A lot has changed recently, so here are some of the top things we think you need to be aware of today.
1. 2019 was the best year for the stock market since 2013, and a lesson in predictions. A year ago, the market was crashing and many thought this was the end of the longest bull market run in history. Today’s result was a win for humility and time-tested, pragmatic investing strategies, and a loss for the alarmist crowd.
2. The tax laws keep changing, and you might want to make some changes, as a result. We are living in possibly the lowest Federal Income Tax regime in history, and it’s scheduled to go back up in 2026.
We don’t remember a time when all the rules were laid out for us to cut the government’s piece of your income so clearly!
This means taking income earlier than later might make sense for you and your family to maximize your after-tax spending ability. Roth IRA conversions or just plain taxable IRA distributions may make sense for you. We have invested in some new Roth IRA conversion technology that is pretty amazing. It runs over 40 retirement distribution scenarios to solve for the least amount of taxes possible. If you would like to talk about this, let us know.
3. The new tax laws will also impact how your loved ones might inherit your retirement accounts. This change has a big potential to be a tax nightmare, especially if the next generation is doing well financially. Many inherited IRA’s will need to be fully distributed and taxed within ten years.
4. Bonds also fared well this year. The interest rate cuts dramatically helped the returns of bonds, along with stocks. We will take it, but like the big run up in the stocks this year, our outlook is tempered. New highs don’t mean the market is going to drop, but reduced returns going forward make sense, especially with the developing news of the day.
5. We are seeing more clients use their wealth to share with charities and family. For those over 70, charitable checkbooks drawn from your IRA have been a big win. It is easy to do, and a wonderful use for the least attractive money in your portfolio (because it has a big future tax bill associated with it). This can also help reduce your required distributions.
6. We begin 2020 with a profound sense of gratitude for our clients like you. It’s an honor to serve kind people and help you reach your important goals.
Have a Great 2020!
-Your Team at ISC
* Tom Gartner is not registered with Woodbury Financial Services, Inc.
This article represents opinions of the authors and not those of Woodbury Financial Services, Inc. and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.