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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We’ve reached peak summertime; schedules are hectic, the weather is hot and humid, and time feels like it’s rushing by faster than usual. Now that we’re over halfway through the year, it’s the perfect time to take stock and do some reflecting. Do you remember your goals for this year or your New Year’s resolutions? How do they look now? Are you on track with your spending plan?
The middle of the year is a great time to stop and evaluate. It gives you a chance to reflect on the last six months and see your successes and struggles. Don’t think of this as a time to be hard on yourself if you’re not doing as well as you hoped, but instead as a time to take inventory. Spending some time reflecting will help you better plan for the second half of the year. You can reassess, restructure, and look at where you want to go before figuring out how to get there.
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Covid Policy Update – We are now hosting in-person meetings with clients that have been fully vaccinated with a booster shot. We will continue to conduct meetings via Zoom as well for those clients that prefer it. Please make sure to indicate your preference for either a Zoom or an in-person meeting when scheduling.
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Mail Issues – We have been getting our mail with more consistency recently, however delivery is still somewhat sporadic. Please keep this in mind going forward when sending us mail, as it may take a while for us to receive it.
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AFP Webinars – There will be no webinar for July. Next month's webinar will be on Medicare 101. We will be sending out an invite for next month's webinar in the upcoming weeks.
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AFP Website Webinars Page – The June webinar is now available for viewing on our website. You can view all of our previous webinars on this page, and all future webinars will be posted here as well. Click here to view.
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Farewell Barbeque – Next Friday, July 29th, we will be hosting a farewell barbeque for Bob from 12 pm - 2 pm. Feel free to drop by and say your goodbyes to Bob. No RSVP required.
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25 Year Celebration Update – We plan on holding our 25 Year Celebration in late September. We will provide further details and an exact date in the coming weeks.
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FYI
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Free Covid Tests – As of May 18th, every household in the US is eligible to make another order of up to two sets of free at-home Covid tests. Each of these sets contains four at-home testing kits. You can order these by either visiting www.covid.gov/tests or by calling 1-800-232-0233.
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Information for the Real ID – Due to the pandemic, the Department of Homeland Security has extended the REAL ID enforcement date to May 3, 2023. Beginning on May 3, 2023, every air traveler aged 18 and older will need a REAL ID compliant driver’s license or identification card (or another TSA-acceptable form of identification) for domestic air travel and to enter certain federal facilities. Click here to learn more.
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Knudge – We’ve had some questions from our Wealth Management clients regarding Knudge, our financial planning to-do list tracking tool. The tool is intended to help track your progress on your to-do list and helps us reduce administrative time spent tracking your to-dos. You are not required to register with Knudge, however registration does offer additional features. Regardless of if you choose to register or not, it would help us immensely if you could please mark your Knudges completed.
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Orion Portal Reminder – 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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I had a wonderful time celebrating the 4th with Tracey’s family, friends, and Gene at Red, White and Boom in downtown Columbus. Andy, Tracey’s husband, has a secret viewing spot atop a building downtown and it was such a wonderful night! Another celebration was my youngest grandson turning 1 years old. It is amazing to see how well he is doing, having come into the world a month and a half sooner than expected. This month I have focused on getting my grandsons back into (or starting to) take music lessons. It was something of a passion of my late parents. My dad sang in a trio and my mom was an accomplished piano and organ player. I made a promise to them I would do this and for a few years, the pandemic got in the way. Never fear, we are back on track. So far, one is taking piano while another is taking piano and ukulele. My vegetable garden is doing well and so are the weeds! It looks like my 30 tomato plants will have enough tomatoes to make sauce later this summer! | | |
The view for Red White and Boom | |
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As you may know, Bob is leaving us at the end of July. He has been working part-time this month and is currently on vacation this week with his family. He will be in the office next Friday for his goodbye barbeque. | | | |
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We spent most of June traveling the Mid-Atlantic States. Our first stop was the Flight 93 Memorial. We visited prominent Civil War Battlefields including Gettysburg where we experienced living history. An encampment of Union soldiers were on weekend duty and demonstrated a firing line.
We went to Shenandoah National Park and drove Skyline Drive before heading east to the N.C. Outer Banks. We stopped at the Wright Brothers Nat’l Memorial, which inspired Cayleigh to try hang-gliding on the dunes. Andy and I traveled to the OBX in 1989 and went to Cape Hatteras Lighthouse. The lighthouse had been in danger of being claimed by the sea and so in 1989, it was moved 2,900 feet inland. The move took 23 days. It is the tallest lighthouse in North America standing at 210 feet.
We traveled south to Charleston, S.C. touring the U.S.S. North Carolina battleship and the U.S.S. Yorktown aircraft carrier. We enjoyed Andy sharing his Navy memories while onboard. We stopped at Forts Sumter and Moultrie.
We toured historical homes including The David Wills house (Gettysburg, PA) where Abraham Lincoln finalized the Gettysburg Address, Thomas Jefferson’s Monticello (Charlottesville, VA), the Biltmore House (Asheville NC), and Boone Hall Plantation (Charleston SC). Boone Hall founded in 1681 is the oldest, working living plantation and is known for the two-century-old oaks lining the approach drive.
Our final stop included a New River white-water-rafting adventure at New River Gorge National Park, WV. Overall, the trip can only be described as epic. Cayleigh earned 18 Junior Ranger Badges bringing her total count to over 50.
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At the beginning of the month, I took a couple weeks off for vacation. I visited Chicago with a friend and we stayed with his sister for about a week. It wasn’t my first trip to Chicago, so we avoided a lot of the more touristy locations. We did visit Wrigley Field and watched our Reds get obliterated by the Cubs. We also visited Shedd Aquarium as well. We spent most of our time checking out restaurants and exploring the city.
After getting back from Chicago, I went with another group of friends to attend a convention in Indianapolis. We stayed for a few days and our Airbnb was pretty much across the street from Lucas Oil Stadium. The bulk of our time was spent in the Indiana Convention Center checking out different booths/exhibits. All in all, they were both great trips and it was really nice getting away for a bit.
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Current Economic and Investment Information | |
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RISING COST OF MONEY – The yield on the 10-year Treasury note nearly doubled YTD after the first 6 months of 2022, rising from 1.496% as of the close of trading on 12/31/2021 to 2.973% as of the close of trading on Thursday 6/30/2022. Over the last 60 years (1962-2021), the yield on the 10-year note has never doubled over the course of an entire calendar year (source: Treasury Department).
CRUDE OIL – The highest closing price ever for West Texas Intermediate crude oil (WTI) was $147.27 a barrel, set 14 years ago on 7/11/2008. WTI crude oil closed at $104.79 a barrel on Friday 7/08/2022, but closed at $123.70 a barrel just 4 months earlier on 3/08/2022 (source: NYMEX).
YOU DON'T GET IT – If you were born on 12/31/1941, by the time you turned 40 years old on 12/31/1981, you had lived through 9 calendar years with at least +7% inflation (as measured by the Consumer Price Index, aka CPI). If you were born on 12/31/1981, by the time you turned 40 years old on 12/31/2021, you had lived through just 1 calendar year with at least +7% inflation, i.e., +7.0% in calendar year 2021 (source: Department of Labor).
THE BARE MINIMUM – The federal minimum wage was last increased to $7.25 an hour nearly 13 years ago on 7/24/2009. 30 states have minimum wage requirements above the federal level while the other 20 states continue to use the $7.25 an hour amount as their wage floor. As of 7/01/2022, San Francisco, CA requires a minimum wage of $16.99 an hour (source: CBS News).
CHANGE FROM Q.E. TO Q.T. – The Federal Reserve began a reversal of “Quantitative Easing” on 6/15/2022 with its program of “Quantitative Tightening,” i.e., changing from monthly purchases of $120 billion of bonds to a monthly runoff of $95 billion of bonds. Fed analysis suggests that every $1 trillion of reduction of bonds from the Fed’s $8.5 trillion balance sheet would have the same impact as a 0.20 percentage point increase in interest rates (source: Federal Reserve).
AND YOU THINK NOW IS BAD – Inflation, as measured by the “Consumer Price Index,” was up +9.1% on a trailing 1-year basis as of 6/30/2022. That’s the 7th consecutive month that has reported inflation of at least +7% on a trailing 1-year basis. Between June 1978 and February 1982, the US suffered 45 consecutive months that reported at least +7% inflation on a trailing 1-year basis (source: Bureau of Labor Statistics).
COLLEGE DEBT– 43 million Americans have student loans. Just 3 million of the 43 million borrowers each owe at least $100,000, while 32 million borrowers each owe less than $40,000 (source: Department of Education).
LOTS OF PEOPLE NEED HELP – Medicare covers 63.8 million Americans, while Medicaid covers 80.9 million low-income Americans. The US population is 332.9 million (source: Centers for Medicare & Medicaid Services).
END OF LIFE – More Americans died in 2021 (3.459 million) than in any year in US history (source: National Center for Health Statistics).
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Weekly Market Recap
Inflation in June came in hotter-than-expected at 9.1% with sharply higher energy and food prices. On the bright side, oil and gas prices have dipped meaningfully (down 11% and 4% from June). This should (we hope) lead to a deceleration of price pressures in the coming months.
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Click here to view the source. | |
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Social Security COLA Estimate Rises to 10.5% for 2023 as Inflation Accelerates in June
By Dinah Wisenberg Brin
Source: ThinkAdvisor
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The consumer price index data for June, released Wednesday, shows that prices have risen by 9.1% over the past 12 months before a seasonal adjustment — the largest year-over-year increase since the period ending November 1981 — and 1.3% from May to June on a seasonally adjusted basis. May statistics showed prices rose by 8.6% over 12 months and 1% from April.
Based on this data, the Senior Citizens League estimates the Social Security cost-of-living adjustment, or COLA, for 2023 could be 10.5%, higher than the 8.6% it predicted last month. A 10.5% COLA would increase the average retiree benefit of $1,668 by $175.10, rounded, the advocacy group said this morning. It would be the biggest increase since 1981.
Click here to continue reading this article.
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Grandparents Can Give More to College 529 Plans After Rule Change
Outside contributions will no longer be penalized in financial aid decisions after Congress made tweaks that will go into effect for the 2024-25 school year.
By Scott Carpenter
Source: Bloomberg
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Grandparents who want to help pay for grandkids’ college costs are getting more bang for their buck.
Recent changes to financial aid rules mean they’ll soon be able to contribute to 529 college savings plans that they own without penalizing their grandchild’s eligibility for federal money, a limitation that’s made some grandparents think twice before opening new accounts or adding to existing ones.
“The fear that a grandparent helping their grandchild by using their own 529 plan would interfere with them getting financial aid, that worry is gone now with the new rules,” said Stuart Siegel, president of college financial-aid service FAFSAssist.
The change is part of an overhaul of the Free Application for Federal Student Aid, or FAFSA, that students and their families fill out when applying for financial assistance. Its length and complexity have been blamed for deterring people from even seeking aid, spurring Congress to streamline the process through the FAFSA Simplification Act.
Click here to continue reading this article.
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Reducing Inheritance Tax Burden | |
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How to Minimize Your Heirs' Tax Burden on Inherited IRAs and 401(k)s
The stretch-IRA strategy largely went away after the Secure Act of 2019, leaving heirs less maneuverability on taxes. Financial pros have some solutions.
By Gail MarksJarvis
Source: Rethinking65.com
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When parents leave their children an inheritance, assets are most often split equally among siblings. But equal isn’t always equal when they leave individual retirement accounts or 401(k)s to adult children with big differences in income—at least not anymore.
Before the Secure Act of 2019, adult children who inherited retirement accounts had significant leeway to control what they withdrew annually and the resulting taxes. While they had to take some money out every year and pay taxes, they could limit those taxes by spreading those withdrawals over a lifetime.
Now, for most adult children, IRAs and 401(k)s must be drawn down within a 10-year period after a parent dies, meaning withdrawals—and taxes—could be sizable whether the disbursements are taken in intervals or in a lump sum by year 11.
Click here to continue reading this article.
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“In these divine pleasures permitted to me of walks in the July night under moon and stars, I can put my life as a fact before me and stand aloof from its honor and shame.”
- Ralph Waldo Emerson
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Alexander Financial Planning |
1621 W. First Avenue
Grandview Heights, OH 43212
614-538-1600
Registered Investment Advisor
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This material is distributed by Alexander Financial Planning, Inc., (AFPI) and is for information purposes only. Although information has been obtained from sources we believe to be reliable, we do not guarantee its accuracy. It is provided with the understanding that no fiduciary relationship exists because of this report. Opinions expressed in this report are not necessarily the opinions of AFPI and are subject to change without notice. AFPI assumes no liability for the interpretation or use of this report. Financial planning, investment conclusions, and strategies suggested in this report may not be suitable for all investors and consultation with a qualified advisor is recommended prior to executing any investment strategy. No portion of this writing should be construed as legal or accounting advice. All rights reserved. | | |
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