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T
his Week from Nathan Ollish
Nathan D. Ollish
CFP® CERTIFIED FINANCIAL PLANNER™
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Upcoming Changes in How We Save and Plan for Retirement
Recently, the House Ways and Means Committee voted unanimously in favor of legislation which could have dramatic impacts on how people plan for and save for their retirement. A few key parts of the legislation include making it easier for small businesses to work together to offer retirement plans for employees, as well as requiring statements to include projections for lifetime income. While these changes will likely impact many, there is another part of the legislation that could be more significant.
One of the major provisions of the bill recommends pushing back the age at which Required Minimum Distributions (RMDs) would begin, from age 70.5 to 72. The current age at which RMDs begin has not been changed since 1986, when the average life expectancy for a 65-year-old in the United States was approximately 3 years less than they are now. Pushing the age at which distributions from tax deferred accounts have to be taken back could have several effects on planning both for, and during retirement.
First, by not being forced to withdraw from a tax deferred account until a later age, the account in theory could grow for 18 more months, allowing for an additional time period of tax deferred growth. However, due to how RMDs are calculated, this additional growth could cause a retiree to be required to take a larger minimum withdraw that could inadvertently cause them to be bumped into a higher tax bracket, depending on other retirement income sources such as pension income and Social Security benefits.
Another potential effect of pushing back the starting age for RMDs could impact those clients who are inclined to make charitable gifts via a qualified charitable distribution (QCD). Simply put, a QCD is a transfer of funds from an IRA, payable to a qualified charity. They are not included in gross income, and the charity does not pay taxes on the gift either. However, QCDs can only be made once an IRA owner has reached age 70.5- if the starting age for RMDs is pushed back to age 72, then this gifting strategy would likely be unavailable to IRA participants until they reach that age as well.
Finally, in a separate bill aimed at helping younger Americans get out of debt sooner and save for retirement, Congress has reintroduced a bill which would allow employers to assist employees with student loan repayments, tax free, for up to $5,250 per year. For our younger clients who are getting started in their careers and trying to accumulate assets for retirement, while also managing student loan debt and saving for any additional financial goals, the potential to have employers provide significant repayments of student loans on the behalf of employees could be huge.
Whether you are currently in retirement, but have not yet reached RMD status, a small business owner looking to provide a retirement plan for your employee, or one of the millions of Americans working to paying off their student loan debt, there are potential changes coming that could impact you and your family. Here at Impel Wealth, we try our best to stay up to date on the changing financial landscape as we all keep "Moving Life Forward ."
Nathan
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Weekly Market Commentary
May 20, 2019
The Markets
Trade war trade-off.
There was some good news on trade, last week. The United States took steps to reduce trade friction with the European Union, Canada, Mexico, and Japan.
"The United States on Friday reached an agreement with Canada and Mexico to remove steel and aluminum tariffs, which had been a persistent source of friction across North America over the past year. The deal on metals came as Mr. Trump decided not to press ahead immediately with levies on EU and Japanese automotive products - despite declaring that foreign car and vehicle imports represented a threat to U.S. national security," reported James Politi, Jude Webber, and Jim Brunsden of Financial Times.
There was some bad news, too. Trade tensions escalated between the United States and China. The United States doubled tariffs on $200 billion of Chinese goods and threatened tariffs on an additional $325 billion of goods. The United States imports about $539 billion worth of goods from China each year, reported the BBC.
In addition, President Trump signed an executive order preventing U.S. companies from using telecommunications equipment made by firms believed to pose a risk to national security. The move is expected to affect the ability of a large Chinese telecoms firm to conduct business in the United States, reported David Lawder and Susan Heavey of Reuters.
China currently has tariffs on $110 billion of American goods and they announced plans to hike tariffs on $60 billion of these goods. In total, China imports $120 billion worth of goods overall from the United States each year.
While the relatively small amount of American goods imported by China would seem to give the United States an advantage in a trade war, China has other means of gaining leverage. The country holds about 7 percent of U.S. debt, which is more than any other nation, reported Jeff Cox of CNBC. If China were to slow purchases of Treasuries, yields on U.S. government bonds may move higher.
A source cited by Reshma Kapadia of Barron's suggested it is unlikely the Chinese will stop buying Treasuries. "Where would they put the trillions of dollars? Ten-year German Bunds are below Japanese 10-year yields; there aren't a lot of options...They also don't want their currency to appreciate, so that handcuffs them...China tends to find things to hurt adversaries without hurting themselves."
The Standard & Poor's 500 Index finished the week lower.
Data as of 5/17/19
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1-Week
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Y-T-D
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1-Year
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3-Year
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5-Year
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10-Year
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Standard & Poor's 500 (Domestic Stocks)
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-0.8%
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14.1%
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5.1%
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11.8%
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8.7%
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12.1%
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Dow Jones Global ex-U.S.
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-0.9
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7.3
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-10.0
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5.1
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-0.2
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4.4
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10-year Treasury Note (Yield Only)
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2.4
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NA
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3.1
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1.8
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2.5
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3.2
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Gold (per ounce)
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-0.5
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-0.1
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-0.7
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0.1
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-0.3
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3.4
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Bloomberg Commodity Index
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1.3
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3.9
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-11.8
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-2.4
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-10.0
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-4.0
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DJ Equity All REIT Total Return Index
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NA
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NA
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NA
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NA
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NA
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NA
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S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
Which cities offer the best quality of life?
In March, Mercer published its 21st Quality of Living Survey. The goal is to help multinational corporations with data that can help them optimize their global operations. The survey considers factors like safety, housing, recreation, economics, public transport, consumer goods, and more. For 2019, the cities offering the highest quality of life were:
- Vienna, Austria
- Zurich, Switzerland
- Vancouver, Canada
- Munich, Germany
- Auckland, New Zealand
- Düsseldorf, Germany
- Frankfurt, Germany
- Copenhagen, Denmark
- Geneva, Switzerland
- Basel, Switzerland
Thirteen of the world's top-20 cities were in Europe. The safest cities in Europe were Luxembourg, Basel, Bern, Helsinki, and Zurich. The least safe, as far as personal safety goes, were Moscow and St. Petersburg.
In North America, Canadian cities generally did better than U.S. cities. The highest ranked city in the United States was San Francisco, which came in at 34th. Boston ranked 36th and Honolulu 37th. The safest cities in North America were Vancouver, Toronto, Montreal, Ottawa, and Calgary.
Dubai offers the best quality of life in the Middle East. Dubai and Abu Dhabi were the safest cities, while Damascus was the least safe - in the Middle East and the world.
Singapore, Tokyo, and Kobe had the highest quality of life rankings among Asian cities. Cities in Australia and New Zealand also did quite well, overall.
Weekly Focus - Think About It
"You are all there, the people in the city. I can't believe I was ever among you. When you are away from a city it becomes a fantasy. Any town, New York, Chicago, with its people, becomes improbable with distance. Just as I am improbable here, in Illinois, in a small town by a quiet lake. All of us improbable to one another because we are not present to one another."
--Ray Bradbury, American author
Best regards,
Nathan Ollish
Investment Advisor Representative
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Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity.
These views are those of Carson Group Coaching, and not the presenting Representative or the Representative's Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.
*To unsubscribe from the Impel Wealth Management please reply to this e-mail with "Unsubscribe" in the subject line, or write us at 2006 4th Street, Cuyahoga Falls, OH 44221.
Sources:
Securities and advisory services offered through Cetera Advisors LLC, member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Confidential: This email and any files transmitted with it are confidential and are intended solely for the use of the individual or entity to whom this email is addressed. If you are not one of the named recipient(s) or otherwise have reason to believe that you have received this message in error, please notify the sender and delete this message immediately from your computer. Any other use, retention, dissemination, forward, printing, or copying of this message is strictly prohibited.
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Is there something we can help you with? Please call me at 330.800.0182 or email me directly at [email protected].
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Impel Wealth Management
2006 4th Street, Cuyahoga Falls, OH 44221
P: 330.800.0182 TF: 844.422.5550 F: 234.312.0460
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