Economic Updates & Financial Articles
- Weekly Economic Update - 7/22/2024
Financial Articles:
- Buying vs. Leasing a Car - 7/22/2024
- Inventorying Your Possessions - 7/22/2024
- AI Tools Changing Retiree Entrepreneurship - 7/15/2024
- Avoiding Cognitive Decline - 7/15/2024
- Your Emergency Fund: How Much Is Enough? - 7/8/2024
- White Elephant Inheritance - 7/8/2024
- Catch-Up Contributions - 7/1/2024
- Should I Accept a Free Credit Lock? - 7/1/2024
- Mortgages in Retirement - 6/24/2024
- How Retirement Spending Changes With Time - 6/24/2024
- Monthly Memberships - 6/17/2024
- Understanding Money Market Funds - 6/17/2024
- Building a Solid Financial Foundation - 6/10/2024
- Mutual Funds vs. ETFs - 6/10/2024
- Dog Bites Neighbor. Now What? - 6/3/2024
- IRA Withdrawals that Escape the 10% Tax Penalty - 6/3/2024
- Estate Management Checklist - 5/13/2024
- Immediate vs. Deferred Annuities - 5/13/2024
- Caring for Aging Parents - 5/6/2024
- The Anatomy of an Index - 5/6/2024
- Choosing a Retirement Plan that Fits Your Business - 4/29/2024
- Where Will Your Retirement Money Come From? - 4/29/2024
- How Insurance Deductibles Work - 4/22/2024
- How to Appeal Your Property Taxes - 4/22/2024
- Intellectual Property Rocks in a New Digital Era - 4/15/2024
- Tax Rules When Selling Your Home - 4/15/2024
- When Should You Take Social Security - 4/8/2024
- How to Make the Tax Code Work for You - 4/8/2024
- Fixed or Variable Mortgage, Which Should You Pick? - 4/1/2024
- What Is a 1031 Exchange? - 4/1/2024
- Estimating the Cost of College - 3/25/2024
- Exploring the Federal Student Grant Program - 3/25/2024
- All Muni Bonds Are Not Created Equal - 3/18/2024
- U.S. Personal Savings Rate - 3/18/2024
- How Will the Economy React to AI? - 3/11/2024
- Can Group, Private Disability Policies Work Together? - 3/11/2024
- Grantor Retained Annuity Trusts (GRATs) - 3/4/2024
- 4 Steps to Protecting a Child with Disabilities - 3/4/2024
- Eight Mistakes That Can Upend Your Retirement - 2/26/2024
- Your Emergency Fund: How Much Is Enough? - 2/26/2024
- Getting a Head Start on College Savings - 2/19/2024
- A Taxing Story: Capital Gains and Losses - 2/19/2024
- What Is a 1035 Exchange? - 2/12/2024
- Three Key Questions to Answer Before Taking Social Security - 2/12/2024
- Five Most Overlooked Tax Deductions - 2/5/2024
- Important Birthdays Over 50 - 2/5/2024
Weekly Economic Update for 7/22/2024
Stocks were under pressure last week as investors appeared to rotate out of mega-cap tech stocks and into areas that may benefit from lower interest rates.
The Standard & Poor’s 500 Index fell 1.97 percent, while Nasdaq Composite Index declined 3.65 percent. The Dow Jones Industrial Average bucked the downward trend, up 0.72 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, slid 1.48 percent for the week through Thursday’s close.1
Dow Leads Again
The week began very differently than it ended.
All three averages rallied over the first couple of days this week, with the Dow leading on both days. Fed Chair Powell indicated the Fed may not wait for inflation to reach its 2 percent target before considering a rate move, buoying the markets.2,3
Buying vs. Leasing a Car
Some people approach buying a car like they approach marriage, "'til death do us part." Others prefer to keep their options open, trading in every few years for the latest make and model, the most cutting-edge technology, or the highest horsepower. Whichever describes you best, we all face a similar decision when it comes to acquiring a car: finance, lease, or pay cash.
When shopping for new vehicles, about one-quarter of consumers choose to lease, while the majority choose to finance. From an investment perspective, which choice is best? That depends on your lifestyle, cash flow, and personal preferences.1
For many, paying cash for a car is the simplest way to get one. When you drive off the lot, you own the vehicle outright and are free to do whatever you want with it. You face no penalties or mileage restrictions, and you have no monthly payments. However, you have paid cash for a vehicle that is expected to depreciate over time.
Inventorying Your Possessions
Only four in ten Americans have a home inventory, despite the fact that 3.4 million Americans were displaced by natural disasters in 2022.1,2
It’s great to have insurance against damage and loss, but if you can't show proof of your possessions, it may result in a protracted settlement process with your insurance company.
Four Tips for Creating an Inventory
Creating an inventory may take a bit of upfront work, but it can pay future benefits in smoothing the claims settlement process with your insurer and increase the potential of receiving the maximum payment possible.
Weekly Economic Update for 7/15/2024
Stocks advanced last week as market leadership shifted amid fresh inflation data and quarterly corporate reports starting to roll in.
The Standard & Poor’s 500 Index advanced 0.87 percent, while the Dow Jones Industrial Average picked up 1.59 percent. The tech-heavy Nasdaq Composite Index, which has led all year, rose 0.25 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, rallied 1.62 percent for the week through Thursday’s close.1
Dow Breaks 40,000 (Again)
Mega-cap tech led modest gains for the S&P 500 and Nasdaq in the first two days of the week, with the Dow posting modest losses both days.
But that narrow trading range didn’t last long as market leadership shifted midweek. Upbeat corporate earnings reports and milder-than-expected consumer inflation in June drove momentum in a handful of larger industrial and consumer stocks.2,3
AI Tools Changing Retiree Entrepreneurship
Artificial intelligence (AI) tools have become a game changer in various industries, and they are also proving incredibly useful for retirees looking to start consulting or a small business venture. These tools can simplify tasks, streamline processes, and help retirees navigate the world of entrepreneurship more efficiently.1,2,3
One of the biggest challenges retirees may face when starting a business is writing tasks. Writing can be difficult and tedious for some, but AI tools can help alleviate this burden. AI-powered writing assistants can generate content, proofread, and even suggest improvements. These tools use advanced algorithms to analyze text and offer better sentence structure, grammar, and vocabulary. Retirees can rely on these tools to produce high-quality written content without spending hours perfecting it themselves.
Another area where AI tools can significantly assist retirees is budgeting and bookkeeping. Managing finances can be overwhelming, especially for those unfamiliar with accounting principles. AI-powered tools can automate budgeting processes, track expenses, and generate financial reports. They can also provide real-time insights into cash flow and identify potential cost-saving opportunities. By utilizing these tools, retirees can ensure that their financials are in order and that they can make informed decisions regarding their business.1,2,3
Avoiding Cognitive Decline
Of those aged 60 and older, 12 to 18 percent have mild cognitive impairment. People living with mild cognitive impairment are more likely to develop Alzheimer's, and almost two-thirds of people currently living with Alzheimer's are women.1
There are three basic forms of cognitive decline associated with aging:2
- Age-related changes in memory, which are a natural consequence of aging.
- Mild Cognitive Impairment, which involves mild memory loss such as forgetting important events or appointments, or an inability or difficulty with finding the right word in a conversation.
- Dementia, which includes Alzheimer's disease, is a chronic, progressive, irreversible and comprehensive cognitive impairment that may affect daily functioning.
Weekly Economic Update for 7/8/2024
Stocks steadily advanced over the holiday week thanks to strength in mega-cap tech issues and encouraging jobs data.
The Standard & Poor’s 500 Index rose 1.95 percent, while the Nasdaq Composite Index added 3.50 percent. The Dow Jones Industrial Average edged up a modest 0.66 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 2.30 percent for the week through Thursday’s close.1
Nasdaq, S&P Extend Runs
ADP’s employment report on Wednesday showed private-sector employers added 150,000 jobs in June—slightly slower than May’s pace—adding to investor hopes that a slowing economy may prompt the Fed to adjust short-term rates as early as September. The Nasdaq and the S&P hit their 23rd and 33rd record closes, respectively, for the year.2
Friday morning’s jobs report from the Labor Department showed 206,000 jobs added last month, which also suggested a strong-but-cooling economy. News of slower job growth, slowing wage growth, and a slight uptick in unemployment helped drive down Treasury yields, and stocks finished the short week with a strong rally. The Nasdaq and S&P both closed at all-time highs on Friday.3
Your Emergency Fund: How Much Is Enough?
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, you see smoke coming from under your hood.
Bad things happen to the best of us, and sometimes it seems like they come in waves. That’s when an emergency cash fund can come in handy.
One survey found that over two in three Americans are not confident that they have enough emergency savings to cover a month's worth of expenses. Another survey found that 43% of Americans said they wouldn’t be able to cover an unexpected $1,000 expense with money from their savings account.1,2
White Elephant Inheritance
Have you ever had to deal with a "white elephant"? Not the actual pachyderm, but what Merriam-Webster calls "a property requiring much care and expense yielding little profit" or, more simply, "something of little or no value." Of course, we're not talking about the sort of "white elephants" you might get in a humorous gift exchange over the holidays, like a tacky t-shirt that isn't even your size or an inexplicable kitchen gadget.
Not everyone has a rich uncle who will present them with a simple cash gift in his will. A "white elephant" is a gift that may cause more issues than it resolves, much as an elephant might eat an unwitting recipient out of house and home. It's an asset that comes to you via gift or inheritance and needs to be quickly sold, liquidated, or transferred to avoid further expenses of time or money. In such cases, it is crucial to understand how to disclaim an inheritance properly and avoid holding the burden. The average American household stands to inherit $46,200. Not all those bequeathments are straight cash, and some might prove inconvenient or troublesome.1
Weekly Economic Update for 7/1/2024
Stocks finished the last week of June and Q2 mixed as investors digested a fresh round of economic data.
The Standard & Poor’s 500 Index slipped 0.08%, while the Dow Jones Industrial Average also dipped 0.08 percent. The tech-heavy Nasdaq Composite gained 0.24 percent. The MSCI EAFE Index tracks developed overseas stock markets and rose 0.27 percent for the week through Thursday’s close.1
Nasdaq Regains Lead
Last week opened with the S&P 500 and Nasdaq heading lower, while the Dow rallied on momentum from the prior week. But by mid-week, the leadership shifted with the Nasdaq pushing higher.2
With the back half of the week packed with fresh economic data, conflicting stories developed about the economy. New home sales fell 11.3 percent in May—the largest month-over-month drop in a year and a half—while the supply of new homes hit a 16-year high. Meanwhile, first-quarter GDP revised slightly to 1.4 percent higher, and durable goods increased in May.3,4,5
Friday's personal consumption and expenditure (PCE) data showed that core inflation slowed to 0.1 percent in May over the prior month and 2.6 percent year-over-year—its lowest annual rate in three years. Both figures were in line with expectations. Stock prices initially rallied on the upbeat inflation news, but the early gains faded as the trading day progressed.6
Catch-Up Contributions
A recent survey found that 18% of workers are very confident about having enough money to live comfortably through their retirement years. At the same time, 36% are not confident.1
In 2001 congress passed a law that can help older workers make up for lost time. But few may understand how this generous offer can add up over time.2
The “catch-up” provision allows workers who are over age 50 to make contributions to their qualified retirement plans in excess of the limits imposed on younger workers.
Should I Accept a Free Credit Lock?
In today's increasingly connected world, protecting your information is arguably more important than ever. Your credit report consists of a slew of personal details, such as your financial activity, credit accounts, loans, and payment history. Because of the importance of your credit report, credit bureaus such as Equifax, Experian, and TransUnion offer credit locks to help protect consumers in the event of identity theft or fraud.
Will a Credit Lock Help?
Although a credit lock will freeze your credit report and score temporarily, there are some potential downsides as well. One of the biggest concerns is that a credit lock applies only to the selected credit bureau. So, if you want to protect your credit fully, you'll need to place a lock on all three main credit reports.
While the initial lock may be free, some credit bureaus may charge a fee to remove or temporarily lift the lock, depending on their terms and conditions. In addition, each bureau's service agreements clarify that they don't guarantee error-free operation or uninterrupted service.
Weekly Economic Update for 6/24/2024
Stocks edged higher over the four trading days last week, with the three major averages taking turns leading based on various economic and artificial intelligence (AI) news.
The Dow Jones Industrial Average rose 1.45 percent–its best week since May–while the Standard & Poor’s 500 Index gained 0.61 percent. The Nasdaq Composite, which has led all year, ended flat. The MSCI EAFE Index, tracking developed overseas stock markets, rose 0.94 percent for the week through Thursday’s close.1
Mixed Economic News
All three averages began the week with gains, including new highs for the S&P 500. However, stocks posted only modest gains on Tuesday as mixed economic data came in. Retail sales rose 0.1 percent—less than expected, although better than in April when sales fell.2,3,4
Markets were closed for the Juneteenth holiday on Wednesday.
As the week ended, it was the Dow’s turn to lead as sentiment shifted on mega-cap tech names as investors again questioned the sustainability of AI market drivers. Home prices hit a new high in May—this, paired with high mortgage rates, caused existing home sales to fall for the third consecutive month.4,5
Mortgages in Retirement
Anyone who has gone through the process of mapping out their retirement knows there can be a lot to keep in mind. Saving, investing, anticipating medical costs, and making sure you have enough tucked away for years to come is just the start. One question many people overlook is: "Should I pay off my mortgage before I retire?" The answer is more complicated than you may think.
Maintaining a Mortgage in Retirement
Opportunity Cost
Imagine you have $300,000 set aside to pay off your mortgage. But rather than using those funds to pay off your mortgage, you instead invest that money. Sure it's tempting to stop making a monthly payment, but what if that $300,000 earned a hypothetical 6% for the next five years. You would have a little more than $400,000. Yes, your house may appreciate in value over the same period of time, but you should consider all your choices for that lump-sum of money.1
How Retirement Spending Changes With Time
New retirees sometimes worry that they are spending too much, too soon. Should they scale back? Are they at risk of outliving their money? This concern may be legitimate. Some households "live it up" and spend more than they anticipate as retirement starts to unfold. In 10 or 20 years, though, they may not spend nearly as much.
By The Numbers
The initial stage of retirement can be expensive. The Bureau of Labor Statistics figures show average spending of $70,570 per year for households headed by pre-retirees, Americans age 55-64. That figure drops to $52,141 for households headed by people age 65 and older. For people age 75 and older, that number drops even further to $45,820.1
Weekly Economic Update for 6/17/2024
Stocks notched a solid gain last week, driven by the Fed’s decision, May's inflation report, and Apple’s AI-related news.
The Standard & Poor’s 500 Index rose 1.58 percent, while the Nasdaq Composite picked up 3.24 percent. The Dow Jones Industrial Average, which has lagged most of the year, slid 0.54 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, fell 1.44 percent for the week through Thursday’s close.1
S&P 500, Nasdaq Lead; Dow Lags
Market leadership took a familiar form. The tech-heavy Nasdaq led while the Dow trailed for the second week (and four out of the past six weeks).2
Stocks trended higher at the start of the week as investors cheered an artificial intelligence update from Apple.3,4
By midweek, the market had split, with the Nasdaq and S&P 500 moving higher while the Dow lagged. Investors were upbeat after learning that consumer prices rose less than expected in May and that the Fed decided to keep rates steady. However, some investors were unsettled after learning Fed officials had shifted their outlook and now only penciled in a single rate cut between now and year-end. A few months ago, the Fed had indicated as many as three cuts were possible.5
Monthly Memberships
In the last few years, we’ve become accustomed to many convenient services, many offered via subscriptions. Now, in the old days, if you had a few magazines or newspapers stacked up, you might not pay to continue your service. Today’s subscriptions typically offer autopay, which is convenient and quickly forgotten for many.
C&R Research reports that the average American spends $219 per month on subscriptions for things like streaming services, news websites, and even regular deliveries of our most often-used goods, such as beans or pet food.1
There is also increasing evidence that these subscriptions are getting out of hand for some households. Many find themselves with an unclear idea of how much they are spending on their services, in many cases underestimating the amounts by upwards of $100 per month.2
Understanding Money Market Funds
A money market fund, not to be confused with a money market account, is a type of mutual fund that invests in instruments like cash equivalents and short-term debt-based securities, which can also include U.S. Treasury Bonds.1
Safety First
These funds are designed to be easily accessible and are often considered cash equivalents. Their primary role in a portfolio is to preserve capital while maintaining liquidity. Financial professionals use them as a place to hold cash for an investor or as a place to "park cash" temporarily while they evaluate new investments. In fact, the core value of money market funds lies in their stability and liquidity, making them one place where investors can build an emergency fund.2
Weekly Economic Update for 6/10/2024
Stocks rose last week despite conflicting stories from economic reports.
The Dow Jones Industrial Average inched up 0.29 percent while the Standard & Poor’s 500 Index powered ahead 1.31 percent. The Nasdaq Composite led, picking up 2.38 percent. The MSCI EAFE Index tracks developed overseas stock markets and rose 1.29 percent for the week through Thursday’s close.1
All Eyes On The Jobs Report
Weak manufacturing data prompted declines early in the week, reflecting investor concerns over the economy's strength. But stocks rallied in anticipation of the jobs report on Friday.
However, the market reaction was mixed when the stronger-than-expected jobs report finally came. The S&P 500 touched a record high intraday before profit-taking late in the session.2,3
Building a Solid Financial Foundation
When you read about money matters, you may see the phrase, “getting your financial house in order.” What exactly does that mean?
To some, when your financial “house is in order,” it means it is built on a solid foundation. It means that you have the “pillars” in place that are designed to support your long-term financial well-being.
#1: A banking relationship. Having a relationship with a bank can play a role in many financial strategies. You have many different choices when deciding on which bank is right for you. Some banks are larger and nationally-based, while others are smaller and community-based. Different banks may have unique advantages and disadvantages, so it’s important to look around and see what each one can offer you.
#2: An emergency fund. You know that label you see on fire extinguisher boxes – “break glass in case of emergency?” Only in a financial emergency should you “break into” your emergency account. What is a financial emergency? Everyone’s definition varies, but it can range from a broken water heater to major car repairs to unemployment help.
Mutual Funds vs. ETFs
The growth of exchange-traded funds (ETFs) has been explosive. In 2006, there were less than 1,000; by 2023, there were nearly 10,000 investing in a wide range of stocks, bonds, and other securities and instruments.1
At first glance, ETFs have a lot in common with mutual funds. Both offer shares in a pool of investments designed to pursue a specific investment goal. And both manage costs and may offer some degree of diversification, depending on their investment objective. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
Weekly Economic Update for 6/3/2024
Stocks edged lower in the final week of May as fresh news on economic growth and inflation failed to inspire investors.
Stocks Slide
Markets shrugged off news that the Q1 Gross Domestic Product was revised lower to 1.3 percent from the initial estimated 1.6 percent. Despite concerns that the economy was cooling faster than expected, investors didn’t believe the update was enough to influence the Fed’s decision about adjusting short-term rates.1
On Friday, investors were on edge waiting for the update on inflation. The Fed’s preferred inflation indicator, called the personal consumption and expenditures (PCE), rose 0.2 percent in April, which was in line with forecasts.2
Stocks rose slightly in pre-market trading on the news but were under pressure throughout the day as investors digested the inflation update. But in the last hour of trading, stock staged a powerful rally led by the Dow, which had its best day of the year.
Dog Bites Neighbor. Now What?
In 2023, there were 19,062 dog bite claims nationwide, totaling aggregate damages of over $1 billion, according to the Insurance Information Institute.1
For most homeowners (and renters), a standard policy generally covers any legal liability that may result from their dog biting or harming another individual. Typically, this coverage is designed to extend to places outside the home (e.g., a walk in the park), but may not include what happens inside a car.2
However, this coverage is not unlimited. There is a cap to liability coverage (check your policy for the limits of your coverage), and your policy may limit such coverage to one bite.
IRA Withdrawals that Escape the 10% Tax Penalty
The reason withdrawals from a Traditional Individual Retirement Account (IRA) prior to age 59½ are generally subject to a 10% tax penalty is that policymakers wanted to create a disincentive to use these savings for anything other than retirement.1
Yet, policymakers also recognize that life can present more pressing circumstances that require access to these savings. In appreciation of this, the list of withdrawals that may be taken from a Traditional IRA without incurring a 10% early withdrawal penalty has grown over the years.
Weekly Economic Update for 5/27/2024
Last week's stock performance was mixed, following investors' reaction to the Fed's May meeting minutes, while a handful of mega-cap tech companies created a buzz with their news.
Market Splits
Stocks began trading in a narrow band last week. Still, mega-cap tech names rallied in anticipation of the Q1 corporate report from a key company that makes semiconductors for artificial intelligence (AI). The enthusiasm lifted the Nasdaq to fresh records.
Federal Reserve news mid-week unsettled investors, who reacted to Federal Open Market Committee meeting notes that stated some Fed officials worried over the lack of progress on inflation.1
Technology was the sole winning group for the whole week, with all other Standard & Poor’s 500 industry sectors ending in the red.2
Weekly Economic Update for 5/20/2024
Stocks notched a solid gain last week in a mega-cap, tech-led rally bolstered by positive inflation news.
Dow 40,000
The week began quietly as market averages traded in a tight range, awaiting fresh inflation news.
On Tuesday, markets rose steadily throughout the day after digesting a mixed wholesale inflation report.1
The next day, a cooler-than-expected Consumer Price Index (CPI) report sparked a broad-based rally as the upbeat news raised investors’ hopes for a rate cut. The Nasdaq Composite and Standard & Poor’s 500 (which ended above 5300 for the first time) closed the day up 1.4 percent and 1.2 percent, respectively. Meanwhile, the bellwether 10-year Treasury yield fell to 4.35 percent.2,3
Investors took a break as the week ended, mostly yawning at mixed economic data. Notably, the Dow closed just above 40,000 on Friday.
Weekly Economic Update for 5/13/2024
Stocks notched a solid gain last week as rate-cut expectations paced the rally as the Q1 earnings season wound down.
Stocks Climb Steadily
Monday opened with stocks picking up where they left off the prior Friday. Stocks were still basking in the afterglow of fresh jobs data, which eased investor concerns of an overheating economy. That and reports of a possible Middle East ceasefire fueled Monday’s rally.1
Stocks hung out in a narrow trading band Tuesday and Wednesday, yawning at the sparse economic news and a handful of negative earnings results. By contrast, the Nasdaq edged lower over those two days.2,3
On Thursday, the S&P 500 closed above 5,200 for the first time since early April. The next day, stocks rallied, and the Dow clinched its eighth consecutive day of gains, the longest winning streak since December and its best weekly performance this year. Fresh data showed consumers continue to have inflation concerns for the year ahead, which was unsettling.4,5
Estate Management Checklist
Do you have a will?
A will enables you to specify who you want to inherit your property and other assets. A will also enable you to name a guardian for your minor children.
Do you have healthcare documents in place?
Healthcare documents spell out your wishes for health care if you become unable to make medical decisions for yourself. They also authorize a person to make decisions on your behalf if that should prove necessary. These documents may include a living will, a power of attorney agreement, and a durable power of attorney agreement for healthcare.
Do you have financial documents in place?
Certain financial documents can outline your financial wishes. If you become unable to make decisions for yourself, these financial documents can be structured to empower a person to make decisions on your behalf. These documents may include joint ownership, durable power of attorney, and living trusts.
Immediate vs. Deferred Annuities
Despite not being as well known as some other retirement tools, annuities account for 6.5% of all assets earmarked for retirement. With about $2.2 trillion in assets, annuities hold more funds than Roth IRAs.1
An annuity is a contract with an insurance company. In exchange for a premium or a series of premiums, the insurance company agrees to make regular payments to the contract holder. The funds held in an annuity contract accumulate tax deferred.
For individuals interested in accumulating retirement assets, annuities can be attractive because they are not subject to contribution limits, unlike most other tax-deferred vehicles. In other words, retirement-minded individuals can set aside as much money as they would like into an annuity.
Weekly Economic Update for 5/6/2024
Stocks notched a solid gain last week, rallying behind upbeat earnings, a dovish Fed, and mixed economic data.
Stocks Pop, Drop, Then Rally
Markets began the week with an upward bump as positive news from some mega-cap tech companies outweighed disappointing updates from other tech names.
The tone quickly changed on Tuesday as higher-than-expected Q1 wage growth triggered inflation and interest-rate anxiety—just as the Federal Open Market Committee kicked off its third meeting of the year. Each of the three major averages dropped more than 1.5 percent on the last trading day of April.1
When the Fed announced it was holding rates steady on Wednesday, stocks initially rallied on the news, but sellers got the upper hand late in the trading session, and prices ended the day slightly down.2
Caring for Aging Parents
Thanks to healthier lifestyles and advances in modern medicine, the worldwide population over age 65 is growing. In the past decade, the population of Americans aged 65 and older has grown 38% and is expected to reach 82 million in 2050. As our nation ages, many Americans are turning their attention to caring for aging parents.1,2
For many people, one of the most difficult conversations to have involves talking with an aging parent about extended medical care. The shifting of roles can be challenging, and emotions often prevent important information from being exchanged and critical decisions from being made.
When talking to a parent about future care, it’s best to have a strategy for structuring the conversation. Here are some key concepts to consider.
The Anatomy of an Index
Did you know that an estimated $13.5 trillion in assets are indexed or benchmarked to the Standard & Poor’s 500 Composite Index, including $5.4 trillion in index assets?1,2
The S&P 500 is ubiquitous – we see it on the news, read about it in the newspapers, and, very likely, see some of our own investments’ performance compared against it. For an index that represents approximately 80% of the value of the U.S. equity market, it may be worthwhile to gain a better understanding of how it works.1
Weekly Economic Update for 4/29/2024
Stocks staged a choppy comeback last week as investors cheered positive earnings, led by mega-cap tech stocks. The rally came to pass despite fresh data showing a slowing economy and increasing inflationary pressures.
Stocks Bounce Back. Twice.
Last week opened with a rebound rally as investors breathed a sigh of relief that Middle East tensions had eased. The market rally extended into Tuesday, with investors cheering positive corporate earnings reports. By Tuesday's market close, the S&P 500 had gained 2% for the week.1,2,3
But investor enthusiasm didn't last, as midweek saw profit taking in all three averages. Rising bond yields threw a wet blanket on market momentum; at one point, the yield on the 10-year Treasury note rose more than 40 basis points from its low earlier in the week.4
On Thursday, markets slipped on two fresh pieces of economic data: a Gross Domestic Product (GDP) slowdown and higher consumer prices. But by midday, selling pressure slowed. Stocks pushed higher on Friday behind upbeat Q1 reports from two mega-cap tech stocks, helping the S&P 500 and the Nasdaq post their best week since November.5
Choosing a Retirement Plan that Fits Your Business
If you have yet to develop a retirement plan for your business, or if you're not sure the plan you've chosen is the right one, here are some things to consider.
How much can my business afford to contribute?
The cost of contributions may be managed by the plan type.
A simplified employee pension plan (SEP) is funded by employer contributions only. SEP contributions are made to separate IRAs for eligible employees.1
Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRAs blend employee and employer contributions. For example, some employers match employee contributions up to 100% of the first 3% of compensation. Others may contribute 2% of each eligible employee’s compensation. It’s up to the employer to decide the formula based on what works best for the business.2
A 401(k) is primarily funded by the employee; the employer can choose to make additional contributions, including matching contributions.3
Where Will Your Retirement Money Come From?
What workers anticipate in terms of retirement income sources may differ considerably from what retirees actually experience. For many people, retirement income may come from a variety of sources. Here's a quick review of the six main sources:
Social Security
Social Security is the government-administered retirement income program. Workers become eligible after paying Social Security taxes for 10 years. Benefits are based on each worker's 35 highest earning years. If there are fewer than 35 years of earnings, non-earning years are averaged in as zero. In 2023, the average monthly benefit is estimated at $1,827.1,2
Weekly Economic Update for 4/22/2024
Stocks fell for a third straight week, as Fed Chair Jerome Powell's mixed but upbeat message could not offset the anxiety caused by the Middle East conflict.
Stocks Retreat
Markets began the week rattled by further escalation in the Middle East over the weekend. A bit of good news punctuated an otherwise sour Monday, as a stronger-than-expected retail sales report showed consumers were spending despite rising inflation.1,2
On Tuesday, remarks from Fed Chair Jerome Powell indicated a shift in thinking—from being confident to not-so-confident about interest rate cuts in 2024. He said rates might need to stay higher until the Fed meets their 2% inflation target.3,4
On Friday, the markets saw further declines, but investors were somewhat reassured by the perception that Thursday's retaliatory actions in the Middle East were restricted in scope.5
How Insurance Deductibles Work
An insurance deductible is the amount you, the insured, pay before any claim is paid by your insurance carrier. Depending upon the type of insurance, a policy may set the amount of deductible, or offer you the ability to select a deductible amount.
Deductibles serve a dual purpose: they save the insurance company money (including the administrative cost of processing small claims) and may help keep your premium costs lower.
How to Appeal Your Property Taxes
Between 30 percent and 60 percent of taxable property has an inflated assessment, which may lead to higher property tax bills. Moreover, typically fewer than 5 percent of taxpayers dispute their assessment.1
For homeowners who think their local government may have assessed their property's value too high, there are ways to appeal and potentially win a lower assessment, which may save hundreds or even thousands of dollars annually in future taxes.2
The procedures and requirements for challenging the assessed value of your property will differ by state, but you should consider a number of general factors.
Weekly Economic Update for 4/15/2024
Stocks fell last week as investors sorted through conflicting inflation reports and assessed geopolitical tensions.
Inflation Spooks Markets
On Wednesday, the March Consumer Price Index (CPI) report rattled markets, revealing that inflation accelerated slightly more than expected. Bond yields rose, and stocks retreated in response, as investors feared the news could influence the Fed’s rate decision. The 10-year Treasury yield had its highest intraday jump in three years.1,2,3
Markets rallied Thursday as investors were encouraged by the Producer Price Index (PPI) report, which measures inflation at the producer level. Unlike CPI, PPI rose less than expected, which sparked a tech-focused rally. Markets opened lower on Friday as investors wrestled with the conflicting inflation reports.
Fears of an escalating Middle East conflict also weighed on stocks during the week. Concerns about a potential weekend event led some investors to end the week in a risk-off position.4
Intellectual Property Rocks in a New Digital Era
How will your IP work for you in your retirement and beyond?
In 2023, the music industry witnessed a groundbreaking shift, as iconic bands like ABBA, KISS, and the Beatles embraced the digital frontier. These legendary acts showcased new digitally created content, with ABBA and KISS debuting live shows featuring their digital avatars. While this development opens up exciting possibilities for entertainment, it also raises questions about intellectual property (IP) ownership and its implications for ordinary people and their estates.
The Beatles’ so-called “final release” was a single called “Now and Then” based on a demo cassette created by John Lennon, who was tragically slain in 1980. While most of us won’t have a posthumous hit single, it’s not rare for deceased authors to have their unpublished—or even unfinished—novels see success in print and film. Famous examples include The Girl with the Dragon Tattoo by Stieg Larsson and Dragon Bones by Michael Crichton. Retired athletes have played again (at least in video games), and aging or passed actors have appeared as their younger selves in films. Another scenario might be for those who hold a patent that didn’t go into mass production during their lifetime, only to become incredibly profitable later. Here’s the big takeaway: Your IP might be more valuable than you realize, so consider consulting a legal professional who can offer guidance.
Tax Rules When Selling Your Home
How the gains from the sale of a primary residence are taxed has changed in recent years. If you have recently sold your home or are considering doing so, you may want to be aware of these new rules.
Home Sale
If you owned and lived in your home for two of the last five years before the sale, then up to $250,000 of profit may be exempt from federal income taxes. If you are married and file a joint return, then it doubles to $500,000.1
To qualify for this exemption, you cannot have excluded the gain on the sale of another home within two years of this sale. Please consult a professional with tax expertise regarding your individual situation.2
This profit would be excluded from your taxable income. In fact, the sale may not need to be reported unless you receive a Form 1099-S or do not meet the above requirements.
If you sold your home at a loss, unfortunately, you can't deduct the loss.
Weekly Economic Update for 4/8/2024
Stocks dropped last week as investors focused on “what's next” for interest rates after mixed comments from multiple Fed officials.
Fed Officials Weigh In
Stocks struggled out of the gate again last week, ending Monday and Tuesday in the red on concerns that recent economic data could derail the Fed’s plan for short-term rates.
The markets recovered Wednesday through Thursday morning when weekly jobless claims were better than expected. But stocks fell broadly Thursday afternoon following mixed comments from multiple Fed officials. All three averages ended the day down more than 1 percent for the first time in a month.1,2
On Friday, a strong jobs report gave investors much-needed confidence. The U.S. economy created 303,000 jobs in March—higher than economists’ expectations—while unemployment dropped slightly to 3.8 percent. Markets rallied after the news, but not enough to recoup all weekly losses.3
When Should You Take Social Security
The Social Security program allows you to start receiving benefits as soon as you reach age 62. The question is, should you?
Monthly payments differ substantially depending on when you start receiving benefits. The longer you wait (up to age 70), the larger each monthly check will be. The sooner you start receiving benefits, the smaller the check.
From the Social Security Administration’s point of view, it’s simple: if a person lives to the average life expectancy, the person will eventually receive roughly the same amount in lifetime benefits, no matter when they choose to start receiving them. In actual practice, it’s not quite that straightforward, but the principle holds.
The key phrase is “if the person lives to average life expectancy.” If a person exceeds the average life expectancy and has opted to wait to receive benefits, they will start to accumulate more from Social Security.
How to Make the Tax Code Work for You
By May 15, 2023, over 142 million taxpayers had dutifully filed their federal income tax returns. And they all made decisions about deductions and credits – whether or not they realized it.1
When you take the time to learn more about how it works, you may be able to put the tax code to work for you. A good place to start is with two important tax concepts: credits and deductions.
Keep in mind that the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties.
Please consult legal or tax professionals for specific information regarding your individual situation.
Weekly Economic Update for 4/1/2024
Stocks were narrowly higher for the week as investors digested mixed economic news about consumer confidence. All three of the major averages posted gains for Q1 2024.
Stocks Finish Strong
Markets slipped for the first half of the four-day week as investors took a breather after the prior week's gain. Conflicting economic news on Monday and Tuesday contributed to the slide. New home sales in February slipped 0.3 percent over the prior month but increased by 5.9 percent from the prior year. Durable goods orders—everything from washing machines to helicopters—rebounded 1.4 percent in February, beating expectations and recouping some of January’s 6.9 percent drop.1,2,3
Stocks rallied on Wednesday, including a fresh record close for the Standard & Poor’s 500. An upward revision to consumer sentiment on Thursday helped the rally along. The markets are closed on Friday when the much-anticipated inflation report called the Personal Consumption and Expenditures (PCE) is released, which could set up a volatile Monday.4
Fixed or Variable Mortgage, Which Should You Pick?
Buying a home is the single-largest financial commitment most people ever make. And sorting through mortgages involves a lot of critical choices. One of these is choosing between a fixed or variable interest rate mortgage.
True to its name, fixed-rate mortgage interest is “fixed” throughout the life of the loan. In contrast, the interest rate on a variable-interest rate loan can change over time. The mortgage interest rate charged by a variable loan is usually based on an index, which means payments could move up or down, depending on prevailing interest rates.1
Fixed-rate mortgages have advantages and disadvantages. For example, rates and payments remain constant despite the interest rate climate. But fixed-rate loans generally have higher initial interest rates than variable-rate mortgages; the financial institution may charge more because if rates go higher, it may lose out.
What Is a 1031 Exchange?
If you want to add investment real estate to your portfolio, you may want to know what a 1031 Exchange is. While the rules and regulations for this tactic can get complicated, understanding the basic concepts may help you decide if this strategy is right for you.
Conducting a 1031 Exchange involves a complex set of tax rules and regulations. Before moving forward, consider working with a professional familiar with the rules and regulations. Also, this article is for informational purposes only. It is not a replacement for real-life advice, so consult your tax or accounting professional before moving forward with a 1031 Exchange.
Here’s what a 1031 Exchange is and some requirements to help you determine if you should pursue this avenue further.
Weekly Economic Update for 3/25/2024
Stocks posted their best week of the year, sparked by news that the dovish Fed decided to keep rates steady and signaled three rate cuts were still possible this year.
Stocks Bounce Back
As widely expected, the Fed left rates unchanged at the conclusion of its two-day meeting. But somewhat less expected, the Fed signaled its inclination to cut interest rates three times this year—each time by a quarter percentage point. That was a positive surprise for some, who worried that recent hot inflation reports would cause the Fed to reconsider its stance.1
Markets pushed higher Wednesday following the news, with all three averages closing at record highs. The rally continued through Thursday, boosted further by news that existing home sales rose 9.5 percent in February.2,3
Estimating the Cost of College
It doesn’t take a degree in finance to see that the cost of college continues to rise.
In its 2023 report, the College Board showed that in-state tuition and fees at private non-profit four-year institutions increased by 5% in inflation-adjusted dollars between the 2013-14 and 2023-24 school years.1
For many families, the lion’s share of education costs falls on the parents and, in some cases, the grandparents. Families rely on a combination of scholarships, grants, financial aid, part-time jobs, and parental contributions to help cover the cost. There are also a number of resources that can help individuals prepare for college, such as the College Board website and the government student aid website.
If your child is approaching college age, a good first step is estimating the potential costs. The accompanying chart can help you get a better idea about the cost of college.
Exploring the Federal Student Grant Program
You may have heard of the Free Application for Federal Student Aid, or FAFSA, if you or someone you know has plans to attend a college, career school, or university. Last year, over 50% of high school seniors submitted a FAFSA to the Department of Education to secure financial assistance. But what many prospective and current students may overlook are the various federal grants awarded to students in need each year.1
Granted value
Most federal grants, unlike loans, function as sources of funding. There are some exceptions, though. For example, if a student is awarded a grant, but withdraws from the program in which they’re enrolled, they may be required to pay back all or a portion of that grant.2
Weekly Economic Update for 3/18/2024
Stocks fell for the second straight week on inflation concerns despite a report on consumer prices that was initially well received by investors.
Stocks Slide
Tuesday was the only bright spot during the week as stock prices rose after the Labor Department report showed the Consumer Price Index rose 3.2% in February compared with a year earlier. It was a bit warmer than economists expected but cooler than investors feared. The news sparked a day-long rally, with the Standard & Poor’s 500 stock index setting its 17th record high of the year.1,2
Following Tuesday, caution lingered as investors parsed the underlying data behind headline consumer inflation numbers. Thursday's fresh producer price index (PPI) report showed that wholesale prices increased by 0.6% in February, more than the expected 0.3% increase. Additionally, core PPI (excluding food and energy) was hotter than expected.
All Muni Bonds Are Not Created Equal
The city of Detroit emerged from bankruptcy in 2014. Still, its previous inability to pay investors left some questioning their long-held assumption about the relative safety of municipal bonds. Without question, in the wake of Detroit’s troubles, gaining a better understanding of municipal bonds makes more sense than ever.1
At their most basic level, there are two types of municipal bonds:2
- General obligation bonds, which are a promise by the issuer to levy taxes sufficient to make full and timely payments to investors.
- Revenue bonds, which are bonds whose interest and principal are backed by the revenues of the project that the bonds are funding.
U.S. Personal Savings Rate
The U.S. personal saving rate stood at 3.7 percent at the end of 2023, up from the 3.4 rate at the end of 2022. The personal saving rate is the federal government’s estimate of what percent of their incomes U.S. households are saving. But market watchers and economists are mixed on what can be learned from swings in the saving rate.1
Why Economists Struggle
They struggle with the personal saving rate because it’s a derivative number – that is, it’s not measured directly. Instead, the Bureau of Economic Analysis derives the saving rate from other estimates. Here’s how it’s calculated:2
- The Bureau of Economic Analysis subtracts payroll and income taxes from personal income to get disposable personal income.
- The Bureau then subtracts its estimate of personal outlays, which include expenditures, interest payments, and payments, from disposable personal income to get an estimate of personal savings.
- The personal saving rate is calculated by dividing personal income by personal savings.
Weekly Economic Update for 3/11/2024
Stocks were down for the week as investors appeared to take some profits and traders parsed Fed Chair Jerome Powell’s Congressional testimony.
Markets Wobble
Stocks had a rough start to the week, with the Dow, S&P 500, and Nasdaq each off more than one percent on Tuesday alone. Mega-cap tech stocks were under pressure as investors appeared to take some profits.
Markets clawed back much of their losses on Wednesday and Thursday, with the Fed Chair’s upbeat comments to the Senate Banking Committee boosting stocks. Chair Powell said that once the Fed was confident inflation was tracking “sustainably at 2%,” the Fed would consider cutting short-term interest rates. The S&P 500 and Nasdaq rallied, with the S&P hitting a record close.1,2,3
How Will the Economy React to AI?
Artificial intelligence (AI) tools are already invading every aspect of our lives. Debates are ongoing about how it will infiltrate individual industries. Governments are working to understand AI and determine how to regulate something that affects much more than the digital space. Its potential uses are being realized everywhere, from musicians turning 50-year-old demo recordings into fully realized hit singles to firms analyzing data to increase productivity, maximize security, and even develop new medicines. The potential for AI is a fast-moving beast, with new tools emerging so quickly that they sometimes make existing ones obsolete just months after they become available.
It has certainly made many people nervous. An online educator surveyed 800 executives about their futures with AI. Almost half of the respondents believed that many of the job skills vital to the employees of various industries, including C-suite executives, may be irrelevant in just two years.1,2
This is some scary talk, to be certain. However, it is important to note that such change is inevitable. Just as the telephone put the telegraph out to pasture and the commercialization of the Internet changed how every company does business, AI will change things. However, not all aspects of the change will be bad or negative.
Can Group, Private Disability Policies Work Together?
According to the Social Security Administration, a 20-year-old has more than a 25% chance of becoming disabled before reaching retirement age.1
Loss of income for such a duration has the potential to cause significant financial hardship. And while Social Security Disability Insurance may help, it’s critical to understand that about two-thirds of initial applications are denied and the average SSDI payment is only $1,534 a month.2,3
Disability coverage may be available through your employer, who may pay all or a portion of the cost for your coverage.
Employer plans typically pay up to 50% to 60% of your income. This limited coverage might not be enough to meet your bills, which is why you may want to supplement employer-based coverage with a personal policy. Supplemental policies may be purchased to cover up to about 70% of your income.4
Weekly Economic Update for 3/4/2024
Stocks extended their tech-led advance last week as signs of a resilient and still-enthusiastic consumer boosted momentum.
Nasdaq Sets New High
Stocks traded in a narrow band early in the week but ended the five-trading sessions with a powerful advance.
While the Dow dipped lower, artificial intelligence (AI) names powered the gains in the S&P 500 and the Nasdaq Composite. The Nasdaq bobbed around the 16,000 level for most of the week before posting consecutive record highs on Thursday and Friday, surpassing its 2021 record. It was the last of the three major stock benchmarks to reach a record high this year.1
Grantor Retained Annuity Trusts (GRATs)
Suppose your financial objectives include income and leaving a legacy for your heirs. In that case, it's essential to work with a financial professional familiar with your many options, including older tools.
Grantor retained annuity trusts (GRATs) gained popularity in 2000 after a favorable ruling by the U.S. Tax Court toward a wealthy family in the retail business. This ruling allowed for zeroed-out GRATs, for which annuity payments return the original assets to the grantor, leaving only the appreciated value for the beneficiaries. You don't need to be a billionaire to take advantage of a GRAT, which has potential for individuals and families of many income levels.
A GRAT is a financial tool used to reduce taxes on large financial gifts to family members. It involves creating an irrevocable trust for a specific period, transferring assets into the trust, and paying an annuity to the grantor each year. When the trust expires and the final annuity payment is made, the beneficiary receives the assets with minimal or no gift taxes. GRATs can be a valuable tool for transferring wealth while minimizing gift tax liability. They allow the grantor to move asset appreciation to the remaining beneficiaries, reducing the value of the grantor's assets subject to estate tax. A GRAT is established for a specific number of years.
4 Steps to Protecting a Child with Disabilities
Raising a child is expensive and can cost over a quarter of a million dollars, excluding college. For a child with special needs, that cost can more than triple. If you’re the parent of a child with special needs, it’s vital to ensure your child will continue to be provided for after you’re gone. It can be difficult to contemplate, but with patience, love, and perseverance, a long-term strategy may be attainable.1,2
Envisioning a Life After You
Just as every child with special needs is unique, so too are the challenges families face when preparing for the long term. Think about the potential needs of your child. Will they require daily custodial care? Ongoing medical treatments? Will your child live alone or in a group home? Can family members assume some of the care? Answers to these and other questions can help form the vision of what may need to be done to plan for your child’s care.
Preparing Your Estate
Without proper preparation, your child’s lifetime needs can quickly outstrip your funds. One resource is government benefits, such as Supplemental Security Income (SSI) and Medicaid, which your child may qualify for depending on their situation. Because such government programs have low-asset thresholds for qualification, you may want to consider whether to make property transfers to your child with special needs.
Weekly Economic Update for 2/26/2024
Stocks vaulted to new heights last week on the back of an artificial intelligence (AI) semiconductor company, marking investors’ belief that AI has the potential to transform the U.S. economy.
Stocks Rally To Record Highs
Stocks traded in a fairly tight range for the first half of the short week, yawning at the lack of economic data while awaiting earnings results from one key company that creates chips that power the artificial intelligence operations of many firms.
A strong Q4 corporate report and long-term message from Nvidia Corp. pushed the S&P 500 and Nasdaq to new closing highs on Thursday.
Eight Mistakes That Can Upend Your Retirement
Pursuing your retirement dreams is challenging enough without making some common, and very avoidable, mistakes. Here are eight big mistakes to steer clear of, if possible.
No Strategy: Yes, the biggest mistake is having no strategy at all. Without a strategy, you may have no goals, leaving you no way of knowing how you’ll get there—and if you’ve even arrived. Creating a strategy may increase your potential for success, both before and after retirement.
Frequent Trading: Chasing “hot” investments often leads to despair. Create an asset allocation strategy that is properly diversified to reflect your objectives, risk tolerance, and time horizon; then make adjustments based on changes in your personal situation, not due to market ups and downs.1
Your Emergency Fund: How Much Is Enough?
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, you see smoke coming from under your hood.
Bad things happen to the best of us, and sometimes it seems like they come in waves. That’s when an emergency cash fund can come in handy.
One survey found that over two in three Americans are not confident that they have enough emergency savings to cover a month's worth of expenses. Another survey found that 43% of Americans said they wouldn’t be able to cover an unexpected $1,000 expense with money from their savings account.1,2
Weekly Economic Update for 2/19/2024
THE WEEK ON WALL STREET
Stocks fell last week as investors reacted to disappointing inflation updates and other economic reports that fell short of estimates.
Stocks Snap Winning Streak
Markets were quiet Monday but opened lower Tuesday in response to the January inflation report that showed higher-than-expected consumer prices. But stocks regained some momentum on Wednesday and rallied Thursday despite disappointing reports on both retail sales and industrial production for January.1,2
News of higher-than-expected wholesale prices on Friday put investors back on edge and kept stocks from ending the week on a positive note. The weekly loss broke a five-week winning streak.3
Getting a Head Start on College Savings
One study estimates the average cost of raising a child to the age of 17 for a middle-income family is about $310,605. As a point of comparison, the median home price in the U.S. was $417,700 at the end of 2023.1,2
If you want to add the cost of education to that number, you can expect to be paying an additional $24,030 a year for the cost of a public four-year in-state university.3
But before you throw your hands up in the air and send junior out looking for a job, you might consider a few strategies to help you prepare for the cost of higher education.
A Taxing Story: Capital Gains and Losses
Chris Rock once remarked, “You don’t pay taxes – they take taxes.” That applies not only to income but also to capital gains.
Capital gains result when an individual sells an investment for an amount greater than their purchase price. Capital gains are categorized as short-term gains (a gain realized on an asset held one year or less) or long-term gains (a gain realized on an asset held longer than one year).
Keep in mind that the information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
Weekly Economic Update for 2/12/2024
THE WEEK ON WALL STREET
The stock market experienced solid gains last week, concluding the trading week on a positive note, thanks to robust corporate reports and favorable inflation news; this propelled the S&P 500 Index to achieve a new record high at the end of the week.
S&P Tops 5,000
At the start of last week's trading, stocks faced downward pressure due to comments by Fed Chair Powell over the weekend, signaling that the Federal Reserve had no immediate plans to initiate interest rate cuts. Consequently, the yield on the two-year U.S. Treasury note, highly influenced by monetary policy, increased to its highest level in two months.1
What Is a 1035 Exchange?
According to the most recent information available, Americans have individual life insurance with a total face value of $14 trillion.1
Due to a variety of factors, these individuals may find themselves in circumstances where the specific life insurance policy or annuity contract they own does not suit their needs. They may want to exchange products without incurring a taxable event.2
That’s where Section 1035 of the Internal Revenue Code comes in. A 1035 exchange provides a means for exchanging an annuity contract or life insurance policy without being treated as if it had been surrendered or sold. Keep in mind that a 1035 exchange can be used only when it involves the same contract or policyholder and the same type of product.3
Three Key Questions to Answer Before Taking Social Security
Social Security is a critical component of the retirement financial strategy for many Americans, so before you begin taking it, you should consider three important questions. The answers may affect whether you make the most of this retirement income source.
When to Start?
You have the choice of 1) starting benefits at age 62, 2) claiming them at your full retirement age, or 3) delaying payments until age 70. If you claim early, you can expect to receive a monthly benefit that will be lower than what you would have earned at full retirement. If you wait until age 70, you can expect to receive an even higher monthly benefit than you would have received if you had begun taking payments at your full retirement age. The decision of when to begin taking benefits may hinge on whether you need the income now or can wait, and whether you think your lifespan will be shorter or longer than the average American.
Weekly Economic Update for 2/5/2024
THE WEEK ON WALL STREET
Stocks pushed higher last week as investors cheered mega-cap tech corporate reports and a better-than-expected employment report.
Stocks at New Highs
At the beginning of the week, stocks surged, anticipating fourth-quarter corporate updates from tech companies and the Federal Reserve's two-day policy meeting; this led to the S&P 500 Index reaching a new record high on Monday.
The market remained relatively stable for the rest of the week until Wednesday, when the Federal Reserve announced its decision to maintain interest rates within the 5.25-5.50 percent target range. The Federal Open Market Committee's (FOMC) news unsettled investors, who anticipated that rates would remain unchanged but expected more specific guidance on the Fed's plan to lower interest rates.1
Five Most Overlooked Tax Deductions
Who among us wants to pay the IRS more taxes than we have to?
While few may raise their hands, Americans regularly overpay because they fail to take tax deductions for which they are eligible. Let’s take a quick look at the five most overlooked opportunities to manage your tax bill.
Important Birthdays Over 50
Most children stop being "and-a-half" somewhere around age 12. Kids add "and-a-half" to make sure everyone knows they're closer to the next age than the last.
When you are older, "and-a-half" birthdays start making a comeback. In fact, starting at age 50, several birthdays and "half-birthdays" are critical to understand because they have implications regarding your retirement income.
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