MONTH-2-MONTH is intended to provide you with updates on AFP and timely financial planning and investment information on a variety of topics.
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Tidings of Comfort and Joy |
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We wish you most joyous holiday with emphasis on comfort. Our celebration circles may be smaller than usual and this can bring a bit of the holiday blues. What would lift your spirits?
There are many in need of assistance this year. You could drop a few extra dollars in the red kettle when leaving the grocery. You could make a bigger impact with a donation of food to a local shelter or food bank. Toy donations are always needed. If a donation of time is more your style, and you are not immuno-compromised you could volunteer at a soup kitchen, deliver meals on wheels, or help out the local animal shelter. There now ways to donate your time to a worthy cause without leaving home. Visit VolunteerMatch.org to find giving opportunities.
However you choose to spend the holiday, please use whatever tech tools you are comfortable with to connect with others. Schedule time to skype or zoom with family or simply call an old friend to reminisce. Share love and laughter. Make tentative plans for a visit in the future, even if it means waiting patiently. Follow through.
Choose to splurge on self-care engaging in activities that provide comfort. Curl up and watch a movie or read a book. Sip a hot beverage. Relax and let the stress flow out, take a deep cleansing breath. Center yourself peaceful and calm.
Consider your resolutions for the new year. How do you picture the best version of yourself? If you aren't there yet, devise an action plan and break the steps into manageable goals. Ask family and friends for support and encouragement or challenge them to join you. Remember to celebrate your accomplishments.
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No More ClientsOnly email address We have decided to retire our [email protected] email box effective 12/31/2020. We gave this a good college try but it has not worked as well as we had hoped. We ask that you contact us directly at our business email addresses in the new year.
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Webinars from AFP coming soon We are kicking around the idea of hosting monthly webinars beginning in 2021.These will be about 20 to 30 minutes in length, centered around a topic of interest. Do you have any ideas or concepts you would like us to address? Any thoughts on a clever name for these? Brainstorming has begun! Send us an e-mail or give us a call. We’d love to hear your ideas.
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The new normal equals status quo at the office and we continue to social distance from each other within our individual offices. Should a change to working conditions be necessary, we will let you know.
- We continue to host Virtual Meetings using Zoom for your safety. Due to the size of our office conference room, proper social distancing is a challenge. We will return to face to face meetings when it is safe.
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For those that must visit our office, please check in with us prior to visiting. Once you are in the parking lot, please give us call so we know you are here. There may be periodic road closures due to construction projects currently underway in the immediate vicinity of the office.
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FYI
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Schwab's acquisition of TD Ameritrade has been approved. TD Ameritrade continues to operate independently for the time being although changes are eminent. The process is expected to take 18-36 months to complete. We will notify you of changes that impact us as information becomes available.
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Orion Portal Update - Orion will be launching a new version of the Client Portal early in 2021. Please stay tuned for more details as the launch approaches. If you cannot access your Orion Portal, contact Tracey to request a password reset. The Orion Portal requires a password reset every 4 months (120 days) and becomes Inactive after 8 months (240 days).
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This month has been a blur with a lot of late nights and weekends in the office. We have been exercising physical distancing so, like many, the communication with family and friends has been via phone or Zoom. It has been great to get out and take dog walks or non-dog runs through the neighborhood. It’s also been fun to take in some favorite Christmas movies and music specials. It has added a sense of normalcy! It seems people have really gone all out this year with their Christmas light decorations! Walks after 5:00 have been illuminating. Looking forward to spending some quality Zoom time with the grandchildren and watch as they open their presents on Christmas.
Wishing you all a safe and cozy Holiday season.
A few years ago we had a Cyber Security client event at Our Lady of Victory. Some of you may have attended that event. The speaker, Bill, is a dear friend of my partner, Gene. His wife had contracted Covid over Thanksgiving and she died on December 14, the day the vaccine became available. We express our condolences to Bill and his family.
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December has been a good but relatively quiet month for us. Layla is doing well in basketball and really enjoys playing. Probably not as much as volleyball but close.
We traveled to our daughter Brittany’s house for an early and small Christmas celebration. It was wonderful spending time with her, her husband Chris, our grandson Logan as well as my parents. Chris is a very good cook and had an excellent spread. His homemade bourbon/apple pie beverage was quite tasty!!
I am playing guitar at Christmas Eve Mass and then we are having take-out Chinese with my parents. We are planning to spend a quiet Christmas day at home watching A Christmas Story, my favorite.
We hope you all have a very Merry Christmas and a wonderful Holiday Season!!
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The Guthrie Family is planning a small celebration. We will enjoy good food but will miss family at our table. We are very thankful that our missing family members will eventually rejoin us.
The season has been anything but typical and a positive of this is that we are returning to a simpler time. Now is good time to recall old family traditions and rediscover the true meaning of the holiday season.
We are grateful for love, life, family, friends, and the limited commodity of time. We plan to spend our time laughing, loving, and living every day like it matters. The rest of the time, we will be camping!
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Current Economic and Investment Information |
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TAKE THE OTHER GUY’S MONEY - 67% of 3,477 Americans surveyed in early November 2020 believe that federal income taxes should be raised for any taxpayer making $400,000 or more (source: SurveyMonkey.com).
COVID-19 DEATHS - Approximately 40% of the American death toll from COVID-19 as of Sunday 12/06/20 are elderly patients in long-term care facilities across the country (source: Dr. Moncef Slaoui, Operation Warp Speed top scientist).
HELP FOR COLLEGE STUDENTS - The Department of Education announced on Friday 12/04/20 a second extension through 1/31/21 of the forbearance period on federal student loans. The forbearance plan, i.e., a pause in required principal and interest payments, began on 3/13/20 and was to expire on 9/30/20, but w as extended on 8/21/20 through the end of this year. 92% of all student loans (by dollar) are federal loans, with the remaining 8% being loans that w ere originated by a private lender (source: Department of Education).
WORSE DURING A PANDEMIC - In the 6 months following the 9/11/01 terrorist attacks on the US, the commercial airline industry in the United States suffered losses of $10.3 billion (stated in 2020 dollars). In the first 6 months of calendar year 2020, i.e., 1/01/20 through 6/30/20, the commercial airline industry in the United States suffered losses of $14.9 billion (source: USA Facts).
ALL THE OTHER STUFF - Administrative costs make up 34% of total US health care expenditures (i.e., expenses not related to direct patient care) including medical billing, the scheduling of appointments, and hiring of an office staff (source: Annals of Internal Medicine).
JUST HERE FOR THE DAY - 48% of hospital revenue in 2018 came from outpatient procedures (source: Deloitte Center for Health Solutions).
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2020 has changed us - the way we connect with others, experience our day to day routines, and see our world. But it has also shown us our constants and what we hold close to our hearts – what’s important in our lives and what we hold dear.
Most likely we will continue to reflect on 2020 throughout our lifetimes: lives lost, time spent away from loved ones, milestones passed without fanfare, and an economic impact that has disproportionately impacted the very fabric of our society. There has been damage to areas of the economy that may never fully recover, but there are other areas that will adapt, reinvent themselves, and help reinvigorate growth.
Entering 2021 - many will not be driving toward the same destination they may have left behind in 2019. Our world has changed, we as individuals have changed, and we are seeing life through new lens. As we leap from one year to another, the focus will rightly remain on health issues. This time has allowed many to pause for a moment. It may be viewed as a gift if we allow it to speak to us in this way. The degree of importance we had placed in different areas of your life may have shuffled or been reaffirmed. Very often this translates into changes in your financial life as well. Change done to you elicits a reaction and an opportunity to be clearer in your intention.
I look forward to the optimism and opportunity a New Year brings for us all. I hope you spend this holiday season taking care of yourself, being safe, healthy, happy, and with the people you love.
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2021 U.S. Market Outlook: Better Days?
By Liz Ann Sonders
Senior Vice President, Chief Investment Strategist
Charles Schwab & Co., Inc.
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As we are soon to say a not-so-fond farewell, or good riddance, to 2020, it’s time to look ahead to 2021 and what we all hope is a better year. This year has had multiple alphabetical characterizations; including a V for the stock market’s recovery, a W for the ongoing fits-and-starts of economic activity, and an L for many parts of the leisure/hospitality industries. As illustrated in the opening cartoon, monetary policy has been the stock market’s heavy-lifter, along with stocks’ forward-looking tendencies—allowing it to quickly span the chasm created by the COVID-19 pandemic. Fiscal relief, and the human ingenuity associated with high-efficacy vaccines coming soon, have provided support for consumers and the broader economy. As we close out the year, it’s a bit of a push-and-pull: the vaccine news has pulled forward the post-pandemic improvement to economic growth; while the surge in virus cases nationally is pushing down near-term growth projections
The aforementioned V, W and L aren’t the full story though. The letter that best characterizes the unique implications of a health crisis-turned economic crisis is a K.
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The pandemic unleashed massive divergences within the economy and the stock market. Some of these divergences persist, including:
- Rising permanent job losses vs. declining temporary unemployment
- Ease with which many high-income workers can work remotely vs. lower-income workers without that flexibility
- Stronger trends in goods production/consumption vs. weaker services
- Booming residential real estate vs. beleaguered commercial real estate
- Booming online retail vs. beleaguered brick & mortar retail
- Strong money supply growth vs. weak money velocity
Other divergences unleashed by the virus are beginning to converge; including:
- Big 5 stocks’ outperformance relative to other 495 within S&P 500
- Options market speculation vs. traditional mutual fund/ETF flows
- Stay-at-home stocks vs. get-out-and-about stocks
Economic outlook
In the midst of the economic lockdown phase of the pandemic, the Federal Reserve Bank of New York created a new leading economic index—the Weekly Economic Index—comprised of ten high-frequency indicators of real economic activity, covering consumer behavior, the labor market and production. It is published twice per week, so it gives us an up-to-the day snapshot of economic activity. As you can see below—and as is the case with many individual economic data series—the WEI has had a V-shaped recovery; but has only retraced about two-thirds of the contraction brought on by the pandemic. The same can be said about overall gross domestic product (GDP): after contracting by -5% in the first quarter and -31% in the second quarter; it rebounded by +33% in the third quarter (on a quarter/quarter annualized rate). Of course the way math works, the third quarter jump did not fully retrace the prior contraction; and GDP is also only about two-thirds of the way back to a full recovery.
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Looking ahead to 2021, we believe we will see another dip in economic activity courtesy of the resurgent virus and implications of mandated, as well as self-imposed, lockdowns. But courtesy of the coming vaccines, the outlook beyond the near-term is brighter. If vaccines represent the light at the end of the tunnel; the virus means we are still in a fairly dark part of the tunnel.
Aside from the vaccine, other tailwinds likely include the prospects of a divided Congress and its relatively benign implications for major changes to tax policy, and stronger-than-expected corporate earnings. In addition, although it appears there is limited chance of another fiscal relief package passed during the lame duck session of Congress; there is bipartisan support for a package post-inauguration; while the corporate cash hoard and consumers’ savings are both ample relative to history.
The chart below shows the trajectory of quarterly GDP estimates tracked by Bloomberg. In early September, the consensus was for fourth quarter growth to be more than 6%; while it’s dipped to only 4% recently (caveat: just in the past few days, many Wall Street economists have upped their estimates—some to as high as 8% in the case of Evercore ISI). The biggest hit recently has been to 2021’s first quarter GDP estimates, which have moved from nearly 5% in early September to only 3% presently. Each of the remaining three quarters of next year have 3-handles. I believe some symmetry could be in play for 2021; meaning the larger the near-term contraction in activity re: the virus, the stronger the rebound.
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Economic “scarring”
There are a few key economic metrics on which we will be keeping a close eye in 2021; which will help clarify the level of longer-term scarring from the COVID crisis. Two of them are labor market metrics: the rise in permanent job losses and long-term unemployment. As the first chart below shows, the number of people on temporary layoff has descended in a sharp upside-down V; reflecting that most of the non-farm payroll gains since the April payrolls low have been workers getting their jobs back. On the other hand, save for a recent respite, permanent job losses have been on the ascent. Key to watch in terms of the latter are layoff and bankruptcy announcements. The vaccine-related pull-forward of economic recovery bodes well for layoff announcements; however, bankruptcies are still running near Global Financial Crisis levels.
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In terms of long-term unemployment, which is typically defined as longer than 27 weeks, the trend is not our friend. As you can see in the chart below, about one-third of the unemployed have now been without jobs for more than 27 weeks; even though the overall unemployment rate has come down from more than 14% to less than 7% today. Long-term unemployment has historically resulted in two destructive forces: waning likelihood of finding a job and/or a higher propensity to exit the labor force. The good news on this front heading into 2021 is that the industries in best shape—like online retailing (and related shipping) and residential housing construction—are ramping up hiring and could begin to absorb more of the unemployed. |
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The net from an economic perspective is that the virus has caused an unprecedented hit to growth and unleashed epic disruptions and dislocations. But with vaccines now being produced for full-scale programs next year, we may be entering an environment again where we can rely on more traditional cyclical indicators to gauge growth.
Inflation risk?
Our opening cartoon depicted a bridge not yet fully constructed over the chasm between pre- and post-pandemic; even if monetary policy allowed the bull (market) to reach the other side. One of the most-frequently asked questions during the 70 client webcasts I’ve done (virtually) since March is about implications—on the deficit and debt, and inflation—of the massive monetary and fiscal stimulus unleashed since the pandemic began. Combining the Federal Reserve’s liquidity injections, zero (%) interest rate policy (ZIRP) and new backstop lending facility tools taken out of the Fed’s toolbox; with fiscal relief, including the CARES Act; the total stimulus amounted to more than 40% of GDP and caused a surge in M2 money supply to nearly 25% year/year. But as you can see in the chart below, although the surge in money supply growth was historically-epic, M2 money velocity—which is the ratio at which money is changing hands in the economy—has sunk like a stone (and has been generally sinking for two decades).
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Despite the massive liquidity/relief offered by monetary and fiscal authorities to prevent the COVID crisis from becoming an even more extreme economic catastrophe, the near-term backdrop remains disinflationary. In addition, money velocity has been falling while money supply has been rising; but inflation has not, due to many structural, global and demographic reasons. So although we should keep an eye on velocity heading into 2021, even if the recent uptick is the beginning of a trend, inflation won’t necessarily rise. Where I do see some inflation risk is if the economy surges more quickly, and with greater force, than is presently expected—while global productive capacity remains constrained.
We also don’t believe the COVID-based surge in the deficit and government debt is necessarily inflationary. In fact, heading into 2021, the interest cost of national debt is near the lowest in several decades, and set to descend before rising again. Even if interest rates doubled from here (not our expectation), financing our debt would not represent a significant strain—certainly not next year. In addition, there has been no clear historical link between high debt levels and inflation in either the United States or other developing countries. In fact, higher debt levels have been generally accompanied by lower rates of inflation (at least as measured by traditional inflation metrics—yes, I know they’re flawed). I do believe that debt growth greater than economic growth suggests a bit of a wet blanket on economic growth; which is why, although I expect a rebound in economic activity in 2021 post-pandemic, the longer-term outlook for growth is likely fairly subdued.
Rotation rips into higher gear
Whereas monetary stimulus has not resulted in real economy inflation, it’s certainly resulted in asset inflation—including the stock market. Topping the list of questions I’ve been getting during webcasts has been the perceived disconnect between the stock market and the economy. It’s an understandable question; but looking under the hood of the stock market’s behavior during the worst of the pandemic’s hit to the economy may shed some light on the perceived disconnect. Much attention, rightly so, has been on the “big 5” largest stocks (by market capitalization) in the S&P 500 vs. the “other 495” stocks. The chart below shows the spread between the performance of the two cohorts; which hit a peak of 62 percentage points on September 2, 2020. At that point, the big 5 were up about 65% on average year-to-date; while the other 495 were up only 3% over the same period.
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Because the big 5 represented nearly 25% of the cap-weighted S&P 500 at that time, their hefty outperformance lifted the overall index; while the vast majority of companies remained in the doldrums. That, in fact, is somewhat reflective on an economy that had a small handful of “thrivers” during the pandemic; while the majority of companies and industries were in a very beleaguered state. Fast forward to today; and looking ahead, that peak in outperformance on September 2 has been followed by a series of massive rotations into other areas of the market outside of the thrivers. The rotations have had many flavors: including from growth to value, from large cap to small cap, from defensives to cyclicals, from stay-at-home stocks to get-out-and-about stocks, and from leaders to laggards.
Looking ahead, we expect the rotations will continue to come in fits-and-starts—largely driven by shorter-term virus-related news about economic activity. Since Pfizer came out of the blocks and announced its Phase 3 vaccine trial results, the big 5 and other technology-related prior winners have taken a back seat to the more cyclical sectors; which could have more to go once the current hit to the economy passes. We recently made a change to our tactical views: after having been overweight U.S. large caps and underweight U.S. small caps since March 2017 (a profitable tactical view), we neutralized the cap view. Assuming the U.S. economy moves into a higher gear in 2021, small caps should be relative beneficiaries given their higher-level of cyclical exposure.
Diversification will remain key heading into 2021; both across asset classes, and within asset classes. I will continue to update the “quilt chart” below; which highlights the rapidly changing monthly performance readings by sector throughout 2020. Energy is a case in point—having spent much of 2020 bringing up the rear in terms of performance; at key inflection points it bounced straight to the top; while technology recently suffered the opposite fate. The point is not to try to time these rotational shifts; but to make sure you remain diversified and not tied to one particular theme or group of stocks.
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Valuation supported by ZIRP or sentiment?
Stronger corporate earnings have also been the stock market’s friend. Some of the relative strength is simply due to analysts’ significant lowering of the expectations bar due to the massive uncertainty associated with the pandemic, as well as the lack of guidance from the companies themselves. But the trajectory of improvement into 2021 is significant; and will serve to put downward pressure on still-elevated valuation levels. As you can see below, earnings troughed in the second quarter of 2020 at a year/year decline of more than -30%; and are expected to jump to a year/year increase of more than +40% in next year’s second quarter.
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Earnings are obviously the denominator in the traditional valuation metric of P/E; and in the case of the forward P/E, an improving earnings outlook helps bring down the P/E. The reality though is that valuation is as much a sentiment indicator—or better put, an indicator of sentiment—than it is a “fundamental” indicator. The enthusiasm surrounding the market’s ascent this year has been accompanied by a surge in the forward P/E to a level in line with the peak reached in 2000, as you can see below. Where the risk is less elevated is in the comparison between the largest stocks’ forward P/E back in 2000 (60) vs. today (32); reflecting the significantly better underlying fundamentals of today’s largest companies vs. in 2000. |
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Froth?
Valuation does represent a risk in 2021 to the extent earnings do not live up to expectations; although multiples will continue to receive implicit support from extremely low interest rates. But as noted, valuation is as much an indicator of sentiment as it is a fundamental indicator. On the sentiment front, it’s also a risk heading into 2021. Up until the recent spate of good news about vaccines’ effectiveness and availability; sentiment indicators were only showing speculative froth in limited pockets in the market and by limited cohorts. At the first push to new highs for the S&P 500 and NASDAQ in early September, most of the froth was concentrated in the single stock options market by “newly-minted day traders.” More recently, frothy optimism became more widespread—encompassing both behavioral and attitudinal measures of sentiment—including the American Association of Individual Investors (AAII) survey and equity exchange-traded fund (ETF) flows.
Ned Davis Research has been measuring sentiment via its Crowd Sentiment Poll for decades. I like the indicator as it’s an amalgamation of many different sentiment measures; including AAII and the equity put/call ratio. After spending much of the post-bear market period this year in “neutral” territory, the CSP is now at the highest level of optimism since before the bear market began in February 2020.
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Another less-discussed sentiment measure pointing to excess enthusiasm is net foreign purchases of U.S. stocks. As you can see below, the 12-month average recently hit a new all-time high—surpassing the prior peaks in 2000, 2007 and 2010. |
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Excessive optimism—however expressed and measured by various sentiment metrics—is not in-and-of-itself a contrarian indicator for stocks. However, when it gets stretched, it suggests increased vulnerability to the extent there forms a negative catalyst (like in February, when the mother-of-all negative catalysts reared its ugly head). For now, an offsetting positive has been strong market breadth, with widening participation as seen below. This is key to watch heading into 2021, especially if sentiment remains frothy. |
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The year isn’t over, but whenever the market is trading at or near all-time highs, it’s important to assess the risks. Sentiment remains a key risk; especially given the economy remains inside the tunnel, even if vaccines represent the light at the end. The stock market has a remarkable ability to look across chasms of economic contraction to the other side. We are optimistic about the other side; but there are likely to remain some broken planks on the bridge to get there. Investors should remain disciplined, diversified and opportunistic with regard to rebalancing. |
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What to Do Before You Die:
A Tech Checklist
By Joanna Stern
The Wall Street Journal
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Earlier this year, I recorded my mother talking about her life.
A few weeks later, after a complication with a routine medical procedure, she was in an intensive care unit, fighting for that life.
In some dark twist of fate, I got the call to come to the hospital as I was filming a scene for a Wall Street Journal documentary on death and technology. It was my work on that project that prompted me to ask her how she wants to be remembered.
Today she is back to her healthy self. But the lesson lived on for both of us—and far too many others in 2020: It’s never too early to plan for the inevitable.
Years ago, when our loved ones would die, we’d uncover their photos and 35mm slides in a shoebox, their letters shoved into the back of a desk. If we were lucky, we’d find old VHS tapes or cassettes with recorded stories. Today, we have more video, audio and photos than ever before, but they’re often locked away, trapped behind layers of usernames, passwords and texted security codes.
Over the years readers have asked me to write to big tech CEOs, begging to gain access to a deceased spouses’ account; they’ve asked how to capture the life of a terminally ill parent; they have asked how to continue to text with a dead friend.
So, even before Covid-19 put mortality on all our minds, I embarked on a video project about what is often referred to as “digital legacy.”
There are two big areas to this topic. The first is how new technology can capture our important life stories, perhaps in new interactive ways, for the generations to come. The second, more mundane part is dealing with your digital life—how your accounts, files and folders can make it into someone else’s hands.
The documentary, “E-Ternal: A Tech Quest to ‘Live’ Forever,” focuses a lot on the first part. Yet as I traveled around talking to people about this, I began making a list of things we need to keep on top of while we’re still clicking and tapping. This is that list.
1. Take inventory of your digital assets
“What do I have?” That’s the most important starting point, says Alison Arden Besunder, a trust-and-estate partner at the New York City law firm Goetz Fitzpatrick LLP.
“Unless you take stock of what you have, you can’t think about what you want to happen to it when you die,” she said.
You don’t have to write down every file name on your cluttered desktop. Instead, make a list of the places where your most important information lives.
Think in big categories. There are your personal files, which include cloud or local storage of your digital photos, videos and documents. There’s your email. There are your social-media accounts — Facebook, Instagram, Twitter and whatever else you’re into. And then there are your financial accounts, including your bank accounts and even Venmo and PayPal.
2. Add a digital executor to your will
Once you have that down, you’re ready for the next questions: Who do I want to have this? What do I want to happen to it?
If you have a will already, that’s where these instructions belong. Adding that digital executor allows the person to identify, manage and distribute your digital property, like photos or music files. You can also give your digital executor powers to access your online accounts, including social media and email. Although Ms. Besunder adds that this can still be subject to the terms of service of the online accounts.
In many states, your existing executor may have this ability even without the direct clause, but it’s still worth asking your attorney to add it.
Ms. Besunder was ahead of the game, incorporating this into her clients’ plans for years. But I didn’t add a digital executor to my will—first drafted when my son was born in 2018—until I called my attorney a few months ago. I named my spouse, who is also my main executor, but it doesn’t have to be the same person. Maybe you’d choose a more tech-savvy family member, for instance. Whoever you choose, you should have detailed discussions with that person about what you want.
If you don’t have a will, well, you really should. There are plenty of websites that allow you to create one, including LegalZoom. (My colleague Julie Jargon wrote about it at the beginning of the pandemic.)
3. Add digital heirs to your accounts
What wills don’t contain are lists of all your online accounts and passwords or any special directives you have for those accounts.
Some of the big tech companies provide specific tools. On Facebook, assign and add a legacy contact. When you die, Facebook will allow this person to take some actions on your account, including downloading a copy of what you’ve shared on Facebook, memorializing your profile so others know you’ve passed or, if you prefer, removing your account. On Google, assign an Inactive Account Manager, who can similarly download the data, including any pictures you may have on Google Photos.
Unfortunately, other tech giants don’t offer such features. Make sure your digital executor will receive access to your passwords and also has a way to get to your phone to receive those number and letter codes that some companies send when you log in. Without that, a company could require the executor to gain a court order. Here are links to the specific policies for companies you might have digital accounts with:
4. Plan to pass on your passwords
The easiest and safest way to make sure your digital executor can access your accounts is via a password manager. You can set up emergency access and designate an emergency contact in Dashlane and LastPass. You specify a waiting period—say, 10 days. If your contact requests access and you don’t deny the request in that time, she or he will be granted access to the parts of the account you’ve designated.
There are some new digital legacy services that are trying to centralize steps like these. GoodTrust lets you designate who you’d like each digital account to go to, and include specific instructions and perhaps a final post to go out to your friends and followers. EverPlans, a service for end-of-life planning, offers similar account management.
The subject of my documentary, Lucy Watts, a 28-year-old woman with a life-limiting illness, uses a different one, MyWishes. She uploaded some of the messages she’d like to be posted when she dies. She even used the service’s funeral playlist feature, which is exactly what it sounds like.
While in theory these services are a good idea, they’re not necessarily as safe as an industry-leading password manager. Besides, there’s a good chance at least some of these startups will die before you do. All of these companies said that they don’t require you store your passwords and that security is a top priority.
5. Record your stories
All these legalities and tech issues are what I call the “easy” part of digital legacy. What’s harder is finding the best way to capture your life’s stories and memories, and finding out what those who will survive you will want, too—in content and format.
I realized through conversations with my mom that I wanted a deeper history of her childhood and career; she wanted to talk more about her outlook on life. (We settled on a bit of both.)
One big decision: video or audio? Lucy wanted to leave behind a series of videos; her mother felt video of her daughter would be too hard to watch. Instead, she said she’d want to hear Lucy’s voice. Similarly, my wife lost her father a few years ago. She still can’t watch videos of him; she’s only now able to listen, usually to his old voicemails.
In the film, I connected Lucy to James Vlahos, co-founder of HereAfter.AI. His company creates voicebots so loved ones can, via an Amazon Echo or Alexa phone app, actually talk to friends or family members after they die.
The company records interviews with people, then turns the audio into an interactive experience. Loved ones can ask the bot questions about your childhood, and it will play relevant chapters of the recording.
To me, the best part of this service—which starts at $95 for an hour of interviews—is that customers get, in addition to the voicebot, the original high-quality audio files. Of course, you and your family can record some yourselves with a good microphone and computer. The key for any interview is asking the right questions to capture the best stories.
“Use targeted questions that guide your loved ones to share the most specific, visceral and emotional things they can remember,” Mr. Vlahos said. “Don’t ask, ‘Tell me about your marriage.’ Ask, ‘Describe the very first time you saw the woman who would become your wife.’”
I’ll tell you though, back in March when I found myself pacing the ICU, I realized that what matters most is just asking the questions—and recording the answers—while you still can.
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TAXES, TAXES, and oh, TAXES
(The Most (and Least) Expensive States to Live In)
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If you could live in any U.S. state, which one would let you keep more of your money than others? The answer turns out to be surprisingly complicated.
Most people would look first at state income taxes, and if you have a decent to high level of income, then California immediately jumps to the bottom of the list; it’s highest state income tax bracket is 13.3%—higher than second-place Hawaii (11.0%). By this criterion, you might want to avoid New Jersey (10.8%), Oregon (9.9%) and New York (8.8%). The most attractive states—by this measure, at least—are the ones that assess zero state taxes on your income: Florida, Texas, Washington, Nevada and South Dakota.
But every state has to pay its bills, so in most cases you’ll find yourself paying for your state services by other means. If you move to Texas, you avoid state income taxes only to find yourself paying the highest property taxes in the country, a median 1.81% of the value of your home or property. Other high-property-tax states include New Jersey (1.89%), New Hampshire (1.86%) and Nebraska (1.81%). California, meanwhile, assesses a relatively modest 0.74% median property tax rate, although Louisiana (0.18%), Alabama (0.33%) and West Virginia (0.49%) are lower still.
So far, Louisiana looks attractive, until you look at state sales taxes. In Louisiana, you would find yourself paying a combined 10.02% state and local sales tax rate on your purchases, which is the highest in the country. Tennessee (9.46%), Arkansas (9.41%), Washington (9.18%), and New York (8.49%) lead the nation in sales taxes, while Oregon, Montana and New Hampshire levy no sales taxes at all.
Is there any way to combine all these tax figures into one number? The WalletHub website ranks every state and the District of Columbia based on a total tax burden, by calculating total collected individual income taxes, sales and property taxes as a share of the total personal income in each state. These rankings would probably change for higher-income individuals, but they give an idea of the interrelation among the different tax burdens. By this calculation, New York is the most expensive state to live in, with taxes eating up 12.28% of its citizens’ total income. Hawaii (11.48%), Vermont (10.73%), Maine (10.57%), Minnesota (10.19%), Connecticut (9.99%) and New Jersey (9.88%) are the most expensive states. Least expensive: Alaska (5.16%), Delaware (5.52%), Tennessee (6.18%), Wyoming (6.47%), Florida (6.82%), New Hampshire (6.85%) and Oklahoma (6.94%).
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