Objective Financial Advice

Welcome to our fall newsletter!

The investment markets have experienced challenges lately, but are still quite positive for the year. As of the close on Friday, October 13th, the S&P 500 is up more than 14% for the year. International developed stock is also up more than 6% year-to-date. Bond funds are down because of rising interest rates with the Bloomberg Aggregate Bond Index off about 1.4%. Brokered CDs are still an attractive investment with 1-year coupons around 5.5%. All of this reminds us of the importance of diversification and taking a long-term view with our investments.

We are delighted that Morgan Green has transitioned to a part-time financial planning analyst role with us after completing her summer internship here. If someone you know might be interested in being our next summer intern, we are now interviewing for that position.

Our office will be closed for a few days in January for a team event following the MLK Day holiday (Monday, January 15th). We will be taking a pause as a team to celebrate our accomplishments and to build upon our core values. As a result of this focused time together, we will also be pausing communications from Tuesday, January 16th - Thursday, January 18th but we will be back online on Friday January 19th ready to go!

Please read on for other actionable planning ideas. We will be closed for Thanksgiving (Thursday and Friday, November 23rd and 24th), our annual teambuilding day (Friday, December 8th), Christmas (Monday and Tuesday, December 25th and 26th), and New Year's Day (Monday, January 1st). We plan to send the next newsletter out soon in the New Year. We'd love to hear from you on questions or suggestions for topics you’d like to see covered in the future.

'tis the season... for end-of-year planning opportunities, of course!

We just received the Social Security cost-of-living adjustment for current recipients: 3.2%. We are awaiting finalization of most retirement plan contributions and other income-related information for 2024, but we do have information on our H.S.A.s, and the increased limits are significant: $4,150 for individual coverage, and $8,300 for family coverage (plus a catch-up contribution of $1,000 for participants 55 and older).

Medicare open enrollment is here. From October 15th - December 7th, you have the opportunity to switch plans or even enroll in certain parts of Medicare. You can start researching available plans right now by clicking here. For most on Medicare, part B premiums will be $174.70 / month in 2024. If your income in 2022 was higher than $103,000 ($206,000 married filing joint), you will be paying a surcharge for your Part B and D coverage.

As we are now in the final quarter of 2023, we want to encourage you (particularly any recent retirees or anyone who experienced a shift in income) to be thinking about implementing any tax planning opportunities. This could be taking advantage of a lower income year by distributing funds from an IRA and paying less in taxes if you're over 59 1/2... or distributing a little more from an Inherited IRA. Did your income go up? You may want to look at savings vehicles that will lower your taxable income like the aforementioned H.S.A. If you have any questions about how these opportunities might apply in your situation, please reach out to us soon!

Tax Efficient Beneficiary Designations

If leaving part of your estate to charity is one of your goals, you can maximize the value of your gift by thinking about income taxes.

Jean Keener shares the differences between how individuals are taxed on different types of inherited assets as compared to charities. In this blog, discover how to stretch your financial impact for your heirs and charity by working with your estate planning attorney to draft or update your documents and coordinate them efficiently with your beneficiary designations.

AA Pilot Corner

Do you have questions about the new contract? With the revamping of benefits like long-term disability insurance and life insurance, you may be wondering if you're covered or if you should be making an imputed income election during your open enrollment this year.

Perhaps you're wondering how to handle the retro pay you're about to receive and how this will effect your taxes... will it hit in 2023 or 2024? If you are on this see-saw, we recommend holding off any end-of-year tax planning moves until you have more clarity on the timing.

We can help you navigate the implications of this new contract in your current plan. If you haven't worked with us before, we can help incorporate the new contract into a plan that also addresses other items like the frozen A Plan or what to do with that 401k (in-service rollovers? Brokeragelink? Pre-tax or Roth contributions?).

Investment Market Update

Even after a challenging 3rd quarter, investment returns remain positive for the year.

The S&P 500 pulled back by 3.27% in third quarter with it's first loss after three straight positive quarters. Small cap stocks lost more at -5.13% while large cap value stocks was slightly less than the S&P at -3.16% for the quarter.

Developed market stock pulled back at -4.11% for the quarter with emerging market stock losing the least of the equity funds for the quarter at -2.93%. We've had some questions around international stock with the recent news of the attack on Israel. It is hard to say in early days the impact this will have economically. Our thoughts and prayers are for those who have been affected in unthinkable ways by this brutal attack.

Some of our bond fund returns retreated again last quarter with the US aggregate bond index dipping down -3.23%. Shorter-term bond funds, however, were positive and returned .72% last quarter. If you find yourself conflicted between cash and bonds, we suggest focusing on your time horizon, with more guidance here.

It's important to rebalance your portfolio annually back to your targeted stock and bond mix. While we subscribe to the "buy and hold" philosophy, if time has gotten away from you and you've "held" for a little too long, please reach out if you'd like an action list on how to get your portfolio back on track. This is a judgment-free zone. We, too, are human and probably aren't flossing as much as we should, but if it's time for your portfolio check-up, we are happy to help!

*Source for investment returns in the opening paragraph is Morningstar as of October 13, 2023. S&P 500 TR USD for S&P 500. MSCI EAFE NR USD for developed international markets. Bloomberg US Agg Bond TR USD for the US aggregate bond index.

**Source for investment returns is Morningstar as of September 30, 2023. S&P 500 TR USD for S&P 500. Russell 2000 TR USD for small cap stock. Russell 1000 Value TR USD for large value stocks. MSCI EAFE NR USD for developed international markets. MSCI EM NR USD for emerging markets stock. Bloomberg US Agg Bond TR USD for the US aggregate bond index. Bloomberg US Government 1-3 Yr TR USD for short-term bonds.

Address:

1692 Keller Parkway

Keller, TX 76248

Ph: 817-993-0401

Fax: 817-993-0002

Get In Touch!