August 31, 2017
One of the charts I look at every quarter is light vehicle sales and I write about it occasionally in our newsletter. While the numbers have backed off their peak, there are still a lot of cars being sold in our country. In fact, just in the last few weeks I have had three different clients talk to me about buying a car.
I am not a car expert. However, buying a car can be a big financial decision, particularly during retirement. Some questions that typically come to mind include:
- How much should I spend?
- Should I finance a car?
- Where should I pull the money from if I don’t use a finance option?
Given these frequently asked questions, I want to devote this e-newsletter to advice regarding car purchases.
August 18, 2017
The first total solar eclipse visible in the U.S. in nearly four decades is happening on Monday, August 21. Only 1 in 1,000 people have ever seen a total solar eclipse and the last time this happened, Jimmy Carter was in office. During most solar eclipses, the moon takes just a “bite” out of the sun – these are called partial solar eclipses. However, the event on Monday will go down as the first total solar eclipse whose path of totality stays completely in the United States since 1776. During the so-called Great American Total Solar Eclipse, the 70-mile-wide shadow cast by the moon will darken skies from Oregon to South Carolina.
While Charlotte, North Carolina may not be in the “Path of Totality,” we’ll experience right around 97-98% coverage of the sun. We’re also close to places that are set to experience a total blackout for roughly two minutes.
So what can the solar eclipse teach us about markets?
- There is a Cycle
- The Current Cycle Doesn’t Last Forever
- Don’t Let Your Emotions Blind You
1. There is a Cycle
Just as there is a schedule established for the location and time of eclipses, there are business cycles as well. The business cycle consists of four phases:
- Expansion– a period of economic increase or positive growth
- Peak– the highest turning point of a business cycle
- Contraction– a period of economic decline or negative growth
- Trough– the lowest turning point of a business cycle
August 2, 2017
For better or worse the national media is focused on healthcare during retirement and what they are calling “the failed healthcare bill.” Of course this refers to the vote to repeal the Affordable Care Act or “Obamacare." The government knows that it faces challenges in the healthcare space and struggles to find an agreeable solution. For anyone trying to plan his or her retirement, healthcare is an essential element of planning.
Some questions you may be asking yourself are:
- How will you pay for healthcare in retirement?
- How can you control Medicare premiums?
- Do you need a Medicare supplement?
- What is going to happen to Medicare in the future?
- How are healthcare and Medicare going to change over the next 20 to 30 years?
These are all valid questions and important to consider when it comes to the planning process. Unfortunately, the answers are not simple and the future of healthcare is incredibly uncertain.
June 30, 2017
Carroll Financial was named the second largest financial planning firm in the Charlotte area by the Charlotte Business Journal! We are proud to have deep roots in the Charlotte community and our Certified Financial Planners™ work hard every day to provide our clients with excellent service, advice and communication.
Check out the article here: http://www.bizjournals.com/charlotte/news/2017/05/05/the-list-these-are-charlottes-largest-financial.html
Listing in this publication is not a guarantee of future Investment success. This recognition should not be construed as an endorsement of the advisor by any client.
June 29, 2017
I recently read an article from USA Today about retirees' satisfaction with retirement, which focused on a 2016 study by the Employee Benefit Research Institute (EBRI).
Here is the link:
I think the satisfaction information is interesting, but I am not sure I agree with all of the author's conclusions. I do think that saving for retirement is essential and I know that will not surprise anyone. I also firmly believe that a fulfilling retirement is about more than money. The happiest retirees that we work with are involved in activities and spend time with their families during retirement. Some days I can’t wait to have grandchildren because the stories I hear make them sound much more fun than children (no offense to my kids if they ever read this).
I believe fewer people are satisfied during retirement due to the decline of pensions in the U.S. Most retirees today either do not have a pension or have a small one that cannot cover their living expenses. In many cases their savings in retirement accounts and other investments may be plentiful, but the uncertainty that comes with creating your own monthly income can be stressful.
May 31, 2017
Tax planning during retirement can be complex. Often individuals (and CPAs for that matter) become focused on minimizing this year’s tax bill. This sounds like a good thing, but it is not the purpose of tax planning. The purpose is to maximize your and your family's wealth. Usually this means minimizing taxes over time, but that may differ from just minimizing this year’s taxes.
Many retirees have assets held in retirement accounts that are taxed as the assets are withdrawn to cover expenses. A retiree may also have after-tax investment accounts, savings in money markets, CDs or even lines of credit. Deciding where to draw money from to cover expenses may be challenging and the choice might affect your taxes. Over time a retiree might avoid withdrawing money from an IRA to avoid paying taxes. However, in the future minimum distribution rules force withdrawals from the IRA, which can push the retiree into a higher tax bracket.
If you have pockets of money with different tax treatment, this should be discussed with your financial advisor. Managing your taxable income during retirement could affect healthcare costs (both for government subsidies and Medicare), the tax treatment of Social Security and can lead to significant differences in long-term family wealth.
At Carroll Financial we have a number of advisors with a background in tax planning and we work with many excellent accountants and tax professionals. Tax planning is a cornerstone of financial planning, but good tax planning doesn’t always mean that you don’t need to pay taxes. In the end, we would rather our clients make money and pay taxes if the alternative is to not make money.
May 12, 2017
Moms have a lot of rules. To wit...
Make your bed every morning. Pick your underwear up off the floor. Don’t waste food. Close the door…were you born in a barn?
These and other Momisms prevent chaos and provide a safe environment for children to learn and thrive. They get passed from one generation to the next as daughters (who swore they'd NEVER say those things to THEIR kids) adopt the colorful Mom-speak for their own rules of the house.
Everyone has their favorite Momisms. But, did you realize some can be modified ever-so-slightly and applied to retirement? It’s a lovely thing, really. Because, even if your Mom isn’t around, her words can still guide you into your next act:
“Money doesn’t grow on trees.”
This was true in your childhood; it’s even more true today. Money will grow only where you plant it. So make sure it’s well-rooted and growing before you take the plunge into retirement.
“If everyone jumped off a cliff, would you do it, too?”
You may be more impervious to peer pressure than you were as a teenager, but don’t be tempted to “keep up with the Joneses” in your retirement. Just because your best friends sold their house and are traveling the country in an Airstream doesn’t mean it’s right for you. Find your own way. Do you own thing.
May 11, 2017
The market has reacted positively to the tax reform proposal from President Trump. As mentioned earlier this year, we believe that tax reform is a key to supporting current equity prices. Here are a few things to know about the tax proposal.
1. The number of tax brackets would be reduced to three: 10%, 25% and 35%.
Currently, the tax code includes seven brackets, so reducing it to only three could streamline and simplify the tax code. Reducing the number of tax brackets also provides an across-the-board tax cut, as the top rate would be reduced from nearly 40% to 35%.
2. The estate tax, alternative minimum tax (AMT) and the Obamacare surcharge would be eliminated.
The estate tax affects estates worth over $5.45 million upon the owner’s death; the AMT is a supplemental income tax (in addition to regular income tax) required for certain individuals, estates and trusts; and the Obamacare surcharge is a 3.8% tax on capital gains and dividends. All three would be eliminated under Trump’s plan.
3. With the exception of charitable and mortgage deductions, personal deductions would be removed from the tax code.
Home office deductions, employee business expenses, transportation expenses, childcare expenses, student loan expenses, state and local tax payments and all personal deductions aside from charitable contributions and mortgage expense, would be eliminated under Trump’s plan.