• What's Beneath the Numbers – Today, we live in a world where you can "google" just about anything and instantly get an answer. But, when it comes to matters related to money, do you know what to do with that answer? Sometimes you need to use a wide-angle lens to capture key numbers and see the big picture. At AFP, we know how to look at the small details and apply them to your bigger picture. If you're ready to make a change and get a fresh look at your financial plan give us a call today. 

• Share Class Exchange – An opportunity to perform a share class exchange was offered to clients holding T. Rowe Price positions. The benefit is a lower expense ratio. The exchange to Institutional class shares was executed on 2/14/2024 and does not create a taxable event. This exchange should be reflected on February 2024 Schwab statements.

Did you make Qualified Charitable Contributions (QCD) from your IRA(s) or complete a Roth Conversion 2023? Please be advised that AFP is in the process of sending you a “Tax Letter” that you can share with your tax preparer. This will help them to correctly complete your 2023 tax return as the Form 1099-R does not provide all this information to properly prepare your tax return.

• AFP February Webinar – “Unique Situations in Social Security” with guest speaker, Susan Moussi, CPA of SMD Tax & Divorce Financial Planning Consultants, Inc. on Friday, January 23rd at noon. This will be a discussion on Social Security and the various situations that recipients encounter.

• How do you attend? A webinar link will be sent via email the morning of the webinar to all of our clients. If you know anyone who would like to attend, please pass along the webinar email to them.

• Upcoming AFP 1st Quarter Webinars:

• March: "Travel Planning in 2024"

Click below to read our February 2024 Blog edition.

Retiring Before 65? Make Sure to Know Your Healthcare Options

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FIRST IMPRESSIONS MATTER – In the 40 years since WWII, when the S&P 500 has been up at least 1.5% in January, its median performance for the remainder of the year has been a gain of 13.4% with positive returns 82.5% of the time. In all other years, the S&P 500’s median gain was 5.7% with positive returns 66.7% of the time. (source: Bespoke)

WEAK UNDER THE SURFACE – The S&P 500 finished January up 1.6%, but the average stock in the cap-weighted index was down 0.8% during the month. Of the index’s 500 members, 279 fell in January while just 221 rose. Communication services stocks were up the most of any sector, with an average gain of 3%, while real estate sector stocks fell the most, by 4.9%. (source: Bespoke)

CYBER CRIMES FALL – Reports of cybercrimes against customers of financial institutions rose 25% year-over-year in 2020, 11.5% in 2021, and 19.8% in 2022, but they fell 34.7% in 2023, back down to levels last seen in 2019, according to the Financial Crimes Enforcement Network, a bureau of the US Department of the Treasury established in 1990. (source: Financial Crimes Enforcement Network)

USED CAR PRICES DROP – Used car prices fell 1% in January, according to automobile auction company Manheim’s Used Vehicle Value Index. While Manheim’s index shows used car prices falling 21% from their all-time high in December 2021, data from Cargurus.com shows that the value of a used Tesla has dropped 49% from a high of $67,900 in July 2022 to $34,883. (source: Manheim, Cargurus.com)

OPENING THE SPIGOT – According to the NY Fed’s quarterly Household Debt and Credit report, 8.52% of credit card loans became newly delinquent in Q4 2023, which was the highest reading since Q2 2011. Credit card utilization, or the percentage of credit extended to consumers that have been used, also ticked up to 23.5% in Q4, the highest reading since Q4 2019. (source: NY Fed)

Inflation Expectations

This month’s chart tracks inflation expectations through 2028 from the perspective of consumers, professional forecasters, and financial markets. Consumers, more directly burdened by higher prices, have historically projected inflation to be higher than professional forecasters. This new report shows the consumer projecting the next 5 years of inflation to be 2.9% vs. professional forecasters at 2.3%. To maintain price stability, the Federal Reserve closely monitors this report on inflation expectations.

Since the spike in 2022, inflation expectations have steadily trended down. Near-term, the ride to get to the Fed’s target of 2% may be a bit more turbulent. This is why looking at expectations out 5-years provides a longer-term projection and is helpful when making financial planning decisions.  

Click here to view the source.

Rent or Own? Which is the Best Housing Choice in Retirement?

By David Rae, CFP®

Source: Forbes

As you near retirement, you may wonder: Should I rent or own? Which is the best financial decision? With today's home prices soaring and the highest mortgage rates in nearly 20 years, buying your retirement home may be a disaster for your financial security. On the flip side, if you plan to retire in your current home, we should have a completely different retirement-planning conversation.

Some retirees will need to reduce their housing costs. Others may want a fresh start in a new location after retirement. At some point in retirement, you may not want to deal with all the hassles (and costs) of maintaining a single-family home. Sadly, with so many people behind in saving enough money to keep their living standards in retirement, access to home equity may be necessary to fund their retirement lifestyles.

Click here to read this article.

Perplexed by the Gift Tax? Here Are Answers to 10 Common Questions

Generous gifts can sometimes come with tax consequences, but in general, only very wealthy people need to worry about gift taxes. Still, there could be IRS paperwork involved.

By Joelle Spear, CFP®

Source: Kiplinger

Unlike us at AFP, the IRS prefers to use language that isn’t easily understandable. 

Most people are familiar with annual gifting limits. In 2024, taxpayers will be able to gift up to $18,000 to individuals without having to report it to the IRS. But what you may not realize is that a married couple can gift up to $36,000 to each of their children annually, since the rules are on a per-person basis. 

Once you cross the limit, some IRS reporting is required, but that’s it. It’s generally not considered a taxable event. We strongly encourage gifting with warm hands rather than cold ones. If you and your family are looking for ways to financially help others, while working within the IRS rules, we’re here to talk.

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“The February sunshine steeps your boughs and tints the buds and swells the leaves within.”

- William Cullen Bryant