For the Week of November 30, 2020

The Markets

Stocks rose on a shortened, post-Thanksgiving Friday as retailers kicked off the holiday shopping season and coronavirus cases rose. The S&P and NASDAQ closed at record highs Friday, and the Dow closed above 30,000 for the first time earlier in the week. For the week, the Dow rose 2.25 percent to close at 29,910.37. The S&P gained 2.30 percent to finish at 3,638.35, and the NASDAQ climbed 2.97 percent to end at 12,205.85.

Returns Through 11/27/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	2.25	7.04	8.68	10.80	13.64
NASDAQ Composite (TR)	2.97	37.16	41.50	22.31	20.23
S&P 500 (TR)	2.30	14.52	17.53	14.02	13.98
Barclays US Agg Bond (TR)	-0.03	7.28	7.21	5.30	4.34
MSCI EAFE (TR)	2.23	4.34	7.20	3.78	6.40

Why Go? — 43 percent of recent college graduates with jobs (under the age of 28) surveyed in September are working in jobs that typically do not require a college degree (source: Federal Reserve Bank of New York, BTN Research).

People Are Spending Again — Retail sales in the United States were down on a month-over-month basis for three consecutive months (February through April) but have rebounded and have increased on a month-over-month basis for the last six months (May through October) (source: Census Bureau, BTN Research).

Not Coming Back — In the six months from February 29 to August 31, 163,735 U.S. businesses closed their doors, including 97,966 businesses (60 percent) that are likely closed for good (Source: Yelp Economic Average, BTN Research).

WEEKLY FOCUS – December 1 Designated Giving Tuesday

Whether it’s due to the holiday spirit or taking advantage of tax deductions before it’s too late, one-third of annual charitable donations are made in December.¹ Just as you try to be a mindful shopper who avoids impulse purchases, it’s important to be a careful giver who thoughtfully evaluates emotion-tugging appeals. The following tips can help.

Plan ahead. You can’t buy gifts for every friend and relative, and you can’t donate to every worthy cause. So consider what areas you’re most passionate about. And don’t be like two-thirds of donors, who don’t do any research before giving.² Examine prospective charities and choose groups who address your concerns most effectively and efficiently. Check out large organizations on charity rating sites like GuideStar.org, CharityNavigator.org, or the Better Business Bureau Wise Giving Alliance site, Give.org. Evaluate smaller, local nonprofits by reading their annual report, audited financial statement, and IRS Form 990. Look for entities that spend 75 percent of their budgets directly on programs. You might even volunteer and observe their programming in action.

Concentrate support. After you’ve identified charities with reputations for performing well, narrow your choices. Although diversification works well when investing in stocks, it’s less effective when investing in charities. Giving more to fewer organizations allows them to spend less on fundraising, keep operating costs low, and plan strategically.

Budget for giving. Once you’ve chosen your favorite nonprofits, decide how much you want to give and make room in your budget. See if you can make your gifts go farther by participating in a matching program through your employer or a generous donor.

Be tax smart. You can’t deduct donations unless you itemize your tax return and give to a 501(c)3 tax-exempt entity. (To check whether a charity qualifies, visit the IRS webpage, apps.irs.gov/app/eos). If you receive something in return for your gift (e.g., a dinner or a book), its value must be subtracted from your donation. A cancelled check or credit card statement is adequate proof for gifts under $250, but you’ll need a receipt for gifts above that.  

For more information on targeting your charitable efforts, give our office a call. We can also work with your tax advisor to help you and your causes get the most benefit from your gifts.

We do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

^1,2 https://neonone.com/resources/blog/year-end-giving-statistics/

For the Week of November 23, 2020

The Markets

Stocks closed lower Friday amid rising coronavirus cases, increased state-level shutdowns, and fiscal stimulus developments. On Thursday, U.S. Treasury Secretary Steven Mnuchin said he would allow pandemic-relief lending programs to expire at the end of the year. For the week, the Dow fell 0.65 percent to close at 29,263.48. The S&P lost 0.73 percent to finish at 3,557.54, and the NASDAQ climbed 0.25 percent to end the week at 11,854.97.

Returns Through 11/20/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	-0.65	4.69	7.68	10.23	13.12
NASDAQ Composite (TR)	0.25	33.21	40.31	21.64	19.64
S&P 500 (TR)	-0.73	11.95	16.60	13.45	13.49
Barclays US Agg Bond (TR)	0.59	7.31	7.26	5.41	4.37
MSCI EAFE (TR)	1.87	2.06	5.71	3.50	5.83

More Bonds Than Stocks — As of June 30, the U.S. stock market was $33 trillion in size. As of that same date, the U.S. bond market was $50 trillion in size (source: Wilshire, SIFMA, BTN Research). 

Bulls — 56 percent of investors surveyed as of Nov. 11 are bullish on U.S. stocks for the upcoming six months, the highest percentage recorded in this weekly survey since Jan. 3, 2018 (source: Amer. Assoc. of Individual Investors, BTN Research).

Taxes — To take deductions on Form 1040, a taxpayer can use the standard deduction or the taxpayer can itemize deductions if the latter is greater than the former. The standard deduction will be $25,100 for married couples filing jointly and $12,550 for individuals in 2021. Please consult a tax expert for details (source: IRS, BTN Research).

WEEKLY FOCUS – Safe Holiday Shopping in 2020

In a year unlike any other, holiday shopping is sure to look different as well. According to Deloitte’s 35^th annual holiday shopping survey, the average household expects to spend $1,400 this season, 7 percent lower than last year. Participants cited economic worries for reigning in their overall spending and safety concerns for reducing travel and socializing outside the home. Not surprisingly, over half plan to do more online shopping.

Unfortunately, increased online shopping leads to increased online scams. Here are a few tips to follow if you’re considering a purchase off the beaten path.

While online shopping may offer fewer impulse-buying temptations than in-store experiences, it’s still important to create a disciplined budget for gift giving. From holiday spending to college funding and retirement planning, our office can be a resource for your financial needs. Call us for assistance when you need to create or update a plan for achieving your financial goals.

For the Week of November 16, 2020

The Markets

Stocks rose Friday amid upbeat earnings reports and a surge in virus cases. Positive vaccine news helped the Dow and the S&P achieve strong weekly gains. On Monday, Pfizer reported its vaccine proved over 90 percent effective in its trial. For the week, the Dow rose 4.19 percent to close at 29,479.81. The S&P gained 2.21 percent to finish at 3,585.15, and the NASDAQ dropped 0.53 percent to end the week at 11,829.29.

Returns Through 10/13/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	4.19	5.37	8.62	10.49	14.04
NASDAQ Composite (TR)	-0.53	32.88	40.78	21.77	20.44
S&P 500 (TR)	2.21	12.77	18.09	13.72	14.40
Barclays US Agg Bond (TR)	-0.14	6.68	7.29	5.27	4.28
MSCI EAFE (TR)	3.89	0.18	3.65	2.92	5.96

Bad but Not That Bad — The March 27 CARES Act included $139 billion of relief for the 50 U.S. states. From Feb. 29 to Aug. 31, the tax revenue collected by all U.S. states was down $30 billion over the same six-month period from a year earlier. When the CARES Act was being debated in Congress, U.S. governors requested financial support of $500 billion from lawmakers (source: National Governors Association, BTN Research).

Many Can’t Wait — An American worker may begin receiving a monthly Social Security retirement benefit as early as age 62, albeit at a reduced level from what is available at one’s full retirement age. Just under 50 percent of American blue-collar workers take their retirement benefits at age 62, while only 38 percent of white-collar workers begin their retirement benefits early (source: Center for Financial Security, December 2019, BTN Research).

Down, But Getting Better — From a February peak of 158.8 million jobs nationwide, the United States was down 9 million jobs to 149.8 million workers as of the end of October (source: Department of Labor, BTN Research).

WEEKLY FOCUS – Maximizing Your Employee Benefits

If you’re among the 49 percent of Americans who receive employer-sponsored health care coverage, you may have already received information on your company’s open enrollment. In previous years, you might not have taken much time to review your company’s options. But the current pandemic underscores the importance of securing the best possible coverage and value.

Even before COVID hit, workers’ average single deductible rose to $1,644 in 2020 – almost double from 10 years ago. And typical annual family premiums under employer-sponsored plans rose 4 percent from 2019 to $21,342. During the pandemic, many of us have postponed tests, routine care, and procedures. If much of that deferred care is scheduled in 2021, PwC’s Health Research Institute projects medical costs could rise as much as 10 percent above pre-coronavirus levels.¹

Two ways to fund some of these rising costs are a pretax Health Savings Account (HSA) or a Flexible Spending Account (FSA).

To set up an HSA, individuals must have a qualifying high-deductible health plan (HDHP). They control their HSA and may roll contributions over from year to year. To qualify in 2021, an HDHP must have a minimum deductible of $1,400 for individuals or $2,800 for families. The maximum limits for out-of-pocket costs are $7,000 for an individual or $14,000 for a family.

In 2021, workers with an HDHP can contribute $3,600 for themselves (plus $1,000 if they’re 55 or older) or $7,200 for their family. Once enrolled in Medicare Part A or B, individuals can no longer contribute pretax dollars to an HSA.

FSAs are owned by the employer; this means you may forfeit unused contributions if you leave your job. At year’s end, unused funds do not automatically carry over. Depending on the policy, an employee forfeits them, has a few-month grace period to use them, or is allowed to carry up to $550 (for 2021) into the next year. The maximum amount an employee can contribute in 2021 is $2,750.  Medicare recipientsmay contribute to their employers’ FSA.

Need help choosing the best health care options for your family? I’m happy to review these crucial elements of your financial plan with you.

¹ https://www.cnbc.com/2020/11/02/5-things-to-watch-out-for-during-open-enrollment-amid-coronavirus.html

For the Week of November 9, 2020

The Markets

Amid uncertainty surrounding the presidential election, U.S. stocks closed mostly flat Friday. But Wall Street saw its best weekly gains since April. For the week, the Dow rose 6.89 percent to close at 28,323.40. The S&P gained 7.36 percent to finish at 3,509.44, and the NASDAQ climbed 9.05 percent to end the week at 11,895.23.

Returns Through 11/06/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	6.89	1.13	5.50	8.87	12.27
NASDAQ Composite (TR)	9.05	33.59	42.80	21.83	19.54
S&P 500 (TR)	7.36	10.33	16.26	12.83	13.08
Barclays US Agg Bond (TR)	0.49	6.83	7.24	5.14	4.35
MSCI EAFE (TR)	8.11	-3.57	-0.53	1.28	4.79

Best Ever — The U.S. economy, expressed as an annualized result, rose a record 33.1 percent in the third quarter of 2020. The economy, as of Sept. 30, is actually only 7.41 percent larger than the size of the economy as of June 30 after removing the impact of inflation. A 7.41 percent gain occurring for four consecutive quarters, equals a 33.1 percent annualized advance (source: Department of Commerce, BTN Research).

The Most Paid — The maximum Social Security benefit paid to a worker retiring at full retirement age in 2021 is $3,148 per month, more than double the $1,536 per month maximum benefit paid in 2001 (source: Social Security BTN Research).

Not All Income — The maximum taxable wage base subject to the Social Security payroll tax will be $142,800 in calendar year 2021. An estimated 82.5 percent of earnings of all U.S. workers will be subject to the Social Security payroll tax next year, a levy that is 6.2 percent for employees and 6.2 percent for employers (source: 2020 Trustees Report, BTN Research).

WEEKLY FOCUS – Long Term Care Awareness

Since 2001, November has been designated Long Term Care Awareness Month, a time to educate Americans on the growing need for long term care (LTC) and potential ways to pay for it. The American Association for Long Term Care Insurance (AALTCI) estimates 14 million citizens currently require long term care support services and predicts that number will grow to 27 million by 2050.¹

It’s no secret long term care can be very expensive. According to Genworth’s 2019 Cost of Care survey, the average monthly costs are $7,513 for a semi-private nursing home room, $4,051 for a one-bedroom assisted living apartment, and $4,385 for a homemaker/health aide (at 44 hours a week).²  Individuals pay for these expenses in a variety of ways.

Long term care insurance is usually most cost effective if purchased before turning 60. According to AALTCI, the average annual premium in 2020 for a healthy couple, both 55-years-old, is $3,050.³ Often more affordable, short-term insurance typically pays $100 to $200 a day for healthcare coverage for a year or less. The AALTCI reports an average monthly premium at age 65 is $105.⁴ These policies may be easier to obtain and have a short or no elimination period.

People who dislike the idea of paying premiums for something they may never use sometimes turn to an annuity with a long term care rider, a deferred fixed annuity (which doesn’t pay distributions until a certain age is reached), or a life insurance policy with an LTC rider or accelerated death benefit riders, which can be used for long term care.

Still other individuals prefer self-funding potential LTC needs. Considering the average nursing home stay is over two years, this option requires discipline and good fortune. Maximizing yearly contributions to HSA and IRA accounts can help.

While all of us hope we never need long term care, it’s best to plan for the unplanned. I would be happy to meet with you to review your plan for long term care funding and discuss changes you might consider to prepare for this possibility.  

¹ https://www.aaltci.org/about/long-term-care-awareness-month-2020.php

² https://www.genworth.com/aging-and-you/finances/cost-of-care.html

³ https://www.aaltci.org/news/long-term-care-insurance-association-news/2020-long-term-care-insurance-price-index-released-for-age-55

⁴ https://www.aaltci.org/short-term-care-insurance/

For the Week of November 2, 2020

The Markets

Stocks fell sharply Friday, led by major tech shares. The S&P and the Dow saw their biggest weekly losses since the March sell-off. Rising coronavirus cases, stalled stimulus talks, and a looming presidential election troubled investors. For the week, the Dow fell 6.47 percent to close at 26,501.60. The S&P lost 5.62 percent to finish at 3,269.96, and the NASDAQ dropped 5.50 percent to end at 10,911.59.

Returns Through 10/30/20	1 Week	YTD	1 Year	3 Year	5 Year
Dow Jones Industrials (TR)	-6.47	-5.38	0.34	6.74	11.12
NASDAQ Composite (TR)	-5.50	22.50	32.84	18.72	17.93
S&P 500 (TR)	-5.62	2.77	9.71	10.42	11.71
Barclays US Agg Bond (TR)	-0.04	6.32	6.19	5.06	4.08
MSCI EAFE (TR)	-5.51	-10.80	-6.86	-1.24	2.85

Double in 30 Years — It took $1,961 in September 2020 to have the same purchasing power as $1,000 in September 1990 (source: CPI Inflation Calculator, Bureau of Labor Statistics, BTN Research).

No Boss — 20 percent of American workers between the ages of 18-49 are self-employed. 46 percent of American workers between the ages of 65-69 are self-employed (source: National Bureau of Economic Research, September 2019, BTN Research).

Little Short of Cash — 17.1 million U.S. households were behind on their monthly rental payment or their monthly mortgage payment as of Sept. 28. That’s 13.5 percent of the 126.8 million households in the country (source: Census Bureau, BTN Research).

WEEKLY FOCUS – Recognizing Family Caregivers

November has been named National Family Caregivers Month to honor parents, adult children, and spouses who selflessly care for loved ones afflicted with illnesses, disabilities, traumatic injuries, or the effects of aging. According to a study by the National Alliance for Caregiving and AARP, the number of family caregivers grew by 9.5 million from 2015 to 2020. As a result, one in five Americans are now serving as a family caregiver.¹

As medical advances prolong lives and turn once-deadly conditions into disabilities, chances of becoming a caregiver for an older family member dramatically increase. Elder caregiving is often a rewarding act of service as well as a demanding sacrifice. In contrast to caring for children, care requirements for older adults can go from zero to 100 percent overnight. Unfortunately, few programs support those caring for the elderly who often juggle multiple responsibilities for which they may feel ill-equipped.

In addition to the mental and physical challenges, the caregiver’s finances may be impacted dramatically – particularly if the role requires them to reduce work hours or stop working entirely. They may lose employer-provided health care coverage, and their lost wages could in turn reduce their retirement savings and Social Security benefits. Middle-aged women who leave jobs to care for an aging parent may find it difficult to re-enter the workforce. Recent research suggests the average female caregiver loses more than $324,044 in wages and Social Security benefits when caregiving during her prime working years.²

Depending on the type and degree of the condition producing the need for care, a variety of solutions may lessen the burden on family members. An older individual might be able to live independently with the help of a visiting nurse, home health aide, or homemaker. A caregiver may be able to continue working if their relative is able to participate in an adult day care. But at some point, assisted living or long-term care may become unavoidable. 

Financial issues related to caring for a loved one can be complicated and difficult to predict. A financial professional can suggest things you can do now in order to be financially prepared should a loved one require care.

¹ https://www.caregiving.org/caregiving-in-the-us-2020/² https://www.marketwatch.com/story/the-heartbreaking-stories-of-some-of-americas-435-million-unpaid-adult-caregivers-2018-07-20