Author: Brett Boner, CDFA
It is hard to believe that the year is 2020. Not only did 2019 fly by, but so did the past decade. Time does seem to go by quickly for me these days, and it is amazing what all has transpired over these past 10 years. Over the holidays I had someone ask me, “what have you been up to”, to which my response was, “well, I wake up, I go exercise, I go to work, I head off to carpool duties, I eat dinner, I may help with homework, I go to bed and then I rinse and repeat”! Some of you who will read this are currently in that same boat and some of you will remember that boat. It is exhausting but it is also a blast. I wouldn’t change any of it for anything, but that’s also what makes time fly.
Henry turned 12 in November and plays soccer year round, basketball in the winter, and sprinkles as much golf in as time will allow, which makes me smile! Middle school has gotten off to a solid start but Lindsay and I see the want, and need, for independence. While that saddens his old man, I get it. I was 12 once and can remember my parents not knowing a thing and especially not knowing what was “cool”. However, and thankfully, he is a caring, big-hearted and loyal little man.
Fran just turned 9….and got her ears pierced. How can it be!? She does gymnastics year round, soccer in the spring and fall, and basketball in the winter. Hence my story about carpool duties. She is a competitive and strong-minded little lady. We just can’t figure out where she gets that from!
But I couldn’t do it without their committed and devoted momma. Lindsay “retired” from Circa Interiors in June after 19 years. It has been great for her and for our family. But fear not, she can’t sit still. She is a warrior from dawn to dusk with breakfast, lunches and kids off to school, homework, carpool, dinner, etc. and has now started her own Organization and Interiors business. I am impressed and proud and we celebrate our 19thanniversary on January 13th.
That’s a snippet of my family and what we have been up to. Since I know so much about your families I thought it was only fair for you to know a little bit about mine.
As for the market and the economy, we have just lived through one of the best decades on record, much to the surprise of many. Considering where we were in March of 2009, no one would’ve begun to predict what this market just returned to us. We began the decade with unemployment hovering around 10% and today sits at historical lows of 3.5%. There were NO recessions in this past decade, which was a first for a decade since the mid 1800’s. The 10 year Treasury at the beginning of the decade would’ve paid you 4% and today is yielding a paltry 1.85%.
During the 2010’s Total Returns were:
- S&P 500 +246%
- Small Caps +207%
- Foreign Markets +73%
- Emerging Markets +38%
- US Bond +43%
For Comparison, the prior decade (12/31/99 to 12/31/09), also known as “The Lost Decade” gave us annualized returns of:
- S&P 500 -.95%
- Small Caps +6.35%
- Foreign Markets +1.2%
- Emerging Markets +9.7%
- US Bonds +6.3%
As you can see, it is crucial to be diversified. In fact, at Carroll we believe it is the most important factor toward long-term goals. We are never going to get it exactly right, but that’s the great thing about diversification, as we should never get it exactly wrong either. For instance, we live in a global economy – one very different than even the turn of the century. While we believe you should have exposure to Foreign and Emerging Markets, and while they had a decent decade, they had a drag on performance relative to the US Markets. On the flip side, the exposure to those sectors helped your performance in the “The Lost Decade” of the S&P 500 from 2000 to 2009.
So, what’s to come? If anyone tells you what is going to happen in the next 10 years, please fill us in as well!! One thing we are certain of is that nothing is certain and it will absolutely look different over the next decade. There will still be the problem du jours, with fears of recessions, inflation, bear markets (another thing we didn’t experience in the past decade), wars, elections, diseases and countless/nameless other issues. But as Larry Carroll says, Home Depot is still going to sell 2×4’s and Apple is still going to sell iPhones.
Other things that may be of interest to you:
Social Security Update
- For 2020, an increase of your benefits by 1.6%, or around $24/month for most of you and up to $150/month for those collecting the maximum benefit
- Full Retirement Age (FRA) increase by 2 months to 66 years and 8 months
- FICA taxes, to fund Social Security, will now be taken out of income up to $137,700, an increase of about $5,000
- Those taking Disability income from the Social Security pool will also receive an increase
Secure Act Highlights
- RMD’s for IRA’s/401k’s will now begin at 72 instead of 70.5 (if you’ve already started your RMD you must continue)
- If you are a non-spouse beneficiary of an IRA, you must now withdraw the TOTAL BALANCE within 10 years of inheriting the account whereas before you had the option of stretching it over your lifetime
2020 401(k) Contribution Limits
- $19,500 maximum employee contribution (increase of $500)
- $6,500 Age 50 and older catch-up contribution
- IRA limits remain unchanged at $6,000 and $1,000 for Age 50 and older catch-up
At Carroll Financial we strive to align ourselves on the same side of the table as our clients. We also strive to be realists and optimists. We have to be realistic when it comes to retirement planning with you, especially when it comes to savings rates, investment returns and spending habits, and how all three of those things combined can potentially be harmful or helpful toward your retirement goals. We strive to be optimistic about your future while encouraging you to stick to YOUR plan and stay committed to YOUR long term goals while also being patient. There are enough pessimists and pessimistic news on our tablets, televisions, and phones. In fact, I was recently reading a blogger that I follow, Ben Carlson, and he was opining on this subject. His theme was, “No One Wants to Follow a Pessimist”. Ultimately it was about how news cycles, 24 hours a day, pound us with awful news reminding us constantly what we should be outraged with on an hourly basis. Good news doesn’t sell so we don’t hear it very often.
I have some good news that is both exciting and optimistic. Carroll Financial is turning 40 this year!! In a town that is becoming more and more corporate with big banks and insurance companies ever present, Carroll Financial has withstood the test of time and in fact has never been stronger. The reputation that Larry, and others, have built is second to none. It has been a blessing to start and continue my career here. The resources, experience, and intelligence I have at my disposal are endless. We have a very solid group of advisors that deeply care for their clients and I am proud to be a part of it.
In closing, Happy New Year and Happy New Decade. I can’t thank you enough for allowing me to be a vital part of you and your family’s lives. I truly enjoy it!
As always, thanks for reading.
BrettMarket Update, Market Volatility