It’s About More Than Numbers

Too often we paint someone with a broad brush as to their contributions to the world solely based on the group in which they are a member. For example, medical doctors may specialize in a field that allows them to focus on a specific area of the human body. These physicians are capable of providing you general advice and medical care but may also provide you greater, more detailed, information pertaining to a particular illness such as kidney ailments or cancer of the brain.

Wealth advisors are individuals who may specialize in certain areas of financial matters that a particular segment of the population needs. For example, many wealth advisors focus on corporate executives and their unique compensation opportunities. Other advisors may focus more on the intricacies of Social Security Benefits and less about long-term market investments.

To be certain, your life is more complex than simply working with numbers to reach your lifetime goals and dreams. It is vital that you consider the qualitative factors in your life as much, if not more so, than you do the quantitative factors. My case in point is the life of a lady we will call “Jane”. By all outward appearances, Jane had all that was needed to sustain her the remainder of her life and leave a legacy for her children to expand their wealth. A couple of years after her husband’s passing, we asked Jane if we could meet to discuss the important matters in her life. She assumed we were talking about her accounts and showed up with her Financial Organizer we provided when initiating the relationship.

Immediately, we recognized that Jane had not understood what we wished to discuss with her. After explaining the importance of happiness in her life, we asked her a few simple questions to initiate this subject. “What is one thing that happened recently that made you smile and one thing that was difficult?” She looked up at me and began to create a big smile on her face. She exuberantly stated, “I had the best time recently volunteering as a cancer patient attendee!” I asked her, “What of that process made you so happy?” She responded in a way that made me realize she had found a new purpose in life. “When John was dying, I had no one that understood, truly understood, what I was going through at that time in my life. By helping these terminally ill individuals live a more fulfilling life and knowing that someone understands the palette of emotions they are experiencing, helped me heal and find happiness again.”

We continued to discuss this wonderful opportunity for Jane to serve and offered her some qualitative advice. “Why don’t you establish a self-help group or lead others in the process of caring for terminally ill individuals that provides dignity, understanding and compassion?” This new form of serving her fellow man gave Jane the emotional support she needed to truly live again after the loss of her husband.

As wealth advisors that specialize in retirement planning, we place a significant amount of importance on helping clients understand, and navigate, the maze of life after the loss of someone special. We are proud of our technical competence and expertise. More importantly, we are most humbled that our clients know that we are here as a resource for more than numbers.

As humans, we are all different in some way. However, we all need emotional support, in addition to financial advice, to truly live a rewarding life. It is not all about the numbers unless you are talking about the lives you touched in deep, emotional moments that helped them see life in a better way. 

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Millennial Perspective: Planting Roots in a Pandemic

As a millennial, buying a home is already hard enough. Trying to save up enough money for an average 6% down payment, trying to determine how much home we can afford, trying to find the time to house hunt, and battling debt to income ratio. Now we are dealing with a seller’s market with some of the lowest interest rates we have seen in years and a pandemic. Many of my fellow millennials are trying to take advantage of these low rates, but it has been a bumpy ride for a lot of us. Throughout this article I will recount my personal experience buying a home as well as the experiences of others in my generation in the past year.

Let us rewind to March of 2020. I know, this is not the best month that we have all had, but it was certainly looking like it was going to be for my husband and me. We had found a home that we both loved at a price point that was perfect in a buyer’s market and we were prepared to take this giant step towards this milestone. We settled on an offer with the seller, signed a contract, and we were on our way. Then the pandemic hit. 

Our situation completely changed. We were no longer in a place where we could get the home. Thankfully, our sellers, lender, and realtor worked with us and we were able to essentially pause the whole process. It was only supposed to be two weeks, right? Then two weeks turned into a month, then two months, and so on. When we finally got back to a place where we could proceed, my husband and I ultimately decided that the time was not right and we needed to wait until COVID-19 blew over, so we ended our contract. 

Ending our contract and losing the opportunity turned out to be a blessing in disguise because we also decided to move closer to family. Not being able to see anyone and not knowing if we may ever see them again due to a deadly virus makes you think about where your heart is meant to be. We packed everything up a few months later, moved across the state, and devised our new plan. We would rent for another year and look at plans to build our dream starter home the following summer. Then the market flipped, and construction costs rose nearly 130%! It was back to the drawing board for us. 

The small community we are now living in is growing and many houses on the market are new construction. Since this was no longer a viable option for us, we would need to find a completed home, but any homes that were listed were typically off the market within 24 hours, were pocket listings, or they entered bidding wars which drove the price up tens of thousands of dollars. This made our search a little tricky. Thankfully, an opportunity to buy a perfect home fell into our laps. We are now back on track to buying our first home. It feels that we got lucky.

I have seen many of my friends post on social media or reach out with the news that they have also found a home. It is great news, and it makes me happy to see so many people in my generation finally able to reach this milestone. I have discussed experiences with several of them and their stories sound very familiar. They spent countless hours searching for homes on sites like Zillow and Realtor.com with little luck. When a home is found and an appointment is secured to view it, it is off the market. You do not get a lot of time to think about the investment you are about to make and practically must sign an offer within hours of viewing the home. The whole task can be very daunting compared to last year’s market. However, with today’s low rates it is something that we simply cannot pass up.

All this to say, hang in there millennials. The timing for buying a house is perfectly imperfect right now. Do not get yourself down if a home falls through. It just means that something better is waiting for you around the corner. Buying a house is a huge step and you do not want to get roped into something that you will regret. Keep searching and the right opportunity will come to you!

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Extra Time to Fund IRA For 2020

Whenever someone tells you something that seems too good to be true, often your presumption is correct. However, since 1974, individuals have enjoyed the opportunity to “keep their money and report a tax deduction” which seems too good to be true. Sure, there are some rules and caveats that must be observed to take the deduction but overall, the Individual Retirement Account (IRA) is a powerful planning tool for your future.

Many changes have been enacted that impact IRA investors. The basic premise of “having your cake and eating it, too” continues for these types of accounts. Due to the recent IRS announcement of postponing the original due date of individual returns, you have another month to contribute to your IRA and take a tax deduction for 2020. Further, if you live in a declared disaster area, such as the State of Oklahoma, the President’s declaration postpones the filing due date for individuals to June 15, 2021. Ultimately, you can fund your IRA on or before June 15, 2021, and take a tax deduction for 2020. 

Too many individuals fail to take advantage of IRA benefits. Some misconceptions are often the cause of this misunderstanding. Many people think they are too old to contribute to an IRA. The SECURE Act of 2019 eliminated the age limit for traditional IRA contributions. No longer are you limited to contributing to your IRA at age 70½. Many of our citizens continue to work during their retirement years. By earning income, the taxpayer may be eligible to contribute to their IRA until such time they no longer work. This is a game-changer for second career individuals!

Another misunderstanding is that single-earner family inability to contribute for the non-working spouse. Assume one spouse, age 30, is working outside the home while the other is caring for the children. If the working spouse earns income, and meets other criteria, she can contribute $6,000 to her own IRA and her spouse can make a spousal IRA contribution of $6,000 to a traditional or Roth IRA based on his spouse’s income.

One of the most common excuses or misconceptions I hear from individuals when talking about saving for their future by contributing to their IRA is that they simply can’t afford it. You are not required to contribute the maximum each year to your IRA to achieve tax benefits. Every dollar you contribute to your IRA is a possible reduction to your taxable income. A little unknown is of the tax law known as the Saver’s Credit may be helpful to you in reducing your tax burden. Lower income workers who make IRA contributions may claim the credit.

If you are single and earned $32,500 or less for 2020, you may qualify for this credit against your income tax burden. The maximum amount of credit is limited to the first $2,000 of your IRA contribution and you may claim a 50% credit for a maximum of $1,000 against your income tax liability. One of the best methods of teaching your children the power of investing and allowing compound interest to help them accumulate is the gifting of funds to their traditional IRA, or better yet, a Roth IRA.

Assume your granddaughter has landed her first job as a teenager and it pays her $10,000 for 2020. Being a wonderful grandfather, and noting this is an excellent teaching moment, you gift to your granddaughter $2,000 to her Roth IRA. She will receive a Saver’s Credit of $1,000 on her 2020 income tax return. 

Individual Retirement Accounts are powerful tools that can yield tremendous tax-deferred savings over time. Start early and teach your children the power of compound interest. Albert Einstein, the famous theoretical physicist, is reputed to have said, “Compound interest is the 8th wonder of the world. He who understands it, earns it… he who doesn’t, pays it.”

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Stimulus Funds Are Not Free Money

You can always count on change occurring in life. First, a pandemic that intrudes in all aspects of our world and, second, the federal government creating responses to the environmental changes. Many Americans will receive, or may have already received, additional economic stimulus payments in the amount of $1,400. Congress has an interesting approach to naming legislation and this most recent law is no different – The American Rescue Plan Act of 2021.

To receive the full amount of stimulus payment, individuals in the U.S. must have a Social Security Number and report adjusted gross income on their 2021 income tax return of $75,000 or less. If the adjusted gross income is higher than $75,000 but less than $80,000, the recipient will retain a portion of the $1,400. In other words, if you report $80,000 or more on your income tax return for 2021, you will be required to repay, through a lower refund amount, the advanced stimulus payment.

One of the changes for this round of stimulus payment is those who qualify for the funds. Unlike previous stimulus payments in 2020, the current stimulus funds are available to individuals, children and non-child dependents. For example, a family of four would receive a total stimulus payment of $5,600. This is helpful for families that are suffering from the effects of COVID-19 but, as my dad would always warn, “nothing in life is free”. The total cost of The American Rescue Plan Act is $1.9 trillion. As of the date of this writing, the United States of America owed more than $28 trillion to its bondholders and other creditors. This debt equates to $85,000 per citizen and $224,000 per taxpayer!

How do we repay such a debt burden? Well, I have good news and bad news. Let’s start with the good news. Individuals who are age 50 or older may not see a significant change in their share of the indebtedness or reduction in their lifestyle due to draconian income tax rates imposed on their earnings. The bad news is that our children and grandchildren will be carrying a heavy burden during their lifetimes to pay for our current overspending.

But, wait, there are other means of resolving our colossal debt balance. One of the most painful would be to cut government spending. Have you ever been given something and had it taken away once you were getting comfortable with its benefits? Not much fun. Cost cutting is one of the most effective yet politically costly methods of resolving our national debt. 

Another painful method to resolving the debt crisis (and that is what we have) is to increase tax rates on taxpayers’ income. At one point in the history of our country, to fund World War II, the top marginal rate for income tax was 94%. I am not advocating we return to such a drastic increase in taxes but paying taxes is a price for living in a civilized society.

Perhaps the most convenient, and difficult, method of paying off the national debt is empowering our economy to grow at a faster rate. There were decades in the United States that our country’s growth rate would average 3% annually. What would happen to our country if we could double our growth rate to 6% for a 5-year period? Full employment and taxes rolling in to the U.S. Treasury at a much higher volume would provide the resources for liquidating the national debt.

To fairly apply these potential pain points, to all citizens, equitably is the most difficult task of any elected official. If we consider the opportunities that we could offer our future citizens by paying off our debt and investing that portion of our annual budget in the areas of technology, infrastructure and job creation that improve quality of life, we could truly increase the lifestyle of all citizens.

Now that you understand “free” stimulus isn’t actually free, how do you feel? My goal was not to bring about negative feelings but rather for all of us to fully acknowledge that my wise, old dad was correct – “there are no free lunches in life, someone is paying for it”. 

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The Millennial Perspective: Workplace Woes

We all face several issues in the workplace at one point or another, but sometimes it feels like millennials get the shortest end of the stick. Lazy. Know-it-all. Entitled. Inexperienced. Job-hopper. These are some of the stereotypes that you may hear uttered about millennials in the workplace. We cannot say for sure why these are the stereotypes assigned to our generation, but we have certainly grown resilient and can roll with the punches. Some may call out those that use their stereotypes and receive, “well, you’re different than other millennials,” but is that really the case?

No two millennials have the same experience, so I reached out to others in my generation to gain their perspective of this ongoing issue. I had many respond with similar, unsurprising answers including a lack of respect from colleagues and being the person that everyone seeks for technology challenges. The lack of respect can stem from many reasons. The most common reason that I have seen is because of our “young age.” Yes, we are young, but I think that the fact that much of our generation is heading into their forties often gets forgotten. Because of this issue, we find ourselves fighting to prove our worth even though we already hold the job. The lack of respect can also come from this idea that millennials are lazy and entitled. However, in reality, many millennials work one or more jobs just to make ends meet due to lower wages, or worked while in school just to pay for school due to higher tuition than the generations before us, two subjects I have covered in previous articles.

When job searching, many millennials come across as inexperienced and unfit on job applications because they recently joined the workforce or they have changed jobs many times. Although, the bulk of our generation has most likely been in the workforce for at least a decade. Some may even argue that recently graduating from college should be sufficient experience to gain entry considering they have the most up-to-date education in terms of technology, techniques, and possibly laws or regulations. This is where we start to get into the know-it-all and job-hopper stereotypes though. As a young girl, I was taught to believe in myself and work hard for what I deserved. If someone feels that they are being treated unfairly because of their young age, despite their true work ethic, why should they continue working for that company? This is where many millennials see stagnation in current work situations and feel that they are being forced to change jobs to improve their standing. The era of companies being loyal to workers and offering pensions, benefits, and achieving middle class status has largely disappeared. It can be a difficult choice to stay with a company when you barely earn enough money to live. This of course, does not apply to all companies. Occasionally millennials will find themselves working with an employer that pays decently, respects their employees, and provides a good working environment, in other words, they put their employees first. This is type of position is practically a “needle in a haystack” in today’s society. Most hard-working millennials will move around because they know that companies would let them go if needed and it is our own responsibility to do what is best for ourselves, especially in today’s turbulent economy.

Millennials feel that the stigma placed upon us, just because of the years in which we were born, should not hold us back from the same opportunities the generations before us experienced. Stereotypes are rarely true for an entire group of people and should certainly not be something that affects someone’s livelihood. Give your millennial employees and job candidates a chance to show you that they can work just as hard as anyone and can bring real value to your teams. You will be glad you did.

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The Millennial Perspective: Office Space Evolution

The traditional office space can be described as a cubicle or office with a desk, chair, and computer. However, the traditional office space has started to evolve for some. If you look at tech companies like Google, their office spaces are far from “traditional.” More and more businesses, especially those that have a large number of millennials on staff, are leaning more towards this open office concept where there are no defined spaces. Instead workers are free to sit where they please and wherever sparks the most motivation and focus. Now in recent times, the office space has once again evolved into something a little more secluded. However, instead of going back to the traditional setting, millennials and many others have found their offices in their own home. 

When COVID-19 made its way to the United States, businesses began shutting down or transitioning to a remote work setting, if possible. Some of us have now found ourselves in a whole new working environment away from our office mates and in the comfort of our own homes. For some this was a welcomed change. For others this change may be less than productive. For myself, I found that I enjoyed working from home. I was more focused on the task at hand and what I needed to get done throughout the day. However, I can’t speak for every millennial in this situation, so I once again reached out to my friends, I asked them if they worked from home due to or before the pandemic. I also asked them if they preferred working from home over a traditional office setting and what they did for a living. I had quite a few friends respond. Some opted to leave their traditional settings to work from home before the pandemic, others decided to start their own business out of their home, but the majority found that this was their new normal as a result of the pandemic.

Many of those commenting found it difficult to deal with balancing and finding the divide between work life and home life. Several of them also mentioned that they got burnt out because of the continued work mode they found themselves in. They missed the face to face interaction with members of their teams and have even found struggles in keeping their team members motivated. Those with children struggle because their kids may not understand the situation completely and required their parent’s attention, although they are attempting to set boundaries to help with this. Some have welcomed the extra time to spend with their significant others and children, but still find that they are getting burnt out. However, despite these challenges they may not want to return to the traditional setting full time even after the pandemic is over. Providing a mixture of remote work and in-office work gives them a chance to avoid burn out on either end and may empower them to stay more focused and motivated. As for their office set up in their homes, they all provided very different answers. Some preferred a private space to make it feel less like home. Others created an office space where they could still interact with their families while others had a space designated for their home office but wouldn’t consider it a “formal” office space. No matter what setting you prefer or what generation you belong to, I feel that we are all facing challenges with our office settings these days while trying to figure out what the new normal will be going forward.

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A Brighter Day Is Coming

The pandemic initiated a change in our community that has brought momentous and abrupt disruption to life as we know, or knew, it. I can remember the simple task of driving to one of my favorite restaurants, sitting down and enjoying a great meal. I fondly recall the waitstaff and their smiles while they served me multiple glasses of sweet tea… Oh! I think I was dreaming just now.

Good news for everyone reading this column – life will return to normal soon. But what does “normal” mean? This simple term once understood by all of us will be redefined in the near future. As the government mandates guidelines to safely open our communities, states and nation, there comes to mind the one variable that can’t, or won’t, be controlled by an edict – our citizens. Will we have the confidence to sit in a crowded restaurant or enjoy a theatre without the somber thought of illness lurking in our memory? I say YES!

One of the most important lessons to learn about capitalism is that this form of an economy works when transactions are being negotiated and labor performed. While businesses continue to define their approach to safely returning to their pre-pandemic routines and functions, a product must be created and sold to a buyer that is willing to part with an asset, their hard-earned cash.

I predict, with great confidence, that our country will return to its former greatness as the world’s best economy. The question as to how long this process will take is the difficult one. To make progress in opening our economy you should remember the traits of our grand tradition. Think about the five characteristics of capitalism: 1) economic freedom; 2) voluntary exchange; 3) private property rights; 4) profit motive and 5) competition. 

Economic freedom is the primary driver of entrepreneurism. We have choices in how we wish to live our lives. “The harder I work, the luckier I get” is often quoted as the basis for the American Dream. Each of us can control our destiny but it takes hard work, dedication and a willingness to accept risk. Currently, our economy is suffering due to a lack of activity caused by an invisible creation of risk. However, we will return to a vibrant economy because of the love of freedom by men like Alexander Graham Bell who desired to speak with others across miles of terrain, Thomas Edison whose inquisitive mind desiderated to light the world with the flip of a switch and Benjamin Franklin who curiously sought to understand electricity and its effects on tangible objects. These men were considered pioneers of their day. Laughed at and mocked by the citizenry because of their unique and unorthodox attempts to conquer unknown areas of life only to see themselves ordained as great men of invention when the world gasped at the benefits afforded our civilization by their creations.

The characteristic of our capitalistic economy that has been the basis for commerce, since the days of pharaoh, is profit motive. In marketplaces across the globe, people gathered to exchange goods and services for the sole purpose of creating income and lifestyle for themselves. In the modern era we continue to seek a profit on the goods we create and sell while retaining the control of our own destinies. It is important to note that our economy is based on this premise and this one characteristic will be the hinge in which our country swings forward from this pandemic.

To truly bring our economy back to the state we appreciated before COVID-19, we must embrace competition. In our state, our primary source of revenues was gross production taxes from oil and gas drilling activities. We are a resilient people that have experienced this type of contraction in our state economy many times before. To revitalize our economy, we must initiate action and take ourselves to the marketplace. I am not telling you to spend your money, I am asking you to invest in the future of our state. Not only do we require investment from private individuals to resuscitate our economy, we must establish an efficient transaction base for the free exchange of ideas and goods. Today is the day to bring a concerted effort of our citizens to the capitalistic economy. To do so in a safe, yet productive, manner would be a catalyst to bringing back the days we so flippantly took for granted prior to the pandemic. Just look overhead, the sun is rising on a new day in the land of paradise that I affectionately refer to as the “Greatest State in the Union”, my home, Oklahoma!

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The Millennial Perspective: Handling the Weight of Stress

Stress. What does this word mean to a millennial? A lot of the time it could be the large sum of student loan debt hanging over our head, saving for our future, finishing a degree, the list goes on. What it really feels like to most of us is a weight on our shoulders that can be hard to shake off. So, how do we handle this weight when it becomes too heavy to bear? As it turns out, there are many ways the millennial generation copes with stress and anxiety.

I, personally, have my own methods of coping with high amounts of stress and anxiety which usually involve eating a lot of snacks, but I wanted to hear the input of my fellow millennials. Since this could be a more sensitive subject, for those who struggle with depression and anxiety, I asked some of my close friends for their input. Many of them claimed playing video games and binge-watching shows, or movies, were a good way to wind down from stress. However, in those higher stress moments where the world feels like it is closing in on them, many turn to proven strategies to help center their mind. In light of recent events caused by COVID-19, finding peace in a disrupted world has been something a lot of us have had to work on. This could be focusing on that single task to distract the mind, such as cleaning, shopping or reading. Many said they make lists of the things they can control to help them get a better handle on what is going on around them. Others seek help from a therapist to talk through their stress. Some said they just cry it out rather than letting their stress build up inside to a point beyond control. Meditation was another tool many used to help ease their mind of stress and anxiety or read something that is similar to a mantra. The last two strategies are interesting and something that I think may be worth trying. Centering your mind to gain perspective is a highly successful strategy for some individuals.

Because of findings, I pursued a lengthy discussion on meditation with a friend. She mentioned that she uses an app called, “Calm”. This app provides guided meditations as well as tips and tricks about how to incorporate meditation into your daily routine. There are similar apps out there as well. Taking time to meditate, in some capacity, on a daily basis can help start and end the day on a positive note. Meditation can also make you more aware that although anxiety and stress are present, our reactions to it may be controllable. People experience a variety of reactions to stress. To put it simply, some people react to situations better than others by approaching stressful situations and anxiety with a different mentality.

There is a concept called “spheres of influence” that is present in some stress-management methods. To briefly describe this concept, there are things you have absolute control over which is called, “The Self”. Things you have limited control over called “Influence”. Lastly, the things you have no control over are grouped as “Everything Else”. 

To place this concept in perspective during the COVID-19 pandemic, consider the following:

  • Self: We as individuals have control over what we do during the pandemic. We can decide to go to the store, or do delivery or pick-up, decide to go to restaurants, decide to exercise, etc. Factors that we can control, we should. We can decrease our stress levels by ensuring we are utilizing good behaviors to keep us as safe as possible. 
  • Influence: The next sphere contains life areas over which we have some or limited control. This may include family members’ decisions during the pandemic. Yes, you can give advice but you cannot decide for them what they can do. Therefore, it is not helpful to devote time to these activities that cause you stress.
  • Everything Else: The final area. This includes the governmental decisions affecting health, safety and the economy. We have very little direct control over these areas on a global basis. It is best not to fixate on these areas of life because it lowers our feeling of comfort and increases our stress level. Focus on what you can affect, not what you can’t.

No matter the method of controlling your stress levels, whether millennial or older, it is important to keep the majority of your focus on yourself and those things you can control. Expend very little, if any, energy on the things you cannot. 

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Relief is on the Way!

These are truly unprecedented times for us as Americans! As businesses deal with the disruption, the U.S. Treasury has designed a few programs to help our citizens with relief. This article will be part one of a two-part series on the various methods and programs for individuals and businesses to seek relief. We will focus on individual relief provisions in this first article.

No doubt that you have heard many acronyms and strange titles assigned to laws passed by Congress but this one may be the most unique. CARES Act is the short name for the Caronavirus Aid, Relief and Economic Security Act. Whew! That is a mouthful. The primary purpose of this bill is to enhance our economy by infusing capital into the hands of citizens and businesses to continue to weather this difficulty. President Trump signed the bill into law on March 27, 2020.

Many of you will be receiving a stimulus check in the amount of $1,200 for each individual and $500 for each child under the age of 17. To receive these funds, you must have filed a tax return for 2018. If you haven’t filed a return for 2018, it is highly recommended that you do so promptly to qualify for this nontaxable benefit payment. For those who filed their 2019 returns before the pandemic worsened in the United States, your 2019 return will be utilized for purposes of qualifying for the stimulus benefit payment.

To qualify for the $1,200 payment, a phase-out, or disqualifying level of income is between $75,000 to $99,000 as an individual or $150,000 to $198,000 as a joint filer. If you did not file a return for 2018 because your income was lower than the filing requirement and you are a Social Security Benefits beneficiary, you will not need to file any returns and the information from SSA will be used to determine your benefit payment qualifications. Many questions exist about the qualifications of the recipients’ income in 2020, which is the year the stimulus payment is received. As an experienced CPA with a Masters in Tax, I expect those individuals that received the stimulus payment based on income reported in 2018, in other words have not filed their 2019 returns, and exceed the income limits for 2020, will not be required to repay the compulsory stimulus payments. We will continue to monitor IRS guidance on this issue.

Typically, a taxpayer would be required to report distributions from an employer retirement plan when received with the resulting tax and premature distribution penalty, if applicable, assessed on their income tax returns. However, for those individuals diagnosed with COVID-19, who receive a distribution from their 401(k)-plan account, the 10% penalty is waived on early withdrawals up to $100,000. The withdrawal will be taxable but the tax associated with the withdrawal will be spread over a three-year period. 

If you own an IRA and were subject to required minimum distributions, you may elect forgo your distribution for 2020 and not be subject to a penalty. This waiver applies even if you were not impacted by the pandemic. This is an excellent planning point and may save retirees unnecessary income taxes at a time our economy is in recovery.

Charities have been stricken particularly hard during this economic halt experienced in our country. To address the issue of revenue loss for these types of organizations, Congress included a provision in the bill that allows individuals to deduct “above-the-line” contribution of a total $300 or less made to qualified charities. To determine the qualified status of a charity, you may find the list of approved charities at the IRS website (irs.gov).

For those individuals who claim itemized deductions on their returns, the limitations for qualified charitable contributions has been increased to allow unlimited deductions in individuals. Another income tax planning point would be to consider charitable contributions more earnestly in 2020 than prior years. You may experience considerable tax savings!

It is critical that you be proactive in the process for applying for additional aid, if needed. This is the time to reach out to your neighbors and check on the welfare of the more senior members of our community. Many families may weather the financial storm but the emotional toll of self-isolation and social distancing may be far worse. Send a note to a friend, place a call to a neighbor for no other reason than sharing a discussion about something positive. This is what makes our nation so exceptional – caring for those who may be suffering worse than you.

Be safe and stay well. We will get through this challenge and become a better community in the process. 

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Perspective is the Key

These truly are challenging times for everyone! One of the most important actions you can take as you consider the current impact on your life is to remain calm. Sure. You have heard everyone tell you to be calm but it is one of the most important foundations of thinking clearly about situations in which you have not control to change.

On February 19, 2020, our economy began a slow down that quickly picked up speed causing a (18.21%) return year-to-date through March 26, 2020. To many of us this precipitous drop in the broad index was felt like an earthquake to our retirement accounts! This is where investors, particular those retiring in the next two years, must find a place of perspective. 

Lets painfully look back to the market turbulence of the last major correction and reflect on the perspective gained from that period compared to today. In 2008, the S&P 500 fell (37.00%) within a period of ten weeks. Comparing the two periods of negative returns in the index gives us a moment of relief. 

When advising our clients to take certain actions to protect their retirement assets, we believe simple steps can be implemented that will yield significant results. The first step is your mindset about investing. Many investors believed the long bull run markets could provide significant returns on their investments but got caught with too much exposure in their portfolios. You should act on those activities you can control – diversification, quality of the investments, timing for retirement election and establishing a level of risk that allows you to sleep at night. 

One of the most important steps of our proprietary process for guiding clients through retirement is to assess their true feelings about risk. The second step is to determine what their ultimate objectives for their investments will be. With these two factors we can develop a portfolio of long-term perspective that considers market contractions and expansions without compromising the investor’s time of retirement.

I have visited with individuals who were surprised by the recent market contraction and will now postpone their retirement plans. This is not the way they wanted to start their next phase of life. Take steps today to seek out the opinion of a specialist in retirement planning to give you confidence that your plan can weather any financial storm you may face. Perspective is the key to success! Are you sleeping well? 

Here is the secret formula to sleeping well tonight: This too will pass. If you are age 50 and above, this is not your first experience with market contractions. Through some miracle, you have survived many market contractions dating back to the 70’s and 80’s. The difference among these markets is that you most likely have more invested at this stage of life than you did in your teens and twenties. More at risk, the more you are concerned about risk. Tomorrow is a new day. Live your life abundantly for today.

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