Shortlink

Tax Updates and Reminders

As we head toward the end of the year, consider maxing out
your contributions on tax-advantaged accounts to help manage your 2019 return.
While some accounts, such as an IRA or Health Savings Account (HSA), allow you
to continue making contributions up until April 15, 2020, most
payroll-deduction plans such as a 401(k) will stop at year end (for 2019
contributions). Employees can contact their plan administrator to learn how
they might make additional contributions above what is automatically deferred
from their paycheck.1

This may also be a good time to strategize your retirement
plan contributions for next year. If you’d like to discuss strategies for any
employer, retirement, college or health savings account contributions, please
let us know.

The 2019 contribution limit for 401(k) plans is $19,000, up $500
from last year. Taxpayers age 50 and older can contribute an additional catch-up
contribution of $6,000.2  

If you haven’t maxed out your Individual Retirement Accounts
(IRAs), you may contribute up to $6,000 in 2019. Be aware that’s the total
amount that can be contributed to all the IRAs you own, including Traditional
and Roth. People age 50 and older can add another $1,000 to their IRA accounts
in 2019.3

HSA contribution limits for 2019 have increased to $3,500
for individuals and $7,000 for a family, when accompanying a high-deductible
health plan. The catch-up contribution isn’t available until age 55 and older, for
an extra $1,000.4 An HSA can be used as an emergency savings account
for any reason, as long as you follow the rules. You can pay some of your qualifying
health care expenses out of pocket, but be sure to keep the receipts. Should
you need additional funds, you can pull amounts up to the paid receipts from
your HSA without incurring any tax liability.5

If you don’t need the money for immediate expenses, consider
using those reimbursed funds as contributions to your HSA for the next year,
which offers the advantage of being tax deductible once again. Even if your
regular contributions are made by payroll deductions through your employer, you
can make direct contributions from your personal checking account, and then
deduct that additional amount on your personal income tax return.6
Just don’t exceed the annual contribution limit.

Content prepared by Kara Stefan Communications.

1 Sandra Block. Kiplinger. Oct. 31, 2019. “10 Year-End
Moves to Lower Your 2019 Tax Bill.” https://www.kiplinger.com/slideshow/taxes/T055-S003-10-year-end-moves-to-lower-your-2019-tax-bill/index.html. Accessed Oct. 31, 2019.

Julia
Kagan. Investopedia. June 19, 2019. “401(k) Contribution Limits for 2019.” https://www.investopedia.com/retirement/401k-contribution-limits/. Accessed Oct. 31, 2019.

3  Eric
Reed. Smart Asset. July 17, 2019. “IRA Contribution Deadlines for 2018 and 2019.”
https://smartasset.com/retirement/ira-contribution-deadline. Accessed Oct. 31, 2019.

4 Kathryn Mayer. Employee Benefit News. 2019. “From HSA
contributions to 401(k) limits, 11 numbers to know for 2019.” https://www.benefitnews.com/list/from-hsa-to-401-k-contribution-limits-11-numbers-to-know-for-2019. Accessed Oct. 31, 2019.

5 HASstore. Louise Norris. “Compound It! How to use your
HAS as an emergency fund.” https://hsastore.com/learn/basics/hsa-emergency-fund. Accessed Nov. 20, 2019.

6 National Benefit Services. “HSA Frequently Asked
Questions.” https://www.nbsbenefits.com/hsa-frequently-asked-questions/. Accessed Oct. 31, 2019.

This content is designed to provide general
information on the subjects covered. It is not, however, intended to provide
specific legal or tax advice and cannot be used to avoid tax penalties or to
promote, market or recommend any tax plan or arrangement. You are encouraged to
consult your personal tax advisor or attorney.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

1010800C

Shortlink

Pharmaceutical Roundup: Lawsuits, Legislation and Growth Opportunities

Drug manufacturers and
distributors have been in the news lately. Here’s a roundup of some of the
biggest headlines:

The Opioid Crisis

In October of this year, three of
the biggest U.S. drug distributors and a drug manufacturer reached a $260
million settlement with two counties in Ohio that had sued them over the opioid
crisis. The counties claimed the drug companies launched an aggressive marketing
campaign to promote the highly addictive medications without sounding satisfactory
warnings about the risks. The settlement by no means ends litigation over the
opioid crisis; nearly 3,000 lawsuits, filed by city, county and tribal
governments, are still active.1

Drug Prices

The cost of drugs continues to
soar in the U.S., with more than 3,400 medications experiencing price hikes
during the first half of 2019. About 40 of those drugs increased prices by more
than 100%, while certain others increased by substantially more — as much as
879%.2 Both President Donald Trump and lawmakers have been trying to
find ways to put a cap on drug spending growth but legislative efforts have
been hampered by the current political climate.3

Growth Opportunities

Big Pharma’s global market is
poised for growth as the population ages. In 2018, the pharmaceutical industry grew
to a market capitalization of $1.2 trillion — up $100 billion from 2017. By
2023, the market is projected to reach $1.3 trillion.4

The drug market typically
represents a long-term investment, given the time it takes to develop, test and
bring new drugs to the public. However, one perhaps underappreciated benefit is
that many well-established pharmaceutical companies have been known to pay out reliable
dividends. This may be attractive to investors who want income from their
retirement portfolio.5 However, it is important to understand
dividends are paid at the discretion of the board of directors and are not
guaranteed.

The China Market

China is the second-largest
pharmaceutical market in the world at $122.6 billion, and industry observers
expect that number to grow to as much as $175 billion by 2022. The country is
working to expand its presence in the sector and export more generic drugs as
part of its “Made in China 2025” plan.6

It’s up to each of us to create a strategy to help pay for potential
future health care expenses. If you are concerned about having enough income in
retirement for expenses like prescription drugs and other health care costs,
give us a call. We can help you consider your available options.

Content prepared by Kara Stefan Communications.

1  Brian
Mann and Colin Dwyer. NPR. Oct. 21, 2019. “Opioid Trial: 4 Companies Reach
Tentative Settlement With Ohio Counties.” https://www.npr.org/sections/health-shots/2019/10/21/771847539/opioid-trial-4-companies-reach-tentative-settlement-with-ohio-counties. Accessed Oct. 24, 2019.

2 Amy Baxter. HealthExec. July 3, 2019. “Drug prices are
soaring in 2019.” https://www.healthexec.com/topics/healthcare-economics/drug-prices-are-soaring-2019. Accessed Oct. 24, 2019.

3 Kate Patrick. Inside Sources. Sept. 25, 2019.
“Republicans Divided Over Drug Price Control Legislation.” https://www.insidesources.com/republicans-divided-over-drug-price-control-legislation/. Accessed Nov. 6, 2019.

4 Jocelyn Aspa. Investing News. Oct. 17, 2019. “Why
Consider Investing in Pharmaceutical Stocks?” https://investingnews.com/daily/life-science-investing/pharmaceutical-investing/investing-in-pharmaceutical-stocks/. Accessed Oct. 24, 2019.

5 Jeff Reeves. US News & World Report. May 16, 2019.
“9 of the Best Pharma Stocks to Buy for Income.” https://money.usnews.com/investing/dividends/slideshows/best-pharma-stocks-to-buy-for-income. Accessed Oct. 24, 2019.

6 Huileng Tan. CNBC. April 19, 2018. “China’s
pharmaceutical industry is poised for major growth.” https://www.cnbc.com/2018/04/19/chinas-pharmaceutical-industry-is-poised-for-major-growth.html. Accessed Nov. 6, 2019.

We are an independent firm helping individuals create
retirement strategies using a variety of insurance and investment products to
custom suit their needs and objectives. This material is intended to provide
general information to help you understand basic financial planning strategies
and should not be construed as financial or investment advice. All investments
are subject to risk including the potential loss of principal. No investment
strategy can guarantee a profit or protect against loss in periods of declining
values.

The information contained in this material is believed to be
reliable, but accuracy and completeness cannot be guaranteed; it is not
intended to be used as the sole basis for financial decisions. If you are
unable to access any of the news articles and sources through the links
provided in this text, please contact us to request a copy of the desired
reference.

1005705C

Shortlink

Retirement Planning During Changing Times

According to the United Nations, across the globe, people older than 65 now outnumber children under five for the first time in history. In 1960, the average woman gave birth to five children in her lifetime; by 2017, that ratio had dropped to 2.4 children per woman. Meanwhile, our life expectancy has increased around the world. In 1960, the average lifespan was just over 52 years of age; in 2017 the life expectancy was 72.1

Today, more than 60 percent of married households with children have two income earners.2 Yet many still struggle to make ends meet. That makes it difficult to save for both the exponentially rising cost of college and retirement. With fewer children in subsequent generations to contribute to the economy and bolster Social Security and Medicare programs, there may be fewer resources available to support the number of older adults in the future.3

It’s worth remembering that 2019 began with the longest U.S. government shutdown in history.4 On top of that challenging start to the year, some economists and media pundits have been suggesting we may be headed for a recession in the future.5 It’s tough enough to plan for retirement during a robust economy, but to forge ahead during uncertain times can be stressful. Do you reduce retirement plan contributions to bolster an emergency savings fund? Do you reposition assets in your investment portfolio? We believe these questions are best addressed in consultation with an experienced financial advisor. If you’d like to discuss your specific situation, please contact us.

One strategy for retirement planning during uncertain times is to create multiple income streams. For example, you could purchase an annuity contract for an insurer-guaranteed stream of lifetime income. In one recent report, several Brookings Institution fellows noted, “For many people, acquiring an appropriately consumer protective and reasonably priced income annuity with at least a portion of their savings will still be the best choice for retirement income, and for many others it will play a key role in a broader post-retirement financial strategy.”6

One reason an annuity can help address uncertainty is because none of us knows how long we are going to live. Therefore, it’s difficult to know how much money to save or how much you can afford to spend each year in retirement. An annuity can help address these financial uncertainties because it offers an option for income for life — as well as the life of your spouse. It’s important to remember that annuities are insurance contracts designed for retirement or other long-term needs. They provide guarantees of principal and credited interest, subject to surrender charges.

As for how much income you’ll need in retirement, be aware that it will likely change as you get older. According to recent research from the National Bureau of Economic Research, people age 70 to 75 spend 10.17% of their household income on health care; after age 80, that share rises to 15.25%. Money spent on domestic services increases from 1.28% to 5.22% during those same time periods.7

Content prepared by Kara Stefan Communications.

1  Fernando Duarte. BBC. April 8, 2019. “Why the world now has more grandparents than grandchildren.” https://www.bbc.com/worklife/article/20190405-why-the-world-now-has-more-grandparents-than-grandchildren. Accessed Oct. 18, 2019.

2 U.S. Bureau of Labor Statistics. April 27, 2017. “Employment in families with children in 2016.” https://www.bls.gov/opub/ted/2017/mobile/employment-in-families-with-children-in-2016.htm. Accessed Oct. 18, 2019.

3 Kathleen Romig, Matt Broaddus and Aviva Aron-Dine. Center on Budget and Policy Priorities. April 22, 2019. “Financial Challenges Facing Social Security and Medicare Largely Unchanged From Last Year, Except for Improvement in Disability Insurance.” https://www.cbpp.org/research/social-security/financial-challenges-facing-social-security-and-medicare-largely-unchanged. Accessed Oct. 31, 2019.

4 Tobias Salinger. Financial Planning Magazine. Jan. 18, 2019. “How wealth management is stepping up to help during the shutdown.” https://www.financial-planning.com/news/financial-advisors-help-clients-through-government-shutdown. Accessed Oct. 18, 2019.

5 Reade Pickert, Yue Qiu and Alexander McIntyre. Bloomberg. Nov. 6, 2019. “U.S. Recession Chances Inch Down to 26% Within Next 12 Months.” https://www.bloomberg.com/graphics/us-economic-recession-tracker/. Accessed Nov. 7, 2019.

6  David John, William Gale, J. Mark Iwry and Aaron Krupkin. Brookings Institution. July 2019. “From saving to spending: A proposal to convert retirement account balances into automatic and flexible income.” https://www.brookings.edu/wp-content/uploads/2019/07/ES_201907_JohnGaleIwryKrupkin.pdf. Accessed Oct. 18, 2019.

7 Retirement Income Journal. Oct. 18, 2019. “Differences in Expenditures between Young and Old Adults.” https://retirementincomejournal.com/article/differences-in-expenditures-between-young-and-old-adults/. Accessed Oct. 18, 2019.

Guarantees and protections provided by annuities are backed by the financial strength and claims-paying ability of the issuing insurer.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

999599C

Shortlink

Year-End Tax Considerations

Now that we’re in the fourth quarter, it’s time to think about what you can do to help minimize your liabilities for the 2019 tax season and position finances for next year. The following is a sample of the usual methods. However, if you’d like us to take a more personalized, comprehensive approach, we’d be happy to review your financial portfolio with your tax professional and make tailored recommendations for year-end planning.

First of all, don’t forget to take your annual required minimum distributions (RMDs) from retirement accounts if you’re over age 70 ½. You’ll need to take them by Dec. 31 to avoid a 50% penalty on required amounts not taken. If you haven’t yet, consider automating your RMDs so they are calculated and deposited into your bank account each year without you having to do anything.1

If you are between ages 59 ½ and 70 ½ and already retired, one way to help reduce your future tax bill on retirement accounts is to go ahead and start taking distributions. This is especially advantageous if you’re in a lower tax bracket now than you will be when you begin combining income from RMDs, Social Security benefits and other sources. Withdrawing income from those accounts now may enable you to delay starting Soci\al Security so that benefit can accrue. By reducing your account balances, future RMDs  may have a lower impact on your taxes.2

If you’ve experienced any “paper losses” in your investment portfolio this year, you may want to speak with your registered representative and consider selling those securities before year-end to harvest losses for tax purposes. The IRS allows taxpayers to deduct up to $3,000 in losses from ordinary income and carry forward any unused loss amounts to future-year tax returns.3

If you harvest any gains or losses by year-end, you also may want to rebalance your portfolio to ensure it remains aligned with your strategic asset allocation to help you achieve long-term goals.

If you are planning to make charitable contributions, you may want to “bunch” cash donations that you would typically make over several years in order to qualify as a tax deduction in 2019. Remember that your donations will need to exceed your (now almost doubled) standard deduction in order to qualify. Also, consider donating highly appreciated securities or gifting your RMD as an alternative to cash contributions.4

Content prepared by Kara Stefan Communications.

1  Raymond James. Sept. 17, 2019. “Check This List – Twice – Before Year-End.” https://www.raymondjames.com/southsidebank/resources/2019/09/17/Check-This-List-Twice-Before-Year-End. Accessed Oct. 9, 2019.

2  Miriam Cross. Kiplinger. Oct. 3, 2019. “How to Downsize Your RMDs.” https://www.kiplinger.com/article/retirement/T045-C000-S002-how-to-downsize-your-rmds.html. Accessed Oct. 9, 2019.

3  Russ Wiles. AZCentral. Sept. 29, 2019. “10 financial tips to follow as the calendar turns to fall.” https://www.azcentral.com/story/money/business/consumers/2019/09/29/year-end-financial-planning-can-start-fall-here-10-tips/2429954001/. Accessed Oct. 9, 2019.

4  Kristin McKenna. Forbes. Sept. 25, 2019. “It’s Time For Year-End Financial Planning.” https://www.forbes.com/sites/kristinmckenna/2019/09/25/its-time-for-year-end-financial-planning/#2db47d047783. Accessed Oct. 9, 2019.

This content is designed to provide general information on the subjects covered. It is not, however, intended to provide specific tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. You are encouraged to consult your personal tax advisor.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

992415C

Shortlink

Medicare Update

Some hard-working, taxpaying Americans get angry when they hear Social Security called an entitlement program, perhaps because the word “entitlement” has come to have a connotation with welfare programs. The reality is that Social Security is, by definition, an entitlement program, along with Medicare, unemployment insurance and worker’s compensation. These mandatory programs are funded by people who work through their payroll taxes, so they are eligible for those benefits through those tax contributions.1

These programs differ from the nation’s six major welfare programs: Medicaid, Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Programs (SNAP), Supplemental Security Income, Earned Income Tax Credit and Housing Assistance. These needs-based programs are funded by federal revenues and administered at the state level.2

Federal government benefits for long-term care fall under the welfare umbrella of Medicaid; beneficiaries must meet certain low-income requirements. This leaves higher income retirees — who may have diligently saved for their retirement needs —to have to pay for long-term care costs because Medicare, in general, limits what it will cover.3 The odds are high that you or a loved one will need long-term care; someone turning 65 today has almost a 70% chance of needing some type of long-term care in their remaining years.4

This kind of care can be expensive: The median cost of a private room in a nursing home is $102,200 a year.5 There are insurance options to help pay for potential long-term care expenses; if you’re interested in learning about these options, contact us for more information.

There’s good news for some Medicare beneficiaries who need help caring for themselves at home: People who purchase a Medicare Advantage (MA) plan now may have more options for household assistance benefits. In 2018, Congress passed legislation that enabled MA plans to pay for some non-medical services for chronically ill members, such as coverage for grocery delivery, caregiver support and retrofitting homes with things like wheelchair ramps.6

The new legislation left it to plan providers to decide what types of supplemental assistance benefits to offer. Insurers have come up with some interesting offerings. For example, Anthem offers Medicare Advantage plans with coverage options for quarterly pest control, an allowance to help care for a service dog, access to acupuncture or massages, sessions with a dietitian or up to 64 healthy food deliveries per year.7

This year’s Medicare annual enrollment period runs from Oct. 15 through Dec. 7. It’s a good idea to comparison shop for plans with new options, or at least find out if anything new is covered in your current plan.

Content prepared by Kara Stefan Communications.

Kimberly Amadeo. The Balance. Aug. 27, 2019. “US Welfare Programs, the Myths Versus the Facts.” https://www.thebalance.com/welfare-programs-definition-and-list-3305759. Accessed Oct. 5, 2019.

2 Ibid.

3 LongTermCare.gov. U.S. Department of Health and Human Services. “Who Pays for Long-Term Care?” https://longtermcare.acl.gov/the-basics/who-pays-for-long-term-care.html. Accessed Oct. 14, 2019.

4 LongTermCare.gov. U.S. Department of Health and Human Services. “How Much Care Will You Need?” https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html. Accessed Oct. 14, 2019.

5 Genworth. “Cost of Care Survey 2019.” https://www.genworth.com/aging-and-you/finances/cost-of-care.html. Accessed Oct. 18, 2019.

Robert Pear. The New York Times. June 24, 2018. “Medicare Allows More Benefits for Chronically Ill, Aiming to Improve Care for Millions.” https://www.nytimes.com/2018/06/24/us/politics/medicare-chronic-illness-benefits.html?module=inline. Accessed Oct. 5, 2019.

Shelby Livingston. Modern Healthcare. Oct. 4, 2019. “Medicare Advantage insurers tout pest control, acupuncture among new 2020 benefits.” https://www.modernhealthcare.com/insurance/medicare-advantage-plans-get-creative-2020-benefits. Accessed Oct. 4, 2019.

Our firm is not affiliated with the U.S. government or any governmental agency.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

982053C

Shortlink

The Economics of Immigration

The Wharton School of Business at the University of Pennsylvania has conducted extensive studies on the effects of immigration on America’s economy. In light of heightened policy debates in the U.S., some of the most critical findings are:1

  • Increasing the number of legal immigrants with a college degree would have little impact on employment and slightly increase GDP.
  • Legalizing undocumented workers currently residing in the U.S. would slightly reduce employment and have a negligible impact on GDP.
  • Increasing deportations would substantially reduce both employment and GDP.
  • Increasing the net flow of immigrants would have the largest positive impact on growing both employment and GDP.

There are a number of reasons economists consider immigrants critical to the future of America’s economy. For one thing, our population is aging and immigrants tend to be young adults. About half the immigrants who come from Latin America are between the ages of 18 and 35.Since the birthrate among Americans is historically low, immigrants help contribute to the future population and workforce.2

As such, many undocumented immigrants may spend the bulk of their careers contributing payroll taxes to Medicare and Social Security, even though they are not eligible for benefits. The net advantage, however, helps bolster pending deficits and sustain those programs.3

If America continues on its path of reducing the number of legal immigrants into the country, it could produce a massive labor shortage — particularly in industries reliant on large numbers of human capital. Therefore, investors considering the long-term implications of such a policy may want to give thought to market sectors that would be less impacted. For example, this may mean considering finance and technology over health care, construction and manufacturing. If you’d like to discuss portfolio strategies, please give us a call.

Since 2011, immigrants have accounted for two-thirds of America’s economic growth. This demographic is responsible for establishing nearly a third of U.S. firms, including more than half of startups valued at over $1 billion.4

Research shows a pattern of how migrant groups tend to cluster in a particular area. Once there is a substantial community present, companies from their home countries will often make capital investments in that area with factories, retail stores and research centers. For every 1% of immigrant population growth in a state, there’s a 50% greater chance that a foreign company will choose to expand its operations there.5

The data shows that large pockets of immigrants throughout the country have been instrumental in increasing jobs, tax revenues and revitalizing the local infrastructure in these clustered areas.

In addition to creating new companies and jobs, immigrants also are consumers. Recent studies of mass deportation impacts concluded that continuing these policies would result in a $1.6 trillion GDP loss.6

Researchers say there’s little data to support the position that immigrants are taking jobs away from U.S.-born citizens. This is because immigrants tend to accept low-paying jobs that Americans often don’t want, such as agriculture and building and grounds maintenance. In fact, the biggest competition comes from other low-wage immigrants, which actually serves to improve quality and productivity in those industries.7

In the growing home health aide and long-term care industry, immigrants hold 27.5 percent of positions as direct care workers and 30 percent of nursing home housekeeping and maintenance jobs. This is an industry that is expected to need 3.5 million additional health care workers throughout the next decade, so it’s worth noting that immigrants are helping to fill this gap. In fact, immigrant health care workers tend to be more educated than U.S.-born health industry workers; often working at lower professional levels because they lack U.S. certification or licensure. They are helping supplement shortages in rural areas, and they tend to work nontraditional shifts (nights and weekends) that are hard to fill.8

While the current debate about immigration policy tends to focus on jobs and wages, some economists are urging policy leaders to consider the broader economic picture. The reality is that immigration may be a necessary ingredient to drive long-term economic growth and financial sustainability of the nation’s entitlement programs.

Content prepared by Kara Stefan Communications.

1 Knowledge@Wharton. Sept. 10, 2019. “Could Increased Immigration Improve the U.S. Economy?” https://knowledge.wharton.upenn.edu/article/us-immigration-policy/. Accessed Sep. 30, 2019.

2 Daniel Kurt. Investopedia. July 30, 2019. “The Pros & Cons of Immigration Reform.” https://www.investopedia.com/articles/investing/043015/pros-cons-immigration-reform.asp. Accessed Sept. 30, 2019.

3 Kimberly Amadeo. The Balance. June 25, 2019. “Immigration’s Effect on the Economy and You.” https://www.thebalance.com/how-immigration-impacts-the-economy-4125413. Accessed Sept. 30, 2019.

4 Ibid.

5 Knowledge@Wharton. Aug. 21, 2018. “Where Immigrants Go, Economic Growth Follows.” https://knowledge.wharton.upenn.edu/article/economic-debate-immigration-reform/. Accessed Sept. 30, 2019.

6 Daniel Kurt. Investopedia. July 30, 2019. “The Pros & Cons of Immigration Reform.” https://www.investopedia.com/articles/investing/043015/pros-cons-immigration-reform.asp. Accessed Sept. 30, 2019.

7 Knowledge@Wharton. Aug. 21, 2018. “Where Immigrants Go, Economic Growth Follows.” https://knowledge.wharton.upenn.edu/article/economic-debate-immigration-reform/. Accessed Sept. 30, 2019.

8 Leah Zallman, Karen E. Finnegan, David U. Himmelstein, Sharon Touw and Steffie Woolhandler. Health Affairs. June 2019. “Care For America’s Elderly And Disabled People Relies On Immigrant Labor.” https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2018.05514. Accessed Sept. 30, 2019.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

971022C

Shortlink

Can Your Portfolio Weather an Economic Storm?

Let’s talk a little about famous last words. On Nov. 8, 2007, then-Federal Reserve Chairman Ben Bernanke told lawmakers that the U.S. economy did not appear headed for recession. One month later, the Great Recession of the 21st century began.1

So, on Sept. 6 of this year, when Fed Chair Jerome Powell announced that he didn’t “at all” expect the U.S. to enter a recession, it makes you wonder.2 The reality is that even the most experienced economists don’t always make accurate predictions.

Economic growth rises and declines just like market volatility, inflation and interest rates. It’s difficult for anyone to predict these things with any accuracy because the economy is cyclical and moves on its own timeframe. The ups drive growth, and the downs spur companies and the government to make effective decisions that will eventually drive up growth again.

When it comes to investment planning, you should plan on ups and downs. It can keep you up at night if your portfolio is reliant on day-to-day market moves and economic cycles. If you have long-term goals, it’s best to align your investment allocation to help you reach those goals and try not to worry too much about temporary declines.

That said, if you’re concerned that your financial strategy or investment portfolio might be vulnerable to a possible economic recession, talk to us. We have some ideas to help you weather the storm.

And speaking of a possible economic storm, it’s a lot like watching predictions of those named weather events that form in the Atlantic Ocean. One day it’s a tropical storm, the next day it’s a hurricane — it’s fast moving; then it’s stalled. There’s just no predicting its next move. But we can pick up on the signals, much as we watch for signs of a recession. And lately, there have been a few.

For example, the Trump administration’s ongoing trade war with China is causing problems for U.S. manufacturers, farmers and even consumers. Moody’s Analytics reports that the U.S. has lost approximately 300,000 jobs and 0.3% in GDP since the trade war began. If trade escalations continue, the firm predicts the nation could lose up to 800,000 jobs and the economy could plunge into a recession.3

The economic effects don’t end there. Because China and the U.S. are the world’s top two economies, the trade war is affecting other countries, as well. The Organisation for Economic Co-operation and Development (OECD) reduced this year’s forecast for global growth from 3.2% to 2.9%. The U.S. economy is expected to grow by only 2.4% in 2019, compared to 2.9% last year. Next year, it’s predicted to drop to 2.0%.4

We’ve also seen a recent drop in CEO confidence, meaning they are less likely to invest in expansion, and fewer jobs may be on the horizon.5 Another possible indication is that ultra-high-net-worth investors have been transitioning parts of their investment portfolios into private ventures, alternative investments and cash in anticipation of a recession in 2020.6

Content prepared by Kara Stefan Communications.

1 Mark Felsenthal. Reuters. Nov. 8, 2007. “Economy faces risks, not recession: Bernanke.” https://www.reuters.com/article/us-usa-bernanke/economy-faces-risks-not-recession-bernanke-idUSWBT00789120071108. Accessed Sept. 25, 2019.

2 Paul Davidson. USA Today. Sept. 9, 2019. “Powell: Fed is not ‘at all’ expecting a recession, saying economy continues to ‘perform well.’” https://www.usatoday.com/story/money/2019/09/06/fed-chair-jerome-powell-no-recession-expected-at-all-u-s/2232221001/. Accessed Sept. 25, 2019.

3 Shane Croucher. Newsweek. Sept. 11, 2019. “If Donald Trump’s China Trade War Escalates, the US Could Lose 800,000 Jobs and Plunge into a Deep Recession: Economists.” https://www.newsweek.com/trump-trade-war-escalates-jobs-deep-recession-moodys-1458706. Accessed Sept. 25, 2019.

4 Antonio Rodriguez and Richard Lein. International Business Times. Sept. 19, 2019. “Trade Tensions Slam Brakes On Global Economy: OECD.” https://www.ibtimes.com/trade-tensions-slam-brakes-global-economy-oecd-2829329. Accessed Sept. 25, 2019.

5 Business Roundtable. 2019. “Business Roundtable CEO Economic Outlook Index Decreases in Q3.” https://www.businessroundtable.org/media/ceo-economic-outlook-index/ceo-economic-outlook-index-q3-2019. Accessed Oct. 10, 2019.

6 Suzanne Woolley and Benjamin Stupples. Bloomberg. Sept. 23, 2019. “The World’s Wealthiest Families Are Stockpiling Cash as Recession Fears Grow.” https://www.bloomberg.com/news/articles/2019-09-23/world-s-wealthiest-families-stockpiling-cash-on-recession-fears. Accessed Sept. 25, 2019.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

970843C

Shortlink

What’s New in Indexing?

Index mutual funds are investment vehicles comprising stocks from a wide variety of companies and track the performance of a specific index, such as the Dow Jones Industrial Average. Investors are able to spread their assets across many different investments with the convenience of one fund, which can help protect them from market volatility. Index funds also tend to be relatively inexpensive, with annual costs ranging from 0.03% to 0.40% of assets compared to actively managed funds, which can have annual costs of 0.85% or higher.1

The first index fund was founded in 1975 by The Vanguard Group. Today it is known as the Vanguard 500 Index Fund, but there are many others on the market now. In fact, their prevalence has prompted some cause for concern. In a 2018 Wall Street Journaleditorial, Vanguard founder John Bogle sounded the alarm that today’s index fund investments are largely managed by three firms — Vanguard, State Street and Black Rock. His concern was that these money managers are now the majority shareholders for more than 80 of the largest companies in the United States. 2 That’s a lot of concentrated power and influence.

There are currently about 5,000 U.S. indexes. The most commonly known are the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite Index. Monitoring various buckets of investments that represent different asset categories and/or sectors is a critical measure for market analysts, as they provide keen insights into the economy and investment trends.3

Indexing may be an appropriate strategy for risk-averse, long-haul wealth accumulation, as well as a strong component in a retirement portfolio. Index funds can offer a way to consolidate aggressive investments into a diversified vehicle offering growth potential to help offset long-term inflation. In fact, annuities that credit interest based on the performance of a specific index may give retirees the ability to combine growth opportunity with guaranteed income (guaranteed by the insurer). If you’d like to learn more, just give us a call.

There are other aspects to the indexing strategy that have come into play in recent months. In August, for example, President Trump pitched the idea of reducing the capital gains tax by indexing it to the rate of inflation. This would lower tax bills for investors.4

However, despite the administration’s claims, the nonpartisan Tax Foundation asserted that indexing capital gains taxes would have very little effect in stimulating economic growth. Furthermore, the tax cut would benefit only the top 1 percent of taxpayers and was projected to reduce federal tax revenues by nearly $178 billion over the next 10 years.5 Trump has since backed off the proposal.6

In related news, JPMorgan has introduced a new index called the “Volfefe Index.” The Volfefe is designed to monitor how President Trump’s messages on Twitter affect Treasury market yields. Volfefe was named after one of Trump’s 2017 tweets featuring the undefined word “covfefe.” Given that one in ten of the president’s tweets relate to U.S. investment markets, JPMorgan’s index tracks the rolling one month probability that each message initiates market-moving volatility (based on the status of Treasury yields five minutes following a Trump tweet). The Volfefe Index indicates that a wide range of stocks have been impacted by Trump tweets, especially in recent weeks.7

Content prepared by Kara Stefan Communications.

1 Daniel Kern. ThinkAdvisor. July 3, 2017. “How ETFs and Indexing Took Over Active Management.” https://www.thinkadvisor.com/2017/07/03/how-etfs-and-indexing-took-over-active-management/. Accessed Sept. 9, 2019.

2 Meghna Chakrabarti. WBUR. Dec. 12, 2018. “Stock Market Distress Signal: How Low-Cost Index Funds Are Taking Over.” https://www.wbur.org/onpoint/2018/12/12/stock-market-index-funds-john-bogle. Accessed Sept. 9, 2019.

3 Caroline Banton. Investopedia. June 25, 2019. “An Introduction to U.S. Stock Market Indexes.” https://www.investopedia.com/insights/introduction-to-stock-market-indices/. Accessed Sept. 9, 2019.

4 Caitlin Oprysko and Arren Kimbel-Sannit. Politico. Aug. 30, 2019. “Trump again flirts with easing capital gains taxes.” www.politico.com/story/2019/08/30/trump-capital-gains-taxes-1478882. Accessed Sept. 26, 2019.

5 Daren Fonda. Barron’s. Aug. 3, 2019. “Indexing Capital Gains to Inflation Would Be Great for the Rich. There’s No Economic Rationale.”
https://www.barrons.com/articles/indexing-capital-gains-to-inflation-makes-no-economic-sense-51564833600. Accessed Sept. 9, 2019.

6 Jacob Pramuk. CNBC. Sept. 11, 2019. “Trump rules out for now cutting capital-gains taxes.” www.cnbc.com/2019/09/11/trump-white-house-mulls-indexing-capital-gains-to-inflation-tax-plan.html.

Accessed Sept. 26, 2019.

7 Tracy Alloway. Bloomberg. Sept. 8, 2019. “JPMorgan Creates ‘Volfefe’ Index to Track Trump Tweet Impact.” https://www.bloomberg.com/news/articles/2019-09-09/jpmorgan-creates-volfefe-index-to-track-trump-tweet-impact. Accessed Sept. 9, 2019.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand a variety of financial vehicles and should not be construed as financial advice. Investing involves risk, including the potential loss of principal. Any references to protection and lifetime income generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

957775C

Shortlink

What’s New in Banking

Nearly a quarter of the adult U.S. population is “underbanked.” This means they don’t regularly use a bank (or a bank’s mobile/online capabilities) to deposit checks and pay bills. That’s about 55 million people ostensibly living from cashed paycheck to cashed paycheck.1

When these underbanked people cash their paychecks for immediate funds to buy groceries and pay rent, they are more likely to use the services of a check-cashing business. These services often charge a flat fee or take a percentage cut for cashing checks, and that can add up. For example, some payday lenders take as much as a 10% cut for cashing a check. That means if you’re cashing a $500 check, you could pay $50 for the service.2

There’s also such a thing as being “overbanked,” meaning that by spreading your assets over a multitude of different accounts, you may be paying more in fees than is necessary. Especially as you approach retirement, it may be worth considering consolidating accounts for ease of cash management and investment oversight. We can also conduct a fee analysis of your portfolio; if you’re interested, please give us a call.

The banking industry is highly competitive, and as such, it changes fast and offers new features all the time. One of the biggest challenges, however, is protecting account data. More government and industry initiatives now promote increased transparency as to how consumer data is gathered, shared and used by third parties.3

The bigger banks, like JPMorgan Chase, Bank of America and Wells Fargo, have the advantage of capital to explore new technologies in an effort to offer more features. You may have recently seen ads that let consumers place their own temporary hold on a credit card, view recurring charges so they can cancel them more easily or access their accounts through fingerprint scans. But most people still like to deposit checks at a physical bank, rather than doing so digitally; a recent survey by Fiserv found that 53% of customers who visit a branch do so to deposit a check.4

Mobile banking has found acceptance among all generations, but millennials, unsurprisingly, have embraced it the most. A 2018 study by Business Insider revealed 97% of millennials use mobile banking, followed by 91% of Generation X and 79% of baby boomers.5

Expect more innovations like this as banks continue to evolve their services to attract and keep their tech-friendly customers happy.

Content prepared by Kara Stefan Communications.

1 Knowledge@Wharton. Aug. 27, 2019. “How Fintech Can Make Banking More Inclusive – and Empowering.” https://knowledge.wharton.upenn.edu/article/fintech-can-make-banking-inclusive-empowering-consumers/. Accessed Sept. 3, 2019.

2 Margarette Burnette. NerdWallet. Sept. 28, 2018. “How to Cash a Check Without Huge Fees.” https://www.nerdwallet.com/blog/banking/cash-check-paying-high-fees/. Accessed Sept. 13, 2019.

3 Knowledge@Wharton. Jan. 16, 2019. “Why Open Banking Represents a Seismic Shift for Fintech.” https://knowledge.wharton.upenn.edu/article/open-banking-represents-seismic-shift-fintech/. Accessed Sept. 3, 2019.

4 Andrew Meola. Business Insider. Aug. 8, 2019. “The digital trends disrupting the banking industry in 2019.” https://www.businessinsider.com/banking-industry-trends. Accessed Sept. 3, 2019.

5 Ibid.

We are an independent firm helping individuals create retirement strategies using a variety of insurance and investment products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial or investment advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

954129C

Shortlink

Fingerprint, Retina Scans Not Just for James Bond Anymore

Most people using the internet to shop, conduct financial transactions or read firewall-protected content are likely familiar with the aggravation of maintaining passwords. Worse yet, tech experts now say conventional password security is only a marginal defense against hacking.1

We are now entering a new age in electronic security for the average user — one that more closely resembles James Bond movies featuring high-tech gadgetry. Biometric coding uses unique physical traits — such as fingerprints and retina images — to permit access to certain devices. You may already use FaceID or fingerprint technology to unlock your smartphone.2

Behavioral biometrics recognizes unique traits such as your voice, the way you swipe a pen or press a keyboard, your gait, common gestures, your foot/pressure movement when you drive a car, etc.3

Biometrics may be easier than remembering passwords. However, the technology is not without challenges. Unlike passwords, biometrics are unchangeable. This data is stored for accessibility, and if hackers breach a cloud storage system that includes biometric data, they could hack into user accounts.4

In this era of rapidly changing consumer technology, it’s important to stay on top of your financial data. It may not be possible to prevent someone from hacking into the company websites that host your accounts, but you may be able to detect fraudulent acts before they cause too much damage by regularly checking your account activity.

Here are some of the common ways fraudsters can hack accounts:

  • A brute force attack is when a hacker guesses at possible credentials using a trial-and-error system. This can take time, but less so if the hacker has some inkling of your data (such as your email address) or personal information (such as the names of your children).5
  • A credential stuffing attack is when the hacker already has a set of your credentials, having purchased or breached a system (hotel or store database) to obtain them. Using this data, he or she may be able to hack into other accounts you use, such as your bank account.6
  • A dictionary attack uses a systematic approach of testing each word in the dictionary as a potential password to hack into an account or system.7

In the movie “Skyfall,” James Bond is tasked with hunting down a genius hacker bent on terrorizing MI6 headquarters. Hollywood’s depictions of cyber hacks are rarely limited by minutiae such as science and technology — only by the imagination of writers and directors. In fact, movies often give would-be hackers ideas on how to infiltrate security systems, which can then lead to life-imitating-art events in which security technology is beefed up in response to creative breaches. Films like “Eagle Eye,” “Snowden” and “The Circle” also demonstrate possibilities associated with artificial intelligence, social media and mass surveillance.8

Content prepared by Kara Stefan Communications.

1 Kelly Lappin. Security Intelligence. Feb. 18, 2019. “Are Passwords Killing Your Customer Experience? Try Passwordless Authentication.” https://securityintelligence.com/are-passwords-killing-your-customer-experience-try-passwordless-authentication/. Accessed Aug. 29, 2019,

2 Sam Rutherford. Gizmodo. Aug. 5, 2019. “Touch ID Will Reportedly Return to iPhones in 2021 With Apple’s New In-Screen Fingerprint Sensor.” https://gizmodo.com/touch-id-will-reportedly-return-to-iphones-in-2021-with-1836973588. Accessed Aug. 29, 2019.

3 Gemalto. Aug. 22, 2019. “Biometrics: authentication and identification  (definition, trends, use cases, news) – 2019 review.” https://www.gemalto.com/govt/inspired/biometrics. Accessed Aug. 29, 2019.

4 Ibid.

5 Mike Greene. Bank Info Security. Aug 19, 2019. “Credential Stuffing Attacks vs. Brute Force Attacks.” https://www.bankinfosecurity.com/blogs/credential-stuffing-attacks-vs-brute-force-attacks-p-2767. Accessed Aug. 29, 2019.

6 Ibid.

7 Techopedia. “Dictionary Attack.” https://www.techopedia.com/definition/1774/dictionary-attack. Accessed Aug. 29, 2019.

8 John William. CPO Magazine. Aug. 29, 2019. “Movies That Can Help You Understand Data Privacy and Hacking.” https://www.cpomagazine.com/cyber-security/movies-that-can-help-you-understand-data-privacy-and-hacking/. Accessed Aug. 29, 2019.

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

947649C