YEAR ONE IN THE WHITE HOUSE - This year (2021) is the 1st year of Joe Biden’s 1st 4-year presidential term. The S&P 500 has been positive on a total return basis during just 13 of the last 23 “presidential 1st-years,” i.e., 1st-years dating back to 1929, but has been up 8 of the last 9 “1st years.” The average performance for the S&P 500 during the last 23 “presidential 1st-years” has been a gain of +7.7% (total return) (source: BTN Research).

THE INDEX TO FOLLOW - The S&P 500 stock index, worth $33.4 trillion as of 12/31/20, represents 81% of the $41.2 trillion market capitalization of all US stocks (source: S&P).

REALLY LOW - Inflation, as measured by the “Consumer Price Index” (CPI), was up +1.4% for 2020. For the decade of the 2010s (1/01/2010 through 12/31/2019), inflation was up just +1.8% per year, the lowest decade of inflation in the USA since the 1930s. By comparison, the decade of the 1970s (1/01/1970 through 12/31/1979) suffered +7.4% annual inflation (source: Department of Labor).

THEY OWN IT NOW - Banks foreclosed on 50,238 homes nationwide in 2020, down 65% from 143,955 foreclosures in 2019 and down 78% from 230,305 foreclosures in 2018. The worst single year of foreclosures in US history – 1,050,500 foreclosures in calendar year 2010 (source: ATTOM Data Solutions).

WHAT TYPES OF TAXES? - 35% of the total tax revenue taken in by state and local governments are property taxes, a total that is more than the combined tax revenue collected in the form of state income taxes (20%) and corporate income taxes (3%) (source: Tax Foundation).

LOAN OR A GRANT - The 3rd iteration of the “Paycheck Protection Program” (PPP) began last Monday 1/11/21. The first 2 PPP programs loaned out $522 billion while PPP # 3 will lend out as much as $284 billion to first-time business borrowers and to some small businesses as repeat-borrowers (source: Paycheck Protection Program).

PRINT AND PURCHASE - The Fed’s balance sheet reached $6.8 trillion as of 1/13/21, up from $3.9 trillion as of 3/11/20, the result of additional purchases of Treasuries (up +$2.2 trillion in 10 months) and mortgage-backed securities (up +$668 billion in 10 months) (source: Federal Reserve).

FOUR YEARS, EIGHT TRILLION - On 1/20/17, the day Donald Trump was inaugurated as POTUS 45, the national debt was $19.9 trillion. As of 1/14/21, the national debt was $27.7 trillion (source: Treasury Department).

ESTATE TAXES - The maximum amount that a deceased individual may pass onto his/her heirs federally estate-tax free (with proper planning) rises to $11.7 million in 2021, up from $11.58 million in 2020. The limit was $675,000 in 2001 or 20 years ago. Please consult a tax expert for details (source: Internal Revenue Service).

This is a great article for moving into 2021 even though it addresses some 2020 year-end items. It gets the financial thinking juices moving either way.

As the year winds down, take this time to think about your future.

Feeling frazzled by holiday fanfare? Do you also have nagging worries about your retirement plans?

One of the best ways to control stress of any kind is to make a list and check it twice. And we have done that for you.

Here is a handy yearly retirement checklist — 24 things you should do before each year’s end to set yourself up for a secure and happy future.

Check out Year-End Tax Advice for Retirees. Effective tax planning could be the most important year-end thing you do.

A health savings account (HSA) is an account that gives you triple tax benefits — tax-deductible contributions, tax-deferred growth and tax-free withdrawals when you use the money to pay for qualified medical expenses. If you are eligible (you have to have a high-deductible health insurance plan), it can be an excellent place to stash your money.

Early Retirement Health Insurance: If you are retiring before age 65, make sure you can find affordable medical coverage to bridge you to Medicare eligibility.

Medicare: If you already have Medicare, be sure to assess your coverage. Actively shop for the best Medicare supplemental policy each and every year. Your health will change, and the policies change. It is worthwhile to rethink your coverage annually.

Long-Term Care: You may also want to look at ways to fund long-term care costs. Long-term care is not covered by Medicare or Medicare supplemental insurance.

Your Home and Other Assets: Review all of the policies covering your home and car and any other assets.

Life Insurance: Your need for life insurance in retirement depends on a number of factors.

Dental and Vision: Make sure you know how you’ll cover these expenses.

Lifetime Annuity: Annuities are often considered investments, but they are actually insurance products. A lifetime annuity covers your income if you live longer than you expect.

Whether you are already retired, or nearing retirement, you need to know exactly how much money you will need to live comfortably for the rest of your life. According to a Merrill Edge Report, 19% of mass affluent Americans — U.S. households with investable assets ranging from $50,000 to $250,000 — have no idea how much they will need. And the guess-timates are wide-ranging:

Planning does not need to be scary or complicated. The NewRetirement Planner makes it easy. Take two minutes to enter some initial information, then see where you stand today. Next, start adding more details and changing some of your information. Discover meaningful ways you can improve your retirement finances.

Are you worried about the taxes you will pay, here are 6 strategies to help you minimize the costs of these RMD withdrawals — especially if you don’t need to use the money now.

It is easy to set up an online My Social Security account with the Social Security Administration.

According to Bankrate, only 39% of people can cover a $1,000 setback using their savings. Where does the money come from when the unexpected happens? More than likely, it comes from the retirement fund. And that’s a risky game to play.

Most financial experts recommend saving no less than three to six months’ worth of living expenses available in an easy to access checking account, with six to nine months being a safer amount to work toward.

The rest of your money should be working for you and earning interest.

Phase 1 – Early Retirement: The first stage of retirement is characterized as a time of adventure and experiences. With more free time and relative health, there are a lot of opportunities for spending money. Some experts recommend that retirees budget for spending 20% more in this phase.

Phase 2 – Middle Retirement: While you may still be enjoying adventures in middle retirement, many people find that they simply spend more time with friends and family and stay a little closer to home. In this phase, your retirement spending may be at its lowest levels.

Phase 3 – Later Retirement: No matter how healthy you are and how well you age, there is no denying that health care expenses ramp as you get older. In fact, health care costs grow so much that this last phase of retirement is usually the most expensive phase of life. Out-of-pocket medical spending and long-term care costs absolutely skyrocket.

The NewRetirement retirement planner lets you model downsizing, refinancing or getting a reverse mortgage to help you see the impact of a housing change on your overall retirement finances.

Bankruptcy Anomaly

You’re probably thinking that the 2020 pandemic environment created a massive flood of commercial bankruptcy filings, perhaps unprecedented since the Great Depression. There have been a number of high-profile filings from well-known companies like Hertz, Neiman Marcus and JCPenney.

But the surprising truth is that bankruptcy filings, overall, are actually down from recent averages in the U.S. economy. The chart included here tracks the total number of commercial bankruptcy filings (blue line) since January 2006. You can see the Great Recession peak toward the middle left side of the graph, which is somewhat jagged since this is monthly data. To the right, you can see that the bankruptcy numbers have been trending downward ever since, and seem unaffected by the pandemic.

Will that last? The graph also shows the number of unemployed Americans for each month over the same time period, and you immediately see how closely these fluctuating unemployment numbers track the fluctuations in the bankruptcy rate—that is, until recently. Notice that the unemployment numbers went up during the Great Recession, right along with the number of bankruptcies, and then declined along with bankruptcies until 2020. As the pandemic hit, suddenly there was a sharp divergence; unemployment spiked up to near-record highs, while bankruptcies continued along the same downward trend.

What does that mean? It’s never easy to predict the future, but unless there has been a dramatic uncoupling of unemployment and bankruptcy filings, we might experience a jump in businesses throwing in the towel in the first quarter of 2021.

Meanwhile, the pandemic seems to have hit some state economies harder than others. Texas and New York have experienced bankruptcy rates, since March of 2020, of 16.65 businesses per ten thousand, and 12.48 respectively, by far the highest rates, outpacing #3 Nevada (8.84 bankruptcies per 10,000 businesses), #4 Virginia (7.56) and #5 Delaware (7.01). At the other end of the spectrum, Rhode Island was experienced zero bankruptcies since March, while businesses domiciled in Connecticut (0.34), Iowa (0.36), New Hampshire (0.52) and Oregon (0.67) seem to have been strangely unaffected by the Coronavirus impact on the U.S. economy.

To answer this, I turned to Jeffrey Hancock , a professor of communi­cation at Stanford University and a noted expert on how and why we lie. I had read that he and his colleagues at the Stanford Social Media Lab had conducted a study on something called the deception consensus effect. They looked at lying in the context of mobile dating and found that the more subjects self-reported lying in text conversations with their partner, the more they believed that their partner was also lying. So if I lie to you, I assume you are lying to me.

This is an important point: If you are like most people, you assume that those around you are roughly as truthful or deceitful as you are, and you act in accordance with that belief. And when people deviate from that, it can come as a surprise.