19Jun
Did You Know about This New Charitable Deduction?
Retirement

Pet therapy for children and the elderly is now considered a charitable purpose by the IRA’s standards.  An organization that has others take their therapy dogs on visits to hospitals and nursing homes at no cost to the patient or facility, now qualifies for tax exemption as a 501 (c)(3) charity.  These pet therapy sessions are intended to improve the well-being of patients, lessen distress and encourage socialization.  Donors can now deduct contributions made to the group.

(Source: The Kiplinger Tax Letter May 19, 2017)

In the same Kiplinger Tax Letter, Knight Kiplinger suggests that things are looking up for the housing market.  As home prices rise, underwater mortgages are falling steadily.  Currently 10% of homeowners owe more on their mortgages than their homes are worth, however this statistic is projected to be 8% by year-end and even fewer next year.  Having fewer folks upside-down on loans means more homes hitting the market.

And finally, Kiplinger warns us to expect more destructive cyberattacks to strike in the coming months.  Recent U.S. intelligence agencies data breaches have exposed hidden security flaws to criminals and other nations.

Microsoft urges Uncle Sam to quickly reveal such security holes so they can be covered.

Although future attacks will be more difficult to stop as malware becomes more sophisticated, there are ways to help fend off hackers.

  • Spend money on anti-virus / anti-malware software and keep it up-to-date with virus definitions
  • Install software updates often and quickly to plug security holes – especially on your operating system such as Microsoft Windows.
  • Back up data regularly with an external remote local hard drive.  Keep it disconnected from your computer between back ups.  Also take advantage of web-based back up storage.
  • Don’t click on suspicious email hyperlinks or unknown attachments without proper vetting.

Your Resonate team continues to increase our security measures on a regular basis.  For example, our broker-dealer, Valmark Securities requires all Resonate employees to undergo ongoing cybersecurity training.  We also back up our files daily.

Of course, we still know that hackers continue to increase their sophistication as well.

As always, we would love to hear from you.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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09Jun
What is Really Going On with Health Care Reform?
Health Care Costs

Knight Kiplinger shares some interesting information in the May 19 Kiplinger Letter and Kiplinger Tax Letter:

Kiplinger does not believe we should expect quick resolution on replacing Obamacare in the Senate.  GOPers are setting aside the controversial House bill and starting over.  He believes there are great problems in this effort: Senators will have to deal with arcane procedural rules to get a bill passed by a simple majority.  This will involve scaling down the bill, with a result unlikely to satisfy House conservatives. Congress will be bogged down with the controversy over Trump’s firing of the FBI director, therefore passing a major bill in such an inflamed environment will be tough.  Overall, a signed bill is a long way off and any final legislation will look significantly different from the House version.

Next, Kiplinger predicts the annual ceiling on deductible payins to Health Savings Accounts (HSAs) will increase in 2018 to $3,450 for account owners with individual coverage and to $6,900 for those with family coverage.  Those born prior to 1964 can put in an additional $1,000.

Limits on out-of-pocket costs, such as deductibles and copayments, will increase to $13,300 for those with family coverage and to $6,650 for self-only coverage.

Minimum policy deductibles will increase to $2,700 for families and $1,350 for singles.  Proposed changes include the ceiling on deductible contributions nearly doubling, HSA funds being able to be used for the purchase of over-the-counter medicines and the fine for payouts made for nonmedical costs being cut in half.

If you, or someone you know needs it, Resonate can provide excellent independent references for navigating the multitude of health insurance choices.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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31May
Six of the Most Overlooked Tax Deductions
Taxes

  1. Student Loan Interest paid by mom and dad:  If parents pay back the child’s student loans, the IRS treats the transactions as if the money were given to the child, who then paid the debt.  So as long as the child is no longer claimed as a dependent, he or she can deduct up to $2500 of student loan interest paid by mom and dad each year.  And the student does not have to itemize to use this money saver.

(Please note that mom and dad cannot claim the interest deduction, even though they pay the bill, because they are not actually liable for the debt.)

2. State Sales Tax:  Many of our clients live in states that do not impose a state income tax.  Congress offers item misers the choice between deducting the state income taxes or state sales taxes they paid.  You choose whichever saves you more money.  So if your state does not have an income tax, the sales tax write off is clearly the way to go.

3. Out-of-pocket charitable deductions:  Like many of you, Resonate is absolutely committed to both corporate and personal philanthropy.  “Little things” that we do can often go unnoticed.  For example, if you prepare a casserole or dessert for your church potluck, provide food for a not- for- profit soup kitchen, contribute stamps for a school’s fundraising mailing, or have other out-of-pocket costs incurred while doings good work for charity, keep your receipts.  These “little things” actually qualify as charitable income tax deductions.  (If your contributions total more than $250, you’ll also need an acknowledgment from the charity documenting the support that you provided.)

Also remember that you can deduct $0.14 per mile plus parking and tolls paid for any philanthropic/volunteer work.

4. Deduction of Medicare Premiums for the Self-Employed:  This deduction is available whether or not you itemize.  Further, it is not subject to the 10% adjusted gross income test that applies to itemized medical expenses for those 65 and older (changed from 7.5% as of 1-1-17).  So, if you continue to run your own business after qualifying for Medicare, you can deduct the premiums for Medicare part B and part D plus the cost of supplemental Medicare policies or the cost of a Medicare advantage plan.

5. Reinvested Dividends:  Many of our investors choose to automatically reinvest their dividends, so that they can purchase extra shares.  Remember that each reinvestment increases your cost basis – just as if you had written a check yourself.  When you decide to sell some shares, it is very important to be sure to include the value of your reinvested dividends in your cost basis.

6. Refinancing points:  Most people know that you get to deduct the points paid to get your first mortgage in a lump sum.

When you refinance, though, you have to deduct the points on the new loan over the life of that loan.  That means if you take out a 30 year mortgage, you can deduct 1/30th of the points per year.

If you happen to sell the house or refinance before the existing mortgage is paid off, then you can deduct all of the as yet un-deducted points in a lump sum.

Beware: if you refinance a refinance loan with the same lender, then you have to go back to deducting points gradually over the life of the new loan.

(Please note that, while we are not accountants and cannot provide tax advice, we do work cooperatively with very qualified accountants.  The information that we will share is available to the general public and should not be construed as giving income tax advice.  We are simply providing it as a value-added service to our clients, their friends and family.)  Credit to Kiplinger’s, 2017

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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24May
What the Worldwide Aging Population Means for Women: Part 3
Health Care Costs

The first two parts of this blog provided the information supporting the fact that women face an unfair disadvantage in terms of planning for a successful retirement.

If you’ve not yet read parts one and two of this blog, please take a few moments to do so.

Here are the action steps that women can take to help prepare themselves for healthcare and retirement costs.

  1. Tell your story and expect to be heard and honored. You and your planning needs are unique.  You deserve the opportunity to “share your story as well as your hopes, fears and dreams”.

Regardless of your current life experience and financial knowledge, you deserve to be listened to without judgment.

You deserve to have all of your questions answered honestly and completely.

You deserve transparency around fees, commissions, and any other form of advisor compensation.

  1. Create a plan and follow it. Again, this is “your plan”.  It needs to be designed specifically for you to get you from “where you are to where you want to be”.
  1. Invest with appropriate risk level. Again, your investment portfolio needs to be designed specifically for you and what it is you want to accomplish.
  1. If you are of a pre-retirement age, be prepared to save aggressively to meet your goals.
  1. If you are already retired, then the allocation of your investment portfolio may be even more critical because you may no longer have the capacity to continue to save to reach your retirement goals.
  1. Be sure you understand how programs such as Social Security, Medicare, and employer-sponsored retirement plans can best be coordinated for maximum results.
  1. Consider products such as life insurance with long-term care riders, products that are designed to create guaranteed lifetime income in retirement, products that are designed to create income tax savings, and anything else that may be appropriate to help you reach financial peace of mind.
  1. Once your plan is in place, be sure to continue with annual conversations with your team of advisors.

As you can see, planning done well is complex and involves the integration of both programs, products and planning.

Do you remember the old Greyhound bus slogan, “Go Greyhound and Leave the Driving to Us”? 

It is suggested that the new slogan might be “Keep Texting and Leave the Driving to Us!”

Whether you find yourself familiar with the first slogan or relate more to the new slogan, we invite you to a conversation at Resonate.  Regardless of your age, our motto is to help you define and discover what Richness of Life means to you.  Then, it is our job to help create the pathway for you to experience this desired destination.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

 

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19May
What the Worldwide Aging Population Means for Women: Part 2
Health Care Costs

In the first part of this three-part blog, we talked about why the U.S. demographics of an aging society present more of a challenge for women than for men.

Here are some additional thoughts for your consideration:

In part one, we suggested that the fact that women still tend to outlive men by 3 to 5 years definitely contributes to the financial challenges that women face in retirement.

Here is a chart that supports that information:

The second reason that women face an uneven challenge is because we still experience a disadvantage in the work place.  In addition to the fact that women are still more likely than men to leave the workforce intermittently, we also know that women are more likely to hold lower- wage and part-time jobs, both of which are detrimental to funding future retirement.

So what can women do about this?  That will be the focus of part three in this series.

If you’ve already read enough, please contact us now.  Otherwise, please be sure to read part three.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

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11May
What the Worldwide Aging Population Means for Women: Part 1
Health Care Costs

In his annual letter to shareholders, BlackRock’s Larry Fink shares these thoughts on April 10, 2017.

“The graying of the population in developed countries is without precedent in human history.

While most developing countries outside of China can look forward to a demographic tailwind for many years, developed countries are rapidly aging.”

 

 

(1)

“According to estimates by the United Nations between 2015 and 2030, the number of people in the world aged 60 years or over is projected to grow by 56%, from 901 million to 1.4 billion.  The number of people aged 80 years or over, the “oldest old” persons, is growing even faster. Projections indicate that in 2050 the oldest old will number 434 million, having more than tripled in number since 2015, when there were 125 million people over age 80.”

If you happen to be female, the situation is even worse.  For decades to come, women’s life expectancy on average will continue to be 3 to 5 years longer than that for men.  This results in higher healthcare expenses in addition to coping with inflation for a longer period of time. (2)

If you are age 50+ and in relatively good health, please do not wait any longer to contact us!

We will work with you to determine what you need in the way of income and assets to help assure a successful retirement.  Then, we will work with you to create a plan to fulfill that goal.

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

 

Source:
(1) World Bank
(2) “Missed Opportunities” by Sue Watt, Morningstar April/May 2017
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09May
Why Might I Want to Invest in Emerging Markets – 2 of 2
Economy

(Nothing I write is to be construed as a recommendation to buy or sell.  This blog is intended for informational use only.  I give full credit to Krishna Momani, Chief Investment Officer of the Oppenheimer Funds, for the information in this blog).

If you missed Part One of this blog, may I encourage you to read it before Part Two?

As you will see in the following chart, growth rates in many of the largest emerging market economies have stabilized and are now trending higher, commodity prices have bottomed, and currencies have steadied, bringing inflationary pressures under control.

Next, as you will see in the following chart, China is successfully transitioning from a manufacturing economy to a service-oriented economy.

The cyclical emerging market economic backdrop combined with still-relatively cheap valuations suggest that emerging market equities are poised to outperform the developed world over the next market cycle.

If you have questions or interest in learning more, I’d love to share a conversation with you!

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

Source of charts: OppenheimerFunds, “The Case for Emerging Markets”, Krishna Memani, CIO
Disclosure:  These views represent the opinions of OppenheimerFunds, Inc. and are not intended as advice or to predict or depict the performance of any investment.  These views are as of the close of business on March 31, 2017, and are subject to change based on subsequent developments.  Equities are subject to market risk and volatility; they may gain or lose value.  Fixed-income investing entails credit and interest rate risks. Bonds are exposed to credit and interest rate risk.  When interest rates rise, bond prices generally fall, and a fund’s share prices can fall.  Investments in securities of growth companies may be especially volatile. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes and geopolitical risks.  Emerging and developing markets may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues.  The mention of specific countries, regions, or sectors does not constitute a recommendation by any particular fund or by OppenheimerFunds, Inc.
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01May
Why Might I Want to Invest in Emerging Markets – 1 of 2
Economy

While there is certainly not a “one-size fits all” answer to this question, I wanted to include some interesting information on emerging markets.

This is a two-part blog.  My goal in writing it is to blend some history of emerging markets with current trends, which I hope you find interesting.

(Please note that nothing in this blog is intended as a recommendation to buy or sell anything.  It is meant to be purely informational.)

Krishna Momani, the Chief Investment Officer of the Oppenheimer Funds, writes:

“In the first 13 years of this century, emerging market equities outperformed U.S. equities by over 7% per year.  That’s almost 200% of cumulative outperformance.”

“The following three years were not as kind to emerging market investors.  Emerging market assets suffered from a series of macro headwinds including weaker global growth, sharp declines in emerging market exports, a collapse in commodity prices, falling currencies, rising inflation, and capital flight as U.S. monetary policy conditions normalized.”

Emerging Markets Had Been Underperforming Since 2013

Prior to 2017, emerging market equities experienced a prolonged period of underperformance relative to developed market equities.  A confluence of factors weighed on emerging market performance including weaker global demand for exports, a slowdown in Chinese growth, the end of the multi-year commodity and credit-driven boom, and tighter U.S. monetary policy.

In particular, the onset of monetary normalization in the United States, beginning in earnest with the tapering of U.S. Federal Reserve (Fed) asset purchases in 2013 and continuing with the first Fed interest rate hike in December 2015, resulted in a massive flight of capital out of the emerging markets and into U.S. dollar-denominated assets.

The tide now appears to be turning.  The cyclical case for emerging market equities is supported by the following:

  1. Economic growth is improving (in some instances, such as in Russia and Brazil, off of
    recession lows) and exceeding expectations.
  1. Inflation has fallen rapidly. Real interest rates are now positive in emerging markets,
    suggesting that this time modest U.S. interest rate hikes will not result in significant capital
    In addition, policymakers are better positioned to support economic growth.
  1. Emerging market equities are trading at attractive valuations compared to developed
    market equities.
  1. The U.S. dollar is unlikely to be a headwind for U.S.-domiciled international investors.
    Many of the emerging market currencies are already trading at steep discounts.
  1. The likelihood that a series of Fed rate hikes will derail the nascent emerging markets economic recovery is small.

While “they may be down,” Momani encourages us to not count emerging markets as “out”.  I’ll discuss the reasons for this in Part Two.

If you would like to talk about anything in this blog, I’d love to share a conversation with you.

 

Barbara A. Culver
CFP®, ChFC®, CLU, AEP®
Resonate, Inc.
(513) 605-2500

 

 

Source of charts: OppenheimerFunds, “The Case for Emerging Markets”, Krishna Memani, CIO

Disclosure:  These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment.  These views are as of the close of business on March 31, 2017, and are subject to change based on subsequent developments.

Equities are subject to market risk and volatility; they may gain or lose value.  Fixed-income investing entails credit and interest rate risks.  Bonds are exposed to credit and interest rate risk.  When interest rates rise, bond prices generally fall, and a fund’s share prices can fall.  Investments in securities of growth companies may be especially volatile.  Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes and geopolitical risks.  Emerging and developing markets may be especially volatile.  Eurozone investments may be subject to volatility and liquidity issues.  The mention of specific countries, regions, or sectors does not constitute a recommendation by any particular fund or by OppenheimerFunds, Inc.

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21Apr
What Is Reflation and How Does It Impact Me?
Economy
Reflation is a fiscal or monetary policy which is designed to expand a country’s output and curb the effects of deflation.  We are currently experiencing reflation policies in the United States which include a move to reduce taxes in an attempt to stimulate the economy.

(The balance of this blog is meant to be informational only.  Nothing is to be taken as a recommendation to buy or sell any particular investment positions.)

As the following chart indicates, the 10-year government bond yields are beginning to recover from a period of decline, which has lasted from 1983 until recently.

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14Apr
What Makes Women Breadwinners Different?
Investing
Part Three of a Three-Part series

If you have not read the first blog in this three-part series, “An Overdue Apology to Women”, dated April 7, you might find it helpful because it is applicable to this blog as well.

The first piece focused on how women clients are often discounted in the relationship with the financial advisor.  It resulted in my apologizing on behalf of the industry to anyone who has experienced this type of discriminatory treatment.

The second part in this series centered on how single women are often victims of “product-pushers” as opposed to professional advisors who are also fiduciaries.  See previous blog titled: “Are You Ready for Disturbing Survey Results about Single Women and Financial Advisors?”

This third part in the Women’s Series shares some important information on women breadwinners.

Who qualifies as a woman breadwinner?  Anyone who earns at least one-half of the household income and is also involved in the financial decisions.

Often, these professional women hold positions in middle management through executive positions.

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