In This Issue
Welcome to MONTH-2-MONTH, an e-Newsletter from Alexander Financial Planning, Inc. MONTH-2-MONTH is intended to provide you with updates on AFP and timely financial planning and investment information on a variety of topics. You are welcome to forward this e-mail on to others.


Experience Summer

Memories of mid-summer lazy days are not difficult to conjure at this time of the year. Presently, we are anything but lazy as we whittle away at summer projects, in and out of the office. It is nice to get lost in the past but instead of dwelling there, consider a way to share with someone in the present. It could be lounging at the pool, building sand castles at the beach or in the backyard sandbox, making mud pies, harvesting crops, or searching for a farm market while driving in the country. Stories are wonderful but sharing through experience is much better. What new memories will you make? 


We have initiated a change in our Portfolio Management software and the process is underway. Getting to this point has taken a great deal of time in vetting potential service providers. Training will be a time commitment over the next several months. We are excited for this change and will share details as they become available.

Save the Date  

We are planning our next client event for Thursday, September 26 at 7 pm. The program is entitled, "Investing in the Current Economic Environment" and our speaker is Matt Lord with JP Morgan. It will be held at the Open Door in Grandview Heights and it will be followed by a tour and tasting at High Bank Distillery. Look for more details as the date approaches. 

On a Personal Note:
Teri's World -  Sounds like a re-run from June, but Teri has been doing pretty much the same stuff - projects around the house and in the office, running and hiking, gardening and taking in some local music programs. She has been spending more time with her grandson's at the pool these last few weeks. It is great to see them learning how to swim and become more comfortable in the water. Last Friday she went to the JazZoo concert  at the Columbus Zoo with friends. It was a little warm, but a great evening full of excellent music and great company. 

Wh at a bou t Bob? - Bob & Christine have had a pretty eventful July. Christine started her new job as the Regional Human Resources Business Partner at Agilon Health on July 1st. She is leading all aspects of Human Resources for offices in three states. She is very excited about this position and the opportunity to make a difference with the employees and in the organization.
They are off to Myrtle Beach the week of July 22nd with Bob's parents, his brothers and their families. Really looking forward to a relaxing vacation!!!

Tracey's Time - 
Tracey and family returned from their southwest adventure in time to celebrate Independence Day. They attended the UA parade and fireworks. The trip was amazing and the weather couldn't have been better, dry and cool most every day. We visited multiple National Parks but  Great Sand Dunes National Park in Colorado deserves mention. These sand dunes were created as sand from the Appalachian Mountains was  deposited on the Colorado Plateau. They sit at the base of the Sangre de Cristo Mountain Range. You can sled or sand board down the dunes but it's not easy.  It is impossible to understand the scale from the photo below but it is jaw-dropping.  The tallest dune is 750 feet tall!  

Great And Dunes National Park, Colorado

Maria's MomentsMaria has had a crazy start to July. She helped work a popular softball tournament in town, Stingrays showcase, and has been preparing for her end of the month vacation. She had a lot of fun being around the sport again even though it has only been a few short months since her final season of competitive softball ended.
Maria has been trying to spend as much time with her nephew Augustine Peter who is now almost 2 months old and growing very quickly. She is very excited to be starting her career here at AFP and is already enjoying being a part of the AFP Team. 

(Current Economic and Investment Information)

  • PUBLICLY TRADED COMPANIES - The number of publicly listed companies, i.e., companies traded on an exchange, has dropped from a peak of 8,090 in 1996 to just 4,336 today (source: theglobaleconomy.com). 
  • US PROJECTED SPENDING - From fiscal year 2019 (i.e., the 12 months ending 9/30/19) to fiscal year 2029 (i.e., the 12 months ending 9/30/29), mandatory spending by the US government is projected to increase +56%, discretionary spending is projected to decrease 1% and outlays for interest on our nation's debt are projected to increase +129% (source: Congressional Budget Office). 
  • PENSION PARTICIPATION - 83% of full-time state and local government employees were participants in a defined benefit pension plan in 2018.  Just 16% of full-time workers in the private sector were participants in a defined benefit pension plan in 2018 (source: Urban Institute). 
  • OIL PRODUCTION - The 15 nations that make up OPEC are the source of just 29.8% of the world's daily production of oil as of July 2019, its lowest total by percentage in almost 29 years, i.e., since September 1990. OPEC generated 39.5% of the world's oil in April 1998 (source: International Energy Agency).
  • U.S. OIL PRODUCTION - US field production of crude oil reached 12.2 million barrels a day for the week ending 6/28/19, its 20th consecutive week producing at least 12 million barrels a day.  Until 2/15/19, the USA had never reported a week with daily production of at least 12 million barrels a day (source: Department of Energy).   
  • THE VERY RICHEST -The top 1% of wage earners in the US reported at least $480,804 of pre-tax income in 2016 and own an estimated 29% of the total wealth in the country (source: Survey of Consumer Finances).  
  • MILLENNIAL DEBT - 57% of Millennials burdened with student debt resulting from their college education regret taking out as many loans as they did.  Millennials were born between 1981-97 and are ages 22-38 in 2019 (source: Citizens Bank).   
  • COLLEGE DEBT -Student loan debt has doubled in the United States since 12/31/09 and has quadrupled since 6/30/05 (source: Federal Reserve Bank of New York). 
  • AGING AMERICANS -An estimated 56 million Americans will be at least 65 years old by the year 2020, i.e., 1 out of every 6 Americans.  An estimated 73 million Americans will be at least 65 years old by the year 2030, i.e., 1 out of every 5 Americans (source: Census Bureau). 
  • JOBS- The government divides the USA into 4 geographical areas: Northeast, South, Midwest and West.  As of May 2019, the Northeast states had 1.258 million job openings while the states in the South had 2.736 million job openings.  The total number of job openings nationwide: 7.323 million(source: DOL).   

World Stock Market Indexes

We are a little over half-way through 2019 and the U.S. Stock markets have had a terrific run so far this year. If we take a longer view of how the world indexes have performed since the beginning of the Great-Recession (October 9, 2007), six of the eight indexes on our world watch list posted gains through July 15, 2019. The top performer is India (SENSEX), our own S&P 500, then Japan (Nikk ei), London (FTSE) Germany (DAXK), and Hong Kong (Hang Seng). The slightly under performing market is France (CAC) with China (Shanghai) trailing all other indexes.


IRAs in Political Sights
Forcing some heirs to empty accounts in 10 years will raise revenue,
 but it's a bad precedent.
By The Editorial Board
The Wall Street Journal

Putting money into a 401(k) or Individual Retirement Account is an act of trust in government. When yesterday's politicians set rules to encourage saving, workers must have faith that tomorrow's politicians won't raid the kitty. Protecting this confidence ought to be top of mind as the Senate takes up the bipartisan Secure Act, which sailed through the House this summer 417-3.

The bill is a 125-page mashup of mostly uncontroversial updates to the nation's retirement rules. Today contributions to a traditional IRA can't be made past age 70½, which is also when mandatory distributions kick in. Lifespans and careers now are stretching longer, so the Secure Act sensibly eliminates the contribution age limit while allowing distributions to be delayed until 72.

Early withdrawals are often subject to a 10% tax penalty, with a few exceptions. The Secure Act would add a new one, allowing $5,000 to be taken out when a child is born or adopted. Another provision would require company 401(k) plans to cover part-time employees who work at least 500 hours for three years running.

The hangup is that broadening such tax advantages will cost the government money. The Secure Act pays for itself, though only by suddenly curtailing tax benefits on retirement assets passed down to children, grandchildren and other non-spousal heirs. New rules would apply to account holders who die starting in 2020. For people with significant money, this could upend years of careful estate planning.

Under current law, a 5-year-old grandson who inherits money in an IRA can "stretch" the mandatory distributions over his lifetime. That allows for longer tax-free growth, giving legacy-minded investors a way to build family wealth. The Secure Act would require the IRA to be emptied within 10 years. This would speed up the tax liability, which could also push the bunched-up distributions into a higher tax bracket.

Maybe there's an argument that IRAs weren't meant to be used as vehicles for inheritance. Nevertheless they are, and the figures can be large. Mitt Romney's retirement account made news in 2012 when financial disclosures, which specify wealth in ranges, said his IRA held between $21 million and $102 million. Those numbers were thought unusual, a result of savvy investments Mr. Romney made in Bain Capital projects.

Still, you may be surprised: Fidelity Investments says that its last census of 401(k) millionaires includes 180,000 of its account holders, along with 168,000 IRA millionaires, plus another 22,000 educational workers or nonprofit staff who are 403(b) millionaires. And that's only Fidelity. Some 33,000 federal workers have accumulated $1 million or more in their Thrift Savings Plan accounts, which can be rolled into IRAs.

Rather than spend this on wine and cruises, some of these people may prefer to pass on as much money as possible, perhaps to help their grandchildren pay for college or starter houses. If savers spent years building up their accounts with that goal in mind, it is hardly fair to switch the rules for everybody who's still alive six months from today.

The Secure Act does have broad exceptions. Surviving spouses would be exempt from the accelerated payout. So would heirs who qualify as disabled or "chronically ill." For minor children (but not grandchildren), the 10-year timetable would start only after they hit the age of majority. Overall, most money in IRAs-about 3 in 4 dollars, according to congressional estimates-would be unaffected.

Yet the remaining 25% of IRA funds is hardly trivial. What's alarming, too, is how little attention this provision has received. The rules on retirement savings constitute a kind of social contract that shouldn't be hastily broken. Particularly as Social Security and Medicare slink toward insolvency, Congress may be tempted to fiddle with the laws on 401(k) plans and IRAs. It's a way for lawmakers to gin up revenue while pretending they aren't raising taxes. The political class wants more control over America's individual savings and investments.

The Secure Act has useful elements, but the Senate should find a different way to pay for it. Speeding up the taxes on heirs is a bad precedent. By all means Americans should keep paying into their retirement plans. But if this passes Congress, they might want to start sharpening their pitchforks.

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 
Appeared in the July 17, 2019, print edition.


"Summer is a promissory note signed in June, its long days spent and gone before you know it, and due to be repaid next January. "

-Hal Borland

Alexander Financial Planning, Inc. | | tguthrie@afp-advisors.com