 ‐ forbes.com/sites/ashleaebeling/2018/01/08/five‐retirement‐housekeeping‐moves‐for‐the‐new‐year/ [1/8/18]

2 ‐ thebalance.com/why‐beneficiary‐designations‐override‐your‐will‐2388824 [8/28/17]

3 ‐ nolo.com/legal‐encyclopedia/estate‐planning‐when‐you‐re‐married‐noncitizen.html [2/4/18]

4 ‐ corporate.findlaw.com/law‐library/who‐should‐be‐the‐beneficiary‐of‐your‐qualified‐retirement‐plan.html [2/4/18]

5 ‐ ameriprise.com/research‐market‐insights/financial‐articles/insurance‐estate‐planning/charitable‐giving/ [2/4/18]

Weekly Economic Update 1/28/2019

Presented by Beacon Financial Group, January 28, 2019

In this week’s recap: home sales slip, the Fed may be discussing an end date for its balance sheet reduction, leading indicators flash weaker signals, and equities continue to climb.

HOME SALES QUICKLY FALTER

Seldom do existing home sales fall 6.4% in a month, but that was what happened in December. National Association of Realtors economist Laurence Yun called the drop a reflection of “consumer search processes and contract signing activity in previous months when mortgage rates were higher than today,” and noted that the housing market could be poised for a spring rebound. Year‐over‐year, the NAR noted, resales were down 10.3%. The median existing home sale price was $253,600 last month, up 2.9% from December 2017. 1

IS A SUNSET COMING FOR THE FED’S BALANCE SHEET RUNOFF?

On Friday, the Wall Street Journal stated that Federal Reserve policymakers are reportedly considering an end date for the unwinding of the central bank’s huge bond portfolio. Investors will, no doubt, scrutinize the Federal Open Market Committee’s January 30 monetary policy statement for any intimations about this. In gradually shrinking its balance sheet over the last 15 months, the Fed has affected the level of liquidity within the financial markets. 2

LEADING INDICATORS RETREAT

The Conference Board’s monthly index of leading indicators descended a tenth of a point in December. A month earlier, the gauge rose 0.2%. In a note accompanying the release of the data, the CB said this might be a hint that the economy may “decelerate towards 2% growth by the end of 2019.” 3

A SHORT AND POSITIVE WEEK ON WALL STREET

All three major U.S. equity benchmarks posted slight gains this past 4‐day trading week, adding to the extended rally that began after Christmas. At Friday’s close, the S&P 500 was up 7.20% month‐over‐month, and the Dow Jones Industrial Average was on a 5‐week winning streak. Friday’s sudden agreement between President Trump and Democratic congressional leaders to end the partial federal government shutdown was but one positive factor influencing stocks. Some key earnings announcements surprised to the upside: China’s government said that it would inject $37 billion worth of liquidity into its money markets, and investors heard that the Fed might be thinking of wrapping up the unwinding of its balance sheet sooner rather than later. 4,5

T I P O F T H E W E E K

At most businesses, sales and revenue ebb and flow across the year. Some astute short‐term budgeting may help your business better manage the lean times. Start with a list of your essential, month‐to‐month costs, and see if you can plan to reduce any extra costs during the slow months.

THIS WEEK

The Internal Revenue Service begins accepting 2018 individual tax returns on Monday; on Wall Street, investors respond to Q4 results from Caterpillar, Celanese, and Whirlpool. | Tuesday, the Conference Board releases its January consumer confidence index, and 3M, AMD, Allergan, Amgen, Apple, Biogen, Corning, eBay, Harley‐Davidson, Lockheed Martin, Nucor, Pfizer, Pulte Group, Regis Corp., Rockwell Automation, Verizon, and Xerox announce earnings. | The Federal Reserve issues its latest policy statement on Wednesday, with a press conference afterward; ADP presents its January payrolls report, the NAR offers its latest pending home sales index, and the earnings roll call includes Alibaba, Ally Financial, Ameriprise Financial, Anthem, AT&T, Avery Dennison, Boeing, Facebook, General Dynamics, McDonalds, Microsoft, Mondelez International, PayPal, Qualcomm, Royal Caribbean, Siemens, Sirius XM, Tesla, U.S. Steel, and Visa. | On Thursday, December consumer spending numbers are out along with earnings from Aflac, Altria Group, Amazon, Celgene, Charter Communications, ConocoPhillips, DowDuPont, GE, Mastercard, Nokia, Northrop Grumman, Parker Hannifin, Raytheon, Royal Dutch Shell, Sherwin‐Williams, Sprint, Symantec, UPS, and Valero Energy. | Friday, Wall Street interprets January jobs data, the final January University of Michigan consumer sentiment index, ISM’s newest manufacturing PMI, and earnings from Aon, Chevron, Cigna, ExxonMobil, Honda, Honeywell International, Merck, Sony, and Weyerhaeuser.

Q U O T E O F T H E W E E K

“Success is really about being ready for the good opportunities that come before you.”

ERIC SCHMIDT

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note ‐ investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 ‐ bankingjournal.aba.com/2019/01/existing‐home‐sales‐dipped‐6‐4‐percent‐in‐december/ [1/22/19]

2 ‐ cnbc.com/2019/01/25/fed‐reportedly‐moving‐closer‐to‐ending‐balance‐sheet‐reduction.html [1/25/19]

3 ‐ reuters.com/article/us‐usa‐economy‐unemployment/us‐weekly‐jobless‐claims‐lowest‐since‐1969‐idUSKCN1PI1SM [1/24/19]

4 ‐ marketwatch.com/story/us‐stock‐futures‐point‐to‐another‐upbeat‐day‐for‐wall‐street‐led‐by‐techs‐2019‐01‐25 [1/25/19]

5 ‐ markets.wsj.com [1/25/19]

6 ‐ investopedia.com/markets [1/25/19]

7 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yield [1/25/19]

8 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yieldAll [1/25/19]

Ways to Ease the Cost of College

Presented by Beacon Financial Group

A look at grants, scholarships, 529 plans, and other methods

How much could a college education cost in the 2030s? You may want to take a deep breath and sit down before reading the next paragraph.

A MassMutual analysis projects that four years of tuition, room, and board at a private college will cost nearly $369,000 in 2031. An article at CNBC offers a slightly cheaper estimate, putting the total expense at $303,000 for a freshman setting foot on campus in 2036. (Today, the cost of four years at a private university is less than half that.) How about the price tag for four years of tuition, room, and board at a public university in that year? The same CNBC article says that it may reach $184,000. 1,2

Even today, finding enough money to pay for college can be an enormous challenge. There are obvious ways to counter the cost: a student can work full time and apply much of the income toward school, or assume student loans. Fortunately, there are other ways – ways that you may want to explore if you do not want your child to take a hard-scrabble path through school or get soaked with debt.

Ideally, you use money you never have to repay. Grants and scholarships are more plentiful than many students (and parents) realize, and some go begging for applicants. Grants are based on need; scholarships, on merit. Grants can be issued incrementally or in lump sums to a student; most are awarded on a first-come, first-serve basis, which is why it is so crucial to fill out the Free Application for Federal Student Aid (FAFSA) early. A school accepting your student will evaluate your student’s FAFSA, then send an award letter detailing his or her eligibility for federal and state grants. As for scholarships, there are literally millions of them. Sallie Mae provides a convenient online search tool to explore more than 5 million such awards, and you can use it to drill down to opportunities that are strong possibilities for your student. 3

Through a 529 plan, you can invest to meet future college costs. 529 plans come in two varieties, and both varieties have common tax advantages. 529 plan earnings are exempt from federal income tax, and 529 plan assets may be withdrawn, tax free, so long as the money pays for qualified education expenses. While there are no federal tax breaks linked to 529 plan contributions, more than 30 states offer state income tax deductions or credits for them. 4

Some 529 plans are prepaid tuition plans, giving you the potential to prepay up to 100% of your student’s future tuition at a public university within your state (most of these plans do not pay for housing costs). You may be able to convert a prepaid tuition plan so that the assets can be used to pay tuition at an out-of-state university or private college. (There is also the Private College 529 Plan, which 250+ private colleges and universities collectively support.) 4

The great majority of 529 plans are college savings plans, analogous to Roth IRAs. In a college savings plan, you can direct your contributions into equity investments, which offer you the possibility of tax-advantaged growth and compounding. (If the investments perform badly, your college fund may shrink.) 4

You may choose to fund a 529 plan account incrementally or with a lump sum. States put different limits on the amount of money that a 529 account can hold, but six-figure balances are often permissible. You can invest in any state’s 529 plan and pay for higher education expenses with 529 plan assets at any qualified U.S. college or university. 4,5

Whole life insurance could help. If you have a permanent life insurance policy with some cash value, you could take a loan from (or even cash out) the policy and apply the amount toward college costs. The value of a life insurance policy does not factor into a student’s financial aid calculation (which many parents do not realize). If you take a loan from a life insurance policy, you will reduce the death benefit; repay the loan in full, and you will restore its full value. 6

Some families use Roth IRA assets to pay for college. A Roth IRA gives you a degree of flexibility that a 529 plan does not. Suppose your child does not go to college. (While this may seem highly improbable, some young adults do start successful careers without a college education.) In that event, you still have a Roth IRA: a tax-favored retirement savings account with the potential for tax-free withdrawals. 7

A Roth IRA is not a perfect college savings vehicle, however. First, the annual contribution limit is low compared to a 529 plan. Second, while you may withdraw an amount equal to your contributions without penalty at any time of life, a Roth IRA’s earnings represent taxable income when withdrawn. Third, while Roth IRA assets are not countable assets on the FAFSA, tax-free Roth IRA contributions, once withdrawn, still amount to untaxed income for your student (i.e., the Roth IRA beneficiary), and they lower a student’s eligibility for need-based aid. 7

Going to college should not mean going into debt. Would you like to plan, save, and invest to reduce or avoid that consequence? Then talk with a financial professional who is well versed in college planning. The variety of options available may pleasantly surprise you.

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - forbes.com/sites/megangorman/2018/08/23/balancing-the-high-cost-of-child-care-and-college-savings [8/23/18]

2 - tinyurl.com/y9on33n6 [6/23/18]

3 - salliemae.com/college-planning/financial-aid/understand-college-grants/ [11/15/18]

4 - savingforcollege.com/intro-to-529s/what-is-a-529-plan [8/29/18]

5 - thebalance.com/529-limits-contributions-balances-taxes-4138359 [9/19/18]

6 - nextavenue.org/life-insurance-pay-childs-college/ [9/18/18]

7 - savingforcollege.com/article/can-a-roth-ira-be-used-to-pay-for-college [8/1/18]

Weekly Economic Update 1/22/2019

Presented by Beacon Financial Group January 22, 2019

In this week’s recap: consumer sentiment declines, new ideas surface in U.S.‐China trade talks, oil advances again, and the major indices post weekly gains.

CONSUMER SENTIMENT HITS A 2‐YEAR LOW

Analysts surveyed by MarketWatch thought the University of Michigan’s preliminary January consumer sentiment index would display a reading of 97.5. Instead, it came in at just 90.7, dropping 7.6 points from its final December mark to its lowest level since October 2016. Richard Curtin, the economist who has long overseen the university’s survey, attributed the slip not only to households reacting to the partial federal government shutdown, but also to “the impact of tariffs, instabilities in financial markets, the global slowdown and the lack of clarity about monetary policies.” 1

HINTS OF A THAW IN U.S.‐CHINA TRADE NEGOTIATIONS

Investors were encouraged Friday by news that China had offered a plan to reduce its trade surplus with the U.S. from more than $320 billion to $0 by 2024. The concept, first presented to U.S. trade officials earlier this month, would involve China buying $45 billion more in U.S. goods this year and incrementally more in the five years to follow. Whether the strategy would work is questionable, as America’s strong ongoing demand for Chinese products is arguably the biggest factor in the trade imbalance. Nevertheless, stocks rallied after the news. A day earlier, a Wall Street Journal story noted that U.S. officials were considering easing current tariffs on Chinese imports in exchange for such concessions. 2,3

OIL RISES 4.3% IN A WEEK

As a result of that gain, WTI crude was worth $53.80 per barrel on the New York Mercantile Exchange at Friday’s close. The latest developments in U.S.‐China trade negotiations and the sharpest weekly pullback in the U.S. rig count since 2016 helped to push the price higher. 3

AN EARLY EARNINGS SCORECARD

Through Friday, 11% of S&P 500 firms had reported Q4 results. Seventy‐six percent of those companies reported actual earnings‐per‐share exceeding projections, and 56% beat revenue estimates. As the trading week ended, stock market analytics firm FactSet projected year‐over-year earnings growth of 10.6% for all S&P constituents for Q4. While this would represent a fifth consecutive quarter of double‐digit improvement, such an advance would be the smallest since Q4 2017. Last week, all three major U.S. equity indices rose; you will find their weekly and YTD performances below, along with last Friday’s settlements. 4

T I P O F T H E W E E K

Most loan payments are scheduled monthly, but if you cut a monthly payment in half and pay it every two weeks, there will be two months per year when you make three payments instead of two. This can help you make 13 months of payments in 12, so you can pay down a loan more quickly.

THIS WEEK

U.S. financial markets are closed Monday as the nation observes Martin Luther King, Jr. Day. | Capital One, Fifth Third, GATX, Halliburton, IBM, Johnson & Johnson, TD Ameritrade, Travelers Companies, UBS Group, Union Bank, and Zions Bancorp report earnings Tuesday, and investors also consider December existing home sales figures. | Wednesday’s earnings parade includes Abbott Labs, Comcast, Ford Motor Co., Kimberly‐Clark, Northern Trust, Procter & Gamble, and Texas Instruments. | Firms reporting Thursday include Alaska Air, American Airlines, Bristol‐ Myers, Discover, Freeport McMoRan, Intel, JetBlue, Norfolk Southern, Starbucks, Union Pacific, and Western Digital; beyond the earnings news, a new initial claims report and the Conference Board’s latest index of leading indicators emerge. | AbbVie, Colgate‐Palmolive, D.R. Horton, and NextEra Energy announce earnings Friday; data on December new home sales and durable goods orders may be released if the partial federal government shutdown ends.

Q U O T E O F T H E W E E K

“Always seek out the seed of triumph in every adversity.”

OG MANDINO

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note ‐ investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are un-managed and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that

may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If

assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 ‐ marketwatch.com/story/consumer‐sentiment‐in‐january‐plunges‐to‐lowest‐level‐since‐trump‐elected‐2019‐01‐18 [1/18/19]

2 ‐ bloomberg.com/news/articles/2019‐01‐18/china‐is‐said‐to‐offer‐path‐to‐eliminate‐u‐s‐trade‐imbalance [1/18/19]

3 ‐ marketwatch.com/story/oil‐prices‐push‐higher‐on‐hopes‐for‐us‐china‐trade‐progress‐2019‐01‐18 [1/18/19]

4 ‐ insight.factset.com/earnings‐season‐update‐january‐18‐2019 [1/18/19]

5 ‐ markets.wsj.com [1/18/19]

6 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yield [1/18/19]

7 ‐ treasury.gov/resource‐center/data‐chart‐center/interest‐rates/Pages/TextView.aspx?data=yieldAll [1/18/19]

Traditional vs. Roth IRAs

Perhaps both traditional and Roth IRAs can play a part in your retirement plans

IRAs can be an important tool in your retirement savings belt, and whichever you choose to open could have a significant impact on how those accounts might grow.

IRAs, or Individual Retirement Accounts, are tax advantage accounts used to help save money for retirement. There are two different types of IRAs: traditional and Roth. Traditional IRAs, created in 1974, are owned by roughly 35.1 million U.S. households. And Roth IRAs, created as part of the Taxpayer Relief Act in 1997, are owned by nearly 24.9 million households. 1

Both kinds of IRAs share many similarities, and yet, each is quite different. Let's take a closer look.

Up to certain limits, traditional IRAs allow individuals to make tax-deductible contributions into the retirement account. Distributions from traditional IRAs are taxed as ordinary income, and if taken before age 59½, may be subject to a 10% federal income tax penalty. For individuals covered by a retirement plan at work, the deduction for a traditional IRA in 2019 has been phased out for incomes between $103,000 and $123,000 for married couples filing jointly and between $64,000 and $74,000 for single filers. 2,3

Also, within certain limits, individuals can make contributions to a Roth IRA with after-tax dollars. To qualify for a tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2019, contributions to a Roth IRA are phased out between $193,000 and $203,000 for married couples filing jointly and between $122,000 and $137,000 for single filers. 2,3

In addition to contribution and distribution rules, there are limits on how much can be contributed to either IRA. In fact, these limits apply to any combination of IRAs; that is, workers cannot put more than $6,000 per year into their Roth and traditional IRAs combined. So, if a worker contributed $3,500 in a given year into a traditional IRA, contributions to a Roth IRA would be limited to $2,500 in that same year. 4

Individuals who reach age 50 or older by the end of the tax year can qualify for annual “catchup” contributions of up to $1,000. So, for these IRA owners, the 2019 IRA contribution limit is $7,000. 4

If you meet the income requirements, both traditional and Roth IRAs can play a part in your retirement plans. And once you’ve figured out which will work better for you, only one task remains: opening an account.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - https://www.ici.org/pdf/per23-10.pdf [12/17]

2 - https://www.marketwatch.com/story/gearing-up-for-retirement-make-sure-you-understand-your-tax-obligations-2018-06-14 [6/14/18]

3 - https://money.usnews.com/money/retirement/articles/new-401-k-and-ira-limits [11/12/18]

4 - https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-ira-contribution-limits [11/2/18]

Weekly Economic Update 1/14/2019

Presented by Beacon Financial Group, January 14, 2019

In this week’s recap: the CPI decreases, a service sector activity index takes a fall, oil’s rebound continues, and equities advance.

FOR THE FIRST TIME SINCE MARCH, INFLATION RETREATS

December brought a 0.1% decline in the Consumer Price Index, the first in nine months. As in November, cheaper gasoline was a factor: gas prices took a 7.5% monthly fall. The CPI advanced 1.9% across 2018. The core CPI, which excludes food and energy costs, rose 0.2% in December for a third consecutive month and gained 2.2% for the year. In short, yearly inflation is back in the vicinity of the Federal Reserve’s 2.0% target. 1

SERVICE SECTOR GROWTH RATE SLOWS

The Institute for Supply Management said that its purchasing manager index service, tracking industry activity, descended to 57.6 in December, paralleling the dip of its factory sector PMI. While the decrease of 3.1 points was a disappointment, the new orders sub-index did rise slightly to 62.7, and the service sector expanded for the 107th straight month. 2

OIL RECORDS ITS LONGEST DAILY WINNING STREAK IN 9 YEARS

Crude oil futures are no longer scraping near 52-week lows. WTI crude settled at $51.59 on the New York Mercantile Exchange at Friday’s close, up 7.6% for the week. A down day on Friday broke a 9-session streak of advances for the commodity, the longest seen since January 2010. 3

BENCHMARKS RISE ON THE EVE OF EARNINGS SEASON

Investors were encouraged by hints of progress in U.S.-China trade negotiations last week and seemed unruffled by the ongoing shutdown of parts of the federal government. Across five trading days, all three major Wall Street equity indices rose 2.4% or more, and both the S&P 500 and Dow Jones Industrial Average exited correction territory with the fourth-quarter reporting season just ahead. (See the table within this Weekly Economic Update for their Friday closes as well as weekly and YTD performances.) 4

T I P O F T H E W E E K

Many people sign up for credit cards without looking at their interest rates and terms. Be sure to read the fine print when applying for a card.

THIS WEEK

A new earnings season starts Monday as Citigroup presents Q4 results. | JPMorgan Chase, UnitedHealth Group, and Wells Fargo report earnings on Tuesday, and the December Producer Price Index also emerges. | Wednesday, Alcoa, Bank of America, BNY Mellon, Blackrock, Comerica, CSX, Goldman Sachs, PNC Financial Services Group, and U.S. Bancorp announce earnings, the Federal Reserve publishes a new Beige Book, and data on December retail sales arrives. | Thursday, earnings roll in from American Express, BB&T, KeyCorp, and Netflix; in addition, investors will consider a Census Bureau report on December housing starts and the latest initial jobless claims figures. | Regions Financial, Schlumberger, and SunTrust Bank offer earnings Friday, which is also when the University of Michigan provides its preliminary January consumer sentiment index.

Q U O T E O F T H E W E E K

“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - cnbc.com/2019/01/10/consumer-price-index-december-2018.html [1/11/19]

2 - dailyfx.com/forex/market_alert/2019/01/07/ISM-Services-Index-Dec-2018.html [1/7/19]

3 - marketwatch.com/story/us-oil-prices-end-lower-to-snap-9-session-streak-of-gains-2019-01-11 [1/11/19]

4 - marketwatch.com/story/stock-market-ends-session-flat-but-books-weekly-gains-as-government-shutdown-approaches-a-record-2019-01-11 [1/11/19]

5 - markets.wsj.com/ [1/11/19]

6 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [1/11/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/11/19]

Quarterly Economic Update

A review of Q4 2018, Presented by Beacon Financial Group

In this Q4 recap: waves of volatility hit Wall Street, trade pacts and disputes make headlines, oil takes a plunge, and the economy continues to perform well.

THE QUARTER IN BRIEF

Wall Street saw many ups and downs in the last three months of 2018. The fourth quarter concluded with bulls and bears vying for control of the market and with the S&P 500 suffering a 13.97%, three-month loss. The Federal Reserve sent conflicting signals about its implementation of monetary policy normalization, to the frustration of investors. No real progress was made in resolving the U.S.-China trade war, and the Brexit appeared to reach a standstill. The price of oil dropped sharply. The housing market gained a bit of momentum as home prices and mortgage rates both declined. The quarter was quite newsworthy, but its major headlines raised some troubling questions about the direction of the markets. 1

DOMESTIC ECONOMIC HEALTH

On the whole, the economy looked quite good in the fall. Consumer spending increased 0.8% for October and 0.4% for November, with retail sales up 1.1% in the tenth month of the year and 0.2% in the eleventh. Retailers benefited from a great holiday sales season: on an annualized basis, consumer purchases made between November 1 and December 24 were up 5.1% compared to the same period in 2017. 2,3

Consumer confidence indices declined from strikingly high levels, but were still notably strong.The Conference Board index hit 137.9 in October, 136.4 in November, and 128.1 in December. Having its best year since 2000, the University of Michigan’s monthly consumer sentiment gauge came in at 98.6 for October, 97.5 for November, and 98.3 for December; it averaged 98.4 for 2018. 4,5

Both the service and factory sectors were booming, according to the Institute for Supply Management’s monthly purchasing manager indices. ISM’s non-manufacturing index was above 60 in both October and November (60.3, then 60.7); its manufacturing index rose from 57.7 in October to 59.3 in November. 6

How was the jobs picture? Non-farm payrolls expanded with 237,000 net new jobs during October; the November gain was 155,000. During both months, average yearly wage growth was at 3.1%. The main jobless rate held at 3.7%; the underemployment (U-6) rate moved north from 7.4% to 7.6%. 2,7

Inflation was advancing just 2.2% a year by November; the 12-month increase had approached 3% as recently as July. Falling fuel costs helped tame inflation pressure. As a result, the average non-supervisory worker saw his or her inflation-adjusted income rise 1.0% in the 12 months ending in November, the most since 2016. On the wholesale front, producer prices jumped 0.6% in October, but rose only 0.1% during November. (Speaking of producers, industrial production was up 3.9% year-over-year in November; overall durable goods orders rose 0.8% for November after a 4.3% fall during the prior month. 2,8

In late December, the Bureau of Economic Analysis stated the economy had expanded 3.4% in the third quarter, revising its previous estimate of 3.5%. With growth like that, it not be surprising that the Federal Reserve made its fourth rate move of the year in December, taking the target range on the federal funds rate to 2.25-2.5%. Top Fed officials sounded alternately dovish and hawkish during the fourth quarter. In October, Fed chair Jerome Powell commented that interest rates were “a long way” from neutral, irritating Wall Street. A month later, both he and Fed vice chair Richard Clarida remarked that the benchmark interest rate was close to a “neutral” level. December’s rate increase came with a relatively hawkish dot-plot, projecting two more hikes in 2019. 2,9

The U.S. and China did little to address the tariffs they had imposed on each other earlier in the year. At the start of December, both nations did agree to a 90-day truce on introducing new import taxes. Even so, the U.S. was slated to hike tariffs on as much as $200 billion of Chinese imports as the year began. 10

GLOBAL ECONOMIC HEALTH

Overseas, manufacturing economies in the east and west seemed to be decelerating. In fact, December marked the eighth consecutive month of a downward trend in weighted average Markit flash PMI readings of U.S., Japan, and European Union member countries. The mean factory PMI reading among those nations was the poorest in two years last month. China’s economy slowed in each month of the quarter, according to a Bloomberg Economics tracker, which cited reduced consumer demand for goods and services as much as the impact of tariffs. In November, the nation’s official factory PMI sat at 50.0, the break-even point between sector growth and contraction. In Q3, China’s annualized gross domestic product was expanding at a 6.5% pace; in Q1, the annualized GDP reading had been at 6.8%. 11

The European Union (and the world) waited for the Brexit to proceed. U.K. leaders, however, spent the quarter debating if it should unfold according to the deal that Prime Minister Theresa May had presented to the European Union. By December, May’s deal faced almost certain rejection in Parliament. There were three other options: another national referendum on the Brexit, a no-deal Brexit that would leave big businesses with headaches, or a “managed,” nodeal Brexit with some bilateral trade arrangements put in place. The deadline for the Brexit was still set for March 29. On December 13, the European Central Bank confirmed that its longstanding, asset-purchase program would wrap up at the end of 2018. Interest rate hikes could be in the ECB’s plans this year; euro-area consumer prices have been rising only about 1% annually for the past six years. Real, annualized GDP for the euro area through the first three quarters of 2018 was just 1.2%, a pace far off the 2.7% GDP seen in 2017. 12,13

WORLD MARKETS

As bearish sentiment mounted in Q4, marquee equity indices steadily descended. Most of the 13-week declines were sizable: in the west, France’s CAC 40 slid 13.89%; Germany’s DAX, 13.80%; the United Kingdom’s FTSE 100, 10.41%. In the east, India’s Sensex lost just 0.44%; Hong Kong’s Hang Seng, 6.99%; Japan’s Nikkei 225, 17.02%; Australia’s All Ordinaries, 9.74%; China’s Shanghai Composite, 11.61%. To our north, the TSX Composite retreated 10.89% in Q4. MSCI’s Emerging Markets index fell 7.85% during the quarter; its World index tumbled 13.74%. 14,15

COMMODITIES MARKETS

While equities had a dismal quarter, some commodity futures posted significant Q4 gains. Take cocoa, which advanced 16.04%, and palladium, which rose 12.32%. Sugar improved 7.41% in Q4; gold, 6.61%; silver, 4.86%; soybeans, 2.68%; corn, 1.90%. The U.S. Dollar Index added 1.62%. At the closing bell on December 31, gold and silver were respectively worth $1,284.50 and $15.54 per ounce on the COMEX.16,17 What notable commodities lost value in the quarter? Here is a list. Platinum fell 3.22%; coffee, 3.78%; wheat, 4.55%; natural gas, 4.70%; cotton, 6.59%; copper, 6.63%; RBOB gasoline, 37.41%; WTI crude, 37.54%. WTI crude ended Q4 at just $45.83 a barrel on the NYMEX. 16,17

REAL ESTATE

While the real estate market cooled off in 2018, the pace of home buying began to improve in the fourth quarter. By the estimations of the National Association of Realtors, existing home sales rose 1.4% in October and 1.9% in November. Perhaps sellers were lowering prices to meet prospective buyers on their turf. By November, NAR noted a median sale price of $257,700, which was merely 4.2% higher than in November 2017. 2,18

A dip in mortgage rates could also have been a factor. In the last Freddie Mac survey of 2018 (December 27), the average interest rate for a conventional home loan was 4.55% nationally; it had been 4.72% three months earlier. (Rates on 15-year, fixed loans and 5/1-year, adjustable loans were respectively at 4.01% and 4.00% in the December 27 survey, compared with 4.16% and 3.97% in late September.) 19

Even so, NAR’s pending home sales index measuring monthly housing contract activity showed declines of 2.6% in October and 0.7% in November. New home purchases fell 8.9% in October. (We do not yet know about November new home sales, as the release of that Census Bureau report was delayed due to the federal government shutdown.) 2

Home builders broke less ground in October, then started more projects (and took out more permits) in November. Census Bureau data showed housing starts down 1.6% for October, up 3.2% a month later; building permits were down 0.4% in the tenth month of the year, but up 5.0% in the eleventh. 2

T I P O F T H E Q U A R T E R

If you are within a few years of retiring, schedule a review of your retirement strategy. You do not want to risk basing your withdrawal rate or your investment selection on out-of-date assumptions.

LOOKING BACK, LOOKING FORWARD

The fourth quarter is often hot for stocks, but this past one was ice cold. Equity investors grew concerned about the Federal Reserve’s plans for 2019, the evident economic deceleration in China and Europe, and a narrowing spread between long-term and short-term Treasury yields that risked becoming an inversion. The S&P 500 closed out 2018 at 2,506.85; the Dow Jones Industrial Average, at 23,327.46; the Nasdaq Composite, at 6,635.28; their quarterly performances are noted in the table below. The CBOE VIX volatility index surged 109.74% in the quarter to 25.42. 1,9

If you are wondering how the small caps fared, the short answer is: even worse than the big three. The S&P SmallCap 600 lost 20.43% in Q4; the Russell 2000, 19.39%. 1,20

The fourth quarter of 2018 was the poorest quarter on Wall Street in 11 years. Was the welcomed, large-cap rebound at the end of December a hint of better times ahead? Earnings season is about to start, and it might be just what the Street needs; before it begins, investors may tread cautiously. Wall Street cannot “resume normal programming” fast enough for some market participants, but the path toward stability may not be an easy one; the volatility seen in December may take weeks to moderate. In sum, 2019 presents investors with many more uncertainties than 2018 did, and patience will be required to contend with them. Patience, in fact, may be an investor’s greatest friend this quarter and year. 23

Q U O T E O F T H E Q U A R T E R

“Time is the most valuable thing a man can spend.”

Know someone who could use information like this? Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

CITATIONS:

1 - barchart.com/stocks/indices?viewName=performance [1/1/19]

2 - investing.com/economic-calendar/ [12/28/18]

3 - cbsnews.com/news/2018-holiday-sales-soar-to-6-year-high/ [12/20/18]

4 - investing.com/economic-calendar/cb-consumer-confidence-48 [12/27/18]

5 - tradingeconomics.com/united-states/consumer-confidence [12/27/18]

6 - instituteforsupplymanagement.org/ISMReport/NonMfgROB.cfm?SSO=1 [12/6/18]

7 - bloomberg.com/news/articles/2018-12-07/u-s-payrolls-rise-below-forecast-155-000-as-wage-gain-misses [12/7/18]

8 - marketwatch.com/story/cheaper-gas-tamps-down-consumer-inflation-in-november-cpi-shows-2018-12-12 [12/12/18]

9 - forbes.com/sites/jjkinahan/2018/12/19/hawkish-now-dovish-later-fed-hikes-but-lowers-projected-2019-rate-projections [12/19/18]

10 - scmp.com/news/china/diplomacy/article/2179505/us-china-trade-war-timeline-first-tariffs-90-day-truce [12/26/18]

11 - bloomberg.com/news/articles/2018-12-27/december-early-indicators-show-china-slowed-for-a-seventh-month [12/27/18]

12 - nasdaq.com/article/british-ministers-split-over-next-brexit-steps-if-pms-deal-fails-20181220-00145 [12/20/18]

13 - tinyurl.com/ycbvf56h [12/28/18]

14 - news.morningstar.com/index/indexReturn.html [12/31/18]

15 - msci.com/end-of-day-data-search [12/31/18]

16 - barchart.com/futures/performance-leaders?viewName=chart&timeFrame=3m [12/31/18]

17 - money.cnn.com/data/commodities/ [12/31/18]

18 - cleveland.com/business/2018/12/ohio-us-home-sales-down-in-november-from-last-years-levels.html [12/19/18]

19 - freddiemac.com/pmms/archive.html [1/1/19]

20 - money.cnn.com/data/markets/russell/?page=33 [1/1/19]

21 - quotes.wsj.com/index/SPX [9/28/18]

22 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [12/31/18]

23 - cnbc.com/2018/12/31/stock-market-wall-street-stocks-eye-us-china-trade-talks.html [12/31/18]

Weekly Economic Update 1/7/2019

In this week’s recap: an impressive jobs report, a disappointing factory activity index, a slight recovery for oil, and some tailwinds on Wall Street.

2018 Ended with a hiring surge

The latest Department of Labor jobs report suggests an economy with plenty of forward momentum. Employers added 312,000 net new jobs in December, the most in ten months. The main jobless rate rose 0.2% to 3.9% as more Americans entered the labor force; the U-6 rate, measuring underemployment, held at 7.6%. Last month, wages were improving at a rate of 3.2% per year, an increase of 0.1% from the prior report. November’s job gain was revised up to 176,000 from the previously reported 155,000.1

KEY MANUFACTURING INDEX DECLINES

In December, the Institute for Supply Management’s purchasing manager index, tracking business activity among the nation’s factories, dipped to 54.1. This reading indicates healthy expansion for the sector; on the other hand, this was the index’s lowest level in 25 months. It was at 59.3 in November.2

OIL HAD A WINNING WEEK

WTI crude just snapped a 3-week losing streak. Futures settled at $47.96 per barrel on the NYMEX, rising 5.8% in four trading days. Some analysts credited the advance to reduced worries about a recession, citing the excellent December hiring numbers and the renewed U.S.-China trade negotiations.3

   

STOCKS START 2019 IN THE GREEN

Three encouraging developments brought out the bulls at the end of the week. The federal government’s December employment report was one pleasant surprise. Another came when Federal Reserve chair Jerome Powell said that the central bank was amenable to adjusting monetary policy and would be patient about raising rates this year. Lastly, China announced plans to cut taxes and inject money into its banking system, and additionally, discussions on trade issues with the U.S. would resume this week. Friday, the S&P 500 climbed 3.43% to advance 1.00% on the new year to 2,531.94. The Nasdaq added 1.56% for the week to reach 6,738.86 at Friday’s close; the Dow Industrials, 0.45%, to settle at 23,433.16.4,5

T I P   O F   T H E   W E E K

Some business owners put off buying insurance because they believe the coverage will be too costly. Having some insurance is better than none. A small business can insure itself with coverage at relatively low limits to start, and then, increase them as time passes.

THIS WEEK

U.S. and Chinese diplomats sit down for further trade discussions in Beijing on Monday; stateside, ISM releases its December non-manufacturing PMI. | On Tuesday, U.S.-China trade meetings conclude, with Wall Street hoping for progress. | The Federal Reserve presents the minutes from its December policy meeting Wednesday; in addition, Bed Bath & Beyond, Constellation Brands, KB Home, and Lennar host earnings calls. | Fed chair Jerome Powell reflects on the economy and monetary policy at the Economic Club of Washington, D.C., on Thursday afternoon, and Fed vice chair Richard Clarida delivers a speech on the same topics in New York City Thursday night. | Friday brings December inflation data from the federal government and quarterly results from Infosys.

Q U O T E   O F   T H E   W E E K

Defer not till tomorrow to be wise, tomorrow’s sun to thee may never rise.”

William Congreve

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.  Additional risks are associated with international investing, such as currency fluctuations, political and economic instability and differences in accounting standards. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. MarketingPro, Inc. is not affiliated with any person or firm that may be providing this information to you. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional.

 

CITATIONS:

1 - reuters.com/article/us-usa-economy-instant-view/instant-view-us-december-payrolls-surprise-big-to-the-upside-idUSKCN1OY18F [1/4/19]

2 - instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1 [1/3/19]

3 - marketwatch.com/story/oil-prices-headed-for-5th-straight-advance-2019-01-04 [1/4/19]

4 - foxbusiness.com/markets/stocks-climb-on-big-jobs-report-beat-positive-news-on-chinas-economy [1/4/19]

5 - markets.wsj.com/ [1/4/19]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=1%2F4%2F18&x=0&y=0 [1/4/19]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=1%2F4%2F18&x=0&y=0 [1/4/19]

6 - bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=1%2F4%2F18&x=0&y=0 [1/4/19]

7 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield [1/4/19]
8 - treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldAll [1/4/19]

A Retirement Fact Sheet

Some specifics about the “second act.”

Does your vision of retirement align with the facts? Here are some noteworthy financial and lifestyle facts about life after 50 that might surprise you.

Up to 85% of a retiree’s Social Security income can be taxed. Some retirees are taken aback when they discover this. In addition to the Internal Revenue Service, 13 states levy taxes on some or all Social Security retirement benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia. (It is worth mentioning that the I.R.S. offers free tax advice to people 60 and older through its Tax Counseling for the Elderly program.)1

Retirees get a slightly larger standard deduction on their federal taxes. Actually, this is true for all taxpayers aged 65 and older, whether they are retired or not. Right now, the standard deduction for an individual taxpayer in this age bracket is $13,600, compared to $12,000 for those 64 or younger.2

Retirees can still use IRAs to save for retirement. There is no age limit for contributing to a Roth IRA, just an inflation-adjusted income limit. So, a retiree can keep directing money into a Roth IRA for life, provided they are not earning too much. In fact, a senior can potentially contribute to a traditional IRA until the year they turn 70½.1

A significant percentage of retirees are carrying education and mortgage debt. The Consumer Finance Protection Bureau says that throughout the U.S., the population of borrowers aged 60 and older who have outstanding student loans grew by at least 20% in every state between 2012 and 2017. In more than half of the 50 states, the increase was 45% or greater. Generations ago, seniors who lived in a home often owned it, free and clear; in this decade, that has not always been so. The Federal Reserve’s recent Survey of Consumer Finance found that more than a third of those aged 65-74 have outstanding home loans; nearly a quarter of Americans who are 75 and older are in the same situation.1

As retirement continues, seniors become less credit dependent. GoBankingRates says that only slightly more than a quarter of Americans over age 75 have any credit card debt, compared to 42% of those aged 65-74.1

About one in three seniors who live independently also live alone. In fact, the Institute on Aging notes that nearly half of women older than age 75 are on their own. Compared to male seniors, female seniors are nearly twice as likely to live without a spouse, partner, family member, or roommate.1

Around 64% of women say that they have no “Plan B” if forced to retire early. That is, they would have to completely readjust and reassess their vision of retirement, and redetermine their sources of retirement income. The Transamerica Center for Retirement Studies learned this from its latest survey of more than 6,300 U.S. workers.3

Few older Americans budget for travel expenses. While retirees certainly love to travel, Merril Lynch found that roughly two-thirds of people aged 50 and older admitted that they had never earmarked funds for their trips, and only 10% said they had planned their vacations extensively.1

What financial facts should you consider as you retire? What monetary realities might you need to acknowledge as your retirement progresses from one phase to the next? The reality of retirement may surprise you. If you have not met with a financial professional about your retirement savings and income needs, you may wish to do so. When it comes to retirement, the more information you have, the better.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 - gobankingrates.com/retirement/planning/weird-things-about-retiring/ [8/6/18]

2 - fool.com/taxes/2018/04/15/2018-standard-deduction-how-much-it-is-and-why-you.aspx [4/15/18]

3 - thestreet.com/retirement/18-facts-about-womens-retirement-14558073 [4/17/18]

Tax Considerations for Retirees

Are you aware of them?

The federal government offers some major tax breaks for older Americans. Some of these

perks deserve more publicity than they receive.

If you are 65 or older, your standard deduction is $1,300 larger. Make that $1,600 if you

are unmarried. Thanks to the passage of the Tax Cuts & Jobs Act, the 2018 standard

deduction for an individual taxpayer at least 65 years of age is a whopping $13,600, more than

double what it was in 2017. (If you are someone else’s dependent, your standard deduction is

much less.)1

You may be able to write off some medical costs. This year, the Internal Revenue Service

will let you deduct qualifying medical expenses once they exceed 7.5% of your adjusted gross

income. In 2019, the threshold will return to 10% of AGI, unless Congress acts to preserve the

7.5% baseline. The I.R.S. list of eligible expenses is long. Beyond out-of-pocket costs paid to

doctors and other health care professionals, it also includes things like long-term care

insurance premiums, travel costs linked to medical appointments, and payments for durable

medical equipment, such as dentures and hearing aids.2

Are you thinking about selling your home? Many retirees consider this. If you have lived in

your current residence for at least two of the five years preceding a sale, you can exclude as

much as $250,000 in gains from federal taxation (a married couple can shield up to $500,000).

These limits, established in 1997, have never been indexed to inflation. The Department of the

Treasury has been studying whether it has the power to adjust them. If modified for inflation,

they would approach $400,000 for singles and $800,000 for married couples.3,4

Low-income seniors may qualify for the Credit for the Elderly or Disabled. This incentive,

intended for people 65 and older (and younger people who have retired due to permanent and

total disability), can be as large as $7,500 based on your filing status. You must have very low

AGI and nontaxable income to claim it, though. It is basically designed for those living wholly

or mostly on Social Security benefits.5

Affluent IRA owners may want to make a charitable IRA gift. If you are well off and have a

large traditional IRA, you may not need your yearly Required Minimum Distribution (RMD) for

living expenses. If you are 70½ or older, you have an option: you can make a Qualified

Charitable Distribution (QCD) with IRA assets. You can donate up to $100,000 of IRA assets to

a qualified charity in a single year this way, and the amount donated counts toward your

annual RMD. (A married couple gets to donate up to $200,000 per year.) Even more

importantly, the amount of the QCD is excluded from your taxable income for the year of the

donation.6

Some states also give seniors tax breaks. For example, the following 11 states do not tax

federal, state, or local pension income: Alabama, Hawaii, Illinois, Kansas, Louisiana,

Massachusetts, Michigan, Mississippi, Missouri, New York, and Pennsylvania. Twenty-eight

states (and the District of Columbia) refrain from taxing Social Security income.7

Unfortunately, your Social Security benefits could be partly or fully taxable. They could be taxed at both the federal and state level, depending on how much you earn and where you

happen to live. Whether you feel this is reasonable or not, you may have the potential to claim

some of the tax breaks mentioned above as you pursue the goal of tax efficiency.5,7

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

«RepresentativeDisclosure»

Citations.

1 - fool.com/taxes/2018/04/15/2018-standard-deduction-how-much-it-is-and-why-you.aspx [4/15/18]

2 - aarp.org/money/taxes/info-2018/medical-deductions-irs-fd.html [1/12/18]

3 - loans.usnews.com/what-are-the-tax-benefits-of-buying-a-house [10/17/18]

4 - cnbc.com/2018/08/02/some-home-sellers-would-see-huge-savings-under-treasury-tax-cut-plan.html [8/2/18]

5 - fool.com/taxes/2017/12/31/living-on-social-security-heres-a-tax-credit-just.aspx [12/31/17]

6 - tinyurl.com/y8slf8et [1/3/18]

7 - thebalance.com/state-income-taxes-in-retirement-3193297 ml [8/15/18]

Staying Out of Debt Once You Get Out of Debt

As you reduce your liabilities, embrace the behaviors that may improve your balance sheet

Paying off a major debt produces a sense of relief. You can celebrate a financial milestone;

you can “pay yourself first” to greater degree and direct more money toward your dreams and

your financial future rather than your creditors.

Once you get out of excessive consumer debt, the last thing you want to do is fall right back

in. What steps can you take to reduce that possibility, and what missteps should you avoid

making?

Step one: save money. So often, an unexpected event can put you in debt: an auto

breakdown, a job loss, a trip to the emergency room or a hospital stay. If you earmark $50 or

$100 a month (or even $20 a month) for an emergency fund, you can create a pool of money

that may help you deal with the financial impact of such crises. Every dollar you save for these

events is a dollar you do not have to borrow through a credit card or a personal loan at

burdensome interest rates.

Step two: budget. Think about a 50/30/20 household budget: you assign half of your income

for essentials like housing payments and food, 30% to discretionary purchases like shopping,

eating out, and entertainment, and 20% to savings and/or paying down whatever minor debts

you must incur from month to month.

Step three: buy things with an eye on value. Do you really need a new car that will require

financing, one that will rapidly depreciate as soon as you drive it off the lot? A late-model used

car might be a much better purchase. Similarly, could you save money by eating in more often

or bringing a lunch to work? You could find some very nice goods at very cheap prices by

shopping at thrift stores or online used marketplaces. These are all smart consumer steps, net

positives for your financial picture.

You should also be aware of some potential missteps that could lead you right back into

significant debt, or negatively impact your credit rating. Some of them may be taken

consciously, others unconsciously.

Misstep one: spending freely once you are free of debt. If you get rid of consumer debt, but

retain the spending mentality that drove you into it, your financial progress may be short-lived.

If the experience of getting into (and getting out of) debt does not change that mindset, then

you risk racking up serious debt again.

Misstep two: living without adequate health, auto, or disability insurance. Sometimes

people are forced to assume large debts as a direct consequence of being uninsured.

Hopefully, you have not been one of them. If you must pay for your own insurance and the

premiums seem high, remember that they will likely be lower than the bills you could be forced

to pay out of pocket without such coverage.

Misstep three: getting rid of the credit cards you used to go into debt. You may think this

is a great way to quickly improve your credit rating. It may not be. Closing out credit cards

reduces the amount of credit you can potentially draw on per month, which hurts your credit

utilization ratio. Having more accounts open (rather than less) improves that ratio.1

The key is how you use the accounts in the future. When you use about 10% of your available

credit each month, that is a positive for your credit score. When you use more than 30%, you

potentially harm your score. For the record, the length of your credit history accounts for

about 15% of your FICO score, so if a card has more good payment history than bad, getting

rid of it could be a slight negative.1

Instead of closing these accounts, keep them open, and use the cards once a month or less.

Should a card charge you an annual fee, see if you can downgrade to a card from the same

issuer that does not.

If you can keep debt reined in, you will have an opportunity to make financial strides. Not

everyone has such a chance due to the weight of their liabilities. Earlier this year, total U.S.

credit card debt alone surpassed $815 billion.2

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular

investment.

Citations.

1 - cnbc.com/2018/01/19/why-you-should-keep-old-credit-card-accounts-open.html [1/19/18]

2 - usatoday.com/story/money/personalfinance/2018/08/15/simple-things-anyone-can-do-stay-out-debt/989168002/ [8/15/18]

Getting Your Personal Finances in Shape for 2019

Fall is a good time to assess where you stand and where you could be

You need not wait for 2019 to plan improvements to your finances. You can begin now. The

last few months of 2018 give you a prime time to examine critical areas of your budget, your

credit, and your investments.

You could work on your emergency fund (or your rainy day fund). To clarify, an emergency

fund is the money you store in reserve for unforeseen financial disruptions; a rainy day fund is

money saved for costs you anticipate will occur. A strong emergency fund contains the

equivalent of a few months of salary, maybe even more; a rainy day fund could contain as little

as a few hundred dollars.

Optionally, you could hold this money in a high-yield savings account. A little searching may

lead to a variety of choices; here in September, it is not hard to find accounts offering 1.5% or

more annual interest, as opposed to the common 0.1% or less. Remember that a high-yield

savings account is intended as a place to park money; if you make regular deposits and

withdrawals to and from it and treat it like a checking account, you may incur fees that

diminish the savings progress you make.1

Review your credit score. Federal law entitles you to a free copy of your credit report at each

of the three nationwide credit reporting firms (Equifax, TransUnion, and Experian) every 12

months. Now is as good a time as any to request these reports; visit annualcreditreport.com or

call 1-877-322-8228 to order them. At the very least, you will learn your credit score. You may

also detect errors and mistakes that might be harming your credit rating.2

Think about the way you are saving for major financial goals. Has your financial situation

improved in 2018, to the extent that you could contribute a little more money to an IRA or a

workplace retirement plan now or next year? If you are not contributing enough at work to

receive a matching contribution from your employer, maybe now you can.

Also, consider the way your invested assets are held. What are your current and future

allocations? Some people have heavy concentrations of equities in their workplace retirement

plan, IRA, or brokerage account due to Wall Street’s long bull market. If this is true for you,

there may be some pain when the next bear market begins. Check in on your portfolio while

things are still bullish.

Can you spend less in 2019? That might be a key to saving more and putting more money into

your rainy day or emergency funds. If your pay has increased, your discretionary spending

does not necessarily have to increase with it. See if you can find room in your budget to

possibly cut an expense and redirect the money into savings or investments.

You may also want to set some near-term financial goals for yourself. Whether you want

to accomplish in 2019 what you did not quite do in 2018, or further the positive financial trends

underway in your life, now is the time to look forward and plan.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are un-managed and are not illustrative of any particular

investment.

«RepresentativeDisclosure»

Citations.

1 - thesimpledollar.com/best-high-interest-savings-accounts/ [8/31/18]

2 - ftc.gov/faq/consumer-protection/get-my-free-credit-report [9/6/18]

Your 2019 Financial To-Do List

Things you can do for your future as the year unfolds.

What financial, business, or life priorities do you need to address for 2019? Now is a good time

to think about the investing, saving, or budgeting methods you could employ toward specific

objectives, from building your retirement fund to lowering your taxes. You have plenty of

options. Here are a few that might prove convenient.

Can you contribute more to your retirement plans this year? In 2019, the yearly

contribution limit for a Roth or traditional IRA rises to $6,000 ($7,000 for those making “catch-

up” contributions). Your modified adjusted gross income (MAGI) may affect how much you can

put into a Roth IRA: singles and heads of household with MAGI above $137,000 and joint filers

with MAGI above $203,000 cannot make 2019 Roth contributions.1

For tax year 2019, you can contribute up to $19,000 to 401(k), 403(b), and most 457 plans,

with a $6,000 catch-up contribution allowed if you are age 50 or older. If you are self-

employed, you may want to look into whether you can establish and fund a solo 401(k) before

the end of 2019; as employer contributions may also be made to solo 401(k)s, you may direct

up to $56,000 into one of those plans.1

Your retirement plan contribution could help your tax picture. If you won’t turn 70½ in 2019

and you participate in a traditional qualified retirement plan or have a traditional IRA, you can

cut your taxable income through a contribution. Should you be in the new 24% federal tax

bracket, you can save $1,440 in taxes as a byproduct of a $6,000 traditional IRA contribution.2

What are the income limits on deducting traditional IRA contributions? If you participate in a

workplace retirement plan, the 2019 MAGI phase-out ranges are $64,000-$74,000 for singles

and heads of households, $103,000-$123,000 for joint filers when the spouse making IRA

contributions is covered by a workplace retirement plan, and $193,000-$203,000 for an IRA

contributor not covered by a workplace retirement plan, but married to someone who is.1

Roth IRAs and Roth 401(k)s, 403(b)s, and 457 plans are funded with after-tax dollars, so you

may not take an immediate federal tax deduction for your contributions to them. The upside is

that if you follow I.R.S. rules, the account assets may eventually be withdrawn tax free.3

Your tax year 2019 contribution to a Roth or traditional IRA may be made as late as the 2020

federal tax deadline – and, for that matter, you can make a 2018 IRA contribution as late as

April 15, 2019, which is the deadline for filing your 2018 federal return. There is no merit in

waiting until April of the successive year, however, since delaying a contribution only delays

tax-advantaged compounding of those dollars.1,3

Should you go Roth in 2019? You might be considering that if you only have a traditional IRA.

This is no snap decision; the Internal Revenue Service no longer gives you a chance to undo it,

and the tax impact of the conversion must be weighed versus the potential future benefits. If

you are a high earner, you should know that income phase-out limits may affect your chance to

make Roth IRA contributions. For 2019, phase-outs kick in at $193,000 for joint filers and

$122,000 for single filers and heads of household. Should your income prevent you from

contributing to a Roth IRA at all, you still have the chance to contribute to a traditional IRA in

2019 and go Roth later.1,4

Incidentally, a footnote: distributions from certain qualified retirement plans, such as 401(k)s,

are not subject to the 3.8% Net Investment Income Tax (NIIT) affecting single/joint filers with

MAGIs over $200,000/$250,000. If your MAGI does surpass these thresholds, then dividends,

royalties, the taxable part of non-qualified annuity income, taxable interest, passive income

(such as partnership and rental income), and net capital gains from the sale of real estate and

investments are subject to that surtax. (Please note that the NIIT threshold is just $125,000

for spouses who choose to file their federal taxes separately.)5

Consult a tax or financial professional before you make any IRA moves to see how those

changes may affect your overall financial picture. If you have a large, traditional IRA, the

projected tax resulting from a Roth conversion may make you think twice.

What else should you consider in 2019? There are other things you may want to do or review.

Make charitable gifts. The individual standard deduction rises to $12,000 in 2019, so there

will be less incentive to itemize deductions for many taxpayers – but charitable donations are

still deductible if they are itemized. If you plan to gift more than $12,000 to qualified charities

and non-profits in 2019, remember that the paper trail is important.6

If you give cash, you need to document it. Even small contributions need to be demonstrated

by a bank record or a written communication from the charity with the date and amount.

Incidentally, the I.R.S. does not equate a pledge with a donation. You must contribute to a

qualified charity to claim a federal charitable tax deduction. Incidentally, the Tax Cuts and Jobs

Act lifted the ceiling on the amount of cash you can give to a charity per year – you can now

gift up to 60% of your adjusted gross income in cash per year, rather than 50%.6,7

What if you gift appreciated securities? If you have owned them for more than a year, you will

be in line to take a deduction for 100% of their fair market value and avoid capital gains tax

that would have resulted from simply selling the investment and donating the proceeds. The

nonprofit organization gets the full amount of the gift, and you can claim a deduction of up to

30% of your adjusted gross income.8

Does the value of your gift exceed $250? It may, and if you gift that amount or larger to a

qualified charitable organization, you should ask that charity or non-profit group for a receipt.

You should always request a receipt for a cash gift, no matter how large or small the amount.8

If you aren’t sure if an organization is eligible to receive charitable gifts, check it out at

IRS.GOV/Charities-&-Non-Profits/Exempt-Organizations-Select-Check.

Open an HSA. If you are enrolled in a high-deductible health plan, you may set up and fund a

Health Savings Account in 2019. You can make fully tax-deductible HSA contributions of up to

$3,500 (singles) or $7,000 (families); catch-up contributions of up to $1,000 are permitted for

those 55 or older. HSA assets grow tax deferred, and withdrawals from these accounts are tax

free if used to pay for qualified health care expenses.9

Practice tax-loss harvesting. By selling depreciated shares in a taxable investment account,

you can offset capital gains or up to $3,000 in regular income ($1,500 is the annual limit for

married couples who file separately). In fact, you may use this tactic to offset all your total

capital gains for a given tax year. Losses that exceed the $3,000 yearly limit may be rolled

over into 2020 (and future tax years) to offset ordinary income or capital gains again.10

Pay attention to asset location. Tax-efficient asset location is an ignored fundamental of

investing. Broadly speaking, your least tax-efficient securities should go in pre-tax accounts,

and your most tax-efficient securities should be held in taxable accounts.

Review your withholding status. You may have updated it last year when the I.R.S. introduced

new withholding tables; you may want to adjust for 2019 due to any of the following factors.

* You tend to pay a great deal of income tax each year.

* You tend to get a big federal tax refund each year.

* You recently married or divorced.

* A family member recently passed away.

* You have a new job, and you are earning much more than you previously did.

* You started a business venture or became self-employed.

Are you marrying in 2019? If so, why not review the beneficiaries of your workplace

retirement plan account, your IRA, and other assets? In light of your marriage, you may want to

make changes to the relevant beneficiary forms. The same goes for your insurance coverage. If

you will have a new last name in 2019, you will need a new Social Security card. Additionally,

the two of you, no doubt, have individual retirement saving and investment strategies. Will

they need to be revised or adjusted once you are married?

Are you coming home from active duty? If so, go ahead and check the status of your credit

and the state of any tax and legal proceedings that might have been preempted by your

orders. Make sure any employee health insurance is still in place. Revoke any power of attorney

you may have granted to another person.

Consider the tax impact of any upcoming transactions. Are you planning to sell (or buy) real

estate next year? How about a business? Do you think you might exercise a stock option in the

coming months? Might any large commissions or bonuses come your way in 2019? Do you

anticipate selling an investment that is held outside of a tax-deferred account? Any of these

actions might significantly impact your 2019 taxes.

If you are retired and older than 70½, remember your year-end RMD. Retirees over age

70½ must begin taking Required Minimum Distributions from traditional IRAs, 401(k)s, SEP IRAs,

and SIMPLE IRAs by December 31 of each year. The I.R.S. penalty for failing to take an RMD

equals 50% of the RMD amount that is not withdrawn.4,11

If you turned 70½ in 2018, you can postpone your initial RMD from an account until April 1,

2019. All subsequent RMDs must be taken by December 31 of the calendar year to which the

RMD applies. The downside of delaying your 2018 RMD into 2019 is that you will have to take

two RMDs in 2019, with both RMDs being taxable events. You will have to make your 2018 tax

year RMD by April 1, 2019, and then take your 2019 tax year RMD by December 31, 2019.11

Plan your RMDs wisely. If you do so, you may end up limiting or avoiding possible taxes on

your Social Security income. Some Social Security recipients don’t know about the “provisional

income” rule – if your adjusted gross income, plus any non-taxable interest income you earn,

plus 50% of your Social Security benefits surpasses a certain level, then some Social Security

benefits become taxable. Social Security benefits start to be taxed at provisional income levels

of $32,000 for joint filers and $25,000 for single filers.11

Lastly, should you make 13 mortgage payments in 2019? There may be some merit to

making a January 2020 mortgage payment in December 2019. If you have a fixed-rate loan, a

lump- sum payment can reduce the principal and the total interest paid on it by that much

more.

Talk with a qualified financial or tax professional today. Vow to focus on being healthy and wealthy in 2019.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell

any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any

particular investment.

«RepresentativeDisclosure»

Citations.

1 - forbes.com/sites/ashleaebeling/2018/11/01/irs-announces-2019-retirement-plan-contribution-limits-for-401ks-and-more [11/1/18]

2 - irs.com/articles/2018-federal-tax-rates-personal-exemptions-and-standard-deductions [11/2/17]

3 - irs.gov/Retirement-Plans/Traditional-and-Roth-IRAs [7/10/18]

4 - forbes.com/sites/bobcarlson/2018/10/26/7-ira-strategies-for-year-end-2018/ [10/26/18]

5 - irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax [6/18/18]

6 - crainsdetroit.com/philanthropy/what-donors-need-know-about-tax-reform [10/21/18]

7 - thebalance.com/tax-deduction-for-charity-donations-3192983 [7/25/18]

8 - schwab.com/resource-center/insights/content/charitable-donations-the-basics-of-giving [7/2/18]

9 - kiplinger.com/article/insurance/T027-C001-S003-health-savings-account-limits-for-2019.html [8/28/18]

10 - schwab.com/resource-center/insights/content/reap-benefits-tax-loss-harvesting-to-lower-your-tax-bill [10/7/18]

11 - fool.com/retirement/2018/01/29/5-things-to-consider-before-tapping-your-retiremen.aspx [1/29/18]

No, That Is Not the I.R.S. Calling

Watch out for crooks impersonating I.R.S. agents (and financial industry professionals)

Do you know how the Internal Revenue Service contacts taxpayers to resolve a problem? The

first step is almost always to send a letter through the U.S. Postal Service to the taxpayer.1

It is very rare for the I.R.S. to make the first contact through a call or a personal visit. This

happens in two circumstances: when taxes are notably delinquent or overdue or when the

agency feels an audit or criminal investigation is necessary. Furthermore, the I.R.S. does not

send initial requests for taxpayer information via email or social media.1

Now that you know all of this, you should also know about some of the phone scams being

perpetrated by criminals claiming to be the I.R.S. (or representatives of investment firms).

Scam #1: “You owe back taxes. Pay them immediately, or you will be arrested.” Here,

someone calls you posing as an I.R.S. agent, claiming that you owe thousands of dollars in

federal taxes. If the caller does not reach you in person, a voice mail message conveys the

same threat, urging you to call back quickly.1

Can this terrible (fake) problem be solved? Yes, perhaps with the help of your Social Security

number. Or, maybe with some specific information about your checking account, maybe even

your online banking password. Or, they may tell you that this will all go away if you wire the

money to an account or buy a pre-paid debit card. These are all efforts to steal your money.

This is over-the-phone extortion, plain and simple. The demand for immediate payment gives

it away. The I.R.S. does not call up taxpayers and threaten them with arrest if they cannot pay

back taxes by midnight. The preferred method of notification is to send a bill, with instructions

to pay the amount owed to the U.S. Treasury (never some third party).1

Sometimes the phone number on your caller I.D. may appear to be legitimate because more

sophisticated crooks have found ways to manipulate caller I.D. systems. Asking for a callback

number is not enough. The crook may readily supply you with a number to call, and when you

dial it someone may pick up immediately and claim to be a representative of the I.R.S., but it’s

likely a co-conspirator – someone else assisting in the scam. For reference, the I.R.S. tax help

line for individuals is 1-800-829-1040. Another telltale sign; if you ever call the real I.R.S., you

probably wouldn’t speak to a live person so quickly – hold times can be long.1

Scam #2: “This is a special offer to help seniors manage their investments.” Yes, a special

offer to become your investment advisor, made by a total stranger over the phone. Of course,

this offer of help is under the condition that you provide your user I.D. and password for your

brokerage account or your IRA.2

No matter how polite and sweet the caller seems, this is criminal activity. Licensed financial

services industry professionals do not randomly call senior citizens and ask them for

financial account information and passwords – unless they want to go to jail or end their

careers.

Scam #3: “I made a terrible mistake; you must help me.” In this scam, a caller politely

informs you that the U.S. government is issuing supplemental Social Security payments to

seniors next year. Do you have a bank account? You could enroll in this program by providing

your account information and your Social Security number.

Oh no, wait! The caller now tells you that they’ve made a huge mistake while inputting your

account information – and your account was accidentally credited with a full payment even

though you were not enrolled. The distraught caller will now attempt to convince you that they

will lose their job unless you send over an amount equal to the lump sum they claim was

mistakenly deposited. If you refuse, the caller may have a conversation with a “boss” who

demands that money be withdrawn from your account.

Scam #4: “The I.R.S. accidentally gave you a refund.” In this sophisticated double-cross,

thieves steal your data, then file a phony federal tax return with your information and deposit a

false refund in your bank account. Then, they attempt to convince you to pay them the money,

claiming they are debt collectors working for the I.R.S. or I.R.S. agents.

Should anyone call and try to trap you with one of these scams, hang up. Next, report the

caller ID and/or callback number to the I.R.S. at phishing@irs.gov with the subject line “I.R.S.

Phone Scam.” You can also notify the Department of the Treasury (treasury.gov) and the

Federal Trade Commission (ftccomplaintassistant.gov); list “I.R.S. Telephone Scam” in the

notes. Regarding scam #4, if you really do receive an erroneous federal (or state) tax refund,

you should notify your tax professional about it as soon as you can and arrange its return. You

may also need to close the involved bank account if you sense you have been victimized.1,3

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular

investment.

«RepresentativeDisclosure»

Citations.

1 - irs.gov/newsroom/irs-continues-warning-on-impersonation-scams-reminds-people-to-remain-alert-to-other-scams-schemes-this-summer [5/31/18]

2 - money.usnews.com/money/retirement/aging/articles/2018-05-09/10-financial-scams-to-avoid-in-retirement [5/9/18]

3 - forbes.com/sites/kellyphillipserb/2018/02/13/irs-issues-urgent-warning-on-new-tax-refund-scam-and-its-not-what-youd-expect [2/13/18]

End-of-the-Year Money Moves

Here are some things you might want to do before saying goodbye to 2018

What has changed for you in 2018? Did you start a new job or leave a job behind? Did you

retire? Did you start a family? If notable changes occurred in your personal or professional life,

then you will want to review your finances before this year ends and 2019 begins. Even if your

2018 has been relatively uneventful, the end of the year is still a good time to get cracking and

see where you can plan to save some taxes and/or build a little more wealth.

Do you practice tax-loss harvesting? That is the art of taking capital losses (selling securities

worth less than what you first paid for them) to offset your short-term capital gains. If you fall

into one of the upper tax brackets, you might want to consider this move, which directly lowers

your taxable income. It should be made with the guidance of a financial professional you trust.1

In fact, you could even take it a step further. Consider that up to $3,000 of capital losses in

excess of capital gains can be deducted from ordinary income, and any remaining capital

losses above that can be carried forward to offset capital gains in upcoming years. When you

live in a high-tax state, this is one way to defer tax.1

Do you want to itemize deductions? You may just want to take the standard deduction for

2018, which has ballooned to $12,000 for single filers and $24,000 for joint filers because of

the Tax Cuts & Jobs Act. If you do think it might be better for you to itemize, now would be a

good time to get the receipts and assorted paperwork together. While many miscellaneous

deductions have disappeared, some key deductions are still around: the state and local tax

(SALT) deduction, now capped at $10,000; the mortgage interest deduction; the deduction for

charitable contributions, which now has a higher limit of 60% of adjusted gross income; and

the medical expense deduction.2,3

Could you ramp up 401(k) or 403(b) contributions? Contribution to these retirement plans

lower your yearly gross income. If you lower your gross income enough, you might be able to

qualify for other tax credits or breaks available to those under certain income limits. Note that

contributions to Roth 401(k)s and Roth 403(b)s are made with after-tax rather than pre-tax

dollars, so contributions to those accounts are not deductible and will not lower your taxable

income for the year. They will, however, help to strengthen your retirement savings.4

Are you thinking of gifting? How about donating to a qualified charity or non-profit

organization before 2018 ends? In most cases, these gifts are partly tax deductible. You must

itemize deductions using Schedule A to claim a deduction for a charitable gift.5

If you donate publicly traded shares you have owned for at least a year, you can take a

charitable deduction for their fair market value and forgo the capital gains tax hit that would

result from their sale. If you pour some money into a 529 college savings plan on behalf of a

child in 2018, you may be able to claim a full or partial state income tax deduction (depending

on the state).2,6

Of course, you can also reduce the value of your taxable estate with a gift or two. The federal

gift tax exclusion is $15,000 for 2018. So, as an individual, you can gift up to $15,000 to as

many people as you wish this year. A married couple can gift up to $30,000 in 2018 to as many

people as they desire.7

While we’re on the topic of estate planning, why not take a moment to review the beneficiary

designations for your IRA, your life insurance policy, and workplace retirement plan? If you

haven’t reviewed them for a decade or more (which is all too common), double-check to see

that these assets will go where you want them to go, should you pass away. Lastly, look at

your will to see that it remains valid and up-to-date.

Should you convert all or part of a traditional IRA into a Roth IRA? You will be withdrawing

money from that traditional IRA someday, and those withdrawals will equal taxable income.

Withdrawals from a Roth IRA you own are not taxed during your lifetime, assuming you follow

the rules. Translation: tax savings tomorrow. Before you go Roth, you do need to make sure you

have the money to pay taxes on the conversion amount. A Roth IRA conversion can no longer

be recharacterized (reversed).8

Can you take advantage of the American Opportunity Tax Credit? The AOTC allows

individuals whose modified adjusted gross income is $80,000 or less (and joint filers with

MAGI of $160,000 or less) a chance to claim a credit of up to $2,500 for qualified college

expenses. Phase-outs kick in above those MAGI levels.9

See that you have withheld the right amount. The Tax Cuts & Jobs Act lowered federal

income tax rates and altered withholding tables. If you discover that you have withheld too

little on your W-4 form so far in 2018, you may need to adjust your withholding before the year

ends. The Government Accountability Office projects that 21% of taxpayers are withholding

less than they should in 2018. Even an end-of-year adjustment has the potential to save you

some tax.10 Talk with a financial or tax professional now rather than in February or March.

Little year-end moves might help you improve your short-term and long-term financial

situation.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell

any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any

particular investment.

«RepresentativeDisclosure»

Citations.

1 - nerdwallet.com/blog/investing/just-how-valuable-is-daily-tax-loss-harvesting/ [4/16/18]

2 - marketwatch.com/story/how-to-game-the-new-standard-deduction-and-3-other-ways-to-cut-your-2018-tax-bill-2018-10-15 [10/15/18]

3 - hrblock.com/tax-center/irs/tax-reform/3-changes-itemized-deductions-tax-reform-bill/ [10/10/18]

4 - investopedia.com/articles/retirement/06/addroths.asp [2/2/18]

5 - investopedia.com/articles/personal-finance/041315/tips-charitable-contributions-limits-and-taxes.asp [10/1/18]

6 - savingforcollege.com/article/how-much-is-your-state-s-529-plan-tax-deduction-really-worth [9/27/18]

7 - fool.com/retirement/2018/06/28/5-things-you-might-not-know-about-the-estate-tax.aspx [6/28/18]

8 - marketwatch.com/story/how-the-new-tax-law-creates-a-perfect-storm-for-roth-ira-conversions-2018-03-26 [9/15/18]

9 - fool.com/investing/2018/03/17/your-2018-guide-to-college-tuition-tax-breaks.aspx [3/17/18]

10 - money.usnews.com/money/personal-finance/taxes/articles/2018-10-16/should-you-adjust-your-income-tax-withholding [10/16/18]

Is Generation X Preparing Adequately for Retirement?

Future financial needs may be underestimated

If you were born during 1965-80, you belong to “Generation X.” Ten or twenty years ago,

you may have thought of retirement as an event in the lives of your parents or grandparents;

within the next 10-15 years, you will probably be thinking about how your own retirement will

unfold.1

According to the most recent annual retirement survey from the Transamerica Center for

Retirement Studies, the average Gen Xer has saved only about $72,000 for retirement.

Hypothetically, how much would that $72,000 grow in a tax-deferred account returning 6%

over 15 years, assuming ongoing monthly contributions of $500? According to the compound

interest calculator at Investor.gov, the answer is $312,208. Across 20 years, the projection is

$451,627.2,3

Should any Gen Xer retire with less than $500,000? Today, people are urged to save $1

million (or more) for retirement; $1 million is being widely promoted as the new benchmark,

especially for those retiring in an area with high costs of living. While a saver aged 38-53 may

or may not be able to reach that goal by age 65, striving for it has definite merit.4

Many Gen Xers are staring at two retirement planning shortfalls. Our hypothetical Gen Xer

directs $500 a month into a retirement account. This might be optimistic: Gen Xers contribute

an average of 8% of their pay to retirement plans. For someone earning $60,000, that means

just $400 a month. A typical Gen X worker would do well to either put 10% or 15% of his or her

salary toward retirement savings or simply contribute the maximum to retirement accounts, if

income or good fortune allows.2

How many Gen Xers have Health Savings Accounts (HSAs)? These accounts set aside a distinct

pool of money for medical needs. Unlike Flexible Spending Accounts (FSAs), HSAs do not have

to be drawn down each year. Assets in an HSA grow with taxes deferred, and if a distribution

from the HSA is used to pay qualified health care expenses, that money comes out of the

account, tax free. HSAs go hand-in-hand with high-deductible health plans (HDHPs), which

have lower premiums than typical health plans. A taxpayer with a family can contribute up to

$7,000 to an HSA in 2019. (The limit is $8,000 if that taxpayer will be 55 or older at any time

next year.) HSA contributions also reduce taxable income.2,5

Fidelity Investments projects that the average couple will pay $280,000 in health care

expenses after age 65. A particular retiree household may pay more or less, but no one can

deny that the costs of health care late in life can be significant. An HSA provides a dedicated,

tax-advantaged way to address those expenses early.6

Retirement is less than 25 years away for most of the members of Generation X. For

some, it is less than a decade away. Is this generation prepared for the financial realities of life

after work? Traditional pensions are largely gone, and Social Security could change in the

decades to come. At midlife, Gen Xers must dedicate themselves to sufficiently funding their

retirements and squarely facing the financial challenges ahead.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This

information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee

of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is

advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and

may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment

or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular

investment.

«RepresentativeDisclosure»

Citations.

1 - businessinsider.com/generation-you-are-in-by-birth-year-millennial-gen-x-baby-boomer-2018-3 [4/19/18]

2 - forbes.com/sites/megangorman/2018/05/27/generation-x-our-top-2-retirement-planning-priorities/ [5/27/18]

3 - investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator [11/8/18]

4 - washingtonpost.com/news/get-there/wp/2018/04/26/is-1-million-enough-to-retire-why-this-benchmark-is-both-real-and-unrealistic [4/26/18]

5 - kiplinger.com/article/insurance/T027-C001-S003-health-savings-account-limits-for-2019.html [8/28/18]

6 - fool.com/retirement/2018/11/05/3-reasons-its-not-always-a-good-idea-to-retire-ear.aspx [11/5/18]