As Marci and I celebrate birthdays (well really it’s just one birthday) this week, we thought we would share the following information to help you plan for your upcoming “milestone” birthdays, compliments of Brighthouse Financial and Investment News.

And no, this is not a milestone birthday for us but we can still help you with each of yours and we will remind you of your options as you approach these BD’s! Remember that all of these milestones are subject to change.

Legislative milestones:

Age 50: You may be able to increase your retirement plan contributions to IRA’s, 401K’s and 403B’s

Age 59 ½: You may be able to take distributions from your eligible plans without a penalty. Depending on the type of account, you still have to pay taxes though.

Age 60: Widows and widowers may be able to collect Social Security benefits

Age 62: You are likely eligible for social security benefits

Age 65: You may be eligible for Medicare health coverage

Age 70 ½: Depending on the type of retirement account you have, spend down is required (RMD’s) and taxes must be paid.

ALPHARETTA August 1, 2019 — Linder Financial Services has been selected for the 2019 Best of Alpharetta Award in the Financial Advisor category by the Alpharetta Award Program.

Each year, the Alpharetta Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Alpharetta area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2019 Alpharetta Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Alpharetta Award Program and data provided by third parties.

About Alpharetta Award Program

The Alpharetta Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Alpharetta area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Alpharetta Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community’s contributions to the U.S. economy.

SOURCE: Alpharetta Award Program

CONTACT:
Alpharetta Award Program
Email: PublicRelations@localrecognitions.org
URL: http://www.localrecognitions.org

Hello, it’s Bradley, Marci’s older son again (with a little light editing from my aunt and mom). All the differing definitions of “jobs in this country” among the Presidential candidates interest me, so I looked at the statistics, what they mean and why we care.

At regular intervals, the US Department of Labor releases data about the nation’s labor market. This evidence is used along with other information to measure the strength of the economy. Below, I’ll define the terms that you’ll probably read in the newspaper and then I will do the hard part – try to explain why any of this actually matters to individual investors like us.

Labor Force: The labor force is defined as all people working or looking for work. The Labor Force Participation Rate is then simply the percentage of people in the United States who are in the labor force (excludes children, retirees, and so-called “discouraged workers” who have given up looking for work). A high labor force participation rate is generally linked to a strong jobs environment, because discouraged workers will re-enter the labor force if they believe they will be able to get a job. Sometimes, if the labor force participation rate increases due to discouraged workers re-entering the labor force, the unemployment rate will increase a bit due to more people counted as unemployed until they actually find jobs.

Unemployment Rate: This is probably the most commonly quoted statistic by both media and politicians. The unemployment rate is the percentage of people in the labor force (defined above) who do not have a job. The reason why the unemployment rate is important is because when most people have jobs, they will buy things, and this requires the production of more things, which creates more jobs, and so on in a virtuous cycle. Economists often talk about something called the “Natural” rate of unemployment, also called “Full” employment, which is the rate at which essentially everyone who wants a job has one. Most economists believe that the natural rate of unemployment is around 4-5% (meaning that the current unemployment rate of 3.7% is full employment).

Non-farm Payrolls/New Jobs: One of the most anticipated monthly reports is the new jobs report. Obviously, the more jobs created, the better. In a growing economy, jobs are created every month. In order for the unemployment rate to decrease, the economy generally needs to create at least 150,000 jobs per month. It’s also worth noting that the initial estimates from the Bureau of Labor Statistics are often way off month to month and can change by hundreds of thousands of jobs in “revised” estimates.

New Jobless Claims: The Department of Labor releases weekly reports of how many new workers have filed for unemployment benefits in the past week (the rest of the reports are released monthly). This is a reasonably good leading indicator of the behavior of the labor market.

As you can see, there are always enough different (and conflicting) statistics for pundits (and politicians) to tell whatever story they want about the economy. As investors, these statistics are important because they are among the major factors that the Federal Reserve takes into account when determining short-term interest rates. These short-term interest rates obviously impact bond pricing, but they also have a very significant impact on the equity market due to the corporate cost of borrowing for business operations or expansion.

As we’ve seen over the last six months or so, the different and conflicting statistics, (along with Presidential tweets) are making the Fed Reserve job more challenging as well but that’s a Blog post for a different day.

We want to share some good news from Vanguard for all of you who own Vanguard Index funds in your Ameritrade accounts.

As of the end of July, Vanguard is eliminating the Investor share class of all index mutual funds. That is the share class that most of you own currently. That share class will be replaced with the Admiral share class, Vanguard’s lowest expense share class available outside of employer-sponsored plans. As an example, Vanguard Index 500 (their largest index fund) carries an expense ratio of .14% for the Investor share class and .04% for the Admiral share class. Obviously, that’s not a huge dollar difference since Vanguard Index funds are already very inexpensive, but in percentage terms, it’s a huge discount!

If you own a Vanguard Index fund at Ameritrade, some time the week of July 22, you will see a new mutual fund in your account. Then the week of July 29th, your current index fund balance will be transferred to the new mutual fund. This is a tax-free conversion and any Ameritrade commissions will be paid for by Vanguard.

For those of you who have automatic purchases or redemptions of Vanguard Index funds, we will ensure that they are reset to the new funds and that your transactions continue with no interruption.

Competition in the index fund market is very intense and expense ratios are dropping in response. Some good news for us as investors!

As always, if you have any questions, don’t hesitate to call or email us.

A client sent us this cartoon so we thought we would share with you. We LOVE investment advising humor so feel free to send us what you see too!

I well recognize that the title of this blog is a bit of an oxymoron (how do we limit something which is required???) but Investopedia recently published an article on this very topic. Not necessarily new ideas here but an interesting different perspective on this question, which we all ask nearly every day.

Four strategies are discussed by Investopedia if the money from the IRA is not needed for expenses right when the investor turns 70 ½:

• Delaying retirement
• Converting to a Roth IRA
• Managing the timing of the initial distribution
• Donating to a charity from your IRA

Delaying retirement past 70 ½ is a possible way to delay paying income taxes on your retirement account. This rule, which only applies to a 401K at your current employer, allows you to delay taking your RMD and PAYING THE TAXES on it until you actually retire. Note that this does not postpone required distributions from other retirement accounts; it only applies to a 401-K at your current employer. This is an interesting idea but I’m not really buying this one.

Converting to a ROTH IRA is a great option since it eliminates taxable required distributions forever, not only for you, but also for your heirs. The downside is that you have to pay tax on the conversion amount in the year of conversion. That obviously can be very expensive in that year. It is a possible option for investors who have the cash to pay the tax outside of the IRA and who do not need the required distributions for current expenses. Think of a ROTH IRA conversion, not only as a strategy to reduce your current required minimum distributions, but also as an estate planning tool since you are leaving a tax free asset to your heirs. I’m sure we all know one person this caveat applies to. I suggest we all get to know more!

Managing the timing of the initial distribution is another way to postpone the initial distribution. The first distribution is required by April 1 of the year following the year the retiree turns 70 ½. After that, distributions are required to be taken annually by December 31. This timing means that a retiree could have to take two distributions in the first year, which could push the retiree into a higher tax bracket. In almost all cases, we recommend going ahead and taking the initial distribution in the year you turn 70 ½.

We have talked in earlier blogs about donating to a charity from your IRA. As a reminder, you can donate your RMD up to $100,000 to an IRS qualified charity and not pay taxes on that amount. This option is only available in IRA’s, not 401K’s or other employer-sponsored retirement plans, so if you want to do this when you are 70 ½, you will need to roll over your 401K – which we can help you with.

As always, we can discuss any of these options in more detail with you!

-Lori