Weekly Market Commentary

Don’t Put Autopay Bills on Autopilot
The majority of Americans have embraced the convenience of online, automatic bill payments. Autopay can save time, reduce clutter, and prevent missed payments, which may impair credit scores or lead to penalties. It also offers more control – allowing us to schedule the payment – compared to not knowing when a check will arrive or be cashed.

Still, you should be aware of potential downsides. Knowing bills will be paid on time can make us less vigilant in tracking spending, or watching for unexpected price increases or fraudulent charges. With autopay, it’s easy to forget the date when a service or subscription automatically renews. And once something renews, it may be challenging to reverse.

It can be a chore to re-enter account information on multiple websites every time you change the credit card or checking account you’re using for payments. Finally, while automatic electronic payments are generally more reliable than manual payments, they’re not totally foolproof. Occasional glitches could result in added fees or loss of service.

You can take a few measures to reduce potential problems. If you have the option when you set up bill pay, choose to be notified by text or email before payments go through. When you cancel a service, make sure to monitor your statement to verify payments are stopped promptly. To keep things simple, you may want to reserve autopay for bills with regular, fixed charges.

Some may use a credit card for auto payments but benefits need to be weighed against the risk of not tracking expenses as closely and incurring interest charges if your balance isn’t paid in full each month.

If you pay a credit card with automatic payments from your checking account, consider choosing the minimum payment option to prevent the possibility of overdrawing your account.  Then when it’s convenient, manually pay any outstanding balance to avoid interest charges. Whether you use a checking account or a credit card for your automatic payments, go through your statement at least once or twice a month to ensure everything is in order.

We are always available to help you look for ways to safeguard your money and protect your financial credit. Feel free to contact our office to set up an appointment to discuss any concerns or questions you may have.

Quick Facts About the New Stimulus Package
In late December, Congress passed a $900 billion stimulus package, which included $600 checks to qualifying citizens. After initially refusing to sign the bill unless the checks were increased to $2,000, President Trump signed it. Although the House voted to increase the checks, the Senate didn’t pick up the vote, leaving the original package unchanged. Some highlights from the bill include:

The IRS and the Treasury have already started direct deposits. Recipients who don’t have direct deposit set up with the IRS will receive physical checks or Economic Impact Payment cards – provided the IRS gets to them by January 15. Those the IRS doesn’t get to by that cutoff date will need to claim a recovery rebate credit when they file their taxes.

Qualifications for this bill’s checks differ from the CARES Act in a few ways. Eligibility is determined based on 2019 tax returns (compared to 2018 or 2019 with CARES). To receive a full payment, an individual can’t have a 2019 adjusted gross income (AGI) above $75,000; married couples can’t have an AGI above $150,000, and a head of household’s AGI can’t be over $112,500. Eligible parents will receive checks for children under the age of 17.

People with higher incomes will receive a partial payment, which declines by $5 for every $100 of income over the full-payment limits. So, individuals with income of $87,000 and above and married couples filing jointly with $174,000 will not receive payments.

The IRS answers questions about the second stimulus checks and provides a tracking option at https://www.irs.gov/coronavirus/economic-impact-payments.

Other provisions from the 5,600-page bill include:
  • Individuals drawing unemployment benefits will receive an extra $300 a week through March 14.
  • Some hard-hit small businesses may be able to apply for a second Paycheck Protection Program loan.
  • Employers deferring payroll taxes under the President’s executive action have until the end of 2021 to increase employees' withholding to pay back taxes owed.
  • The $300 above-the-line deduction for cash contributions to qualified charities is extended through 2021.
If you have questions on how the bill may affect you or other financial concerns, don’t hesitate to call.  
We do not provide tax advice; coordinate with your tax advisor regarding your specific situation.
Why You Should Set Up Your Online Social Security Account
For many of us, Social Security plays an important part in our financial plans for retirement or later stage of life. So even if you’re years away from applying for benefits, there are good reasons to set up your online Social Security account at www.socialsecurity.gov/myaccount.

You can go online to ensure there aren’t any gaps in your earnings. Why is that important? Because the amount you receive from Social Security will be based on how much you’ve earned over your working career. Many people change jobs frequently, increasing the possibility an employer will fail to report their earnings, use the wrong Social Security number, or use an incorrect name. In fact, it’s estimated Social Security records have a 3 percent error rate.1 If there is a mistake, you’ll want to fix it as soon as possible, so you aren’t shortchanged when you finally apply for benefits.

You may protect yourself against fraud. By setting up an online Social Security account, you’ll prevent anyone else from doing so. Much like income tax fraud, identity thieves sometimes set  up Social Security accounts and file for benefits using other people’s names. You don’t want to wait until you retire to find someone else is collecting your hard-earned benefits. The most effective way to prevent that is by creating your own account.

You can easily replace a lost or stolen Social Security card – for free. With an online account, there’s no need to sit through traffic to get to your local office and wait in line for a new card. You can also download a printable copy of your Social Security 1099/Benefit Statement, the tax form the Social Security Administration mails each year in January. No need to wait.

If you already receive Social Security, you can still benefit from having an online account. You can set up or change direct deposit or address information and get a benefit verification letter, which you may need if you’re applying for a loan. You’ll also be able to check the status of your Social Security benefit application from anywhere you can safely log in to your account.

If you’re wondering about the role of Social Security benefits in your retirement plans or how much income you’ll need in retirement, call our office. We can help you evaluate your financial plan to ensure you’re on track to work toward the retirement you envision.

Financial Resolutions for 2021

Despite a crazy year or perhaps because of it, over half of Americans are expected to make at least one financial resolution for 2021.1 If you haven’t identified yours, here are a few to consider. 

Pad your retirement savings. You probably spent less on travel, restaurants, movies, gas, or sporting events in 2020. Why not maintain some of those cuts after things normalize and add the savings to your retirement account? 

Increase your emergency fund. According to FINRA, almost half of Americans don’t have a rainy day fund. If you don’t have an emergency fund equal to six months of income, start one. If you do, why not add enough to cover an additional month or two of expenses? 

Reduce debt, safeguard credit. Automate account payments to avoid missing any. Plan to eliminate debts before retiring. Thwart identity thieves with credit monitoring, which notifies you when key information on your file changes. 

Create a long-range plan. If you’re married, project future expenses if you both live to 95 or either of you dies and the other lives to 95. Then go to ssa.gov/myaccount to estimate Social Security benefits you’d receive when claiming at different ages. Determine how much more you’ll need to maintain your lifestyle. 

Review your insurance and estate plan. Make sure your insurance coverage is adequate and beneficiaries are up to date. If you haven’t reviewed your estate plan recently, you’ve moved, or your assets or family has changed, schedule a meeting with your estate planning attorney. 

Invest in yourself. Health care is expensive. Studies indicate the average 65-year-old couple retiring in 2020 can expect to pay $295,000 for out-of-pocket health care and medical expenses (not including potential long-term care). Taking steps to stay fit now may help you enjoy retirement and save money. 

Work with a coach. Your odds of successfully implementing goals increase when you have an objective, knowledgeable partner. Make an appointment to discuss your financial resolutions and how we can work together to make 2021 a happy and prosperous new year!




Smart Things to do with a Year-End Bonus

Despite the pandemic, two-thirds of U.S. employers still plan to offer their employees year-end bonuses. If you work for one of those companies, it is wise to come up with a thoughtful plan for the extra cash. If you need more time to consider your options, deposit the money in a savings account. It will be harder to chip away at it if it’s not connected to your debit card. Here are a few other suggestions.

Account for taxes. If your employer doesn’t withhold taxes from your bonus, or doesn’t withhold enough, make sure to set aside money to pay them. 

Increase your bonus’ value. Contributing the maximum allowed to a pretax employer retirement plan can make your bonus go farther than using it as after-tax dollars, especially if your employer matches the contributions. If your income falls within IRS guidelines, you may be able to make pretax contributions to your 401(k) and a traditional IRA or add post-tax contributions to a Roth IRA, which will grow tax-free.

Put your money to work. Since a bonus is extra money, it may be easier to use it for an investment with long-term growth potential or to rebalance your portfolio by introducing new money rather than selling stocks.

Build your emergency fund. Everyone should have liquid savings available to cover six months’ worth of living expenses when the unexpected occurs. If you keep your fund in a savings account, be sure to shop around for the best rates, or consider a short-term CD.

Invest in yourself or loved ones. Many of the most successful people continually pursue knowledge and increase their skills. You might take a coding course, learn a language, hire a health coach, pay for a professional certification, or enroll in a public speaking program. If you have a child or grandchild, you could contribute to their 529 plan.

Plan an experience. Research indicates great memories often provide more satisfaction than purchases. In the midst of a rough winter, planning a future vacation can give you something to look forward to. 

We’re here to help you reap the rewards of your success and build a brighter tomorrow. Call our office to schedule a time to discuss what you want to accomplish in 2021 and beyond.
We do not provide tax advice; coordinate with your tax advisor regarding your specific situation.

U.S. stocks fell Friday following disappointing retail sales data and big bank earnings reports. Investors also feared President-elect Joe Biden’s ambitious stimulus plan could result in tax hikes or higher interest rates. For the week, the Dow fell 0.91 percent to close at 30,814.26. The S&P lost 1.46 percent to finish at 3,768.25, and the NASDAQ dropped 1.54 percent to end at 12,998.50.

Returns Through 01/15/21 1 Week YTD 1 Year 3 Year 5 Year
Dow Jones Industrials (TR) -0.91 0.73 8.59 8.59 16.79
NASDAQ Composite (TR) -1.54 0.87 41.63 22.66 25.03
S&P 500 (TR) -1.46 0.39 16.66 12.74 17.23
Barclays US Agg Bond (TR) 0.19 -0.76 6.00 5.25 4.07
MSCI EAFE (TR) -0.30 1.59 8.40 3.33 10.04

Debt — The U.S. increased its national debt by $7.77 trillion in the last four years. The U.S. increased its national debt by $7.67 trillion in the previous seven years (source: Treasury Department, BTN Research). 

Housing — The average interest rate nationwide on a 30-year fixed rate mortgage was 2.76 percent at the end of 2020. The all-time record low national average is 2.66 percent, set just one week earlier on Dec. 24 (source: Freddie Mac, BTN Research). 

Where Does This Money Come From? — The Fed is buying $120 billion of bonds each month – $80 billion of Treasury debt and $40 billion of mortgage-backed securities. The Fed confirmed on Dec. 16 the purchases will continue “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals” (source: Federal Reserve, BTN Research).    

Source: Morningstar.com. *Past performance is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Three- and five-year returns are annualized. The Dow Jones Industrials, MSCI EAFE, Barclays US Agg Bond, NASDAQ and S&P, excluding “1 Week” returns, are based on total return, which is a reflection of return to an investor by reinvesting dividends after the deduction of withholding tax. (TR) indicates total return. MSCI EAFE returns stated in U.S. dollars.

* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System. The Morgan Stanley Capital International Europe, Australia and Far East Index (MSCI EAFE Index) is a widely recognized benchmark of non-U.S. stock markets. It is an unmanaged index composed of a sample of companies representative of the market structure of 20 European and Pacific Basin countries and includes reinvestment of all dividends. Barclays Capital Aggregate Bond Index is an unmanaged index comprised of U.S. investment-grade, fixed-rate bond market securities, including government, government agency, corporate and mortgage-backed securities between one and 10 years. Written by Securities America, Copyright January 2021. All rights reserved. Securities offered through Securities America, Inc., Member FINRA/SIPC. SAI#3410930.1