Money and Relationships: There’s No One-Size-Fits-All Solution

Money tends to be a taboo subject regardless of where you are in life. But it can become a much more complex issue when you’re in a serious relationship. It’s not just about deciding whether to “go Dutch” and splitting the bill every time you go out to dinner, it’s about learning how to make financial decisions together. It also involves much larger topics such as power, trust and many more. Like most things in life, not every relationship is the same and not every couple will have the same money rules.

Issues of income or expense inequality can lead to conflict

  • Guilt or resentment – When one partner feels they’re not paying their fair share it can create emotional tension. However, there may be true income inequality. The median household income in America in 2019 was about $68,700 – income from wages, investments and benefits – and in many cases the income between couples wasn’t 50/50. Some may feel resentment of helping keep the others afloat by keeping a job they disliked, an inflated mortgage, or the like.
  • Money infidelity – Hiding spending can occur when the partner earning less wants to avoid being confronted for “non-essential” spending. Another example is a partner who doesn’t share in the common bills thinking their money is “their money” in a sense of entitlement or hoarding money as a means of security.
  • Power – Does the partner who makes more decide where the family is going for vacation? It might lead to conversations about who controls the financial decisions and why.

Closing the gaps in your relationship: Eliminate finances as a source of conflict

  • Discuss financial decisions together – Money is a leading topic that couples fight about. And at no surprise, because you each have different perspectives and experiences, and money matters can be emotional. Financial matters deserve time at the table. Successful couples have shared objectives, a mutual vision for the future and alignment of priorities and responsibilities.
  • Budget – You can only do two things with money – spend or save – and knowing where your money goes and who pays for what greatly simplifies the puzzle. It’s good to have my, your and our accounts. However, joint accounts are where two become one, things become much more transparent and you have a backup plan – each other!
  • Non-financial contributions – Recognize that you each bring contributions to the relationship. Housekeeping, childcare, landscaping and caregiving are valuable services.

Where inequality is OK – Things don’t always have to be “equal,” but they should be “fair”

  • Separate assets and accounts – Reasons to keep things separate could include not being married, legal issues, and inheritances. For example, one partner might own the home and pay the mortgage and the other pays rent.
  • Blended families – This can occur when one or both partners have children from a previous relationship. More significant estate planning may be needed if you wish to protect the interest of your children rather than simply naming your significant other as the beneficiary of an asset.
  • Different life expectancies – Having life expectancy stamped on our foreheads would greatly simplify financial planning. But life is meant to be interesting and sometimes a couple has a significant age difference and one may outlive the other by ten or more years. They may retire the same time or stagger retirement. Or if they’re both eligible for pension benefits, the older person might elect a 50% joint and survivor benefit option and the younger one a single life payout.

Cultivating solid relationships takes time and effort. Communication can be awkward, but it’s necessary. Discuss your money matters in a safe space where both partners are heard, follow sage advice and secure your future wisely.

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Spring Clean Your Finances

The traditional ritual of spring cleaning can take on a new meaning this year. Just as your home doesn’t declutter itself, your finances don’t either. Northwest Mutual, an American financial institution, commissions an annual survey to explore Americans’ attitudes and behaviors around money and personal finances. Even prior to the pandemic, they found about one in three households was within three missed paychecks of borrowing money or skipping bill payments. I share this to remind you not to wait too long before breaking out your financial dustpan and getting things cleaned up.

Here are six tips to discuss with your family and financial advisor as you spring clean your financial house:

  1. Realign your financial and investment plans. Changes in your situation, goals and outlooks may require financial plan updates. And investment plan changes may be prudent from shifting investment, tax and policy landscapes. Lower expected returns and heightened volatility may warrant diversification into foreign investments, small or mid-caps, “value,” and adjusting for higher interest rates and potential inflation.
  2. Increase your income and savings. Easier said than done, but you can make plans for growth. Higher incomes come from job skill enhancement, training, education, and side hustles. And no fancy investment strategy will offset inadequate savings. Revisit your budget and find additional savings. And if you refinanced your mortgage, think twice about plowing the savings into a new truck or kitchen. The average refinance generated a $400 per month savings. Investing that for 30 years at 6% return would accumulate to about $404,000 which is equivalent to about $16,000 a year in retirement.
  3. Get your risk tolerance right. Risk tolerance is a nebulous term, is hard to measure and changes over time. What is important is how you are going to react when the next market meltdown occurs. Can you stay the course? Now’s the time to adjust when the markets are up rather than trying to switch horses midstream.
  4. Check your insurance. Do you have sufficient coverage and is it competitively priced? Your house value and net worth may have risen. Are your homeowner’s and umbrella liability policies due for a review? Are you and your family adequately covered for life and disability insurance? What about health insurance? Talk to your agent and get competitive bids.
  5. Update your estate plan. Changes in your health, family and financial conditions warrant reviews and updates of estate plans, trustee designations, powers of attorney to name a few. Are beneficiary designations up to date and living trusts funded? Would it be more tax-efficient to name your charities as beneficiaries of your IRAs and leave your home to your kids with its stepped-up cost basis (if tax laws remain)?
  6. Prepare to withdraw from 529 plans. Congratulations if you have a kid or grandkid graduating this spring, and better yet if you had a dedicated savings plan. Requesting checks is a little like retirement where you get to enjoy the fruits of your labor and dedicated savings. Maybe ask the young graduate to show you a copy of the receipts and their grade reports if they expect to see more checks.

The important things in life don’t often come without a little work. Your financial house doesn’t have to be spotless, but planning and assistance go a long way in getting things in order. May you secure your future wisely and have sage advice.

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American Rescue Plan Act of 2021: What You Need To Know

The $1.9 trillion American Rescue Plan Act of 2021 was recently signed by President Biden. Federal aid for the health and economic crisis now tops a record $6 trillion in the form of fiscal and monetary support and represents about 26 percent of gross domestic product (GDP). This is a brief summary of the new legislation. Some are extensions of last year’s CARES Act and some reflect changes in the tax law that should be discussed with your tax advisor. If you filed your 2020 return early, you might want to discuss filing an amended return. And as with any new legislation, patience is warranted. Additional planning issues and opportunities may emerge as the Act is studied and clarified.

About a quarter of the bill was focused on four elements – expanding vaccinations, containing the pandemic, reopening schools and extending unemployment benefits. A little over half was for state and local aid, broad rebates for many households, and other long-standing priorities. And the balance reflected a combination of tax and spending policies.

$1,400 Stimulus Checks

Third round of checks will be distributed to adults and dependents for people making under $75,000 ($150,000 for couples) and it’s estimated that 280 million people would receive full or partial payments. However, this round contains more restrictive cutoffs – there will be no checks for those with Adjusted Gross Income (AGI) over $80,000 (individuals) or $160,000 (couples).

Extended Unemployment

Pandemic benefits of up to $300 a week are extended to September 6, 2021. The first $10,200 in benefits for 2020 is tax-exempt for families making $150,000 or less. And the Feds will subsidize COBRA health benefits through the end of this September.

Child Tax Credit

There’s a one-year expansion to $3,000 (from $2,000) for kids age 6 – 17 and to $3,600 for kids under 6. The AGI limits are $150,000 (couples) and $112,500 (single parents).

State and Local Governments

$350 billion in aid to cities, States, Tribal governments and U.S. Territories.

Schools and Childcare Block Grants

$130 billion for K-12 education, $40 billion for colleges for emergency student financial aid grants, $40 billion for childcare providers through the block grant program and $1 billion for Head Start.

Pandemic Response

$50 billion for COVID testing and contact tracing, $19 billion for public health workforce expansion and $16 billion for vaccine distribution.

Help for Businesses

$25 billion for pandemic assistance grants for bars and restaurants and an additional $7.25 billion into the Paycheck Protection Program (PPP). Hurry up because the PPP application deadline is the end of this month. A significant provision is the extension of the Employee Retention Credit through the end of this year – review the interplay between ERC and PPP with your CPA.

Federal Moratoriums Remain

These remain for evictions and foreclosures until the end of this month. However, they expanded housing assistance by about $32 billion.

Student Loan Forgiveness

While they didn’t forgive student loans, there is a provision that any student loan forgiveness passed between 12/20/2020 and 1/1/2026 will be tax-free. Normally, loan forgiveness is taxable income.

A global pandemic, shutdowns, new policies, and the reactions to all are good reminders that financial planning is a work in progress. May you secure your future wisely and always have sage advice.

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Reduce the Surprise on Tax Day

Are you the type of person who likes to be surprised? How about when it comes to your tax return? It’s that time of year when Americans turn their focus to their taxes. For those of you that like to plan ahead, I’d like to share some tips for filing your taxes and smart uses of your tax refund.

Tax Filing Tips

  • Consult financial professionals when making important decisions such as selling or purchasing a house, business expansion or adding a partner, or a change in your family. On that note, be sure to hug your CPA or tax preparer. Their job, which is helping you pay the minimum tax legally required, is made more difficult by a complex tax system and you’re a moving target each year. You’re better off when they are not the last ones to know about material changes in your life.
  • Electronically file and auto-deposit. The average refund this year is about $2,880 (down from $3,125 from last year). Remember, tax refunds are overpayments – not bonuses. Think of them as getting change back for your purchase. You may be reunited with your money faster by choosing direct deposit to your designated account.
  • Update your tax withholding. Tax policy, economic conditions, and the pandemic impact your financial situation. Withholdings and quarterly tax payments help you pay as you go throughout the year. Unfortunately, according to a recent survey by the American Institute of CPAs, less than half (44%) of people say it was their goal to pay close to their actual bill. The remainder purposely over or under-pay. April 15th doesn’t have to be a surprise of an unusually large tax bill or refund.
  • Did you move into the gig economy this past year? Many people found new ways to earn a living in a year of surprise and change. Remember income is taxable and consider making quarterly tax payments.
  • Working from home? You may be entitled to a home office deduction for qualifying self-employed taxpayers and independent contractors. However, if you’ve been blessed (or cursed) to work from home by your employer, you might not be eligible. The Tax Cuts and Jobs Act suspended business use of home deductions through 2025 for employees. This is another technical area to discuss with your CPA.

Smart Uses of Your Tax Refund

  • Increase your ‘Rainy Day’ fund. A good rule of thumb for cash reserves is an amount equal to three to six months’ living expenses – or more if your income significantly fluctuates. Retirees should consider having one to two years of living expenses stashed away in cash. These funds should be safe and earn competitive interest. Talk to your banker and consider online FDIC-insured money market accounts.
  • Reduce your debt. You can only do two things with money – save or spend – so use your debt wisely. Budget to save what is required for you to retire, and it may be well-advised to adopt an aggressive debt reduction plan now to enable you to save in the future. For example, use the refund to pay off an 18%-interest credit card balance. Or use it to pay closing costs if refinancing your home makes sense rather than rolling those costs into the loan amount.
  • Make contributions to your retirement plan. Are you saving enough? Contribution limits to IRAs and 401ks are higher this year ($6,000 plus $1,000 catch-up, and $19,500 plus $6,500 catch-up, respectively). Do you have the option of contributing pre-tax or after-tax (Roth)? Answer is dependent on your future tax brackets. If your rates will be lower in retirement, then taking the deduction now (pre-tax) makes more sense. If not, then consider after-tax Roth contributions. And update your tax withholding accordingly.
  • Invest in yourself. Consider self-improvement for professional or career enhancement or well-being. Ideas include a training or certificate program, a hobby to keep you active and engaged, or a personal trainer or home gym equipment.
  • Roll it to 2021. We do not yet know what the Biden administration tax policy will propose, or Congress will pass. Pay attention and adjust accordingly.

Some surprises in life can be exciting. However, you may prefer to not be surprised by Tax Day or your retirement finances, so it’s best to have a plan. May you secure your future wisely and always have sage advice.

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Sage Advice – Episode 3: Kim Surratt, Surratt Law Practice

Sage Financial Advisors welcomes you to our third episode of Sage Advice, featuring Brian Loy, CFA, CFP of Sage Financial, with Kim Surratt, founder and principal with Surratt Law Practice. This is a fun, informative and thought-provoking session about issues that may arise with family law, such as divorce, adoption or eldercare planning.

Check back regularly for more episodes of Sage Advice.

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8 Important Money Conversations to Have with Your Family

Money can be a taboo topic and uncomfortable for some to talk about. Some fear talking about wealth with their kids may shift their ambitions or values. And talking about money with your parents may be disrespectful or worse, cause them to question your intentions. However, opening the money discussion with family members is becoming more important with the rise of a “sandwich generation,” where people are assisting both their adult children and parents.

Why Have the Conversation?

You can help your children develop a healthy relationship with money. You can foster this by sharing what wealth means to you, its history, why you work hard, and how it shapes your family’s future. For your parents, it can help relieve their financial stress and build peace of mind before a crisis event occurs. Your conversations might focus on their retirement plans, long-term care and wishes for transferring wealth.

Eight Money Conversations You Should Have

  1. Long-term financial goals – New families might be focused on merging finances, saving for a home or general spending habits. Mature families could be focused on where they’re going to live in retirement.
  2. Spending decisions – Raising financially savvy children in a material world can be challenging. You can teach them that money has value – it’s gone once you spend it – just as you teach them good manners. And helping them overcome the apparent “magic” of credit cards by being a good example – not going overboard yourself or giving in to their request for the latest and greatest.
  3. Insurance – Your ability to earn income is one of your major assets and at the same time, your insurance benefits at work may be overlooked. Life and disability insurance provide a safety net. According to Social Security, an estimated one in four 20-year-olds will become disabled before reaching full retirement age.
  4. Marching through tough times – A job loss may be a temporary setback. Instead of announcing the cancelation of Christmas, be upfront with your family. You may be surprised by their support and creativity in cost-cutting measures.
  5. Future of the family business – These are the cornerstone of the global economy, generating an estimated 70% or more of GDP and over half of all jobs. Discuss all sides of the business with your kids so they can rise to become leaders. Encourage them to develop outside skills and expertise. Teach them your values and instill meritocracy.
  6. Long-term care costs – Parents may believe it’ll never happen to them and the kids may assume their folks have got this need covered. But just in case, who will help take care of you and how will those costs be funded?
  7. Naming trustees and powers of attorney – Some avoid these discussions fearing that they are related to mortality. But what if you are incapacitated? Shouldn’t your loved ones know and be prepared that they’ve been designated?
  8. End-of-life wishes – Your loved ones need your help and guidance. Very few of them majored in mind reading. What are your wishes regarding medical care, distribution of wealth and treasured personal belongs, and charitable giving? And remember that fair doesn’t always mean equal.

Three simple “rules” when approaching these conversations:

  • Get on the same page with your spouse
  • Start the conversations early
  • Set the right tone – Speak with them, not to them. Recognize the value your parents place in maintaining their independence, dignity and never being a burden.

Talking about this seemingly taboo topic can be uncomfortable, but valuable to you and your family. May you secure your future wisely and always have sage advice.

This article can also be viewed at the Reno Gazette Journal.

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The GameStop Wild Ride

The GameStop stock surge has taken Wall Street by storm. What Wall Street once derided as ‘dumb money’ (individual investors, or ‘Main Street’) might not be so dumb as ‘smart money’ was taken to the woodshed. Score one for the little guy as a rag-tag group of investors took down at least one hedge fund with GameStop, AMC and other heavy short-sell stocks.

However, there’s a big difference between investing and speculating. It can be fun to take a flyer now and then. Just be careful with your money earmarked for precious goals such as retirement and your kid’s education. This article summarizes what’s going on with the retail investors’ revolt and investor mistakes to avoid.

Modern Day “Trading Places”

Trading Places, a 1983 movie, is about how a snobbish investor, Louis Winthorpe III, and a street con artist, Billy Ray Valentine, get rich while bankrupting the Duke Brothers on the commodities trading floor. Today we have a remake with the roles of Louis and Valentine played by Reddit’s popular forum r/wallstreetbets (WSB), and the Duke Brothers played by hedge funds. The retail investor community at WSB bought stocks that were targeted by short-sellers. GameStop was one of the most prominent stocks with a short interest of 260% (over twice as many shares shorted than those on the market in the first place). Several brokerage firms, including Robinhood, shut down buy orders for GameStop, AMC and others in an effort to limit their own potential losses. That sparked outrage in the retail investment community and got the attention of regulators.

It looks like the little guys beat the big guys. Hedge fund losses on GameStop in January were estimated at $19 billion according to S3 Partners, a New York firm that tracks short positions. And there, new millionaires amongst small investors egged on by social media as GameStop shares soared 1,700%.

However, not all GameStop shareholders will be profitable, nor are they profit-motivated. Shares were most volatile last Thursday – highs of $460 or so, lows $132 or so, and closed around $200. Some traders may have bought at the high and sold at the low for a loss of almost 70%. What’s the value of GameStop once the bubble is gone – more like $20 or lower as the shorts believe. And the stock may be driven by pure emotion from people who were hurt by the 2008 financial crisis, who want to “put it to the man,” and are willing to ride it to the bitter end.

So, here are some tips to consider.

Prudent saving and investing are boring and take hard work. There are no short cuts for the majority of us. And they call it the “Rule of 72” not the “Rule of Two.” It is a method for estimating an investment’s doubling time given a fixed annual rate of return (72 / interest rate = years to double).

Investors can be their own worst enemy. DALBAR Inc., a research firm, has published its annual “Quantitative Analysis of Investor Behavior” report since 1984. They compare the average equity fund investor to the index over the trailing 20 years. The most recent report showed the average investor lagged market indexes (the S&P 500 and a global index) by about 2 to 4% annually.

Strive to achieve investment returns, not investor returns, by avoiding these mistakes:

  •   Greed and panic
  •   Over-confidence
  •   Leverage
  •   Speculation
  •   Concentration – Diversification is the trade-off of never making a killing for the blessing of never getting killed
  •   Market timing – Difficulty in doing two things very well (buy and sell) and things tend to smooth and trend to the average over time
  •   Not having a long-term plan

Small investors have a new power. Hedge funds contemplating to short-sell stocks are likely to rethink that strategy in the face of angry mobs and price spikes. However, as a shortcut to building long-term wealth, be prepared for the risks. Instead, consider limiting your thrills by having stop losses, and dedicate the bulk of your serious money to a diversified portfolio of quality investments that is more capable of riding good times and bad. Secure your future wisely and seek sage advice.

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Should Spouses Retire at the Same Time?

Many couples dream of retiring together to realize long-held plans. They imagine themselves traveling to their bucket list destinations. Others are thrilled to spend their extra time with family and not having to worry about waking up early the next morning for work. They coordinate their exit dates then often retire within a couple of years of each other. However, there are reasons why some couples have asymmetric retirements. Some are involuntary due to factors such as business closures, disability or caregiving for a loved one.

However, there are some general relationship challenges introduced to simultaneous retirement.

Couples don’t always see eye to eye. A Fidelity Couples and Money Survey of more than 1,600 couples revealed that 43% disagree about what age they plan to retire, 54% disagree on how much should be saved by the time they reach retirement age, and 49% say they have ‘no idea’ how much should be saved by retirement age.

Some challenges stem from resentment, differing interests and juggling calendars. Picture a working spouse being greeted at the day’s end by the retired spouse asking, “What’s for dinner?” Or a working spouse saying, “Please find something for my retired husband to do! I didn’t marry him to have lunch every day.” Routines can be disrupted when transitioning from full-time work to retirement.

So, is it best to retire at the exact same time or staggered? Here are four reasons for one of you to continue to work after the other has retired:

Build Your Nest Egg

There are only two things you can do with money – save it or spend it. Retiring later provides three benefits. You can contribute more to your 401(k), the earnings can compound longer, and you can defer withdrawals.

Increase Social Security

Benefits might increase from age or additional covered earnings (and may increase benefits to your spouse). If you wait until full retirement age (FRA), you may be entitled to 100% and your spouse 50%. However, if you drew Social Security three years earlier, your benefit might only be 80% and your spouse 37.5%. For every year to defer Social Security from full retirement to age 70, your benefit increases 8%. The maximum benefit at age 70 in 2021 is $3,895 a month.

Too Young for Medicare

Typically, company health benefits end when you retire. Fewer than one in five large firms offer retirees health coverage. It may make sense to stay employed with the company offering healthcare until you’re Medicare eligible.

You Love Your Job

There are non-financial reasons people continue to work. These include sense of purpose, social engagement and value. How many 20-somethings does it take to replace a person with 45 years of knowledge, experience and relationships? And as someone once said to me, “once you get off the horse, it’s hard to get back on.”

I encourage you and your significant other to discuss these three questions to help align expectations and set the stage for improvement:

  1. If time and money weren’t a concern, what would your retirement look like? What are you doing and with whom?
  2. What does your job provide that you will miss (and need to replace) in retirement?
  3. How will your physical and mental health shape your retirement?

Make not working work for both of you. It may require you to apologize more often, be quick to forgive, and embrace opportunities to develop new passions and routines. And it’s never too early to start planning your retirement. Secure your future wisely.

This article can also be viewed at the Reno Gazette Journal.

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Top 10 Financial Resolutions for 2021

The value of a financial plan isn’t the accuracy of the forecasts, but rather, the conversations and pondering the what-abouts and what-ifs. It’s about clarifying goals, aligning priorities and evaluating the projected implications of today’s actions on your future. In the words of President Eisenhower, “Plans are useless, but planning is essential.” Planning is an on-going process, not something you set and forget.

2020 left scars on humanity and the economy, from the worst pandemic since the Spanish Flu to becoming a country at war with ourselves over lockdowns and elections. Some worry if life will get better, and there are certainly issues and challenges beyond our control. On the other hand, we can control the controllable. Things can get better if you plan ahead or are extremely lucky, and I’d rather put my money on the former. Here is a Letterman-inspired Top 10 List from a financial advisor.

#10 – Lock Them Up

Secure important files and documents in vaults, physically and digitally. This includes usernames and passwords for online accounts and subscriptions. Also, make sure to share a key and combination with your emergency contact.

#9 – Don’t Forget Your Credit

Sign up for credit monitoring. Consider an online service or order and review a copy of your credit report.

#8 – Automate it

On the income side, pay yourself first via payroll deductions for your retirement, savings, and health savings account (HSA) contributions. If you’re enrolled, consider upping your contributions rate to the maximum limits allowed. On the expense side, make life more convenient and avoid late charges by setting up autopay for your bills.

#7 – Update your Budget

There are only two things to do with money – save it or spend it. One of the keys for long-term financial success is controlling what you do in both areas. The average person earns nearly $2.7 million over their lifetime.

#6 – Manage your Debt

A new status symbol is being debt free. Don’t set your debt off to the side. Make sure you include it in your financial plan.

#5 – Review and Adjust Investment Strategies

Review investment account statements with your advisor. Online tools for your 401k plan may include “matchmakers” (your age, risk, etc.), target date or lifecycle funds, auto rebalancers and more.

#4 – Prepare for the Unexpected

Bad things don’t just happen to the “other guy.” Have a cash reserve fund, a contingency plan and maintain the right insurance protection.

#3 – Protect your Estate

Update beneficiary designations for retirement accounts and insurance; and review your will, powers of attorney, trusts, titling of assets, and medical directives.

#2 – Eat your Veggies

Financial health is only one part of your journey. There’s a lot to be said about being healthy in mind, spirit and body. What improvements can you make in your nutrition, sleep and exercise routines?

#1 – Do Something for Someone Else

This act goes by many names including doing the right thing, paying it forward, and charity. Whatever the label, it is rewarding and contagious. What will you do to make this world a better place?

Some call New Year’s Resolutions folly – something that goes in one year and out the other. Some people consider them as ways to shift things in their favor. Either way, I wish health and happiness to you and your loved ones. Secure your future wisely.

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A Fresh Start in 2021

Many say good riddance to 2020, a year marred by a health crisis-turned economic crisis. A ton of effort – fiscal support, dedication by front-line workers, the ingenuity of high-efficacy vaccines coming at warp speed, and true grit – have helped people survive the impacts of the pandemic. The light at the end of the tunnel shines brighter. As for 2021, get a head start by planning considerations you can (and should) review with your family and trusted advisors.

There are reasons why the stock markets post new highs, and why some wonder if the markets have gotten ahead of themselves. Looking ahead, key big picture views include:

  • Long and sturdy global growth. Goldman Sachs’ forecasts of real GDP growth for 2021 are Global 6.1%, U.S. 5%, Developed Markets 5.1%, and Emerging Markets 6.9%.
  • Recovery is uneven. The impacts of vaccines will be non-linear as countries respond differently to the distribution and benefits of the vaccine. And for many countries, full recovery is dependent on the service sectors which will take time to normalize.
  • The U.S. election and divided government (depending on the outcome of Georgia elections) may limit the size of fiscal stimulus, tax and regulatory changes.
  • The list of known risks includes COVID-19, vaccine development and rollout, election impacts, and deglobalization.

Jeffrey Kleintop, Chief Global Investment Strategist of Charles Schwab, reminds us that often the biggest risks are not the ones out of left field (unlike the COVID-19 breakout), but the ones hidden in plain sight. Quoting Mark Twain, “It ain’t what you know that gets you in trouble, it’s what you know for sure that just ain’t so.” Humbleness, doing your homework, seeking advice, diversification, and having a plan can serve you well.

Here are some actionable items that can help you keep your financial house in order:

Continue financial habits from 2020

Americans adjusted due to COVID-19 whether by choice or for survival, including setting a budget, spending less, saving more, stretching cash reserves and upping financial knowledge, to name a few. These are good things that can be contagious among your family members and friends.

Adjust your Thrift Savings Plan (TSP)

TSP provides a chunk for most retirees – often 30 to 50% of retirement income. It’s a retirement plan for Federal employees and uniformed service members. And it’s similar to 401(k) plans so these tips are applicable to those of you in the private sector. Many participants have become TSP millionaires because of the following:

  • Long-term consistent savings plan benefiting from of the double-barreled powers of tax-deferred compounding.
  • Forced savings via payroll deduction. Most are auto-enrolled at 5% of pay and money is saved before you have a chance to spend it.
  • Diversify and customize the investment strategies according to your retirement needs. There are five U.S. and international funds, a bond fund and a Treasury Securities fund. For convenience, there are also ten lifestyle funds which are mixes of the five core funds. You might consider broadening your global equity exposure, go smaller in market caps, diversifying bond investments per the macro trends above.
  • Choose between pre-tax and after-tax (Roth) contributions based on your situation, retirement plans and outlooks.

$900 Billion Pandemic Relief Bill

House and Senate leaders recently agreed to another coronavirus relief bill. Provisions may be beneficial to you. Here’s a brief summary:

  • 11-week extension of unemployment benefits ($120 billion)
  • Stimulus checks of $600 per person with similar income thresholds as before ($166 billion)
  • Employee-side payroll tax deferral deadline extended to 12/31/21
  • Renewed funding of $284 billion for first and second forgivable Paycheck Protection Program loans with expanded eligibility for non-profits
  • Additional $20 billion for new EIDL grants and $43.5 billion for SBA debt relief payments
  • Tax breaks including tax credits, charitable deductions, education benefits, and more
  • Other educational, medical, nutrition and transit relief ($233 billion)

We hope your personal and financial health remain top priorities as you set your goals for 2021. May your list of worries be shorter than your New Year’s resolutions, you grow from adversity and you secure your future wisely.

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