Thousands of friendships have been formed and lives made better because of Bunny Skirboll. Her impact extends from Rochester to Sarasota and beyond. For that, Skirboll, a Rochester and Sarasota resident and longtime community leader, was honored with the prestigious Lee and Bob Peterson Legacy Award during the group’s annual gala in Sarasota, Florida.
“Bunny has been unwavering in her passion for helping individuals gain mental wellness through friendship. She exemplifies the award: an individual in the community who has bettered the lives of those who have mental health challenges” said Marlene Hauck CEO of the Lee and Bob Peterson Foundation.
Bunny Skirboll founded Compeer in Rochester 50 years ago after a long rehabilitation from a near fatal car crash. She discovered the healing power of friendship and vowed to make a difference in the lives of others.
“I’m proud of the people’s lives I have made better. There’s a saying in the Talmud that to save one life is to save the world, so I hope along the way I have saved more than one life” reflected Skirboll.
Compeer matches volunteers with community members living with mental health challenges. In 1982, it was recognized as a national model by the National Institute of Mental Health.
In 2011, Compeer opened an office in Sarasota. It is now part of Coastal Behavioral Health, the largest community mental health organization in Sarasota County.
Skirboll is an active member of both the Rochester and Sarasota communities. She is a founding Director of the Board of Canandaigua National Trust Company of Florida.
Congratulations, Bunny and thank you for all you do!
In order to ensure your financial plan meets your goals, it’s important to keep up to date with the latest federal numbers. For example, there are inflation adjustments, expiring tax breaks and changes to rules coming up in 2024 that could impact how much you can save, gift, deduct, etc. Taxpayers will need to be mindful, too, that numerous provisions from the Tax Cuts and Jobs Act are sunsetting at the end of 2025.
The big news for 2024 is the tax brackets and tax rates, which are shifting higher by 5.4%. This could provide the ability for Americans to increase their take-home pay and shield more of their income from the IRS.
In 2024, the standard deduction will rise to $29,200 (up from $27,700 in 2023) for married filing jointly and for single payers it is $14,600 (up from $13,850 in 2023). Heads of households will see their standard deduction jump to $21,900 (up from $20,800).
The estate, gift, and generation-skipping transfer (GST) exclusion for 2024 is $13,610,000 (up from $12,920,000 in 2023). These higher lifetime exemption amounts are due to “sunset” at the end of 2025, so you have less than two years to prepare.
The annual gift exclusion is $18,000 for 2024. This is the amount you can give to another without reporting it on a gift tax return. Payments made directly for tuition and medical expenses are unlimited.
Taxpayers age 70½ or older can make tax-free distributions up to $105,000 from an IRA directly to charities in 2024 (up from $100,000). The distributions will decrease taxable income if included as a part of a Required Minimum Distribution (RMD) and, with limited exceptions, should be used by all those over 70 ½ who plan to make charitable contributions.
This is just a sample of the key numbers for 2024, there are many more not listed here. To make sure you are taking advantage of all the tools to assist in achieving your goals, schedule a meeting with one of our knowledgeable team members. We are always here to help and wish you all the best in 2024!
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>When it comes to New Year’s Resolutions, there seems to be two types of people: those who look forward to making (and sometimes breaking) them, and those who think the whole thing is probably a waste of time. Everyone knows that many popular resolutions are broken by the time Valentine’s Day comes around, just look at the gym in January versus February or March!
However, I would argue that financial resolutions should be seriously considered for everyone. Getting started on financial resolutions at any time, New Years or not, can help bring peace of mind to both working and retired people when tackled in a few easy steps.
For many, this may not be a challenge as you may already be a spreadsheet wizard or use an aggregator (i.e., MINT or Personal Capital) to regularly look at your balance sheet. For those who are new to the process, I would start by listing your assets including: home, investment accounts, bank accounts, loans, credit card balances, cash value of life insurance policies, 401k/403b, automobiles, home furnishings, vacation home or rentals. By subtracting debt from your assets, you end up with your total net worth.
The resolutions you should make may become clearer by regularly completing this exercise, as you look closely at your assets and liabilities, patterns may emerge. If you have low interest savings accounts and high interest debt, for example, a pay off strategy could be a top priority. Or, if your savings are not where they need to be, is there a way to save more?
Volatility always creates opportunities, as the winners of last year are often the losers of today. Rebalancing your portfolio to your target allocation (such as 60% stocks, 40% bonds) will enable you to buy low and sell high, a proven long-term strategy for success. An annual rebalancing is preferable to a more frequent one, as studies show that rebalancing too often can increase taxes or fees and inhibit performance.
Identity theft is running rampant, so checking your credit report is more important than ever. You are entitled to three free credit reports per year, in addition, many banks offer credit reporting that is free, and daily. There are also paid services that can help reduce the risk of someone opening accounts in your name or getting ahold of passwords or other personal data.
If your credit score looks good and you can verify all the accounts as yours, then there is not much more to do than continue to monitor the data. If there are issues, however, take steps to improve your credit rating as it would adversely impact your ability to borrow by forcing you to get credit at a higher interest rate, or not be able to get it when you need it.
Insurance is a critical part of risk management and yet is an often overlooked area of personal financial planning. At least annually, you should review all your coverage, including your Property and Casualty (homeowners, auto and umbrella), as well as your life insurance coverage.
When setting the budget for the year, a good method is to first establish the minimum required for living expenses. If your spending often exceeds your income, you may need to cut back on some of the more enjoyable things, such as vacation, concerts, sporting events, etc.
Be sure to budget not just for spending, but also for saving to ensure you have a comfortable emergency fund, as well as longer term investments for retirement or legacy needs/ wants.
The New Year is an excellent time to take a close look at your overall financial picture and take the necessary steps to rechart your course, if there are improvements to be made. If not, the peace of mind from knowing you are fiscally sound can put you in a positive frame of mind as you enter another year. As always, our team is ready to help you with any of your financial needs, so give us a call, we would love to help.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>The experts of this show featured Alexander Bell, Wealth Advisor and Norton Suda, CFP®, ChFC®, RICP®, Assistant Vice President, Wealth Advisor.
Broadcasted on November 25, 2023.
For questions, feel free to contact Alexander Bell or Norton Suda.
Understanding Insurance and its Importance | Audio Clip |
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Part 1: What is insurance and how could it fit into your financial plan? | |
Part 2: Term vs Permanent Insurance | |
Part 3: How they work and why they’re used | |
Part 4: Next steps to choose a policy that matches your needs |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Having proper insurance coverage for those starting out in their careers can seem like a daunting proposition. From keeping up with student loan payments and the ever-increasing costs of everyday life, additional expenses are not always easy to take on. However, having adequate insurance coverage is an important part of reducing financial risk and one of the best ways to protect income and assets.
Life insurance is one of the most important types of insurance to have to protect our loved ones. An unexpected death can bring about unexpected bills such as funeral expenses and debt burdens, but it also halts an important element of any financial plan: future income. For those that have loved ones that rely on them financially, having adequate life insurance coverage is essential to avoid a serious downgrade in financial means and lifestyle.
Oftentimes, some life insurance coverage is offered through employee benefit packages, so check with your HR department to find out how much, if any, coverage you might have and then find supplemental coverage to ensure you have the appropriate coverage.
There are many types of life insurance, a topic that is beyond the scope of this article, and working with a professional is one of the best ways to understand how much coverage is needed for your situation and what is the most cost-effective way of gaining that coverage.
Disability Insurance
A more common occurrence than premature death is becoming disabled, whether temporarily or permanently. According to the US Census Bureau, just under 1 out of 12 Americans under age 35 reports having a disability and that jumps to just under 1 out of 8 Americans for those between ages 35 and 64 (Census Bureau, 2021)1. Disabilities include not only physical but also long-term mental illnesses that can keep people out of work, sometimes indefinitely.
Many employee benefit packages include coverage for short term (usually considered less than six months) and/or long-term disabilities (usually considered six months or longer). If your employee benefits include disability coverage, it is important to understand what it covers, and more importantly what it does not cover, and try to find additional coverage if needed.
One of the more overlooked - but not less important – insurances you may need is property and casualty (P&C) which covers physical properties and if someone is hurt on or by your property, such as your house or car. As you start to build your savings and acquire assets, it is important to have those assets protected from both damage and liability. Car insurance is one of these P&C coverages that many of us are familiar with and protects the vehicle if it becomes damaged, as well as provides coverage if we injure someone else or their property while operating our vehicle.
Another P&C coverage is homeowner’s and renter’s insurance, both of which cover the residence (in the case of homeowner’s insurance) and the valuables of the residence in case of damage from fire, theft, and other threats. Umbrella insurance covers beyond the previously mentioned protections to provide coverage over and above what either homeowner’s or auto insurance will cover.
There are many factors to consider when shopping for P&C coverage. Consider working with a broker or noncommissioned professional to find the best and most appropriate coverage for yourself.
While it may seem like a burden to take on additional insurance premiums, now that you are building your savings and assets, it is important to make sure that what you have worked hard for is protected from damage and liability. Even the best financial situation can be turned on its head when unexpected and unplanned events occur. Reach out and talk with one of our experts to learn if the coverages you have are adequate and make the most sense for your situation.
Source: 1) https://data.census.gov/table?q=disability
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
If you are covered by Medicare, it's time to compare your current coverage with other available options. Medicare's Open Enrollment period began on October 15 and runs through December 7. Medicare plans can change every year, and you may want to switch to a health or prescription drug plan that better suits your needs or your budget.
Any changes made during Open Enrollment are effective as of January 1, 2024.
Original Medicare (Part A hospital insurance and Part B medical insurance) is administered directly by the federal government and includes standardized premiums, deductibles, copays, and coinsurance costs.
A Medicare Advantage (Part C) Plan is an alternative to Original Medicare. Medicare Advantage Plans cover all Original Medicare services and often include prescription drug coverage and extra benefits. They are offered by private companies approved by Medicare. Premiums, deductibles, copays, and coinsurance costs vary by plan.
Medicare Part D drug plans, like Medicare Advantage Plans, are offered by private companies and help cover prescription drug costs.
Start by reviewing any materials your plan has sent you. Look at the coverage offered, the costs, and the network of providers, which may be different than last year. Maybe your health has changed, or you anticipate needing medical care or have a change in prescription drugs.
If your current plan doesn't meet your health-care needs or fit your budget, you can make changes. If you're satisfied with what you currently have, you don't have to do anything — your current coverage will continue.
If you're interested in a Medicare Advantage Plan or a Medicare Part D drug plan, you can use the Medicare Plan Finder on the Medicare website medicare.gov, to see which plans are available in your area and check their overall quality rating. For personalized information, you can log in or create an account to compare your plan to others and see prescription drug costs.
Determining what coverage you have now and comparing it to other Medicare plans can be confusing and complicated, but help is available. Call 1-800-MEDICARE or visit the Medicare website to use the Plan Finder and other tools that can make comparing plans easier. You can also call your State Health Insurance Assistance Program (SHIP) for free, personalized counseling. Visit shiphelp.org to find the phone number and website address for your state. Local resources are also available.
Our team is here to answer any questions you may have so that you can make informed decisions about your Medicare coverage.
©2023 Broadridge Investor Communication Solutions, Inc.
All rights reserved. This material provided by Denise Kelly-Dohse.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
2023 began with a hangover of sorts with the same troubles that plagued the market last year. But how has the situation changed year to date? In this inaugural episode in our series quarterly market updates, Brian J. Murphy, CIMA® Senior Vice President, Chief Investment Strategist joins Laurie Haelen, AIF®, Senior Vice President, Director of Wealth Solutions to discuss various aspects of financial markets over the past quarter as well as the current market climate. We’ll address inflation’s impact on the economy, the current labor market, valuations, possible opportunities with fixed income, and the importance of focusing on long term goals during times of market uncertainty.
Broadcasted on October 18, 2023
For questions, feel free to contact Brian J. Murphy or Laurie Haelen at 941.366.7222 x41970.
Third Quarter 2023 Market Commentary | |
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts**.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
**Google Podcast™ mobile application is a trademark of Google LLC and this website is not endorsed by or affiliated with Google in any way.
Christine Jennings has been appointed Board Chair of Canandaigua National Trust of Florida (CNTF) following the retirement of George W. Hamlin, IV.
Jennings has served on the CNTF board since 2015 following an esteemed banking career in which she founded and Chaired Sarasota Bank for almost 15 years. Prior to that, she served as Senior Vice President, Chief Lending Officer of Liberty National Bank in Manatee County.
“Christine’s leadership, acumen, and deep passion for the Sarasota community are true assets to CNTF. She has played an instrumental role in the success of our Sarasota office” said Sam Guerrieri, Executive Vice President Canandaigua National Trust of Florida.
Jennings leads a board of 9 directors at CNTF and is also involved in numerous philanthropic organizations. She has been twice named one of the “100 Most Powerful People” in Sarasota.
“I am proud to be part of the CNTF family. Our parent company, Canandaigua National Bank & Trust was founded over 100 years ago. Their reputation is established as a strong financial institution with exceptional customer service and dedicated employees,” said Jennings
]]>Sarasota, Florida- Canandaigua National Trust Company of Florida (CNTF) is expanding and Angela Carlson, MBA, CFP, a veteran of wealth management and financial services, has joined its team in Sarasota as Vice President, Wealth Advisor.
Angela brings over 18 years of experience and a passion for a holistic and comprehensive approach to wealth management and financial planning to CNTF.
“Her vast experience in all of the various disciplines of wealth management, combined with her thoughtful approach with clients, make her an excellent addition as we look to grow our customer base in the Sarasota region,” said Laurie Haelen Director of Wealth Solutions at Canandaigua National Bank & Trust.
Carlson says the opportunity to join CNTF was a simple decision. “I’ve known several of the team members for over a decade. I wanted to be part of it. It’s a great group of people inside a culture based on a genuine desire to help our clients”.
Carlson serves on several boards including the Siesta Key Chamber of Commerce and Humane Society at Lakewood Ranch.
Canandaigua National Trust Company of Florida has been serving the Sarasota area since 2009 with more than a century of experience in financial services through its affiliate, Canandaigua National Bank & Trust.
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The experts of this show featured Jillian Erika Dart, Esq., CTFA, AEP, Senior Vice President, Manager of Trust and Estate Solutions, and Ramona Green, CTFA, Vice President - Trust Officer.
Broadcasted on July 29, 2023.
For questions, feel free to contact Jillian Erika Dart or Ramona Green.
Social Security - No One Size Fits All Approach | Audio Clip |
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Part 1: Estate Planning Basics | |
Part 2: Creating a Will and Considering Your Assets | |
Part 3: Beneficiaries and Distributing Your Assets According to Your Wishes | |
Part 4: Special Asset Considerations and Next Steps |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Many Americans are utilizing investment accounts to build wealth. In fact, sums held in investments often exceed what would typically be held in a checking or savings account. Additionally, the average consumer likely does not check in on their investment account activity as often as they review their checking account balance. What does this all add up to? Vast opportunities for fraudsters to target unsuspecting consumers. Read on to learn how can protect your accounts.
Our team is ready to answer any fraud prevention questions you may have. For current articles and additional resources, visit CNBank.com/Security.
©2023 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Ryan Kaiser.
]]>The original “SECURE” Act was approved into law in 2019. SECURE stands for Setting Every Community Up for Retirement Enhancement. It was aimed at preventing Americans from outliving their savings. SECURE 2.0 Act was enacted in December 2022 to finish the job by helping workers save more money for retirement and leave their savings untouched and untaxed for longer. Here are a few highlights you should be aware of.
The age that retirees must begin taking taxable distributions from their traditional IRAs raises from 72 to 73 starting in 2023. If you turn 72 this year, you will not be required to start your RMD until 2024. The RMD age will change from 73 to 75 in 2033.
Another favorable change to the rules starting this year, the excise tax for NOT taking your RMD drops from 50% to 25% of the RMD amount, but if corrected in a timely manner (sometime during the following tax year) the tax drops to only 10%.
The cap on Qualified Longevity Annuity Contracts (QLACs) has been raised from $125,000 to $200,000, and the 25% limit is eliminated. A QLAC is simply an annuity contract purchased with IRA (or other retirement plan) funds to create a fixed monthly income payment from your retirement account which can begin as late as age 85. This is one option to consider if you are looking to create a monthly “paycheck” to supplement your social security. Under the SECURE 2.0 Act, retirees can now combine the payments from both the QLAC and the IRA for the purpose of calculating their RMD. Previously they had to be separated, each with its own RMD which sometimes resulted in higher total RMD payments than if they were combined.
Starting in 2024, a husband or wife can use the deceased spouse’s age for RMD calculations and use the more favorable Uniform Lifetime table to stretch RMDs over his/her lifetime. If the surviving husband or wife dies before RMDs begin, the beneficiaries (most often their children) can stretch RMDs over their lifetime instead of being stuck with the 10-year rule. This is quite lucrative in a situation where the deceased spouse was younger, had a sizeable IRA, and the surviving husband or wife remarries.
If you have a 529 account where there is money left over that won’t be used for a family member’s college expenses, you may be facing a sizeable tax bill if you are planning to cash it out to repurpose the money. Fortunately, account beneficiaries will now be able to directly roll over up to $35,000 to Roth IRAs provided the 529 has been open for at least 15 years. The beneficiary must have earned income and rollover is subject to annual contribution limits, $6,500 in 2023. Any money contributed to the 529 within the last 5 years is not eligible to be rolled over to the Roth.
If you have student loans to be repaid, your employer can now help you directly. Starting 2024, the employer can match an employee’s student loan payment with a contribution to the employee's 401(k) plan. This could be an inducement for potential employees with large student loan debt to join a company.
Beginning in 2025, the Act requires most new employer-sponsored plans to automatically enroll employees with contribution levels between 3% and 10% of income, and automatically increase their savings rates by 1% each year until they reach at least 1% - 15% (max) of employees earned income. Workers will be able to opt out of the programs.
There are over 90 provisions in the Act including allowances for families to access retirement funds in case of emergencies, increasing the “Catch-up” contributions for workers over 50, and providing more flexibility to make higher charitable donations from your IRA to name a few. The items listed above are not all inclusive, but they are the ones that will most likely affect you and your family so it’s good to be aware.
With recent tax law changes, this is a good time to evaluate your plan for Retirement Savings. As always, our team would be happy to help guide you through the process and answer any questions you have.
©2023 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Nancy E. Bowes.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>The experts of this show featured Denise Kelly-Dohse, CFP®, Vice President, Wealth Advisor, and Adam R. Leszyk, CFP®, Senior Vice President, Senior Wealth Advisor.
Broadcasted on May 20, 2023.
For questions, feel free to contact Denise Kelly-Dohse or Adam Leszyk.
Social Security - No One Size Fits All Approach | Audio Clip |
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Part 1: The importance of Social Security | |
Part 2: Determining the right time to draw Social Security | |
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Part 4: Considerations for married and previously married couples |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>To those not familiar, the stock market may seem like a complex, mystical being. But with the right strategy, investing can help you achieve your long-term financial goals. We’ll break things down to basics in this latest episode in our series of next generation podcasts. Tune in as Alexander Bell, Wealth Advisor joins Dario Saccente, Wealth Associate, CNB Wealth Management to answer common questions about stocks, bonds, mutual funds, investment styles, and more. With these helpful tips, you’ll be equipped with the knowledge you need to begin putting your money to work for you.
Broadcasted on April 26, 2023
For questions, feel free to contact Alexander Bell.
Investing 101 | |
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
Janice Zarro, a Director of CNTF, shares her praise for the upcoming "Wisdom From Widows" event CNTF is hosting on Thursday, March 30 featuring widow, author, and speaker Hedria Saltzman.
In her book, “Square One at 51”, and in her presentation Hedria shares what she's learned about being widowed, embracing a new road of change, and creating her own success despite the unexpected.
"Hedria showed you can take emotional and financial control of your life even if you did not think you can," said Zarro. "Hedria, by sharing her story, gives you the framework to have the confidence to do it yourself."
Saltzman's experience and writings around being a widow led Janice Zarro, Executive Director of the “Women's Resource Center”, to invite Hedria to conduct several interesting and successful seminars for widows.
Lunch and refreshments will be provided.
Space is limited. Register today! Please RSVP by March 23 at: CNTrustCompany.com/Wisdom
You may also RSPV by calling Sandra Cusson at (941) 366-7222.
Today Hedria is a client of Canandaigua National Trust Company of Florida where Janice Zarro is a Board Member. It is their partnership that is bringing the “Wisdom From Widows” event to the Sarasota Florida area.
]]>Your investment portfolio can help to secure your future, but did you know it can also provide you convenient access to funds when you need it?
Selling investments is one option to gain access to cash. Another way is to tap the equity in your investment portfolio through a Wealth Line of Credit (WLOC).
A WLOC is a convenient funding solution that is secured by using the nonretirement portion of your investment portfolio as collateral for a revolving line of credit.
Essentially, a WLOC allows you to leverage the assets in your investment portfolio to fund non-investment activities. Once a WLOC is established with Canandaigua National Bank & Trust, funds are usually accessible within a few days and can be used for a variety of purposes, such as:
A WLOC can benefit you as an investor in a variety of ways:
A WLOC can help you manage your short-term liquidity needs, keeping your investment goals on track while minimizing capital gains exposure and investment losses that can result from the selling of securities.
Borrowers typically enjoy greater repayment flexibility than they do with other lending options. Lending rates are generally lower than the rates associated with credit lines from home-equity lines of credit (HELOCs), credit-card advances, and other lending instruments.
To learn more about a Wealth Line of Credit, speak with a CNB representative today or visit CNBank.com/WealthLOC.
©2023 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Matthew J. Alexander.
*Subject to credit approval. Minimum line amount $75,000.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>An estate plan can address what happens to your money, home, and family after you die. There are many tools you can use to achieve your estate planning goals, but a Will is probably the most vital. Even if you're young or your estate is modest, you should have a legally valid and up-to-date Will. This is especially important if you have minor children because, in many states, your Will is the legal way you can name a guardian for them.
Probably the greatest advantage of a Will is that it allows you choose who will get your property, rather than leaving it up to state law called “intestacy.” State intestate succession laws provide a pattern of property distribution if you die without a Will. Generally, intestacy distributes your property to your closest blood relatives in proportions dictated by law. However, the state's distribution may not be what you would have wanted. Intestacy also has other disadvantages, which include the possibility that your estate will owe more taxes than if you had you created a valid Will.
A Will allows you to leave bequests, another name for gifts, to anyone you want. You can leave your property to a surviving spouse, children, relatives, friends, trusts, or charities. There are some limits, however, on how you can distribute property using a Will. For instance, your spouse may have certain rights with respect to your property, regardless of the provisions of your will. In New York, the spouse’s rights are called their “elective share.”
Gifts through your Will take the form of specific bequests (e.g., an heirloom, jewelry, furniture, or dollar amount of cash), general bequests (e.g., a percentage of your property), or a residuary bequest of what's left after your other gifts.
In many states, a Will is your only means of stating who you want to act as legal guardian for your minor children if you die. You can name a personal guardian, who takes personal custody of the children, and a property guardian, who manages the children's assets. This can be the same person or different people. The surrogate court has final approval, but courts will usually approve your choice of guardian unless there are compelling reasons not to.
A Will allows you to designate a person or trust company as your executor to act as your legal representative after your death. An executor carries out many estate settlement tasks, including locating your will, collecting your assets, paying legitimate creditor claims, paying any taxes owed by your estate, and distributing any remaining assets to your beneficiaries. Like naming a guardian, the probate court has final approval but will usually approve whomever you nominate. Under Florida law, the term for an executor is “personal representative.”
The way in which estate taxes and other expenses are divided among your heirs is generally determined by state law unless you direct otherwise in your Will. To ensure that the specific bequests you make to your beneficiaries are not reduced by taxes and other expenses, you can provide in your Will that these costs be paid from your residuary estate. Or, you can specify which assets should be used or sold to pay these costs.
You can create trusts in your Will, known as testamentary trusts, that come into being when your Will is probated. Your Will sets out the terms of the trust, such as who the trustee is, who the beneficiaries are, how the trust is funded, how the distributions should be made, and when the trust terminates. This can be especially important if you have a spouse or minor children who are unable to manage assets or property themselves. Certain types of trusts such as a martial trusts or charitable trusts can even help with reducing estate taxes.
Your Will gives you the chance to minimize taxes and other costs. For instance, if your Will that leaves your entire estate to your U.S. citizen spouse, none of your property will be taxable when you die (if your spouse survives you) because it is fully deductible under the unlimited marital deduction. However, if your estate is distributed according to intestacy rules, a portion of the property may be subject to estate taxes if it is distributed to heirs other than your U.S. citizen spouse.
A living trust is a trust that you create during your lifetime. If you have a living trust, also known as a revocable trust, your Will can transfer any assets that were not transferred to the trust while you were alive. This is known as a pour-over Will because the Will "pours over" assets from your estate to your living trust.
Overall, a Will is an important document to provide structure and organization to your estate plan and to ensure your family and assets are given direction after your passing. Our team is available to answer any questions you may have, and to discuss how a Will can be incorporated into your financial and estate planning process.
©2023 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Amy K. B. Ertel.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>The experts of this show featured Donna Cator, Vice President, Wealth Planning Advisor, and Matt Sorce, Assistant Vice President, Wealth Advisor.
Broadcasted on January 28, 2023
For questions, feel free to contact Donna Cator at 941.366.7222 x50623 or Matthew Sorce.
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Part 1 - Determine Your "Why" and Create a Financial Plan |
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This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>When David and Susan Gorin moved from Washington, D.C., to Sarasota, Florida four years ago they also found a home at Canandaigua National Trust Company of Florida, and it was something of a reunion.
Susan grew up in Rochester just miles from where Canandaigua National Bank & Trust was founded near the shore of Canandaigua Lake.
“I knew the bank had a history and I was impressed,” said David. “One-hundred-thirty-seven years in the same family, that’s impressive. I have always had a great affinity for small businesses.”
Canandaigua National Bank & Trust was founded in 1887. President and CEO Frank Hamlin is now the fifth generation to lead the independent community bank.
Bill Paxon and his wife Susan Molinari considered several regional and national wealth management firms before choosing Canandaigua.
“Its amazing attention to our long-term planning won our investments. And every day since, everyone at Canandaigua has fulfilled this commitment with professionalism, integrity, and detailed attention to our family’s needs.”
The Gorins selected Canandaigua after interviewing several firms. “Just the fact it was smaller, and Paul (Tarantino) was dressed casually made us feel comfortable. We weren’t rushed or pressured,” said Gorin.
“Unlike any other financial firms I have worked at, clients and employees choose Canandaigua National Trust Company for the same reasons,” said Paul Tarantino, Wealth Advisor and Regional Manager. “Customers don’t want high pressure sales and our advisors want to advise. Sounds simple but it is rare to find this alignment in a financial firm. Our advisers are paid by salary not commission. They want to be paid for performing their fiduciary responsibilities, not for convincing a client to buy something. And the most important family is your family. No one understands this better than Canandaigua National Bank & Trust which has thrived across five generations of family leadership. We understand the importance family plays in the creation and preservation of wealth,” Tarantino said.
Bill Paxon and Susan Molinari agree. They’ve been so impressed with Canandaigua National Trust Company; their two daughters are now customers.
“Joining the Canandaigua family has been great choice,” said Susan Molinari. “They have worked hard to successfully manage our assets while keeping in mind every-day our long-term needs.”
]]>A CERTIFIED FINANCIAL PLANNER™ professional, or CFP® practitioner, is a financial professional who meets the requirements established by the Certified Financial Planner Board of Standards, Inc. While some professionals may call themselves financial planners, only those who demonstrate the requisite experience, education, and ethical standards are awarded the CFP® mark.
A CFP® professional is trained to develop and implement comprehensive financial plans for individuals, businesses, and organizations. He or she has the knowledge and skills to objectively assess your current financial status, identify potential problem areas, and recommend appropriate options. You're also working with someone who's demonstrated expertise in multiple areas of financial planning, including income and estate tax, investment planning, risk management, and retirement planning.
A CFP® professional can help you create a personal budget, control expenses, and develop and implement plans for retirement, education, and/or wealth protection. A CFP® professional can offer expertise in risk management, including strategies involving life and long-term care insurance, health insurance, and liability coverage. He or she often can help with your tax planning or manage your asset portfolio based on your goals. Specifically, a CFP® professional can help you:
Selecting a CFP® professional is like choosing a doctor for your financial health. Working with a CFP® professional involves sharing very personal information, and you will want to feel comfortable with the professional you've chosen. He or she should be knowledgeable, have integrity, and demonstrate a commitment to the highest ethical standards in the industry. Also, a CFP® professional may offer services to a particular clientele, such as small-business owners, corporate executives, or retirees, so be sure the planner you select works with people whose interests and goals are similar to yours.
The financial world has become a very complex place. Even if you're used to handling your own financial affairs, the time may be right to consult a CFP® professional at Canandaigua National Trust Company. We will review your financial health and offer suggestions that may help you pursue your financial goals.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>There's no doubt about it — 2022 has been a tumultuous year for the financial markets. If you are looking forward to a fresh start this year, why not begin with your personal finances? Here are some tips to help you get started.
One way to start the year off right financially is to examine your budget. First, identify your income and expenses. Next, add each of them up and compare the two totals to make sure you are spending less than you earn. Hopefully you've been able to stay the course during the pandemic and your budget is still on track. If you find that your expenses outweigh your income, you'll need to make some adjustments. For example, if you've experienced a loss or reduction in income during the year, you may need to cut back on certain discretionary spending (e.g., online shopping, take-out) or look for ways to lower your fixed costs, which may require more significant changes.
Once you have a solid budget in place, it's important to stick with it. And while straying from your budget from time to time is normal, there are some ways to help make working within your budget a bit easier:
While the market downturn may have sidelined or stalled some of your financial goals, now is a good time to regain your focus. Take a look at the financial goals you set for yourself last year. Perhaps you wanted to increase your emergency fund or save money for a down payment on a home. Maybe you wanted to invest more money towards your retirement? Do you have any goals you would like to achieve in 2023?
It is a good idea to memorialize these goals in writing and then check your progress regularly throughout the year. Finally, if your personal or financial circumstances changed, will you need to reprioritize your goals?
Despite the pandemic, the U.S. stock market ended 2021 at an all-time high-but has now declined significantly from that level in 2022. Despite the stress market downturns can often elicit, it is usually a good time to contribute more when markets are down. When evaluating your investment portfolio, you'll want to ask yourself the following questions:
Rebalancing your portfolio at least annually can ensure that your asset allocation remains in line with your long-term financial goals.
Reducing debt is part of any healthy financial plan. Whether you have student loan debt, an auto loan, and/or credit card balances, you'll want to try to pay it down as quickly as possible. Start by tracking all of your balances and being mindful of interest rates and hidden fees. Next, optimize your repayments by paying off any high-interest debt first and/or taking advantage of debt consolidation/refinancing programs.
If an event in your life has made it difficult for you to pay down your debt, you may want to contact your lenders to see if they offer financial assistance. Many lenders may be willing to work with you by waiving interest and certain fees or allowing you to delay, adjust, or even skip some payments.
If you have not worked with a financial professional before and are finding it difficult to navigate the many facets of your financial life, you may want to consider engaging with one.
Our team is always standing by, ready to help you with any financial questions or concerns you may have. Most importantly, we wish you all the best in 2023.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Laurie Haelen.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>You’ve accepted a job offer and are on your way to starting your career. Chances are your new workplace offers a variety of benefits to their employees. But which options are right for you? In this first episode in our series of next generation podcasts, Matthew Sorce, CFP®, Assistant Vice President, Wealth Advisor joins Dario Saccente, Wealth Associate, CNB Wealth Management to answer common questions new employees have about prioritizing benefits, contributing to HSAs, choosing a 401(k) plan, and more. Tune in to learn what you need to know to take full advantage of your employer-sponsored benefits.
Broadcasted on November 15, 2022
For questions, feel free to contact Matthew Sorce.
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
The reigniting of inflation to its highest levels in over four decades has been the catalyst for the dramatic sell-off in stock and bond markets for the past year. Inflationary pressures began building in early 2021 as the result of several factors: revived consumer demand in the aftermath of the COVID shutdowns; supply chain disruptions from multiple sources; and the excessive monetary and fiscal stimulus from multiple COVID rescue plans implemented by the Federal Reserve and the Federal government.
In its effort to fight inflation, the Fed raised interest rates five times so far this year, including not one, but three rate hikes of 75 basis points each, for a total increase of three-percentage points on the Fed Funds rate – the overnight lending rate for banks. And with inflation running hot at over 8% annualized, the Fed has clearly signaled that it isn’t done yet. Indeed, with interest rates having started the year near zero, the Fed indicated that it may push its Fed Funds target up another 1.25 percentage points to about 4.5% by year-end, and possibly higher. Meanwhile, short- and long-term interest rates began a game of “catch up,” as bond investors demanded higher yields on fixed income assets to compensate themselves for the prospect of higher and sustained inflation. Yields on the shortest maturities have risen most, with 2-year Treasuries yielding more than 4% at the time of this writing.
Many analysts expected a temporary, post-COVID jump in inflation, due to pent-up demand and a normalizing of prices following the brief deflation during COVID (recall that many prices fell as consumption collapsed in early 2020). However, the ongoing shutdowns of overseas economies (particularly in China) have extended and worsened supply chain disruptions, as has an unusual decline in labor supply as many workers have effectively quit the labor force, creating bottlenecks and backlogs everywhere from restaurants to commercial shipping ports. Meanwhile, a different kind of supply disruption was created by curtailed US oil and gas production and embargoed Russian energy supply – a global sanction for that country’s war on Ukraine. The resulting surge in energy prices further “fueled” inflation by raising the costs of production throughout the supply chain, from transportation to the fertilizer needed to grow global crops. Grain production was another tragic casualty of the war in Europe, resulting in a troubling food shortage that has also had global and inflationary consequences.
It has been rightly said that inflation can be described as the result of too much money chasing too few goods. Fiscal and monetary policy injected trillions of dollars into the US economy during the COVID crisis, and the Fed’s newfound monetary retrenchment may help with that source of rising prices, but it can’t resolve the supply issues resulting from other factors like war, regulatory restrictions, and lifestyle changes. Most of these may still prove to be temporary, though painfully prolonged.
However, the Fed’s aggressive rate hikes have produced something else: a bear market in stocks. As the Fed pushes interest rates higher, the likelihood of an economic recession also grows. By traditional measures, the US economy was officially in recession after two quarters of contracting gross domestic product (GDP) during the first half of the year. GDP performance for the third quarter is uncertain, but many analysts expect it to be soft at best. Nevertheless, unemployment remains remarkably low at 3.5% and business hiring remains relatively strong, though much slower than at the start of the year – likely a product of the unusually low labor force participation rate. Still, a weak economy translates into lower profits – a direct reduction of one of the key factors supporting stock valuations. Furthermore, rising interest rates mean that the present value of expected future corporate earnings (now revised downward) is also lower, exacerbating the decline in stock prices.
Index Returns as of 9/30/2022 |
Q3 2022 |
YTD |
S&P 500 | -4.88% | -23.87% |
Russell 1000 Growth | -3.60% | -30.66% |
Russell 1000 Value | -5.62% | -17.75% |
Russell 2000 Value | -4.61% | -21.12% |
Dow Jones US Real Estate | -10.44% | -29.37% |
MSCI EAFE (net) | -9.36% | -27.09% |
MSCI Emerging Markets (net) | -11.57% | -27.16% |
Bloomberg U.S. Aggregate Bond | -4.75% | -14.61% |
Bloomberg Municipal Bond | -3.46% | -12.13% |
Bloomberg U.S. High Yield | -0.65% | -14.74% |
Source: Morningstar |
As measured by equity returns through the third quarter, US and global stocks are in a bear market, with declines of more than 20% from their recent highs. For the first nine months of the year, the S&P 500 declined nearly 24%. Most of those declines came from the growth side of the market (down more than 30%, as measured by the Russell 1000 Growth and NASDAQ indices), where technology companies, especially, retreated sharply. Having led the gains in stocks for much of the past ten years, they have been leading the way lower for most of the past twelve months. Value companies have performed much better year-to-date – but are still down roughly 17% for the Russell 1000 Value index and the much-watched Dow Jones Industrials. Nevertheless, during the third quarter, value stocks performed slightly worse than growth companies, as fears of recession spread.
While bonds are often the beneficiaries of falling stock prices and a “flight to quality,” that is not the case in this market cycle, as the inflation-driven surge in interest rates means the value of bond portfolios decline. In fact, the most common measure of US bond market performance declined year-to-date by nearly 15% -- only slightly better than the performance of value stocks and the Dow.
Looking forward, investor expectations for inflation and the trajectory of interest rates will likely remain the key drivers of market conditions, though other factors can provide unexpected positive or negative surprises for the market. The midterm elections are looming, an event that often creates market uncertainty. Many pundits anticipate a shift in control of one or both houses of Congress. While that could result in gridlock, the markets often respond favorably to divided government that makes dramatic change (and, therefore, uncertainty) less likely. The war in Ukraine, a source of increasing worry in recent weeks, could move things in either direction. Clearly, an early end to that conflict would be welcome for many reasons, and especially to bring relief to the untold human suffering that is occurring.
Uncertainties abound. Excluding the depression-era, the average bear market for the S&P 500 has averaged about 16 months, so we may yet have more financial pain to deal with. Even so, stock valuations generally have become much more appealing. Some sectors of the market look very attractive, providing opportunities for income as well future growth. While recovery from losses in the bond market will likely take time, recovery from stocks can come swiftly. And the rising consumer prices that are currently battering stocks and bonds will eventually flow through to corporate revenues and the bottom line, meaning stocks may offer the best long-term protection from our current bout of inflation. That doesn’t mean we should all start buying stocks. That decision should be considered in the context of your personalized financial plan. Though uncertainties abound, your CNB advisors are here to help you navigate our current financial challenges.
Data as of 9/30/2022.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Medicare begins the month you turn 65, or after being on disability for 2 years. Some people who are working can delay Medicare. If you are turning 65, Medicare becomes effective the first day of your birth month; if you turn 65 on the 1st of the month, it starts the month prior. If you are collecting Social Security, you will be automatically enrolled. If not, you have 7 months to apply: 3 months before your birthday, your birthday month or the 3 months following.
Annually, Medicare beneficiaries can make new choices and pick plans that work best for them during the annual Medicare Open Enrollment Period. Each year, Medicare plan costs and coverage typically change. In addition, your health-care needs may have changed over the past year. The Open Enrollment Period — which began on October 15 and runs through December 7 — is your opportunity to switch your current Medicare health and prescription drug plans to ones that better suit your needs.
Any changes made during Open Enrollment are effective as of January 1, 2023.
Now is a good time to review your current Medicare benefits to see if they're still right for you. Are you satisfied with the coverage and level of care you're receiving with your current plan? Are your premium costs or out-of- pocket expenses too high? Has your health changed? Do you anticipate needing medical care or treatment, or new or pricier prescription drugs?
If your current plan doesn't meet your health-care needs or fit your budget, you can switch to a new plan. If you find that you're satisfied with your current Medicare plan and it's still being offered, you don't have to do anything. The coverage you have will continue.
On September 27, 2022, the Centers for Medicare & Medicaid Services (CMS) released the 2023 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs, and the 2023 Medicare Part D income-related monthly adjustment amounts.
You can find more information on Medicare benefits in the Medicare & You 2023 Handbook on medicare.gov.
While Medicare can be complicated, it is important to have a comprehensive understanding of the options available to you. Our team is here to meet with you and answer any questions you may have so that you can make informed decisions about your Medicare coverage.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Denise Kelly-Dohse.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>On August 24, 2022, just a few days before federal student loan repayment was set to resume, President Biden announced a plan for additional student loan debt relief.
Federal student loan repayment was originally halted in March 2020 at the start of the pandemic. The new plan extends the payment moratorium through the end of the year, offers partial debt cancellation, and includes proposed updates to the Public Service Loan Forgiveness program and a new income-based repayment plan.
Loan cancellation. The plan will cancel $10,000 of federal student loan debt for borrowers with an adjusted gross income less than $125,000 ($250,000 for married couples filing jointly). The loan cancellation increases to $20,000 for borrowers who are Pell Grant recipients.1 (A Pell Grant is a federal financial aid grant award to students from low-income households.) Eligibility is based on income from 2020 or 2021, but not 2022.
The pause on federal student loan repayment is being extended one "final" time through December 31, 2022. President Biden's announcement states that "borrowers should expect to resume payment in January 2023."2 In practice, borrowers should expect to hear from their loan servicer at least three weeks before their first payment is due.
Borrowers who are employed by a nonprofit organization, the military, or the government may be eligible to have their federal student loans forgiven through the Public Student Loan Forgiveness (PSLF) program due to time-sensitive changes. These temporary changes waive certain eligibility criteria for the program and make it easier for borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF. These changes expire on October 31, 2022.
Important note: Borrowers who might qualify for loan forgiveness or credit under the PSLF program due to these time-sensitive changes must apply to the program before October 31, 2022. Borrowers can visit the administration's PSLF website for more information.
In addition, the Department has proposed allowing certain kinds of deferments and forbearances, such as those for Peace Corps and AmeriCorps service, National Guard duty, and military service, to count toward PSLF.
Lastly, there will be a new income-based repayment plan.
For most borrowers, no. The Department of Education has released a "simple" application for borrowers to claim relief, which is available at the Department of Education’s website, studentaid.gov. Once borrowers complete an application, their loan cancellation should be processed within four to six weeks. The Department recommends that borrowers apply before November 15 in order to receive loan cancellation before the payment pause expires on December 31, 2022. (The Department will still process applications even after the pause expires.)
Some borrowers, however, may be eligible to have their loans cancelled automatically because the Department already has their income data on record.
Graduate students are eligible for loan cancellation of federal loans such as a Direct Loan or Grad PLUS Loan, provided income limits are met. Parent PLUS Loans also qualify for cancellation provided income limits are met; however, private loans are not eligible.
Understanding repayments for student loan debt can be overwhelming, especially when juggling other financial obligations. No matter what life stage you are in, our financial planning team can help you create a clearer path to your overall financial goals.
Sources: 1) U.S. Department of Education, 2022 2) White House Fact Sheet, August 24, 2022.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Matthew Sorce.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured Nancy E. Bowes, CFP®, Vice President, Wealth Advisor, and Tina Scahill of Ahrens Benefit Company.
Broadcasted on September 24, 2022
For questions, feel free to contact Nancy Bowes at 941.366.7222 x50673.
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Part 1: Medicare Eligibility and Enrollment |
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This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Broadcasted on July 30, 2022
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Part 1: Managing Passwords in your Digital Life |
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There are many reasons to consider having a Roth IRA as part of your retirement picture, and anyone can convert a traditional IRA to a Roth IRA in 2022. There are no income limits or restrictions based on your tax filing status. You generally must include the amount you convert in your gross income for the year of conversion, but the post-tax portion of any conversion won't be taxed when you convert.
The conversion rules can also be used to allow you to contribute to a Roth IRA in 2022 if you wouldn't otherwise be able to make regular annual contributions because of the income limits (sometimes called a "back door" Roth IRA). In 2022, you can't contribute to a Roth IRA if your adjusted gross income (AGI) is $214,000 or more and are married filing jointly or if you're single and earn $144,000 or more. You can contribute up to $6,000 to a traditional IRA in 2022, or $7,000 if you're 50 or older.
The “back door” Roth conversion works best if there are no other pre-tax IRAs. This is because you must aggregate all IRAs, then calculate the ratio of the pre-tax portion relative to the total conversion to determine the taxability of your conversion. If you don’t have any other pre-tax IRAs, you can simply make a nondeductible 2022 contribution to a traditional IRA, and then convert that traditional IRA to a Roth IRA.
Simply notify your IRA provider that you want to convert all or part of your existing traditional IRA to a Roth IRA, and they'll provide you with the necessary paperwork to complete. You can also transfer or roll your assets over to a new IRA provider.
Remember that you can also convert SEP IRAs, and SIMPLE IRAs that are at least two years old, to Roth IRAs. And, if you're eligible for a distribution from your employer retirement plan, you may be eligible to transfer or roll those distributions over to a Roth IRA as well.
Caution: If you've inherited a traditional IRA (or SEP/SIMPLE IRA) from someone other than your spouse, you cannot convert that traditional IRA to a Roth IRA.
There are some nuances not described here, but your Wealth Advisor or Tax Professional can provide further clarity on whether or not converting some or all of your IRA to a Roth could benefit your long-term retirement picture.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Donna Cator.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>2022 has certainly been an interesting and somewhat stressful year for investors, with high inflation and market volatility dominating the financial news daily. During all of this, even bonds—historically less risky than stocks—have decreased in value year to date. To understand why, you must first understand the nature of bonds and why interest rates and inflation can impact the prices.
There are two fundamental ways that you can profit from owning bonds: from the interest that bonds pay, and from any increase in the bond's price. Many people who invest in bonds because they want a steady stream of income are surprised to learn that bond prices can fluctuate, just as they do with any security traded in the secondary market.
Just as a bond's price can fluctuate, so can its yield—its overall percentage rate of return on your investment at any given time. A typical bond's coupon rate—the annual interest rate it pays—is fixed. However, the yield isn't, because the yield percentage depends not only on a bond's coupon rate but also on changes in its price.
Both bond prices and yields go up and down, but there's an important rule to remember about the relationship between the two: They move in opposite directions, much like a seesaw. When a bond's price goes up, its yield goes down, even though the coupon rate hasn't changed. The opposite is true as well: When a bond's price drops, its yield goes up. That's true not only for individual bonds but also for the bond market as a whole. When bond prices rise, yields in general fall, and vice versa.
In some cases, a bond's price is affected by something that is unique to its issuer—for example, a change in the bond's rating. However, other factors have an impact on all bonds. The twin factors that mainly affect a bond's price are inflation and changing interest rates. A rise in either interest rates or the inflation rate will tend to cause bond prices to drop. Inflation and interest rates behave similarly to bond yields, moving in the opposite direction from bond prices.
The reason has to do with the relative value of the interest that a specific bond pays. Rising prices over time reduce the purchasing power of each interest payment a bond makes. Let's say a five-year bond pays $400 every six months. Inflation means that $400 will buy less five years from now. When investors worry that a bond's yield won't keep up with the rising costs of inflation, the price of the bond drops because there is less investor demand for it.
Inflation also affects interest rates. This year has certainly been one where there is a lot of talk about the Federal Reserve Board trying to tame inflation by raising interest rates. However, the Fed's decisions on interest rates can also have an impact on the market value of your bonds. The Fed takes an active role in trying to prevent inflation from spiraling out of control. When the Fed gets concerned that the rate of inflation is rising, like this year, it may decide to raise interest rates which in turn can affect the economy.
When the Fed raises its target interest rate, other interest rates and bond yields typically rise as well. That's because bond issuers must pay a competitive interest rate to get people to buy their bonds. New bonds paying higher interest rates mean existing bonds with lower rates are less valuable. Prices of existing bonds fall. That's why bond prices can drop even though the economy may be growing. An overheated economy can lead to inflation, as we have seen this year, and investors begin to worry that the Fed may have to raise interest rates. Bond prices would be negatively impacted, while the yields (or income) on bonds would increase.
Just the opposite happens when interest rates are falling. When rates are dropping, bonds issued today will typically pay a lower interest rate than similar bonds issued when rates were higher. Those older bonds with higher yields become more valuable to investors, who are willing to pay a higher price to get that greater income stream. As a result, prices for existing bonds with higher interest rates tend to rise.
Bonds are an important asset class to have in an investor’s portfolio. Though the ups and downs of the bond market are not usually as dramatic as the movements of the stock market, they can still have a significant impact on your overall return. If you're considering investing in bonds, either directly or through a mutual fund or exchange-traded fund, it's important to understand how bonds behave and what can affect your investment in them.
Your bond investments need to be tailored to your individual financial goals and integrate with your other investments. Our team may be able to help you design your financial plan to accommodate changing economic circumstances.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Laurie Haelen.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Broadcasted on May 21, 2022
Financial Fraud and How You Can Avoid Becoming a Victim | Audio Clip |
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Part 1: Today’s Fraud Landscape |
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This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>The decision to attend college can have a financial impact on both students and parents for years to come. So how do you set yourself up for success? Tune in to our latest episode with Denise Kelly-Dohse, CFP®, Vice President, Planning Advisor, CNB Wealth Management who joins Laurie Haelen, AIF®, Senior Vice President, Director of Wealth Solutions to discuss these financial implications. How do you choose a cost-effective school? What should you know about student loans? Which repayment plan is right for you? We will answer these questions and more to assist you in making the best decisions for you and your financial future.
Broadcasted on May 2, 2023
For questions, feel free to contact Denise Kelly-Dohse or Laurie Haelen at 941.366.7222 x41970.
College Costs - Setting Yourself Up for Success | |
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured Denise Kelly-Dohse, CFP®, Vice President, Wealth Advisor, Canandaigua National Bank & Trust, and Kevin D. Kinney, CTFA, Vice President, Trust Officer, Canandaigua National Bank & Trust.
Broadcasted on March 26, 2022
For questions, feel free to contact Denise Kelly-Dohse or Kevin Kinney.
Estate Planning Assets - Common Mistakes and How to Avoid Them | Audio Clip |
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Part 1: Planning for Hobbies and Personal Interests |
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This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>Women have unique concerns when it comes to estate planning. On average, women live 5.7 years longer than men.* This means there is a greater chance that you need your assets to last for a longer period of time; there is a greater need to plan for incapacity; and, you need to take responsibility for your own estate plan.
An estate plan is a map that captures the way you want your personal and financial affairs to be handled in case of your incapacity or death.
What would happen if you were unable to make decisions or conduct your affairs? Failing to plan may mean a court would appoint a guardian, and the guardian might make decisions that would be different from what you would have wanted.
Health-care directives can help others make sound decisions about your health when you are unable to. There are also tools that help others manage your property when you are unable to, including a durable power of attorney and joint ownership.
A will is a legal document that directs how your property is to be distributed when you die. You name an executor to carry out your wishes as specified in the will.
Most wills have to be probated. The will is filed with the probate court. The executor collects assets, pays debts and taxes owed, and distributes any remaining property to the named beneficiaries.
For most estates, there is little reason for avoiding probate, as the actual time and costs involved are modest. There are several benefits to probate - because the court supervises the process, you have some assurance that your wishes will be abided by, and probate offers some protection against creditors.
There are a number of reasons for avoiding probate as well. For complex estates, probate can take up to two or more years to complete, and wills and other documents submitted for probate become part of the public record, which may be undesirable if you have privacy concerns.
Probate may be avoided by owning property jointly with rights of survivorship; by completing beneficiary designations for property such as IRAs and retirement plans; by putting property in an inter vivos trust; and, by making lifetime gifts.
Whether or not you have a will, some property passes automatically to a joint owner or to a designated beneficiary. Property that does not pass by beneficiary designation, joint ownership, will, or trust passes according to state intestacy laws. These laws vary from state to state and they specify how property will pass.
A trust is an estate planning tool that can protect against incapacity; avoid probate; minimize taxes; allow professional management of assets; provide safeguards for minor children, and other beneficiaries; and protect assets from future creditors. Most importantly, trusts can provide a means to administer property on an ongoing basis according to your wishes, even after your death.
A trust is a legal entity where someone, known as the grantor, arranges with another person, known as the trustee, to hold property for the benefit of a third party, known as the beneficiary. The grantor names the beneficiary and trustee, and establishes the rules the trustee must follow in a document called a trust agreement. With a trust, you can provide various interests to different beneficiaries. For example, you might provide income to your children for life, with the remainder going to your grandchildren.
You can create a trust while you are alive (a living or inter vivos trust) or at your death (a testamentary trust). A trust you create during your life can be either revocable or irrevocable. You retain the right to change or revoke a revocable trust. An irrevocable trust cannot be changed or revoked.
When you dispose of your property during your lifetime or at your death, your transfers may be subject to federal gift tax, federal estate tax, and federal generation-skipping transfer (GST) tax. Your transfers may also be subject to state taxes.
Making gifts during one's life is a common estate planning strategy that can serve to avoid probate and held reduce transfer taxes. Take advantage of the annual gift tax exclusion, which lets you give up to $16,000 (in 2022) to as many individuals as you want free of gift tax.
As always, we encourage you to reach out to your advisor with any questions or concerns you may have about estate planning.
*NCHS Data Brief, No. 427, December 2021. ©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Jillian Erika Dart.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Sending a child to college is at the top of the wish list for many parents. A college education can open doors to many opportunities and help your child compete in today's competitive job market. But, the cost of college has risen exponentially over the years and getting started on saving can be a daunting task.
For the 2021-2022 school year, the average annual cost is: $27,330 for a four-year public college (in-state student), $44,150 for a four-year public college (out-of-state student), and $55,800 for a four-year private college. Total figures include tuition and fees, room and board, books, transportation, and personal expenses. Costs for the most selective private colleges are substantially higher. (Source: College Board, Trends in College Pricing and Student Aid 2021)
It's likely that costs will continue to rise, but by how much? Annual increases in the range of 3% to 5% would be in keeping with historical trends, but it is not possible to predict if those trends will continue. Therefore, it is important to start planning as early as possible to have adequate time to accumulate the funds required.
Year after year, thousands of students graduate from college. So how do they do it? Many parents are unable to save 100% of their child's education costs before their kids are ready for college. In many cases, they put aside enough money to make a down payment on the college bill (in the same way you might purchase a home). Then, at college time, parents supplement this down payment with:
You'll want to save as much money as you can in your child's college fund and a 529 plan is a popular and flexible option to use. The more money you set aside now, the less you or your child will need to borrow later. Start by estimating your child's costs for four years of college. Then use a financial calculator to determine how much money you'll need to put aside each month or year to meet your goal. In many cases, the amount of money you set aside really comes down to how much you can afford to save. You'll need to take a detailed look at your finances, as every family's situation is different.
Perhaps the most difficult time to start a college savings program is when your child is young. New parents face many financial demands that always seem to take over — the possible loss of one income, child-related spending, the competing need to save for a house or car, or the demands of your own student loans. Yet this is the time when you should start saving.
When your child is young, you have time to select investments that have the potential to outpace college cost increases (though investments that offer higher potential returns may involve greater risk of loss).
You'll also benefit from compounding, which is the process of earning additional returns on the interest and/or capital gains that you reinvest along the way. With regular investments spread over many years, you may be surprised at how much you might be able to accumulate in your college fund.
Don't worry if you can't save hundreds of dollars every month right from the beginning. Start with a small amount and add to it whenever you can. If it seems overwhelming to start the process, a professional advisor (such as a CERTIFIED FINANCIAL PLANNER™ Professional) can assist you in setting goals and staying on track. Please reach out to us if you need assistance getting started and we will be happy to help.
©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Laurie Haelen.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>While divorce can happen at any age, over the last 20 years, the rate of divorce has doubled for couples over 50. In this episode, Donna Cator, CFP®, CDFA®, Vice President, Wealth Advisor, CNB Wealth Management, and Margaret Whelehan, CFP®, CDFA®, Vice President, Financial Advisor with Canandaigua Investment Services*** join CNB’s Pittsford Bank Office Manager, Harry Gibbs and Laurie Haelen, AIF®, Senior Vice President, Manager of Investment and Financial Planning Solutions, to discuss this trend. Tune in to learn more about the unique financial challenges divorce poses to people over the age of 50 and how a Certified Divorce Financial Analyst® can help.
Broadcasted on March 18, 2022
For questions, feel free to contact Donna Cator at 941.366.7222 x50623 or Margaret Whelehan.
Divorce After 50 and Finances | |
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
***Securities and insurance products are offered through Cetera Investment Services LLC, member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investment services are offered. Advisory services are only offered by Investment Adviser Representatives. Located at: 1816 Penfield Road, Penfield, NY 14526 585-899-4653
Investments are: *Not FDIC insured *May lose value *Not bank guaranteed *Not a deposit *Not insured by any federal government agency.
This site is published for residents of the United States only. Registered Representatives of Cetera Investment Services LLC may only conduct business with residents of the states and/or jurisdiction in which they are properly registered. Not all of the products and services referenced on this site may be available in every state and through every advisor listed. For additional information, please contact the advisor(s) listed on the site, visit the Cetera Investment Services LLC site.
View Cetera Investment Services privacy policy, business continuity plan, and other important information.
]]>Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured Stephen Krauss, CFA®, Senior Vice President, Senior Wealth Advisor, and Charles Cox, CFP®, Vice President, Planning Advisor, Canandaigua National Bank & Trust.
Broadcasted on January 29, 2022
For questions, feel free to contact Stephen Krauss at 941.366.7222 x50604 or Charles Cox.
Generating Income in Retirement | Audio Clip |
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Part 1: Current Market Conditions |
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This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>The year 2021 saw a significant rebound in economic growth propelling real GDP above its pre-pandemic level. Equity markets followed along, making new highs throughout the year as corporate earnings continued their recovery. While the final numbers aren’t in yet, the expectation is that U.S. GDP grew at roughly 5.6%1 in 2021 and will likely carry that momentum into the first half of 2022 before slowing down later in the year. Not surprisingly, the primary driver of economic growth was the U.S. consumer who unleashed a wave of spending fueled by government stimulus payments, increased savings rates, and pent-up demand following 2020’s lockdowns.
Aiding the recovery was a significant uptick in labor demand. Businesses rehired workers and added new jobs to meet increased demand, bringing the unemployment rate from 6.7% at the start of the year down to roughly 4.2% by year-end. As a sign of the ongoing labor market’s strength, most recent data showed more than 11 million unfilled job openings,2 an all time record. This strength has led to meaningful wage increases as businesses competed for workers to fill positions.
The flip side of this unprecedented recovery has been one of the most substantial increases in inflation that we’ve seen in decades. Unsurprisingly, when significantly elevated cash levels from government stimulus payments and Federal Reserve balance sheet expansion met a wave of demand that couldn’t be filled due to supply chain issues, prices rose. As it stands, the U.S. Consumer Price Index ended November at 6.9% (annualized) and has been far more robust, in both its level and duration, than the Fed anticipated. By year-end, this prompted the Fed to begin a more aggressive tapering of its bond purchase program, which it will now likely wind down by March. This sets up the potential for a Fed Funds rate increase by spring, with others later in the year.
2021 Index Returns |
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S&P 500 | 28.71% | |
Russell 1000 Growth | 27.60% | |
Russell 1000 Value | 25.16% | |
Russell 2000 Value | 28.27% | |
Dow Jones US Real Estate | 38.99% | |
MSCI EAFE (net) | 11.26% | |
MSCI Emerging Markets (net) | -2.54% | |
Bloomberg US Aggregate Bond | -1.54% | |
Bloomberg Municipal Bond | 1.52% | |
Bloomberg High Yield Bond | 5.28% | |
Source: Zephyr/Informa Investment Solutions |
U.S. equities had another outstanding year, with the S&P 500 up 28.7% on back of strong earnings growth. Both revenues and profits continually exceeded expectations over the course of the year as companies fought to keep up with consumer demand. By year-end, even with the sharp increase in the S&P level (price), overall valuations had moderated, with the forward price-to- earnings ratio falling from 22.4x to 21.4x.3 While still well above historical averages, this level continues to be supported by low interest rates, a strong consumer, and increased government spending. The question moving into 2022 is whether the likely increase in rates, along with moderating GDP growth, unsettles equity investors.
The rising tide lifted all boats, and equities fared well across the style and market capitalization spectrum with most U.S. asset classes up over 20%. Generally, small cap stocks lagged large caps, but small cap value stocks did very well with the Russell 2000 Value Index up over 28%. Also of note, real estate did exceptionally well, returning over 39% as measured by the Dow Jones U.S. Real Estate Index as the asset class continued its recovery and investors sought yield and potential inflation hedges.
Internationally, developed market equities fared well but lagged U.S. returns with the MSCI EAFE Net Index up 11.2%. Conversely, emerging markets struggled on weakness in China, and the MSCI Emerging Market Net Index was down 2.6% for the year.
Fixed income returns, outside of high yield credit, were generally negative for the year as prices dropped with rising rates. Yields, which continue to be extremely low, were not enough to offset the weakness in prices, leading the Bloomberg U.S. Aggregate Bond Index to post a -1.5% return for the year. For bond investors, the only areas of the market that provided meaningful returns were in high yield (below investment grade) and inflation protected securities (TIPS).
The fixed income outlook for next year doesn’t look much better, as the Fed will likely begin raising rates to combat inflation. This will lead to more weakness in bond prices as the yield curve adjusts to higher rates. For the near-term, bond investors will need to focus on the diversification benefits of owning fixed income, understanding their role in dampening volatility in portfolios that own equities.
CPI: Consumer Price Index, PCE: Personal Consumption Expenditures
Source: Northern Trust, information as of 10/31/21
Inflation would seem to be the lynchpin in 2022. Is it short-lived and likely to fade as we go through the year, or does it become embedded in the economy? Right now, the camps seem split, with arguments being made to support either argument. But one thing is almost certain: Its trajectory will play a significant role in how 2022 unfolds from a market and economic perspective.
Asset prices have been buoyed by easy monetary policy for over a decade, and if the punch bowl is removed by a Fed that is forced to be more aggressive with rates, then equity markets may bear the brunt of investor angst. Either way, given current U.S. equity valuations, it’s likely that returns moderate over the next few years as they take a breather from their recent pace.
Of course, the virus will also play a substantial part in 2022. Covid-19 has taken a horrible toll on us as a country, with over 800,000 people having died from the disease and its complications. Yet many have decided to return to a more normal lifestyle, and there is little appetite for additional restrictions on schools and businesses. At the same time, hospital systems and workers can only endure so much, and the government will need to do what it can to protect them and their ability to function and provide vital services. Any restrictions, whether in the U.S. or internationally, could limit economic growth through lost revenues and the exacerbation of supply chain issues. Equity markets will continue to factor in the virus news flow as they attempt to ascertain the likely winners and losers, and the Fed will also need to weigh its policy decisions carefully in a very uncertain environment.
Our expectation is that the global economic recovery will continue in 2022 with GDP growth and inflation beginning to moderate toward more normal levels as we go through the second half of the year. Challenges will be posed by the uncertain path of the virus, and the Fed will have its hands full balancing the desire to fight inflation while not undermining asset prices, but for long-term investors the path ahead remains the same. A diversified portfolio of equities, with allocations across various capitalizations, styles, and geographic regions, remains the best way to grow wealth over the long-term, and while bonds may be handicapped in the short-term, they still provide stability in difficult periods.
Our investment committee will continue to actively discuss all of these factors and make adjustments in light of new opportunities or to help mitigate risks based on market conditions. As always, we are here to help keep your financial plan on track to meet your life goals. Please contact your advisor if you have any questions or concerns, and we wish you and your family all the best in the New Year.
Data as of 12/31/2021. Sources: 1The Conference Board December forecast, 2Bureau of Labor Statistics JOLTS report, and 3FactSet as of 12/31/21.
This material is provided for general information purposes only. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Bank & Trust or its affiliates, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Whether you are early in your career or have started a family, as a member of the next generation of investors you face your own set of unique needs. Below are key tips to ensure you are off to a financially healthy 2022!
Spending Budgets: Review your 2021 spending and create your 2022 spending budget. The past two years have been full of change for many working in different ways or facing unemployment challenges. Now is an ideal time to reevaluate needs and create a realistic, maintainable budget.
Insurance: Review your current insurance portfolio to make sure it meets your coverage needs. This applies to health, life, disability, and property and casualty insurance. If you have had a major life event occur this year, such as marriage, a new baby, change in job, or home purchase, this takes on even greater importance.
Healthcare: Many early-career workers have high-deductible health insurance plans combined with some type of tax-advantaged health savings account, such as a flexible spending account (FSA). Check your balance and see how much you have left to spend because these balances are “use it or lose it.” Many employers offer a grace period, and some allow you to roll over a portion, if not all of the balance into the new year. If not, you will need to exhaust the funds by December 31 to avoid any forfeiture.
Retirement Savings: The maximum contribution limit for 401(k)s increases by $1,000 in 2022 to $20,500. If you have a plan through your employer, aim to increase your contributions, if possible. Many do not take advantage of increasing contributions when they receive a salary increase or bonus. These are easy ways to help boost retirement savings, and more importantly, benefit from the gift of time.
Credit: Many young investors are still building or establishing credit. Getting a credit card is an important step if you are able to manage spending and confident in using one responsibly. It is vital to pay bills on time, limit the use of credit, and pay off debts. Additionally, you should be sure to check your credit score. Federal law gives you the right to access a free copy of your credit report every 12 months.
These are just a few important steps you can take to ensure you are on track for financial success. Recognizing everyone’s situation is different, we welcome you to speak with our team. We can help tailor your strategies to your personal financial goals.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>As we approach the end of 2021, now might be a good time to take a closer look at a few developments surrounding required minimum distributions (RMDs) and take note of what has remained in place.
Once you reach age 72, you are required to take minimum distributions from your traditional IRAs and most employer-sponsored retirement plans. (RMDs are not required from an employer plan if you are still working at the company sponsoring the plan and you do not own more than 5% of the company.) You can always take more than the required amount if you choose.
The portion of an RMD representing earnings and tax-deductible contributions is taxed as ordinary income, unless the RMD is a qualified distribution from a Roth account. Failing to take the full amount of an RMD could result in a penalty tax of 50% of the difference.
Generally, RMDs must be taken by December 31 each year. You can delay your first RMD until April 1 following the year in which you reach RMD age; however, you will then need to take two RMDs in one year — the first by April 1 and the second by December 31. (If you reached age 72 in the first half of 2021, different rules apply; see below.)
You may want to weigh the decision to delay your first RMD carefully. Taking two distributions in one year might bump you into a higher income tax bracket for that year.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 raised the minimum RMD age to 72 from 70½ beginning in 2020. That means if you reached age 70½ before 2020, you are currently required to take minimum distributions.
However, there was a pandemic-related rule change in 2020 that might have affected some retirement savers who reached age 70½ in 2019. To help individuals manage financial challenges brought on by the pandemic, RMDs were waived in 2020, including any postponed from 2019. In other words, some taxpayers could have benefitted from waiving both their 2019 and 2020 RMDs.
Anyone who took advantage of the 2020 waiver should note that RMDs have resumed in 2021 and need to be taken by December 31. The option to delay to April 1, 2022, applies only to first RMDs for those who have reached or will reach age 72 on or after July 1, 2021.
The IRS publishes tables in Publication 590-B that are used to help calculate RMDs. To determine the amount of a required distribution, you would divide your account balance as of December 31 of the previous year by the appropriate age-related factor in one of three available tables.
Recognizing that life expectancies have increased, the IRS has issued new tables designed to help investors stretch their retirement savings over a longer period of time. These new tables will take effect for RMDs beginning in 2022. Investors may be pleased to learn that calculations will typically result in lower annual RMD amounts and potentially lower income tax obligations as a result. The old tables still apply to 2021 distributions, even if they're postponed until 2022.
Investors age 70 ½ and older can use distributions from their traditional IRAs (not employer sponsored plans) to make donations directly to qualified charities, even though the new RMD age was increased to 72 as described above. Such distributions are not taxable. If you are in RMD territory, you can reduce your adjusted gross income (and taxable income) dollar-for-dollar by the total of QCDs in any one year. This is particularly advantageous if you do not itemize deductions.
For more information on RMDs, such as ways to ensure you’re taking the correct required amount, especially if you have multiple traditional IRAs at different financial institutions and QCDs, we encourage you to reach out to your Advisor.
©2021 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Donna Cator.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>All Faiths Food bank is striving to provide 3.2 million holidays meals to local children, families, seniors and veterans in need. For those who are struggling – especially as the COVID-19 pandemic continues to impact so many – the holidays are a stark reminder of ongoing financial challenge.
“It is important to CNTF to support local charities, especially those struggling with emergency needs due to COVID-19. We believe in serving the needs of our communities as well as our customers,” states Paul Tarantino, Senior Vice President and Senior Wealth Consultant at CNTF.
]]>After a strong start to 2021, the third quarter was a volatile one for global markets, as the Dow, the Russell 2000 Nasdaq and ACWI (All Country World Index) declined, while the S&P 500 was able to eke out a quarterly gain. As uncertainty regarding the recovery emerged, treasury prices, the dollar, and crude oil prices increased, while gold prices dipped lower. Despite the difficult quarter, the benchmark indices remain well ahead of their 2020 closing values, led by the S&P 500, which ended the quarter up nearly 15.0% year-to-date.
July kicked off the third quarter with large caps reclaiming their lead over small caps, as the S&P 500, the Dow, and the Nasdaq advanced, while small caps as defined by the Russell 2000 fell over 3.5%. Despite a surge in COVID cases spurred by the Delta Variant, 80% of S&P 500 companies reported earnings that exceeded expectations and stocks continued to rise early in the quarter, only to be taken lower in September as concerns on inflation, the debt ceiling, and unwinding stimulus by the Fed built a wall of worry for investors.
Globally, emerging markets fell 7.3%, bogged down by China’s regulatory crackdown across several industries as well as real estate developer Evergrande’s financial distress becoming a daily news item. The path forward remains unclear, with a bull case indicating a halt to regulatory crackdowns and a bear case where China does even more to prevent excesses.
Inflation continued to be a main concern, as dysfunctional supply chains coupled with strong consumer demand pushed Consumer Price Index readings up over 5% year-over-year. Adding to concerns, many businesses have been unable to fill job openings, leaving them short-staffed and struggling to meet demand. This in turn has led to strong wage gains as employers seek to retain current workers. While the Fed continues to maintain its thesis that these issues are temporary, and inflation will eventually dissipate, inflation readings continue to be strong, including in areas like rent, health care, insurance and wages. These tend to be stickier areas where price gains are less likely to fade.
Productivity gains have offset some of these pressures, and U.S. economic output (GDP) recently surpassed its pre-pandemic levels despite having roughly 4 million fewer workers in the job force. But the question of whether this inflation spike is transitory remains and will factor significantly into how the Fed approaches interest rates going into 2022.
Meanwhile, The Federal Reserve noted that the economic recovery remained on track. Second-quarter gross domestic product advanced at an annualized rate of 6.5%, according to the initial estimate from the Bureau of Economic Analysis. Employment continued to improve during the quarter and Fed chair Jeremy Powell clearly signaled that this strong performance made taper time more imminent.
The Federal Open Market Committee met in September. While noting that the economy has continued to recover, the ongoing spread of the Coronavirus, particularly the Delta Variant, may be slowing the pace of recovery. With the goals of maximum employment and inflation running at 2.0%, the Committee decided to maintain the current target range for the federal funds rate at 0.00%-0.25%. However, the FOMC indicated that it may begin scaling back its purchases of securities as early as this November.
Despite the lackluster quarter for most equities, the bull market run of the past several years-particularly for U.S. stocks has left investors wondering if equities have become overvalued. In fact, valuations (based on price-to-forward earnings) have actually fallen, because earnings revisions have moved higher at a faster pace than prices. This is true in most major markets globally and may help equities continue their upward march at least in the short-term.
On the other side, fixed income is likely to face a difficult road over the next year. The Fed has signaled its intent to begin tapering its bond purchases starting in November, and rates have already begun drifting higher in anticipation. While an actual rate increase from the Fed is unlikely prior to late 2022 or early 2023, bonds prices will continue to face significant headwinds as rates begin to normalize.
Heading into the fourth quarter of 2021, several economic indicators have improved, while a few have waned. While earnings continue to be strong, supply chain issues going into the holiday season remain top of mind. And of course, while latest COVID numbers look promising, there is always the risk of another variant slowing the recovery down again.
However, the consumer is well positioned with strong income growth and historically high savings rates along with relatively low debt service payments, leading to continued strong demand. This should bolster corporate earnings going forward, and while rates may begin to move higher, they will likely remain low by historical standards for an extended period.
As always, we encourage our clients to talk to their advisor if they have any concerns about the current market impeding their ability to meet their goals. Despite the daily noise, a long-term approach to investing continues to be optimal for taking advantage of the opportunities presented by the global markets.
Data as of 9/30/2021.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured CNB's Denise Kelly-Dohse, CFP®, Vice President, Wealth Advisor, and Tina Scahill of Ahrens Benefits Company.
Broadcasted on September 25, 2021
For questions, feel free to contact Denise Kelly-Dohse.
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Special Considerations, EPIC, and the Importance of Working with an Expert |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>An estate plan is an essential component to every financial strategy, and ensuring you have one in place now can provide you with peace of mind for the future. In this episode, Amy Boyd Ertel, Esq., CTFA, Vice President, Trust Officer with CNB Wealth Management, joins CNB’s Pittsford Bank Office Manager, Harry Gibbs, to discuss key points to consider when it comes to estate planning. What is an estate plan? Why should you have one? How do you plan for incapacity? What is the difference between an executor and a trustee? It’s never too early to start planning, so join us as we answer these important questions and more.
Broadcasted on October 5, 2021
For questions, feel free to contact Amy Boyd Ertel at 941.366.7222 x41960.
Estate Planning for the 99% | |
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
Medicare is the federal health insurance program that was signed into law in 1965. It was created for people over age 65 and certain young people with disabilities. Open enrollment for Medicare runs annually from October 15th to December 7th. During the enrollment period you have the opportunity to select your health care plans that will take effect on January 1st for the next calendar year.
Medicare begins the month you turn 65 or after being on disability for 2 years. Some people who are working can delay Medicare. If you are turning 65, Medicare becomes effective the first day of your birth month; if you turn 65 on the 1st of the month, it starts the month prior. If you are collecting Social Security, you will be automatically enrolled. If not, you have 7 months to apply: 3 months before your birthday, your birthday month or the 3 months following.
Medicare is made up of various parts.
Medicare can get confusing if you’re still working and covered by other plans.
So now that you have applied for Medicare and received your red, white, and blue card, what’s next? At this point, you want to understand your coverage and what deductibles and coinsurance you have, and if you need additional coverage. There are a few options that may be of interest to you.
Medigap plans do just as the name implies. They fill in all, or some, of the gaps left by Medicare. There are 10 different plans, each one covering different gaps in Medicare, labeled with letters A-N. Premiums vary between companies but plans are standardized and benefits remain the same.
Medigap plans do not have drug coverage, so you must also purchase a standalone prescription drug plan to avoid a penalty for not having drug coverage. It is important to note that the penalty applies for the rest of your life, so it is important to avoid incurring. Keep in mind that Medigap plans do not cover any expenses related to vision, dental or hearing, and most do not have additional benefits, such as fitness or transportation.
The second option is a Medicare Advantage Plan, called Part C. They are more like a box of benefits instead of a “Part” as they combine Parts A, B, and usually Part D into one plan. The premiums for Medicare Advantage plans range from $0 per month to over $200 per month. These plans are subsidized by the government, so don’t assume that a low-priced plan is a bad plan. When you are on an Advantage Plan, you will have co-pays and co-insurance amounts for any medical services and these will vary by plan. Medicare Advantage plans may also give you extra perks, like vision, hearing, dental, a fitness membership, acupuncture, and meals after a hospital stay. Some plans have a Part B giveback, which means that they give you some of your Part B premium back. Extra benefits vary by plan and may cost a higher, or additional, premium.
Navigating supplemental plans can be challenging. They change annually and during the open enrollment period, you have an opportunity to revisit the plans. Any changes in your health, prescription drugs, or lifestyle may mean you want to adjust the type of plan you choose. Consulting with an expert on our team can help ensure you are enrolled in the plan that meets your needs.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>The time has come to pay back your student loans, now what? Dealing with student loan debt can be stressful and even frustrating for borrowers, however, now is the time to take control and alleviate that stress. First, create an inventory of your loans including loan type (private vs federal), balance, interest rate, payment amount, and repayment term. This can be done using your credit report through annualcreditreport.com for private loans or studentaid.gov for federal loans.
Once you have collected this information, you are able to develop a debt management strategy. First, determine how these payments fit into your budget. For those with extra funds, prioritize paying down the principal of the loan with the highest interest rate or pay extra on the loan with the lowest balance to increase future cashflow. Some may find it financially difficult to repay their student loans. In this case, federal loans offer options for repayment and possible forgiveness. Private loans have fewer options and protections, therefore, refinancing may be the only option to lower payments in these instances.
Types of federal loans include Direct Subsidized, Direct Unsubsidized, FFEL, Direct Plus, or Direct Consolidated. Federal loans have several repayment options. For those that can’t afford standard repayment terms, choosing the right repayment plan is critical. Under some Income-Driven Repayment Plans (IDR), remaining balances are forgiven, usually after 20 to 25 years or repayment. This forgiveness may be taxable and require additional planning. Public Service Loan Forgiveness (PSLF) is typically available for those in an IDR plan after 10 years or successful repayment and 10 years of service with a government or non-for-profit organization. PSLF requires the borrower to recertify their income annually. Direct Loans should only be refinanced if there is no opportunity for forgiveness.
The Coronavirus Aid, Relief, and Economic Security Act, (CARES Act) suspended payment, interest, and involuntary collection on Direct Loans. This provision, which is set to expire on January 31, 2022, increased cashflow for borrowers and allowed borrowers to receive credit towards their repayment plans. The paused payments count toward IDR forgiveness and PSLF as well as on time payments for those in Rehabilitation Plans. The CARES Act also suspended the income tax due on loan forgiveness amounts to 2025.
Resuming student loan payments may come with challenges. After 21 months, some loan servicers have exited the business. The remaining servicing companies are preparing for payments to resume and taking on new loans from exited servicers. An estimated 10 million borrowers will need to transition to a new servicer or are entering repayment status for the first time. With this in mind, borrowers should be proactive as January approaches. Your servicer will be in touch regarding your payment due date, but ensuring that your servicer has your correct contact information is paramount, as your first payment needs to be made on time. Another wrinkle will be the annual income recertification for IDR plans. Typically, this is done annually, however the system may be taxed recertifying so many borrowers at once.
Debt management is an important part of any financial plan. While student loans come with their own challenges, understanding what debt you have and the options available will help you develop a plan that works for you. Our team can help incorporate a successful strategy into your financial plan.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured Donna L. Cator, CFP®, CDFA®, Vice President, Wealth Advisor, and Margaret M. Whelehan, CDFA®, Vice President, Financial Advisor, Canandaigua National Bank & Trust.
Broadcasted on May 29, 2021
For questions, feel free to contact Donna Cator at 941.366.7222 x50623 or Margaret M. Whelehan.
How to Protect Yourself Financially When Going Through a Divorce | Audio Clip |
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Part 1: The Benefits of Mediation and Understanding Your Complete Financial Picture |
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Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured Stephen Krauss, Vice President, Wealth Advisor, and Brian Murphy, Vice President, Senior Investment Strategist, Canandaigua National Bank & Trust.
Broadcasted on May 30, 2020
For questions, feel free to contact Jason Fitzgerald at 941.366.7222 x50628 or Brian Murphy.
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Market Reactions to the Covid-19/Coronavirus Pandemic |
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This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured CNB's Denise Kelly-Dohse, CFP®, Vice President, Wealth Advisor, Canandaigua National Bank & Trust, and Jane Ahrens and Tina Scahill of Ahrens Benefits Company.
Broadcasted on September 26, 2020
For questions, feel free to contact Denise Kelly-Dohse.
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Choosing a Plan |
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The Impact of Covid-19, EPIC, and Timeframes to Consider |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Ask the Experts is a financial forum for education and advice as CNB’s experts answer your questions on financial topics that interest you.
The experts of this show featured Jason W. Fitzgerald, CFP®, Senior Vice President, Senior Wealth Advisor - Team Leader, and Brian J. Murphy, CIMA®, Vice President, Senior Investment Strategist, Canandaigua National Bank & Trust.
Broadcasted on January 30, 2021
For questions, feel free to contact Jason Fitzgerald at 941.366.7222 x50628 or Brian Murphy.
Investments - A Recap of 2020 and the Outlook for 2021 | Audio Clip |
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Part 1: A Review of 2020 and the Importance of Having a Plan | |
Part 2: The Lasting Economic Impact from Covid-19 |
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Part 3: Rebounding from 2020 into 2021 |
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Part 4: Market Expectations for 2021 |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Budgeting is the foundation of a great financial plan. But how can establishing a budget provide you with more financial freedom and less financial stress? In this episode, Laurie Haelen, AIF®, Senior Vice President, Manager of Investment and Financial Planning Solutions and Donna Cator, CFP®, CDFA®, Vice President, Wealth Advisor with CNB Wealth Management, join CNB’s Pittsford Bank Office Manager, Harry Gibbs, to break down the basics of budgeting. What is a budget? Why is having a budget important? How do you get started? We answer these questions and more so you can put this financial tool to work in your own life.
Broadcasted on January 30, 2021
For questions, feel free to contact Laurie Haelen at 941.366.7222 x41970 or Donna Cator at 941.366.7222 x50623.
Budgeting - Needs, Wants, and Wishes | |
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Your financial life can be complicated. But it doesn’t have to be. Tune in to hear from Canandaigua National Bank & Trust’s financial professionals as they discuss strategies for improving your financial wellness. No matter what stage of life you are in, this podcast provides you with the knowledge you need to take the stress out of finances so you can focus on reaching your financial goals.
Subscribe to our podcast on Apple Podcasts* or Google Podcasts.
The information in this podcast is educational and general in nature, and is based on the financial and regulatory environment as of the date of recording. It does not take into consideration the listener’s personal circumstances. Listeners should not act upon the content or information in this podcast without first seeking appropriate individualized advice from an accountant, financial planner, lawyer or other professional. The views expressed in this podcast may change without notice and may differ from those views expressed by other Bank personnel. The Bank makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in this Podcast.
*Apple, the Apple logo, and Apple Podcast are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc., registered in the U.S. and other countries.
Despite the economic shock of the coronavirus pandemic, American workers and retirees remain surprisingly optimistic about their ability to achieve their retirement income goals.
In its annual Retirement Confidence Survey conducted in January 2021, the Employee Benefit Research Institute (EBRI) found that 80% of retirees and 72% of workers were either very or somewhat confident in their ability to afford a comfortable retirement. "Even with changes in the labor market, workers' confidence in their ability to live comfortably in retirement remains high overall," said Craig Copeland, EBRI senior research associate and the study's co-author.
On the other hand, he continued, "Three in 10 workers say the pandemic has negatively impacted their ability to save for retirement due to reduced hours, income, or job changes." Workers who said their ability to save was negatively affected were those who have historically reported lower confidence, including individuals with low income and debt-management challenges.
Nearly four in 10 workers said their households experienced a negative job or income change since February 1, 2020. One in 10 were furloughed or temporarily laid off, while 18% said their hours and/ or pay were reduced. Half of workers who reported a negative change said they were either somewhat or significantly less confident in their ability to retire comfortably because of the pandemic. By contrast, 21% of workers reported having some type of positive change during the pandemic, and just 17% now plan to retire later than anticipated because of the crisis.
Retirees seemed even more resilient. Eight in 10 said their overall lifestyle is what they expected or better than they anticipated — results that remained virtually unchanged from the January 2020 survey. Just 26% of retirees said their expenses are higher than expected, a decrease from the 2020 results. About 70% said their retirement confidence was not affected by the pandemic. Study coauthor Lisa Greenwald speculated that some of this confidence may be because retirees spent less overall during 2020, a year with limited opportunities to travel and enjoy other leisure activities.
The survey also revealed stronger confidence in Social Security and Medicare, perhaps because benefits continued uninterrupted throughout the challenging year. Both retirees and workers reported the highest-ever confidence levels in the ability of Social Security to continue providing benefits at least equal to what is received today. And despite critical health-care concerns during 2020, 75% of retirees and nearly 60% of workers were confident in the future of Medicare — another record high.
One-third of workers said they currently work with a financial professional. Of those who didn't, 38% expect to do so in the future. Evidence shows that working with a financial professional can help you define and achieve your retirement goals. As always, our credentialed team stands ready to meet with you and answer any questions you may have.
©2021 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Greg Pilato.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>According to the Federal Reserve’s Survey of Consumer Finances, the average American family carries $6,270 in credit card debt. This is in addition to loans held for vehicles, homes, education and other obligations which brings the average American personal debt to $92,727.* While these figures may make previous generations balk, the average cost of a car, house, and college education has skyrocketed when compared to the average household income. While gross household debt was only 15% of GDP in 1946, it is close to 80% now.** As a result, typical consumers need to borrow money if they want to buy a home, drive a car, or educate themselves or their children.
Ideally, a household should run like a business. Each year, we should make more money then we spend, adding dollars to the left side of our personal balance sheets while paying down debt and reducing liabilities on the right hand side. There are several tips and tricks to keep this balance sheet aligned, and the first is proper budgeting from the beginning.
The first step in budgeting is to truly understand how much we spend on a monthly basis. Fixed expenses are fairly straight forward and easy to track, as mortgages, car payments, and student loans will typically be the same every month. It’s our discretionary spending that needs our full attention. A helpful exercise is to check your statements on a monthly basis to see where your discretionary income is going and where it can be adjusted (there are several apps to help with this). Next, we should compare this negative cash flow to our positive cash flows, otherwise known as our income. Are they close? If so, how can we reduce the negative outflows, as that is usually easier than picking up a second job and boosting income. If they are not close, that’s great, let’s figure out how to best utilize this extra cash flow.
If you find yourself with ample cash after paying all your monthly expenses, we should determine the best use of that cash. What short-term or long-term goals do you have that this cash can be utilized for? For example, if you want to save for retirement, then you should consider tax efficient investment accounts such as your company's 401(k) or IRAs. If one of your goals is to buy a boat in the next 3 years, then I recommend keeping this extra cash flow fairly liquid, as market volatility can disrupt savings on a short-term basis. In either case, setting up automatic transfers to the appropriate account is an easy way to set this money aside to accomplish your goals.
The next step in controlling your personal balance sheet is realizing when it is appropriate to utilize credit. As a modern consumer, you need credit. The old adage of, "If you can't pay for it with cash, then you can't afford to buy it" may have been sound advice 40 or even 20 years ago, but such attitudes about credit are unrealistic for most adults living in modern times. Borrowing money for purposes of home improvement, home purchase, education, vehicles or starting a business are great examples of utilizing credit appropriately, as long as the repayment on these obligations are feasible. Circling back to our cash flow analysis above, how much leftover income do you have, and can you afford these additional responsibilities? It’s critical not to overextend ourselves.
Should we find ourselves a bit over extended, what is the easiest way out? There are two primary methods of paying down debt. The first method is referred to as the debt avalanche. This is where you make minimum payments on all of your loans and then pay extra principal towards your loan with the highest interest rate. This will save you money in the long run as you pay down the highest rate first. The second method is referred to as the debt snowball, this is where you make minimum payments on all loans and then put extra money towards your lowest balance. The idea here is that the morale boost of paying off the lowest balance will push you to continue the same disciplined repayment schedule on other obligations.
Just like a business, our personal balance sheet should have a cash reserve readily available that is not earmarked for other goals. The purpose of this extra savings is your emergency fund for unexpected events. Typically, it is recommended to have 3-6 months of living expenses stashed away. This will vary depending on your current employment situation, whether you have proper insurance coverage, and your stage in life. Our team would welcome the opportunity to meet with you to discuss your financial plan. While no one has a crystal ball, the concept of developing and sticking with a financial plan will surely reduce anxiety and help prepare you for the future.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Two emergency relief bills passed in 2020 in response to the COVID-19 pandemic will make this an unusual tax season for many taxpayers. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed in March, and a second relief package was attached to the Consolidated Appropriations Act, 2021, in December.
The following provisions may affect many households when they file their personal tax returns for 2020. You might consult a tax professional who can explain the changes and recommend strategies to help reduce your tax liability for 2021.
Most U.S. households received two Economic Impact Payments (EIPs) from the federal government in 2020. They are not taxable because technically they are advances on a refundable credit against 2020 income taxes.
The CARES Act provided a Recovery Rebate Credit of $1,200 ($2,400 for married joint filers) plus $500 for each qualifying child under age 17. The second bill provided another $600 per eligible family member.
Any individual who has a Social Security number and is not a dependent generally qualifies for the payments, up to certain income limits. The amounts are reduced for those with adjusted gross incomes (AGIs) exceeding $75,000 ($150,000 for joint filers and $112,500 for heads of household) and phase out completely at AGIs of $99,000 ($198,000 for joint filers and $112,500 for heads of household).
In order for the money to be delivered quickly, eligibility was based on 2019 income tax returns (or 2018 if a 2019 return had not been filed). Eligible taxpayers who did not receive two full payments, possibly due to errors or processing delays, may claim the money as a Recovery Rebate Credit on their 2020 tax return. Households that reported a lower AGI in 2020 (or added a dependent) might be eligible for additional funds. To calculate the credit, filers will need to know the amounts of any payments they already received. The credit amount will increase the refund or decrease the tax owed, dollar for dollar.
Taxpayers who received two full payments don't need to fill out any additional information on their tax returns.
Another measure in the CARES Act allowed IRA owners and employer-plan participants who were adversely affected by COVID-19 to withdraw up to $100,000 of their vested account balance in 2020 without having to pay the 10% tax penalty (25% for SIMPLE IRAs) that normally applies prior to age 59½.
Still, withdrawals from tax-deferred retirement accounts are typically taxed as ordinary income in the year of the distribution. To help manage the tax liability, qualified individuals can choose to spread the income from a coronavirus-related distribution (CRD) equally over three years or report it in full for the 2020 tax year, with up to three years to reinvest the money in an eligible employer plan or an IRA.
Taxpayers who elect to report income over three years and then recontribute amounts greater than the amount reported in a given year may "carry forward" the excess contributions to next year's tax return. Taxpayers who recontribute amounts after paying taxes on reported CRD income can file amended returns to recoup the payments.
Qualified individuals whose plans did not adopt CRD provisions may choose to categorize other types of distributions — including those normally considered required minimum distributions — as CRDs on their tax returns (up to the $100,000 limit).
Last year was unpredictable, and your financial situation may have been far from normal. As always, CNB Wealth Management's financial planning team is here to answer any questions you may have.
Have questions about how pandemic relief measures may affect your tax return? Contact me at (585) 419-0670, ext. 41970 or by email at LHaelen@CNBank.com.
©2021 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Laurie Haelen.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>The desire for heads of family to preserve and continue wealth for future generations face challenging odds. According to studies by Victor Preisser and Roy Williams, in their book “Preparing Heirs,” almost 70% of family wealth transference and business succession plans fail. However, it does not have to be this way. With proper planning and focusing on three key things—communication, documentation, and initiation—families can strengthen mutigenerational relationships and increase chances of continued family legacy.
The most essential factor to facilitating successful transference of wealth is communication. In order to have healthy conversations, a foundation of trust needs to be established. Ideally, it is advised to hold family meetings to facilitate these conversations. Ground rules should be established to ensure every family member will be listened to and that differences in opinions will not be judged. This applies not only to younger generations but for family leaders as well. When families create structured discussions with an agenda or predetermined discussion points, there is less chance of catching a family member “off guard,” as this allows family members time to process information beforehand.
Family conversations should be meaningful and include discussions on the values shared by the family as well as traditions and family history. Education is a critical component of the conversation. Education can take on many forms, whether it is basic financial literacy, an understanding of how family wealth is invested, a better understanding of the family business, or the philanthropic goals of the family. For younger family members, understanding their role and expectations for them going forward will help develop good stewardship of future wealth and less breakdown in communication and misunderstandings.
Family meetings have been an integral part of the Rockefeller family. Twice a year, all family members aged 21 and older, and their respective spouses, participate in the family meeting. According to David Rockefeller Jr., “The family talks about its direction, projects, new members and any other family news related to careers or important milestones. It’s important that everyone feel a part of the family, even if they married into it.”
Yet you need not be a Rockefeller to benefit from multigenerational planning. According to a Cerulli Associates study, “U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2018: Shifting Demographics of Private Wealth,” aging generations are expected to pass on $68 trillion in assets within the next 25 years. With notable inheritances to pass on to descendants, a real need for generational wealth planning exists.
In conjunction with the family meetings, it is important for things to be documented. I encourage families I work with to memorialize the key aspects of the family legacy. As time passes, it can be difficult to recollect information or stories that occurred years prior. Having it documented provides a gift for future generations to be able to share with their offspring.
Key discussion points should also be documented, especially related to estate planning. Estate planning documents include wills, durable powers of attorney, and advanced medical directives. Families have evolved from years ago to reflect a modern view of the family entity, including blended families from previous marriages. With that said, it is often desirable to have strategies in place to ensure family wealth flows the way the family wishes. Trusts can be an effective means to help facilitate desired estate planning outcomes. Trusts are also helpful with minor children, family members who need assistance with spending and budgeting, as well as those with disabilities or addictions. Lastly, a letter of instruction, which is not a legal document, can accompany a will to provide instruction and a reflection of personal thoughts and wishes.
Lastly, in the words of the behemoth footwear and apparel company Nike: “Just do it.” Yet as simple as this sounds, a small percentage truly give their children a full picture of what they stand to inherit. There are a variety of reasons for this, ranging from the anxiety of broaching the subject, determining the appropriate age to have financial conversations, not wanting to create entitlement, to the stigma of the discussion of death itself. The impact of not having the conversations can create negative consequences, such as family discord or even financial ruin in some circumstances.
Leveraging your trusted partners, such as your Wealth Advisor, Financial Planner, CPA, and Estate Attorney, can help structure and facilitate these meetings and conversations. Having guidance from professionals can help initiate difficult conversations, provide objectivity, and provide effective and creative strategies that are appropriate for the family’s specific situation.
With statistics revealing the dismal odds of passing family wealth on to generations beyond grandchildren, the importance of proper multigenerational planning cannot be over emphasized. It begins with conversations that encompass candid conversations around family values, goals, and objectives. By engaging in family meetings where education and honest dialogue can be conducted on a regular basis, the odds ever increase in favor of the family. Leaning on trusted advisors to help facilitate meetings and conversations, as well as developing a good estate plan, are crucial steps to making family wealth last.
Published on March 12, 2021 in the Rochester Business Journal. To see the full version of this column in the RBJ, visit RBJ.net.
Have questions about multi-generational planning? Contact me at (585) 419-0670, ext. 50666 or by email at MCaton@CNBank.com.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>It’s a busy time. But it’s not too soon to start thinking about taxes. Let’s take a look at 9 tax facts for tax-year 2020 along with tips that may save you money.
1. Tax brackets and tax rates have changed. Every year, the tax brackets for taxable income are adjusted based on the rate of inflation.
2. The increased standard deduction has simplified filing for many. The standard deduction for married filing jointly rises to $24,800 for tax year 2020, up $400 from last year. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,400, up $200 from 2019. For heads of households, the standard deduction will increase to $18,650, up $300. The personal exemption for tax year 2020 remains at 0, as it was for 2019. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act.
3. You may be eligible to take a $2,000 tax credit for each child. The credit is available to parents if your child is younger than 17 years of age on the last day of the tax year, generally December 31. It begins to phase out at $200,000 of modified adjusted gross income for single filers. The amount doubles to $400,000 for married couples filing jointly.
4. Limitations on itemized deductions. If cash expenses that are eligible to be itemized fail to top the standard deduction, skip Schedule A and take the standard deduction. It’s that simple.
If you itemize, please be aware that state and local income taxes and real estate taxes are capped at $10,000. Anything above cannot be written off against income.
You may generally deduct up to 60% of your adjusted gross income (AGI) for cash donations, but a 30% limitation applies for gifts of appreciated securities. For 2020 only, cash donations made directly to charities (not donor-advised funds) are deductible up to 100% of AGI. Also, for 2020 only, up to $300 in cash donated directly to charities is deductible if the standard deduction is taken.
In 2020, the IRS allows all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceed 7.5% of their adjusted gross income.
5. Penalties have been eliminated for not maintaining minimum essential health care coverage, according to the Tax Cuts and Jobs Act.
6. Estates of decedents who die during 2020 have a basic exclusion amount of $11,580,000, up from $11,400,000 for estates of decedents who died in 2019. The annual exclusion for gifts is $15,000 for calendar year 2020, as it was in 2019.
7. The maximum credit allowed for adoptions for tax year 2020 is the amount of qualified adoption expenses up to $14,300, up from $14,080 for 2019.
8. Changes to the AMT—the alternative minimum tax. Tax reform failed to do away with the alternative minimum tax (AMT), but it snags far fewer people.
The AMT exemption amount for tax year 2020 is $72,900 and begins to phase out at $518,400 ($113,400 for married couples filing jointly for whom the exemption begins to phase out at $1,036,800). The 2019 exemption amount was $71,700 and began to phase out at $510,300 ($111,700, for married couples filing jointly for whom the exemption began to phase out at $1,020,600).
9. There is a 20% deduction for business owners. The new law gives “flow-through” business owners, such as sole proprietorships, LLCs, partnerships, and S-corps, a 20% deduction on income earned by the business. This is a valuable benefit to business owners who aren’t classified as C-corps and can’t benefit from 2018’s reduction in the corporate tax rate to 21% from 35%.
Individual taxpayers and some trusts and estates may be entitled to a deduction of up to 20% of their net qualified business income (QBI) from a trade or business, including income from a pass-through entity.
In general, total taxable income in 2020 must be under $163,300 for single filers or $326,600 for joint filers to qualify. The deduction does not reduce earnings subject to the self-employment tax.
Consult with your CNB Wealth Advisor and tax professional to make sure you are taking advantage of all the tax benefits you are entitled to. CNB Wealth Management, with its staff of 11 CERTIFIED FINANCIAL PLANNERTM professionals, is well-equipped to help you meet your financial goals..
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>Some members of the team. The financial planning process will likely include a team of professionals to ensure the plan is effective. Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas. Planners who have the CFP designation are held to a high standard and have expertise in all areas of the planning process. Accountants or tax attorneys provide advice on federal and state tax issues. Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death. Insurance professionals evaluate insurance needs and recommend appropriate products and strategies. Investment advisors provide advice about investment options and asset allocation and can help you to build and manage an investment portfolio to meet your long-term goals.
The most important member of the team, however, is you. Your needs and objectives drive the team. Once you have carefully considered any recommendations, all decisions lie in your hands.
Staying on track. The financial planning process doesn't end once your initial plan has been created. Your plan should generally be reviewed at least once a year. It's also possible that you'll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:
No matter what type of help you need, CNTF Wealth Management’s financial planning team can help ensure you are on track to meet your financial goals and will gladly answer any questions you have. Schedule an appointment with one of our financial advisors.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>1 Vanguard.com, “What U.S. Elections Mean for Investors”
2 Invesco, “2020 Election: 10 Truths No Matter Who Wins”
3 Ibid
4 Forbes.com, “Fasten Your Seat Belts: Markets Could Have a Bumpy Election Season”
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>According to a recent Bankrate report, more than 50% of millennials have a “side hustle.” Finding a way to earn extra cash to pay down debt or invest in your future may ultimately be a prudent strategy to help with limited cash flow. But before making that decision, it may make better sense to evaluate the foundation of your financial situation.
First and foremost, know where your money is going. Some people have a natural tendency to budget. It provides them with a sense of comfort knowing they are living within their means and whether they are on track to meet their goals. For others, budgeting is constricting, challenging and unnatural. Regardless, it is a necessary task for anyone who wants to create efficiencies in their cash flow management. There are ample resources available to help track expenditures for review, from spreadsheets to online tools such as Mint, PocketGuide, or Clarity Money. Many are free and aggregate all financial accounts to help organize and track your spending. Most importantly, it allows you to understand where your money is going so you can determine what expenditures are important and necessary and others that are non-essentials.
Adhere to the 50/30/20 rule. If you still are challenged with tracking your money, a simple way to budget is to adhere to the 50/30/20 rule. In a nutshell, 50% of takehome pay is allocated to needs, 30% to wants and 20% on savings or paying off debt. At the very least, it requires you to spend within your means and gets you thinking about your regular recurring expenses, or essentials, versus your wants, or non-essentials.
Utilize a credit card. If you are confident in your ability to spend only what is within your means and you have a strategy to pay off your debt or increase your savings, utilizing a credit card is preferential to using a debit card. Credit cards allow you to earn cash back, provide rewards on spending, and take advantage of perks that debit cards don’t offer. Additionally, they allow you to build credit and provide protection if your card is lost or stolen.
Financially re-evaluate housing costs. If you are in the fortunate position of owning a home, it may make sense to investigate refinancing. Generally, if you can reduce your interest rate by 2%, it can make a lot of sense. Other ways of reducing your housing costs can be downsizing or looking for a roommate. As a general rule, housing costs should never surpass 30% of your gross income. If you rent, this would include utilities. For homeowners, this would include mortgage interest, property taxes, and home maintenance.
Consider what cash benefits might be provided by your employer. If your employer offers an employer-sponsored retirement account, take advantage of it. In many plans, an employer will agree to match the funds you contribute up to certain amount. That match is virtually “free” money. You should always contribute enough to capture the match.
Specifically related to health, Employee Wellness Programs typically offer employees a discount on their insurance premium, paid time off, a contribution to an HSA (Health Savings Account) or HRA (Health Reimbursement Arrangement), or a lower co-pay or deductible as an incentive.
Lastly, many companies have augmented their Employee Benefits programs to encompass more than what has been historically offered. These can include the aforementioned health wellness programs but also include professional development opportunities and memberships, financial wellness programs, and discount programs.
Sometimes getting a second job is necessary to make ends meet. However, it should be considered only after a thorough review of your financial situation has occurred. Looking at all available resources and opportunities can often provide the bridge needed to avoid the additional job.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Recessions, defined by economists as negative GDP growth for two consecutive quarters, are a natural component of the business cycle and on average have happened every four years since 1900. Our current situation is different in that it is not solely driven by economic forces. The global pandemic created a sense of urgency to dramatically limit our ability to interact with each other, so what we are experiencing now can be best described not as a recession but rather an economic shutdown. This distinction may be obvious, but it is important for us to understand this as we make our way out of this unprecedented predicament.
Businesses can only operate when they are allowed to be open, and reopening the economy will be key to our economic revival. But what will that look like going forward? Will it be a rapid V-shaped recovery, or a slower U-shaped one? Will a second infection wave convert our fledgling recovery into a W-shaped disaster that would cause a double-dip recession or will this drag on for an extended period of time in an L-shaped recovery, which could pose a risk to emerging markets? The frustrating answer may be, “Yes.” That is, we may be eating alphabet soup.
The purpose of the global shutdown was to slow the spread of COVID-19. Reversing the shutdown without reigniting a dangerous spread of the illness is complicated. Just as the initial shutdown was not uniform and absolute, economic revival will be subject to the phased re-opening. As a result, some sectors will feel economic relief sooner than others, and some groups of workers will regain employment sooner than others.
In New York State, the four-phase re-opening strategy began with activities deemed essential and gradually extended to a wider range of businesses. Those industries able to restart more quickly also suffered less damaging disruption and have been among those enjoying a more rapid recovery. Activities requiring people to be in close proximity with each other are being reopened in the later phases and can all expect a much slower recovery. For some businesses, recovery may ultimately not be possible but organizations that are able to innovate and adapt to the COVID-19 environment will improve their ability to recover. The massive shift of companies, schools and families to online video calls is just one example of such flexibility.
The stock market impact reflects the dynamics just discussed. After a sharp selloff for most stocks, many technology companies quickly rebounded, with some setting new highs. Stocks of companies in the entertainment and travel industries continue to languish, though most are well above their recent lows. Many other stocks are somewhere in between as their varied economic scenarios offer both challenges in dealing with COVID-19 and new opportunities for growth.
On a macro scale, the economic impact of the COVID-19 shutdown is yet to be determined. Second-quarter GDP may post an historic 30% decline, while a third-quarter economic rebound may be a comparably historic 20%.
In a recession, government policy makers focus on efforts to spur economic activity. In the COVID-19 shutdown, policy has primarily been to help organizations and families maintain solvency. While the Federal Reserve Board did slash interest rates to near zero, the low rates are not intended to encourage new loans, but to maintain much-needed liquidity in the economy. In recessions, tax cuts and spending bills are typically intended to increase aggregate demand. With COVID-19, the goal has not been economic revival but financial survival. Two key policies in the Coronavirus Aid, Relief and Economic Security (CARES) Act were intended to help businesses and families simply stay afloat.
One of the early challenges faced by most organizations was to avoid insolvency when the economic shutdown also turned off their cash flow. A critical policy response from the federal government was the Paycheck Protection Program (PPP)—a bank-administered lending program that provided critical cash that allowed businesses to continue employing their workers. Ongoing adjustments to the program are intended to provide needed flexibility as companies await the full re-opening of their industries.
Assistance also was needed for households. An economic shutdown meant many workers were unable to pay their rents, mortgages and taxes—not to mention food bills, etc. Nor were landlords able to collect income to pay their bills; and states and municipalities lost tax revenues needed to pay their employees and provide public services. The dominoes began to fall quickly. The CARES Act also provided automatic payments to nearly all households and expanded unemployment benefits to workers whose jobs were temporarily or permanently ended due to coronavirus. While the more lenient rules for the COVID unemployment insurance may eventually impede rehiring efforts as economic sectors reopen, continued support may be needed for the economic sectors and communities whose re-openings are deferred for an extended period.
The key criterion for economic revival is safety from coronavirus, whether that comes from acquired immunities or from an eventual vaccine. With neither of those being immediately available, the outlook for recovery remains uneven across the broad economy. Uncertainty will persist, but we remain confident that creativity and the desire for a brighter tomorrow will produce the needed changes to spur a resurgence of growth and opportunity.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>In acknowledgement and support of this action, Canandaigua National Trust Company (CNTF) and our parent company, Canandaigua National Bank & Trust (CNB), will be closing its branches and all offices on Friday, June 19th at 1pm in observance of Juneteenth – the commemoration of the end of slavery in the United States.
This time will allow the opportunity for our employees to join members of our communities who are participating in celebrations and events in the area. Recognizing this as a time for reflection, CNB will also provide our employees access to information and education on the significance of this day in history, as well as educational resources regarding diversity, equity and inclusion.
“Please join me in using this time to reflect, learn and listen on how we can bring an end to our nation’s inequities and advance real change, said CNB President and CEO Frank H. Hamlin, III. We can do better, and we will”.
]]>Stock markets have continued their downward trajectory with most major worldwide stock indices trading in bear market territory (a decline of 20% or more from recent highs) versus experiencing a correction (a drop of 10%). Investors continue to struggle to quantify the impact of the Coronavirus on global supply chains and consumer behavior, and now have the added uncertainty brought about by falling oil prices. Additionally, attempts to control the spread of the virus through limiting social contact have added an additional element of anxiety.
Governments and central banks have begun to institute policies, both monetary and fiscal, that they hope will begin to calm markets so that they can function in a more orderly fashion. Lower interest rates and gasoline prices should benefit the consumer, as would a well-coordinated series of health measures to contain the virus.
It is entirely possible that the stock market has overshot on the downside and priced in too severe of a negative scenario. For comparison, banks today are in far better shape to weather shocks than they were in 2008 and are less than half as leveraged as they were back then. Markets today show no signs of the credit crisis that created the Great Recession and the basic plumbing that keeps financial markets moving shows no signs of stress. In fact, we do not see any of the excesses that can often build prior to major recessions, whether it be in lending, real estate values or other asset prices. Given this, investors would be better served taking the long-term view. The chart below provides a longer-term perspective and shows that investors have been rewarded for their patience through both corrections and bear markets.
We continue to closely monitor the situation and look for opportunities that arise in times of market downturns. Rebalancing portfolios to take advantage of falling prices, retaining more cash for clients in distribution mode and ensuring that our clients’ financial plans are up to date are ways that we can help during these challenging times. The depth and breadth of this decline is still unknown, so the best defense is to rely on fundamentals, versus emotion, to steer our course.
No one is happy when market volatility increases, but it is an inevitable side effect of being invested in the market. The key is to maintain a balanced approach to investing, keeping in mind the long-term plan you’ve carefully created with your advisor and not letting the short-term noise throw you off your game.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Included in the legislation are several provisions impacting IRA and employer-retirement plans. This communication is intended to give you a high-level overview of just a few of these provisions so that you can make timely changes, if necessary, to your retirement-plan strategy.
The CARES Act is a game-changer. Consult with your Relationship Manager by calling (941) 366-7222 to learn how this legislation may impact your financial plan and to make appropriate plan updates to take full advantage of the Act’s provisions.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>Our business continuity plans were established and tested specifically to address situations such as this, and our employees can effectively fulfill their roles while away from our office locations.
To assist our employees and community during these difficult times, we have placed further emphasis on social distancing and will operate with less than half of our staff in the office and the remainder working remotely. In addition, we are recommending that all meetings with clients be conducted via phone or webex. As this is subject to change, we are prepared to modify accordingly to support the evolving environment.
We know you depend on Canandaigua National Trust Company to partner with you and help guide you through difficult times, and we value that trust and partnership. We are confident we have taken all requisite preventative measures, and that you will be able to depend on us through these trying times. As always, reach out to your advisor with any questions or concerns that you have.
]]>Market declines are challenging times and it is important to realize that they are an inevitable part of the economic cycle. Here are some simple tips to consider when thinking about your portfolio.
1. Stay Calm - There is more information available, both true and false, than there ever has been before. The result can be that investor stress causes people to make bad decisions. We understand that you may be feeling anxious. In order to make decisions that are best for your own long-term financial situation, stay calm and make your decisions based upon facts and not emotions.
2. Focus on the long-term - Your investments are designed to support your long-term goals and therefore should not change unless your long-term objectives warrant it. According to Vanguard, the average annual return of a portfolio consisting of 60 percent stocks and 40 percent bonds for the period from 1926-2018 was 8.6 percent. The highest loss during that period was 26.6 percent in 1931. There were losses in 22 of the 93 years. Although the future may not be identical to the past, it has benefited investors to stick to their plan for the long-term, even when the current situation seems dire.
3. Review your Financial Plan - Have your circumstances changed? Are your goals different? If not, resist the urge to make drastic changes to your investment strategy. Remember that market volatility has already been anticipated and built into your plan. We have had an 11-year positive run in the stock market. It was inevitable that a major downturn would occur at some point. It was a matter of when, not if.
With that said, declines in the market are a great time to revisit your long and short-term financial goals. Ensuring that you have an emergency fund, for example, is a goal that can help prevent from having to withdraw funds from the market at an inopportune time. Ensure your stock-to-bond asset allocation is appropriate and that your portfolio is adequately diversified to weather the storm. If you are retired and taking regular distributions from your portfolio to support your household cash flow needs, draw from the bond or cash portion of your portfolio, and give your stocks a chance to recover.
4. Take Advantage of Opportunities - Market declines present opportunities that investors may not be aware of with the daily media onslaught of negativity. When the markets are down, stocks are “on sale” and it is a great time to consider increasing contributions to your investments to take advantage of lower prices. For example, recent market activity has caused an average 60/40 portfolio to be down close to 20% year to date (as of March 20th). Adding funds now to long-term portfolios will aid in recovery once the market downturn reverses. Also, with low interest rates, it may be time to refinance some higher interest debt such as credit cards or auto loans
If you need help navigating this difficult time, CNB Wealth Management stands ready to be of assistance to you with any of your financial needs. Please feel free to reach out to us at any time and be kind to yourself during these uncertain times. #CNBeKind
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Last December, the SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019 became a reality. This far-reaching legislation effects everyone who has a 401(k)-or-similar employer retirement plan or IRA.
Let’s look at just a few of the law’s 29 provisions that likely have the biggest impact on Canandaigua National Trust Company clients. The intent is to give you a high-level overview and indicate whether you are covered by the “old” or the “new” rules.
Later Start Date for Required Minimum Distributions (RMDs). For traditional IRAs and employer retirement plans subject to RMDs, the SECURE Act changes the initiation age to 72 for RMDs. Under the prior legislation, the threshold was the year in which you turn age 70 ½.
If you turned age 70 ½ in 2019 or earlier, you are covered by the “old” rules. Your RMDs will continue as normal. If you turn age 70 ½ in 2020 or later, you are covered by the “new” rules. Your RMD initiation year will 2021 for those turning 70 ½ in the first half of 2020 and 2022 for those turning 70 ½ in the second half of 2020.
The Required Beginning Date (RBD) is still April 1 of the year following the RMD initiation year. As before, those who wait until the following year will need to take two RMDs that year.
No More “Stretch” IRAs for Most Beneficiaries. The SECURE Act eliminates “stretch” IRAs for most beneficiaries and mandates that inherited Traditional and Roth IRAs be distributed within 10 years following the year of the IRA owner’s death.
Exceptions are spouses, minor children, those who are chronically ill or have disabilities, and those within 10 years of the deceased IRA owner's age. Other than minor children who must follow the 10-year mandate once reaching the age of majority, the remaining exceptions can still take advantage of the stretch feature. For beneficiaries who are not exceptions:
If the IRA owner passed in 2019 or earlier, as a non-spouse beneficiary, you are covered by the “old” rules. While you must take RMDs, you can continue to stretch inherited Traditional and Roth IRAs over your life expectancy.
If the IRA owner passes in 2020 or later, the “new” rules are in place. Unless you are an exempt beneficiary, RMDs are no longer required but your inherited IRA must be distributed fully within 10 calendar years following the year of the IRA owner’s death.
Oddly enough, the effective date is extended for two years (for deaths after 12/31/2021) for beneficiaries of 403(b), 457(b) and other government retirement plans.
Age 70 ½ Ceiling for Traditional IRA Contributions Eliminated. Starting in 2020, you now can contribute to a Traditional IRA after age 70 ½ if you are still working. While this provision may appear to be attractive, we generally advise clients at this stage in their lives to direct excess cash flow to a Roth IRA and/or taxable investment account instead.
Paying Student Loans from 529 Plans. The SECURE Act allows up to $10,000 (lifetime for a beneficiary) for student loan payments using 529 Plan distributions. Such distributions are considered qualified by the IRS, meaning they are tax and penalty-free at a federal level. The spoiler here is New York State, which recently deemed such distributions as non-qualified for state income tax purposes. These distributions will trigger a recapture of related NYS tax deductions and a state income tax on the earnings portion of these distributions.
Kiddie Tax. Welcomed by parents and grandparents, the SECURE Act reversed the harsh taxation of unearned income enacted as part of the Tax Cuts and Jobs Act of 2017 that taxed interest, dividend, and capital gains income for dependent minors at high fiduciary rates. The new law restored these tax rates to the parents’ marginal rate and made the change retroactive to the 2018 tax year.
Qualified Charitable Distributions (QCDs) from Traditional IRAs. QCDs can still be made starting at age 70 ½. Even though there is now an age gap when QCDs are allowed but distributions are not required, QCDs are still considered the most tax-efficient method for making charitable gifts. QCDs continue to be allowed from Inherited IRAs within the new 10-year timeframe.
Still have questions? Contact your CNB Wealth Advisor to learn how the SECURE Act may impact your financial plan.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Determining how much income you'll need in retirement requires projecting the type of lifestyle you plan to have and when you want to retire. However, as you grow closer to retirement, you may discover that your income won't be enough to meet your goals. If you’re in that situation, you'll need to adopt a plan to bridge this projected income gap.
One way of dealing with a projected income shortfall is to stay in the workforce longer than you had planned. This will allow you to continue supporting yourself with a salary rather than dipping into your retirement savings. Depending on your income, this could also increase your Social Security retirement benefit. You'll also be able to delay taking your Social Security benefit or distributions from retirement accounts.
Remember, too, that income from a job while receiving Social Security may reduce the benefit you receive if you are under normal retirement age – by $1 for every $2 you earn over $17,640 in 2019. Once you reach normal retirement age, you can earn as much as you want without affecting your Social Security retirement benefit.
Delaying retirement can also let you continue to build tax-deferred funds in your IRA or employer-sponsored retirement plan (or tax-free funds in Roth accounts). And if you're covered by a pension plan at work, you could also consider retiring and then seeking employment elsewhere. This way you can receive a salary and your pension benefit at the same time. Just make sure you fully understand your pension plan options.
You might also consider adjusting your spending habits to bridge the income shortfall. Start by preparing a budget to see where your money is going. Here are some ways to stretch your retirement dollars:
Some people invest too conservatively to achieve their retirement goals. That's not surprising, because taking on more risk increases your potential for losses. But greater risk also has the potential for greater reward, and with life expectancies rising, retirement funds need to last longer. So if you’re facing an income shortfall, you may consider shifting some of your assets to investments that have the potential to outpace inflation.
The amount of investment dollars you might consider keeping in growth oriented investments depends on how long you have to save and your tolerance for risk. Still, if you are at or near retirement, you may want to keep some of your funds in growth-oriented investments. Get advice from a financial professional if you need help deciding how your assets should be allocated.
Once you are within a few years of retirement, prepare a realistic budget that will help you manage your money in retirement. Think long term: Retirees frequently get into budget trouble in the early years of retirement, when they are adjusting to their new lifestyles. Remember that when you are retired, every day is Saturday, so it's easy to overspend.
©2019 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by David P. Guzzetta.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
It is an exciting time of your life – you’ve graduated college, moved out on your own, landed your dream job, and you’ve even been lucky enough to find that special someone. The future is looking bright, but you have questions about money mixing into your love life. This dilemma is no small matter; in fact, a study published by SunTrust Bank discovered that 35% of people experiencing relationship stress blame money as the primary culprit*.
The Basics: Transferring Funds – Platforms to Use With money-transferring apps available at the click of a button, splitting the cost has never been easier. But easy doesn’t mean safe, or effective. If you have never been affected by fraud, then you probably don’t question these apps, but as someone in the financial services industry, I cannot say how important it is to stay protected and be aware of how these apps operate; who can guarantee your funds if something should happen?
Most banks offer a user-friendly mobile app or online site that also simplifies the process of sending/receiving money to/from a significant other. This is a great option, as it provides safety yet still allows you to keep your checking accounts as individuals.
The other suggested platform of use for splitting bills is to open a joint checking account. This option is geared toward those in relationships who have started to completely combine their lives. I say this because each owner in a joint account can withdraw any amount of cash with proper identification, even if they weren’t the ones who funded the account.
Next Steps: What’s Fair? The next step is to determine whether each partner will pay 50/50 or if there will be another arrangement. It is important to have an open and honest conversation with your significant other regarding this decision.
Based on Percent of Total Household Income: This is a simple concept where both partners add up their net income to get a total: Say Partner 1 brings home $5,000/month and Partner 2 brings home $3,200. Their combined household monthly income would be $8,200; therefore, Partner 1 would pay 61% of all household costs ($5,000/$8,200). Partner 2 would pay 39% of all household costs.
Based on Income Levels: This concept is more of an art than an exact formula. Say one partner decided to go back to school. This leaves a question in terms of fairness, as one partner has sacrificed earnings in an effort to have better opportunities in the future. Here, I would suggest deciding on a “fair” amount for both parties to contribute to household expenses. It may even be easiest to have a fixed dollar amount come out of every paycheck that is intended to be used for expenses. For Partner 1, this amount could be $450/month, for Partner 2, it could be $1,500/month, it will vary based upon your lifestyle and what you decide is fair.
The above conversations can be especially difficult to have if partners came from households who had vastly different approaches to finances. That’s okay, it is important to not bring biases into these conversations. Everyone will have an amount or percentage that works for them. Be sure to review from time to time as situations change. You may also find it helpful to keep an active spreadsheet of all payments made. This will help you track how much you spent in a months’ time, where those funds were spent, and also allows you to see the totals each partner paid.
Fun Money vs. Household Money vs. Individual Debt: Fixed expenses stay the same every month (rent/mortgage, car payment, savings), and variable expenses range from month to month (utility bills, groceries, gas, “fun-money”). Together, you will need to discuss which expenses will be split and which ones will stay as individual. Next, you will need to decide a fair way to allocate (above). Combining debt can be tricky because if anything should happen to a relationship you are now both on the hook. If this isn’t a concern, combining debt may be for the better as two people together may get better financing than as two individuals.
You may notice savings was included in the above fixed expenses list, this is an important part of your budget. You should factor in how much you and your partner wish to set aside for goals such as: emergency accounts, vacations, and retirement. Retirement could be decades away now, but starting early is critical and will result in much less stress later in life. Albert Einstein even said, “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” In a side by side comparison, a person who starts saving $5,000 from 30 to 65, earning 6% rate of return will have $300,000 more than a peer who waits until 40**. At the very least, I always encourage people to contribute what their employer is willing to match, to not do so would be passing up a benefit you have earned.
I like to look at a couple as a team. In a successful team, individuals make sacrifices for the greater good of the whole, and the team flourishes as a result. I encourage you and your partner to discuss your financial goals; agree on what the “team” wants in the future, both short- and long-term. Then, compose a budget that works for you in order to accomplish these goals, sprinkling in the above suggestions wherever you find appropriate. Take the first step by having the conversation, and if that requires having a financial representative present in order to provide insight, please feel free to reach out to one of your trusted Wealth Advisors at Canandaigua National Bank & Trust.
*https://www.cnbc.com/2015/02/04/money-is-the-leading-cause-of-stress-in-relationships.html
** $5,000 annually invested at the end of the year, 6% annualized return. Early investor dollar amount at 65: $595,604.33. Delayed investor dollar amount at 65: $295,781.91.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
Women are experiencing an entirely new relationship with money than previous generations. Women are buying homes, raising children on their own, building thriving careers, and owning their own businesses. As a result, nearly half of women are the primary breadwinners in their households. Even so, women have unique challenges that need to be addressed in order to ensure lifetime financial success and independence.
On average, women live 5 years longer than men. They also tend to make less money and are more likely to experience time out of the workforce throughout their lifetimes than their male counterparts. With these challenges in mind, how do we as women ensure we are in good shape financially for our lifetimes?
1. Take control or be an active participant of the family budget, bill paying, and balancing of the checkbook.
Develop a clear picture of your current financial situation. Identify your current monthly income and expenses as well as your spending habits. Set goals and direct your money accordingly. Save and invest your money regularly, but don’t forget to build in occasional rewards! Being intentional, educated, and informed about your money decisions reduces your worry and improves your financial outlook for now and the future.
2. Manage your debt and credit.
Establish and maintain a good credit history in your own name. Know exactly how much you owe and the interest rate for each debt. Develop a short term plan to manage your payments, avoiding late fees and pay off high-interest debt first. Request a copy of your credit report at least once each year. Know how to read it and make sure there’s no fraud/identity theft. Avoid too many accounts and keep credit card debt low.
3. Put yourself first making sure your financial goals are in place.
It’s ok to say “no” to loved ones asking for money. Be a role model for your children and discuss saving, spending, credit, and retirement. For adult children, determine if they are making any sacrifices and still need assistance or if they are habitually making bad financial decisions. Consider other ways to help besides writing a check.
4. Save for retirement.
Utilize employer plans by contributing at least enough for the full match. Be educated about the different retirement options such as Roth IRA, Traditional IRA, Roth 401(k), Traditional 401(k) and the impact they have on taxes today and in the future upon distribution. Set retirement spending goals and know how much you need to save in order to achieve them. Ensure you are investing in the right combination of stocks and bonds for your goals, risk tolerance, and general attitude about money.
5. Work with a financial professional.
Although you may be able to do it alone, you may find it helpful to work with a financial professional. We can help you:
One of the best things we can do as women is to take ownership of our financial destiny. Money affects all of us and touches every area of our lives, so we need to get comfortable talking about it! Share successes, mistakes, fears, and desires. Be financially empowered and empower other women in your lives so we all achieve our financial goals.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Our rich history began in upstate New York back in 1919, when our affiliate, Canandaigua National Bank & Trust, was granted trust powers. What does this mean to our clients and community? As a Fiduciary, we are required to act on behalf of any person with the “highest standard of care,” trust, honesty, and loyalty. We have a legal obligation to act with our clients’ best interest in mind, and this comes naturally to us each and every day. This standard of excellence permeates our culture at CNC, where each employee is doing what is in the best interest of you, our clients.
As we celebrate this milestone, we are proud to be recognized as a premier wealth services provider. We deliver to you the full capabilities of our wealth solutions, accompanied by seamless access to the complete banking services available through Canandaigua National Bank & Trust. This allows us to create relationships that are measured in generations, not years.
Our approach is to leverage the resources of our on-staff professionals, providing you with a level of expertise across a variety of disciplines not commonly available within one organization. Our wealth team credentials reflect our commitment to continuing employee development and education. Professional designations and certifications include Attorney, Accountant, Certified Financial Planner®, Accredited Investment Fiduciary®, Chartered Special Needs Consultant™, Accredited Asset Management Specialist®, Certified Divorce Financial Analyst®, and more. This enables us to deliver customized solutions to you through every phase of life.
Financial Planning is at the core of everything we do, and our CERTIFIED FINANCIAL PLANNER™ professionals are certified by the CFP® board that upholds a standard of excellence for competent and ethical personal financial planning. CNB Wealth Management currently has 12 CERTIFIED FINANCIAL PLANNER™ professionals with additional employees currently enrolled in the rigorous course work. Our team will work with you to develop and implement a personalized plan that will enable you to meet your goals now and in the future.
Our trust and estate professionals have built strong connections with our legal community. Our team can lessen the burden of fulfilling the fiduciary responsibilities for your trust and estate plans, serving as trustee or executor on your behalf. Whether it’s for family, tax, or charitable planning, our goal is to provide you with peace of mind as you navigate through the often difficult process of ensuring your legacy plans are fulfilled.
For business owners and your employees, our Retirement Plan team has the knowledge to help you design a new plan to meet your needs or take over an existing plan. We strive to be a partner to our business owners, ensuring your employees are educated on the many benefits of contributing to a retirement plan.
Our investment philosophy combines knowledge of the macro economic environment with a rigorous asset allocation and selection process. Our investment choices are driven by our Investment Committee, as opposed to any one advisor. This committee of experienced, credentialed people meets on a regular basis to oversee the asset allocation, individual assets (such as stocks, bonds, mutual funds, ETFS and third party managers), economic data, performance and investment policy for our clients and our firm. The team constructs and maintains diversified portfolios built to help you meet your long-term goals.
As we reflect on the past 100 years of trust powers, we know that none of this would be possible without you, our loyal clients, and the communities we serve. We are proud to have been named Best Wealth Management by the RBJ and Daily Record readers as well as Best Wealth Management of the Finger Lakes by the readers of the Daily Messenger. It’s our pleasure to provide premier financial services to the communities we serve and our greatest accomplishment is seeing you succeed.
We are available to meet with you at one of our four office locations:Supplementing these locations is our 23 Bank Office network for additional meeting convenience.
Our team is available to answer your questions and we are always looking for new ways to help our clients meet their goals. Let us know if we can help you better understand the options available to you.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Paying too much in income taxes? Uncertain of what investments are best for you? Looking for a comprehensive financial plan? Professional Financial Planner to the rescue. But, wait. We've all heard stories about people who have been burned by unscrupulous
financial planners. How can you tell the planning heroes from the villains?
Since virtually anyone can call him- or herself a financial planner, choosing the right planner may seem like a shot in the dark. However, spending some time deciding
what you really want out of a financial planner should shed some light on the decision-making process.
The place to start is by checking a prospective planner's training and experience. Is the person someone with a professional background
such as an attorney, accountant, trust officer, or banker. These generally are safe choices.
Is the planner qualified to use such designations as CFP® (CERTIFIED FINANCIAL PLANNER™) or ChFC (Chartered Financial Consultant) following his
or her name? CFP® practitioners must have at least three years of planning experience and complete the CFP® Board of Standards' seven-course educational program. ChFCs have completed the American College's program in financial planning.
Looking at a planner's background, education, and professional designations may weed out the less desirable planners. But it will not guarantee excellence or determine whether the person is the right planner for you.
The next thing for
you to do is to check the person's experience and performance record. Have any of your friends or associates used this planner? Is his or her reputation one of fiscal responsibility and integrity? What does the planner know about estates and trusts?
Is he or she knowledgeable about real estate and tax-sheltered arrangements? Review the planner's track record. Ask for names and telephone numbers of clients. Talk to them. Find out if they are satisfied with the services they received. Because it
may take several years to tell if an investment has paid off, contact the people who used the planner as long ago as possible. Generally, what results have been realized from financial plans this person has devised for other individuals in your basic
situation?
Once you've pared your list down to several reputable planners, it's time to check out costs. How will the planner charge you for his or her services? Financial planners charge for their services in one of three ways: fee only, commission
only, or fee plus commission. Each type of compensation method has its advantages and disadvantages. Fee-only planners charge either an hourly rate or a flat fee for their advice and take no commissions on the financial products you purchase to carry
out this advice. Most fee-only planners are registered or certified. Without the constant pressure to sell financial products, they can devote more time to devising a client's plan and may be less likely than commission-only planners to recommend
an investment as the solution to every financial problem.
Commission-only planners charge nothing for devising your financial plan. Rather, they depend on commissions from financial products they sell you to cover the cost of producing the
plan. The caveat here, of course, is that the planner may recommend certain financial products simply to get a higher commission, not necessarily because they are the best investment for you.
Fee-plus-commission planners charge a fee to
devise a financial plan and then charge commissions on the financial products purchased from them to carry out the plan. This category basically combines the good and bad of the other two, with some of the fee-only advantages canceling out the commission-only
disadvantages and vice versa. For instance, once the fee-plus commission planner has put together your plan, he or she will recommend specific investments to purchase. You can buy these investments directly from the planner or buy them elsewhere.
Let's suppose, you've now narrowed your list down to just a couple of good prospects. Go and talk with them. Ask up front how much your financial plan might cost and what additional charges there will be to carry it out. If the planner sells financial
products for a commission, ask him or her to disclose his or her "take" on each investment sold. And ask if the planner's policy is to offer alternative ways to carry out plan objectives. A financial planner should help you review your total financial
picture and determine your goals and then give you guidance in meeting those goals. But, ultimately, you should make the investment decisions with a full understanding of all alternatives.
Your search for a financial planner probably will
not produce a super hero who can step in and solve your every financial concern. If you take your time and do a little digging, though, you will find a professional financial planner who is right for you. Start with CNB's James Terwilliger, Senior
Vice President, Senior Planning Advisor, CERTIFIED FINANCIAL PLANNER™, 585-419-0670 ext 50630 or email JTerwilliger@CNBank.com.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Skirboll, a 1972 SUNY Brockport alumna, received this distinction at the May 18, 2019 undergraduate commencement ceremony. Skirboll is the founder and former executive director/president of Compeer, Inc., an international non-profit organization that seeks to help people overcome the effects of mental illness through the power of friendship. Compeer has become a national model in dealing with mental health issues, having been replicated throughout New York State, the United States, and around the globe.
Bernice (Bunny) and Mort Skirboll are part-time residents of Rochester, NY and Longboat Key, FL. Through her role as a seasoned Director, Skirboll plays an integral part in growing the CNTF brand, consistently offering valued guidance and support.
]]>Wills: A will is the cornerstone of any estate plan – no matter the size of your estate and even if you have implemented other estate planning strategies. You can leave property by will in two ways: making specific or general bequests. A specific bequest directs a particular piece of property to a particular person. A general bequest is typically a percentage of property or property that is left over after all specific bequests have been made.
Trusts: You can leave property to your heirs using a trust. Trust property passes directly to the beneficiaries according to the trust terms. There are two basic types of trusts: revocable and irrevocable.
Revocable trusts are flexible because you can change the terms of the trust and the property in the trust. This is a good way to protect your property in case you become incapacitated. Irrevocable trusts can't be changed or ended except by its terms, but can be useful if you want to minimize estate taxes or protect your property from potential creditors.
Beneficiary designations: Property that is contractual in nature, such as life insurance and retirement accounts, passes to heirs by beneficiary designation. Beneficiaries can be persons or entities and you should name primary and contingent beneficiaries.
Joint ownership arrangements: Two persons can own property equally, and at the death of one, the other becomes the sole owner. This type of ownership is called joint tenancy with rights of survivorship (JTWRS). A JTWRS arrangement between spouses is known as tenancy by the entirety, and several states have a form of joint ownership known as community property.
Another type of joint ownership is called tenancy in common where there is no right of survivorship. Property held as tenancy in common will not pass to a joint owner automatically. Joint ownership arrangements are useful and convenient with some types of property, but may not be desirable with all of your property.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>You entered the workforce during the “lost decade” with the 2000 - 2002 stock market downturn and the 2008 financial collapse. You probably heard parents, friends and colleagues speak in fear about the stock market. But looking ahead, your long time horizon affords you the ability to invest more aggressively in stocks which likely will provide for higher longterm returns and the time to ride out market declines. Despite what you may have heard, stock markets work.
The decades ahead of you can be your greatest advantage due to time and the compounding of your money. Compounding is essentially earnings on your earnings due to reinvesting. Here’s an example: at age 25, you begin investing $3,000 per year. At age 65, $120,000 would have been invested. If we assume a 6% average annual return, you would have accumulated a total of $464,286. Alternatively, if you wait until age 35 to begin investing that $3,000 annually, you would have invested $90,000 and it would have grown to $237,175. That’s a difference of nearly a quarter million dollars!
Start now with whatever amount you can afford and invest with a tilt toward stocks. A good target in your early twenties is to save 10%-15% of your annual salary. Each year when you receive a raise, increase your contribution by 1% of salary until you reach the target.
We all hear the headlines about the student loan debt crisis. Millennials have borrowed more to attend college than previous generations. While you must pay this debt on time, find a balance between saving for retirement and making the payments. As your salary increases, increase your debt payments and retirement savings. Remember, you were able to borrow for college, but you cannot borrow to fund your retirement goals.
If your employer offers a retirement plan, such as a 401(k), take advantage of this easy way to save. Initially, contribute enough to obtain the company match. That’s free money! If you have a Roth 401(k) option, consider contributing all or a portion to the Roth. Unlike contributions to a traditional 401(k) plan, Roth contributions are made after-tax. Such investments, once in a Roth account, can grow and are shielded from income taxes forever – as long as certain rules are followed. The goal for retirement is to have a mix of tax free, tax deferred, and taxable buckets.
Millennials are known to change jobs often. You should consider the pros and cons of keeping your money in your current employer plan, rolling it into your new employer plan if allowed, or rolling it over into the appropriate traditional or Roth IRA. What you should not do is take the cash!
Having a Roth IRA outside of your Employer Plan is a good idea. It will allow for a tax free bucket of money if your employer doesn’t offer the Roth 401(k) option. In addition, because there is typically a timeframe that has to be met before you are able to contribute to an Employer Plan, it provides you the ability to still save for retirement.
Millennials should save until they have at least 6-12 months' worth of expenses. This cash reserve will get you through the unexpected times if, say, you lose your job or have a medical emergency. Research shows that Millennials are more likely to borrow against their 401(k)s in an emergency when they should be accessing an emergency fund first. Set up a savings account that you don’t have easy access to for this purpose and have 10% of your paycheck automatically deposited until you reach your 6-12 months' goal.
It can be overwhelming to navigate your financial future on your own. How much will you need in retirement? Can you buy a home? Will your student loan debt ever get paid off? With sound financial planning, you can overcome all these challenges.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>2019 Performance 1/1/2019 - 3/31/2019 |
1st Quarter 2019 | 4th Quarter 2018 | Full Year 2018 |
S&P 500 Index | 13.65% | -13.52% | -4.38% |
Dow Jones Industrial Average | 11.81% | -11.31% | -3.48% |
Nasdaq Composite (tech) | 16.81% | -17.29% | -2.84% |
Russell 2000 Index (small cap) | 14.58% | -20.20% | -11.01% |
MSCI EAFE (net) (foreign developed) | 9.98% | -12.54% | -13.79% |
MSCI Emerging Markets (net) | 9.93% | -7.47% | -14.58% |
Bloomberg Barclays US Aggregate Bond Index (bonds) | 2.94% | 1.64% | 0.01% |
BofA Merrill Lynch 3-month Treasury Bill (cash) | 0.60% | 0.56% | 1.87% |
Source: Zephyr StyleADVISOR |
Investing and overall wealth management use numbers as the basis for just about every financial decision. We use them to interpret, compare, inform, justify, and comfort. The quality (and quantity) of those numbers typically improve the quality of our lives. Let’s take a look inside some recent numbers to see how they may impact current and future investment and financial planning considerations.
The S&P 500 Index achieved an all-time closing high on April 30, 2019, when it closed at 2,946 points.1 This was the Index’s 211th record close during the ongoing bull market that began March 10, 2009.1 Is the market’s growth slowing? Yes. Can the market’s run continue? Certainly, given economic indicators that remain generally positive. Should investors get out at the top? No, but it is a good time to rebalance portfolios, trimming over-weighted positions and replenishing those that are underweighted. Also, if one’s investment strategy remains long-term, and the same high quality securities owned today would be owned in the future, stay invested. Conversely, if clients need money for short-term expenses, this is a good time to raise it.
The U.S. economy is projected to grow +2.2% in 2019, nearly a percentage point higher than the +1.3% projected growth rate of the collective economies of the 19 nations that make up the Eurozone.2 Investments in U.S.-based companies have also outpaced international companies for most years of the bull market run. While continuing to diversify portfolios globally makes sense, and a U.S.-centric bias is the norm, now may be a prudent long-term opportunity to rebalance allocations and replenish the international components to their target levels.
March’s core Personal Consumption Expenditure (PCE) year-over-year reading came in at 1.6%,3 below expectations and further away from the Federal Reserve’s 2% target. By many estimations, core inflation has been benign and is expected to remain relatively moderate. But, looking at the gas pump, we see that from the end of 2018 through mid-April 2019, the price of a barrel of oil increased approximately 41% and the price of a gallon of gasoline increased approximately 24%. 4 In higher education, the average cost of one year of college (tuition, fees, room and board) at an average 4-year public institution has tripled over the last 22 years, rising from $7,142 per academic year 1996-1997 to $21,370 during academic year 2018-2019.5 Consequently, the need to save regularly and continue growing investments remains a primary financial planning focus.
The recent dovish tone adopted by a number of central banks (e.g. European Central Bank, Bank of Canada, U.S. Federal Reserve) suggests that policy rate hikes are unlikely across most regions for the time being. This, along with an outlook for slower global growth and low inflation expectations, has contributed to lower yields which are likely to persist. March’s yield curve inversion when the 10-year Treasury note yield dipped below the 3-month Treasury bill’s triggered investor worry. Many economists historically view an inversion as a sign of future economic weakness and a precursor of recession, but the timing and duration of any approaching recession is anyone’s guess. What we do know is that the U.S. has been in a recession during just 83 months over the last 50 years, equal to just 14% of the months during the last half century.6
At age 65, an American couple has a 48% chance that at least one of them will live to age 90, i.e. at least a 25-year life expectancy.7 So, with the anticipation of global market growth slowing, and interest rates and inflation remaining lower for longer, forward-thinking asset allocation decisions are crucial. The importance of following a disciplined financial plan to help ensure fiscal stability has never been greater. Tax law changes, Social Security benefit options, cash flow and investment income needs, required minimum distributions from retirement accounts, insurance planning, estate planning, and charitable giving, etc. all reinforce the need for experienced and comprehensive oversight. Simplifying the complex isn’t easy, but it is doable when someone like your CNB Wealth Management CERTIFIED FINANCIAL PLANNERTM professional helps develop the plan.
The current economic expansion may soon clock in as the longest on record. Interest rates, despite nine rate hikes since December 2015, remain low on a historically relative basis. Market volatility has regained momentum and reminded us of the importance of investment risk control management. The S&P 500 Index’s 4Q18 loss of -13.5% was followed by a 1Q19 gain of 13.6%, just the sixth time in the last 50 years that a double-digit loss quarter has been followed by a double-digit gain quarter.1 Global economic, monetary, and political rumblings reverberate throughout the financial system, often leaving lasting effects, but almost always prompting emotionally-charged investor behavior. Whether or not we’re close to the end of one cycle and the beginning of another, it remains a challenge to follow the disciplined plan you and your advisor have laid out.
Despite good market performance through the first quarter of 2019, clients seem more anxious. Real or imagined, temperaments toward recent market fluctuations suggest now is a good time to talk with your CNB Wealth Management advisor and review your investment and financial plans. Our team is knowledgeable, experienced, and prepared to discuss the changing economic landscape and how it may affect you and your family’s personal situation – now and in the future.
Data as of 3/31/19.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
1 Source: BTN Research
2 Source: International Monetary Fund
3 Source: Bloomberg
4 Source: NYMEX, AAA
5 Source: The College Board
6 Source: National Bureau of Economic Research
7 Source: Social Security Administration
Medicare is a federal health insurance program to assist those who are 65 or older, but if you are disabled or have kidney disease, you may be eligible no matter what your age. Medicare currently consists of Part A (hospital insurance), Part B (medical insurance), Part C (which allows private insurance companies to offer Medicare benefits called Medicare Advantage Plans or MAP), and Part D (which covers the costs of prescription drugs).
Seniors enroll in Medicare through the Social Security Administration. If you are collecting Social Security already when you turn 65, you are automatically enrolled and will be mailed a Medicare card showing your coverage. If you don’t receive this card, call to inquire, as it is your proof of coverage. If you are waiting until after 65 to start your Social Security, you will need to contact Social Security Administration to enroll yourself – it is not automatic and you need to do this in order to avoid penalties for late enrollment.
You do not have to sign up with a private insurance company for Medicare – you may use your Medicare card for healthcare services. This is called “straight” Medicare and it covers 80% of your eligible costs. In our community, we are fortunate to have excellent, low cost Medicare Advantage Plans (MAPs). They can provide better coverage than “straight” Medicare with more bells and whistles (think “Silver Sneakers”). These MAPs work really well for those who are relatively healthy.
If you have more health issues requiring multiple specialist visits and numerous procedures, then you should consider buying a Medigap policy instead of a MAP. Medigap policies have higher monthly premiums, but the coverage is more comprehensive and flexible. However, MAPs usually include prescription drugs, while Medigap policies do NOT. You must buy a separate Part D Drug plan to complement a Medigap policy, therefore you are paying two monthly premiums instead of one.
If you compare the amount you’re spending each month on copays and deductibles under the MAP, and if it adds up to more than the cost of the monthly Medigap & Part D premiums, you should consider switching. Under Medigap, you could have zero co-pays and zero deductibles, plus the flexibility to see any healthcare provider who accepts Medicare in the U.S. – something vitally important if suffering from a complex disease or injury.
Medicaid is a need based government program which provides assistance to aged, disabled, and dependent children who could not otherwise afford necessary medical care. Medicaid pays for a number of medical costs, including hospital bills, physician services, home healthcare, and long-term nursing home care. You apply for Medicaid through your County Department of Human Services office where they will look at income and resources. The state has the right to examine your finances and those of your spouse as far back as 60 months from the date you are eligible for medical assistance under the state plan.
Disability benefits, healthcare benefits, and long-term care benefits are available through various military programs sponsored by the Department of Defense and the Department of Veterans Affairs (VA). Healthcare for veterans is typically available at VA hospitals and healthcare facilities. In general, active service members, retirees, and veterans are eligible for military benefits. Survivors of service members and veterans are also generally eligible for some of the same benefits. The rules surrounding these benefits can be complex and may change frequently. It is best to check with your military personnel office or local VA office if you have questions about any of these benefits.
Bottom line? Seek professional guidance when considering your options for health insurance coverage in retirement and review it annually. Our experienced team is here to help you navigate the next steps on your path to retirement.
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>The first step to managing student loan debt is to understand the loan(s). Who is the loan provider? What is the interest rate for each loan? And most importantly, are the loans government or private? Understanding these basic aspects can help set up a strategy for repayment.
There are a few critical differences between private and government loans. The first is that the interest on government loans is tax deductible, while the interest on private loans isn’t always. Government loans allow students to make income-driven payments, as long as their income falls below a certain threshold. This is not typical for private loans. Some private loans offer variable interest rates, while government loan interest rates are set and guaranteed. Government loans tend to offer a variety of loan forgiveness programs, while private loans do not. Last but not least, government student loans are completely forgiven in the event that the student passes before the loan is paid off. The balance on private loans is typically charged to the student’s estate or is due by the surviving family members.
There are several government loan repayment plans. The most common are standard repayment or income-driven repayment. For individuals who find they have predictable income and are interested in paying the least amount in interest, standard repayment makes the most sense. If an individual has difficulty obtaining a job, or is in a job that pays a low wage, an income-driven repayment plan may be the best option. In some situations, it is possible to reduce payments to zero if the situation warrants it. There are four income driven repayment plans: income-based repayment, income contingent repayment, Pay as You Earn (PAYE) and Revised Pay as You Earn (REPAYE).
Another option is the Public Service Loan Forgiveness program. This program forgives the remaining balance of government loans after 120 payments have been made under a qualifying repayment plan while working for the government or a nonprofit. Recent statistics indicate that a very small percentage of borrowers who have applied for PSLF have had their loans discharged due to not meeting the program’s strict requirements. It’s important to do due diligence in order to understand eligibility requirements.
Both government and private loans can have high interest rates and there are now many financial institutions that can refinance borrower’s loans, possibly at lower rates. If a borrower can get a lower interest rate by refinancing to a private loan, do consider: what if the borrower loses a job or becomes disabled? Will the origination fees offset some of the savings from the lower rate?
It is critical to tailor a repayment program that can complement a retirement savings plan. For example, it is recommended to contribute at least the company match in a 401(k) plan so that you aren’t leaving money on the table. Interestingly, some employers are now adopting programs that pair 401(k) savings with student loan repayments.
Understanding and organizing repayments for student loan debt can be overwhelming, especially when juggling other financial obligations. No matter what stage you or your family are at, our financial planning team can help you create a clearer financial path to your overall goals.
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Chained CPI is generally lower than CPI. For 2019, it is about 2%. While the difference is subtle, use of this factor makes annual tax-related adjustments less favorable for taxpayers.
Seven tax brackets, ranging from 10% to 37%, were carried over from the 2018 tax year. In 2019, the taxable income range within each of the seven brackets will increase by about 2%. This will result in a modestly-lower tax bill for a given taxable income compared to 2018.
The standard deduction was increased by $200 for single taxpayers and by $400 for married filing jointly. Additional deductions are still available for those who are blind and/or age 65 and older.
The federal gift and estate tax exclusion increased 2% from $11.18 million to $11.40 million. The portability provision remains, allowing a married couple to shield $22.8 million from federal estate taxation. The annual gift tax exclusion remains at $15,000.
Provisions ending in 2019 include: 1) the ability to treat alimony payments as a deduction for the payer and as taxable income for the payee for divorces finalized after 2018 and 2) the ability to deduct medical expenses exceeding 7.5% of Adjusted Gross Income (AGI). The medical deduction threshold starting in 2019 is 10% of AGI.
Several contribution limits were increased for 2019. The increase is $500 for 401(k)/403(b)/457, Traditional/Roth IRA, and SIMPLE IRA plans. Catch-up contribution limits are unchanged from 2018.
Inflation adjustments for Social Security benefits are based on actual CPI (not chained). The 2018-to-2019 benefits increase is 2.8% - the highest since 2012. The ceiling on wages taxed for Social Security purposes increased 3.5% from $128,400 to $132,900. While this will not make current high-income workers happy, the good news is that it will pump additional funding into the system.
Medicare premium increases were modest. Combined Part B and Part D monthly premium costs increased by 90 cents to $1.50 in the first five Medicare premium tiers. A 6th higher-premium tier was added for a Modified AGI threshold of $500,000 single and $750,000 married filing jointly. Again, this will not make high-income retirees happy but will help keep the program solvent at least for the near term. Medicare premiums for 2019 are based on 2017 Modified AGIs.
Don’t confuse these new 2019 numbers when preparing your 2018 taxes. They will come into play in 2020 when you prepare your 2019 income taxes.
Consult with your tax professional and Wealth Advisor.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>You may have heard the expression “If it can’t be measured, it can’t be done.” In order to create the plan, the place to begin is putting your goals into writing. It is o.k. to have both short-term and long-term goals (a new house, and retirement, for example). However, it is critical for success to make sure that the list is not too long and that the goals are clear and easy to measure. If, for example, your goal is to “save more money,” like 55% of those recently surveyed by Fidelity responded, then how much? Set a specific target based upon your budget and the timeframe. Avoid vague goals like “send children to a good school” or “have a comfortable retirement.” Being specific is critical to an effective process.
In order to figure out what you can accomplish, you first must evaluate your current baseline for fiscal fitness. Do you have a good handle on what you spend? Do you know your credit score? Are you maximizing all the savings options available through work? Are you spending money on things that will diminish your ability to meet your goals? A good look at your current spending and saving habits can be surprising and may result in some revisions to your goals.
Once the goals are written, the next step is to make them easy to track and monitor. There is the more old-fashioned way to do this (pen and paper, or an Excel spreadsheet) or you can take advantage of various software (Quicken, Mint) to ameliorate the reporting process. For short-term goals, monthly monitoring makes a lot of sense, whereas for longer-term goals, a semi-annual or annual review is preferable.
If you are successful at one (or more) of your goals, plan a celebration. Success breeds success, so it is important to make progress milestones memorable. A hike in the woods, a family movie night or a game night with friends, whatever you wish that you could spend more time doing. If you are not completely successful, it may be time to take a look at why and tweak the goals accordingly.
Having a written plan has proven to be the key to building wealth, at all income levels. Whether or not you are currently the type of individual who is good at planning, a few simple steps can get your resolutions kick started for 2019. As always, our team of CERTIFIED FINANCIAL PLANNER™ professionals stand ready to help you create and implement a successful financial strategy. In the meantime, we wish you and yours a wonderful holiday and a Happy New Year!
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>The goals of special needs planning are to:
One of the first steps in getting organized is to create a personal care plan that involves thinking and making decisions about the kind of personal care your loved one needs. Some key considerations might be: who will provide the care your loved one needs or where will your loved one live? It also needs to include medical, daily living, and safety considerations.
To ensure the plan is carried out, it is important to execute specific legal documents. These may include: medical directives, durable powers of attorney, a will, and naming a guardian who will continue to care for your loved one after you are gone. You may also want to have a letter of intent or instruction, in which you can express specific, personal wishes regarding the ongoing care of your loved one. Be aware, however, that such a letter is not legally binding, so be sure to include any legally binding wishes in your will. This can be accomplished by an experienced Special Needs Planning attorney.
Finally, the last step in the process entails creating and implementing a financial plan tailored to help pay for your loved one’s current and future needs. For most people, planning ahead financially includes saving for retirement, saving for a child’s education, and providing for a spouse or children in the event of a parent’s untimely death. But when you have a loved one with special needs, you also have a number of additional factors to consider. Preservation of benefits is one of the most important considerations. Fortunately, federal and state laws permit certain planning techniques that maximize the use of all available resources, both private and governmental, to provide fully for the needs of the disabled. One of the most important planning techniques involves the use of a special needs trust, which is sometimes called a Supplemental Needs Trust.
If you have a loved one who is disabled or has special needs and you are concerned about their future personal needs and security, our team of Special Needs Planning specialists would welcome the opportunity to meet and address any specific questions or concerns you may have.
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>If you’re working, have you contributed all that you can to your retirement accounts and/or retirement work plans? For 401(k) and 403(b) accounts, the maximum contribution is now $18,500 per person if under age 50, or $24,500 if age 50 or older. Any contributions (not ROTH contributions) made will lower your taxable income. You may also contribute up to a maximum amount of $5,500 to a traditional or Roth IRA, and if 50 or older, another $1,000 (for a $6,500 max contribution). Your adjusted gross income (AGI) and other factors will determine if such traditional IRA contributions are deductible. The ability to contribute to a Roth IRA is strictly governed by AGI.
Another important tool that can be used for those working and planning for retirement is a Health Savings Account (HSA). If you are covered by a High Deductible Health Plan (HDHP), not on Medicare or covered by another health plan, and not able to be claimed as a dependent on someone else’s tax return, you may be able to use this strategy. It is inevitable that we will have medical expenses, especially in retirement, and contributions to an HSA are tax deductible (or excluded from income if an employer is contributing for you). Withdrawals for qualified medical expenses are also tax free. Individuals may contribute up to $3,450, families up to $6,900, and 55+ can make a catchup contribution of an additional $1,000. Talk to your planner to understand the rules around this under-utilized strategy.
We see many retired individuals who need to take their Required Minimum Distributions (RMDs) before the end of the year. If you have not taken yours yet or have not completed taking the full amount, you may direct your RMD to a qualified charity. Qualified Charitable Distributions (QCDs) are not taxable, and using QCDs partially or fully to satisfy your RMD reduces your Adjusted Gross Income, which can be favorable for reducing Medicare premiums and the taxability of Social Security, among other benefits. From a tax perspective, this is the preferred method for giving – especially when some or all of the RMD is not needed.
Still in the mood for gifting? Gifting of appreciated property/ securities is still an option retained under the new TCJA legislation. This is a favored tax-advantaged method of giving regardless of whether or not a deduction is given, as neither the taxpayer nor the charity pays tax on the unrealized capital gain. The higher the unrealized gain, the better! Note: timing of this strategy is important – if approaching end-of-life, there is a step up in basis that should be considered first.
If you have a taxable investment account and have realized capital gains from selling securities at a profit, you may sell positions that are at a loss to avoid being taxed on some or all of those gains. Any losses over and above the amount of your capital gains may be used to offset up to $3,000 of ordinary income ($1,500 for married person filing separately). Selling losing positions for the tax benefit is commonly known as “tax loss harvesting” or “harvesting your losses.” So, even though tax considerations shouldn’t be the primary driver of your investing decisions, there are steps you can take before the end of the year to minimize any tax impacts.
If you’re working in New York State and have younger children, you may want to consider adding to their NYS 529 Plan. These plans allow you to contribute up to $15,000 a year ($30,000 if married filing jointly) without triggering the need to file a gift tax return. Up to $10,000 is deductible annually from NYS taxable income for married couples filing jointly, and up to $5,000 annually for single taxpayers. There is also an expanded use available for these funds that now includes certain qualified expenses for children in K-12 plus the normal higher education expenses.
These are just a few of the basics available to most people, you may want to consider by December 31. Before implementing any strategy, I always recommend working with a CERTIFIED FINANCIAL PLANNER™ professional and your tax advisor to ensure that all aspects of the plan are coordinated to meet your goals. If you have any questions, our well qualified Wealth Advisors would love to speak with you.
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>Community Video Archives (CVA) professionally produces video biographies of outstanding living individuals chosen for the CVA Hall of Fame. These videos can be borrowed from any Sarasota County Public Library at no charge. The videos are also available to all students and staff of the Sarasota County School System.
Christine Jennings, is one of four Hall of Fame honorees featured this year, and was formally recognized at the CVA Hall of Fame Luncheon in April. As well as her role as Board Member for CNTF, Jennings also serves on the Foundation Board of New College. Jennings was founding president of Sarasota Bank. In her 14 years she held titles of President, CEO, Chairman of the Board, and Director. Her strong banking background was beneficial in the CEO role of the Westcoast Black Theatre Troupe, where she developed a strategic plan to help stabilize the organization and become financially sound. Jennings is past president of The John & Mabel Ringling Museum and the Sarasota Ballet. She has won numerous awards for her humanitarianism and leadership within the Sarasota community.
]]>Nelle Miller, a 2018 honoree, serves on the Board of Directors for Canandaigua National Trust Company of Florida. Miller is co-founder of BizTank LLC. She was co-founder and Chief Financial Officer (CFO) of PlanetResume.com, and before that a partner and CFO in the software & hardware development company, Software House. Miller earned her B.A. in Anthropology from Brandeis University. Miller is past President of the Jewish Federation of Sarasota-Manatee and is now a lifetime trustee. She also serves on the boards of: All Faith’s Food Bank, The Community Foundation of Sarasota County, the Glasser Schoenbaum Human Services Campus, and All Children’s Johns Hopkins Hospital.
Christine Jennings, Sue Jacobson, and Bernice (Bunny) Skirboll, directors on the CNTF Board, are past NCJW recipients and have also earned this prestigious recognition. “We are thrilled to work with these exceptional women, who not only add value to our community but the Trust Company as well,” states Paul Tarantino, Vice President and Wealth Advisor at CNTF.
Christine Jennings, a NCJW honoree in 2000, has worked as the Chief Executive Officer for the WestCoast Black Theatre Troupe. She developed a strategic plan to help stabilize the organization and worked to recruit a new Board of Trustees and advisory board. Jennings was founding president of Sarasota Bank. In her 14 years she held titles of President, CEO, Chairman of the Board, and Director. Jennings has also served as chairwoman of the Sarasota Democratic Party and has run twice for U.S. Congress against Vern Buchanan, losing to him by very narrow margins.
Sue Jacobson, originally from Elmira, New York, was honored by the NCJW in 2017. She began her law career as a Confidential Law Research Assistant to the Justices of the New York State Supreme Court, Appellate Division. After living and practicing law for many years in Rochester, New York, Sue moved to Sarasota in 1999. She continued to practice law in Sarasota until 2012, when she retired. Jacobson’s community involvement includes: past Chair of the Board of Directors of Jewish Family and Children’s Service of the Suncoast, Past President of the West Coast Florida Region of American Jewish Committee, the Board of Trustees of Pines of Sarasota Foundation and a member of the Board of Directors of the New College Foundation.
Bernice “Bunny” Skirboll was also a 2017 honoree. Skirboll founded Compeer 40 years ago in Rochester, NY. In 1975, she recruited 12 volunteers to join “Adopt-A-Patient,” later changed to Compeer. In 1979, Skirboll received funding from the New York State Office of Mental Health to expand Compeer within the state. Compeer was chosen as a national model in 1982 by the National Institute of Mental Health and the program has since grown to 50 cities, internationally, with over 5000 volunteers. Skirboll served as executive director since Compeer’s inception. Under her leadership, Compeer grew from a small program to an internationally recognized mental health agency. Skirboll also serves on The Jewish Federation of Sarasota-Manatee the board of directors.
]]>These are just a few of the realities. The goal is to make informed decisions while going through the divorce process to set yourself up for the best financial outcome possible.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Now, many retirees are just as active in retirement as they were when they were working full time. They are filling their days with meaningful non-profit work and embarking on second and third careers that they likely could not afford to try in their earlier lives.
Regardless of what you plan to do in your retirement, if you have collected a paycheck for the past many years, you will need to find ways to replace the cash flow by generating income from the money you have saved. The common sources of retirement income — Social Security and defined benefit pension plans — may or may not be enough to support the lifestyle you have mapped out for your golden years. If you have been saving in a 401(k), 403(b), IRA or another type of retirement plan, some sound financial planning can determine both how to draw income from these assets as well as the best way to ensure that they last as long as possible.
One simple way to create an income stream from your investments is to draw only the interest and dividends and have them deposited electronically into your bank account. This method is simple and makes it very unlikely that you will run out of funds, as you are not tapping into principal. The portfolio that is optimal for this strategy in a low interest rate environment is one that is a combination of income-producing assets such as dividend paying stocks, real estate investment trusts, and bonds. The strategy can be implemented on your own, with mutual funds or individual securities or with the help of a professional advisor to oversee the portfolio and ensure you are adequately diversified and thereby managing risk. The drawback to this strategy is that it limits the control you have over the income you receive, as it is dependent on the current interest rate and dividend payout environment.
Another strategy that could provide more income is one that experts call managed payouts. In this method, you apply a safe withdrawal rate to the portfolio and draw that amount on an annual basis. Many have touted the “4% rule” as a good number to start with. For the past several decades, the annualized returns of a balanced investment portfolio have in most cases outpaced this number. There is no guarantee, however, that the future returns will reflect those of the past. There are many factors to look at to arrive at the number that works best for your circumstances, including: your risk tolerance, your asset allocation, and inflation and market outlook. It is best to use financial planning tools or the help of a financial planner to arrive at the appropriate withdrawal rate and to monitor it over time to ensure it is still optimal for the current environment.
Purchasing an immediate annuity is another option for investors seeking current income, and the options have become much more sophisticated over the years. The basic premise is that you purchase an annuity from an insurance company, which pays you a monthly benefit for your lifetime, creating a do-it-yourself pension. You may also protect your spouse or partner with a joint and survivor annuity, which will pay a monthly income as long as either one of you is living. There is even an option to purchase an inflation-adjusted immediate annuity that gives you a cost of living increase every year to account for inflation. The downside to this method of income replacement is a lack of flexibility, as once you have signed the contract you most likely cannot change your mind or get your money back.
These are just some of the options to create an income stream from your savings in retirement. In order to ensure a successful retirement, it is critical to utilize all of the resources you have to make these important decisions. If we can help in any way, give us a call and we can work together to make your retirement the best that it can be.
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>Here are a few simple ideas to keep your assets on target with your plans.
Maybe you inherited stock certificates long ago and put them somewhere for safekeeping. It may sound strange, but it can be very easy to lose track of such securities. All of your assets are relevant to your financial plan, but if you forget that you have them, they can’t very well help you achieve your goals.
One client recently found an old municipal “bearer bond” – a physical certificate with coupon stubs attached. The bond had long ago matured. Not only did she not receive her principal repayment, but she failed to present her coupons to get the interest income for many years. Another client found several stock certificates tucked in a desk drawer when a family member passed away; among them were Kodak shares that should have been sold long before the company lost all of its value.
These common examples of out of sight, out of mind aren’t limited to stocks and bonds. Where’s that insurance contract you bought years ago? Is it still in force? Do you still need it? Your financial planner can help determine if this should still be part of your planning puzzle.
Some employers give their workers shares in the company, or options to buy shares. These may be held in a profit sharing plan with the company, or they might have been deposited in a brokerage account or with a stock transfer agent chosen by your employer. In any case, they should be part of your plan. Especially with a former employer, shares can be easily neglected and forgotten. If possible, moving these assets into a managed portfolio is a good way to make sure they are properly monitored, especially if they are a large portion of your total wealth. There are far too many sad tales of investors who lost fortunes in their company’s stock when their employer’s fortunes turned south. Even if such assets weren’t forgotten, the oversight of an objective, unsentimental advisor can avoid unnecessary heartache. (Remember that Kodak stock? It first experienced the tech boom of the 1990s before going bust in 2012 – a small fortune gained and lost.)
Harder to forget, but just as easy to ignore are 401(k) retirement accounts left in the care of former employers. These, too, should be factored into your overall investment strategy. Sometimes 401(k) plans include the company stock, but even in fully diversified accounts, it is important that the asset allocation be properly tended to in a way that is consistent with your overall goals. You can roll over your former employer’s retirement account into your IRA to consolidate your accounts and provide better oversight to reach your goals.
Often in the course of a successful career, we buy investments that suit the needs of the moment, but that are scattered in various places: a brokerage account here, a mutual fund there, CDs with several banks, a term life insurance policy somewhere in the house. Are you keeping track of it all? Do the pieces still fit? If you’re getting on in years, does your family or a trusted advisor know where everything is? Bringing the pieces of the puzzle together to form a coherent picture is often the best solution. The idea, remember, is to have your assets serve you to meet your goals. They are not an end in themselves.
By bringing your assets together under the watchful eye of a trusted advisor, you can be more confident that your wealth strategies will stay true to your plan. It allows you to share the burden of tracking your assets with someone who has your interests in mind and who knows all the pieces of the puzzle.
Consolidating your assets with a competent and trusted financial advisor can be the key to simplifying your financial life in a complex and dynamic world – and maybe give you some extra time to enjoy the goals you set out to meet. The professionals at Canandaigua National Trust Company will be happy to help you do that.
This material is provided for general information purposes only. Canandaigua National Trust Company of Florida is an affiliate of Canandaigua National Bank & Trust. Investments are not FDIC insured, not bank deposits, not obligations of, or guaranteed by, Canandaigua National Bank & Trust or any of its affiliates, including Canandaigua National Trust Company of Florida. Investments are subject to investment risks, including possible loss of principal amount invested. Past performance is not indicative of future investment results. Before making any investment decision, please contact your legal, tax or financial advisor. Investments and services may be offered through affiliate companies.
]]>With this method, you actually receive a distribution from your retirement plan and then, to complete the rollover transaction, you make a deposit into the new retirement plan that you want to receive the funds. You can make a rollover at any age, but there are specific rules that must be followed. Most importantly, you must generally complete the rollover within 60 days of the date the funds are paid from the distributing plan.
If properly completed, rollovers aren't subject to income tax. But if you fail to complete the rollover or miss the 60-day deadline, all or part of your distribution may be taxed, and subject to a 10% early distribution penalty (unless you're age 59½ or another exception applies).
Further, if you receive a distribution from an employer retirement plan, your employer must withhold 20% of the payment for taxes. This means that if you want to roll over your entire distribution, you'll need to come up with that extra 20% from your other funds (you'll be able to recover the withheld taxes when you file your tax return).
The second type of rollover transaction occurs directly between the trustee or custodian of your old retirement plan, and the trustee or custodian of your new plan. You never actually receive the funds or have control of them, so a trustee-to-trustee transfer is not treated as a distribution. Trustee-to-trustee transfers avoid both the danger of missing the 60-day deadline and, for employer plans, the 20% withholding problem.
With employer retirement plans, a trustee-to-trustee transfer is usually referred to as a direct rollover. If you receive a distribution from your employer's plan that's eligible for rollover, your employer must give you the option of making a direct rollover to another employer plan or IRA.
A trustee-to-trustee transfer (direct rollover) is generally the most efficient way to move retirement funds. Taking a distribution yourself and rolling it over makes sense only if you need to use the funds temporarily, and are certain you can roll over the full amount within 60 days.
In general, you can keep your money in an employer's plan until you reach the plan's normal retirement age (typically age 65). But if you terminate employment before then, should you keep your money in the plan (or roll it into your new employer's plan) or instead make a direct rollover to an IRA?
There are several reasons to consider making a rollover. In contrast to an employer plan, where your investment options are limited to those selected by your employer, the universe of IRA investments is almost unlimited. Similarly, the distribution options in an IRA (especially for your beneficiary following your death) may be more flexible than the options available in your employer's plan.
On the other hand, your employer's plan may offer better creditor protection. In general, federal law protects your total IRA assets up to $1,245,475--plus any amount you roll over from a qualified employer plan--if you declare bankruptcy. (The laws in your state may provide additional protection.) In contrast, assets in an employer retirement plan generally enjoy unlimited protection from creditors under federal law, regardless of whether you've declared bankruptcy.
Please feel free to contact us with any questions you have at 941-366-7222.
Source: ©2017 Broadridge Investor Communication Solutions, Inc.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>“Aging seems to be the only available way to live a long life.” Daniel-Francois-Esprit Auber, French composer 1782-1871
In Rochester, NY, Lifespan and St. John Fisher College offer a non-credit certificate program in gerontology with the goal of producing professionals who truly understand and respect older adults. As a student in the program, it is my mission to dispel the myths of getting old.
Let’s start with physiological aspects of aging. I’d like to eradicate our notion that getting “old” is something to be dreaded. First we need to differentiate between “Disease” and “Aging” because they are NOT synonymous.
Aging equals change, not frailty. It is a process that begins at conception and continues throughout our lives with a series of small changes that end at death. We should not view old age as a “big” change, it really isn’t. You’ve been steadily working toward this goal since before you were born. Embrace it! “Successful aging” means to grow old with no disease. Most of us are not aware that between the ages of 25 and 75, healthy humans only lose 5-10% of their strength and mental capacity. Think of people you know in their 80’s who are still going strong and show no interest in slowing down. How so?
That’s where disease comes in. Arthritis, hypertension, cataracts, and diabetes are common diseases that, left untreated, can accelerate aging. Practicing wellness in your 50’s is crucial. It is possible to postpone disease, pushing off the clinical stage for years. So, rather than living 40 years with critical disease, you can shrink the clinical phase to 10 years starting at the age of 80 or so. It is our ability to bounce back that makes it possible. Being resilient is a trait most of us have as a child and carry with us into adulthood. We are unlikely to develop resilience in old age.
Another important element is stress. We need stress. It helps us get things done. We feel challenged under pressure and it leads to accomplishment. On the other hand, too much stress is deadly if it goes unaddressed and can make you blind to real issues happening. Be sensitive to that. Proactively dealing with stress will help you age well. Loss of memory is a common source of stress. It’s been proven 80% of memory issues are due to NOT paying attention. Paying attention is within your control and something you can practice to improve memory.
Keep in mind too, isolation is stressful and may cause permanent mental illness. Social media is no substitute for human contact.
Let’s turn to Mental Aerobics for a moment. Did you know the human brain is 78% water? Besides drinking lots of water, there are easy (fun) things we can do to boost our brain power.
Healthy aging is a goal that is achievable. Mental games are great, but physical activity like walking every day has more influence in slowing dementia. Eat right, avoid white flour, sugar, and salt to reduce inflammation. Your body will thank you. Don’t forget to engage all your senses: sight, smell, taste and touch. They all have a direct connection to the brain. Finally, treat yourself to one piece of dark chocolate, savor it slowly and tune in to how it makes you feel. It will make you smile!
]]>Since the early 1990s, there has been an evolution taking place within the vast and complex world of investments. Once regarded as a strategy with a lot of heart and little gain, Socially Responsible Investing (SRI) has become more sophisticated and accessible. SRI investment assets grew to $6.57 trillion by 2014.* In addition, the ways that one can access SRI and express a particular point of view have increased exponentially, since the early days of this investment philosophy. An investor can screen out, for example, a lot more factors much more easily than was feasible in the past.
In order to understand the nuances of SRI, it is critical to realize just how many styles of investing fall under this category. SRI, by definition, is any investment strategy that seeks to consider BOTH financial return and social good. Investors are looking to promote concepts and ideals they feel strongly about. The three main ways to do this are:
In the past, the most popular strategy for investors looking to augment their portfolio with SRI investments was to restrict a particular company or sector from their portfolio, such as tobacco or weapons. This is known as a Negative Screen methodology and actually got its beginnings in the 1700s as the Quakers sought to avoid having members that took part in anything related to slavery. In the modern age, there is more transparency for investors and it is relatively easy to implement this strategy than it was in the past.
Today, there is a new generation of SRI, and it is called Positive or Impact Investing. Versus the Negative Screen approach, Positive Investing involves making investments in companies believed to have a positive social impact. It includes the aforementioned “ESG”-Environment, Social and Governance but introduces the concept of “Sustainability” into the SRI equation. This refers to choosing companies that are successful financially, have strong long-term performance, and are leaders in areas such as social justice and environmental issues. In other words, there are companies who are thinking beyond profitability and instead thinking about their long-term impact on the world. Recent studies have shown that these investments in these companies have been very lucrative for investors versus those investments in companies with lesser focus on these issues.
For investors interested in the concept of SRI, the easiest way to see if this strategy is right for some or all of your investment assets is to review the many choices available today with your advisor. Although the options are much greater than they were many years ago, there are still many factors to consider to select a strategy that is right for you.
Our team is always available to answer your questions and we are always looking for new ways to help our clients meet their goals. Let us know if we can help you better understand the options available to you.
*Source: Forum for Sustainable and Responsible Investment, 2014
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>In December 2015, federal legislation addressed many provisions which expired at the end of tax-year 2014. Many had come up for renewal every year or two, leading to uncertainty for taxpayers and making meaningful tax planning difficult. Retroactive to tax-year 2015, the act enhanced or made “permanent” a number of these provisions and further extended others temporarily. Below is a summary of some of the more popular personal tax provisions impacted by the legislation.
For nine years off-and-on, Congress allowed taxpayers age 70-1/2 and older to transfer up to $100K annually directly from IRAs to charities. Such transfers, known as Qualified Charitable Distributions (QCDs), are treated as non-taxable distributions. They are now allowed on an ongoing basis. Since a QCD is not taxable, gifts made in this manner cannot also be listed as itemized deductions. Note that if you made such a distribution from an IRA in 2016, you will receive a Form 1099-R from your IRA custodian coding the distribution as “normal”. You will show the full distribution on line 15a Form 1040 but then list the taxable amount as zero on line 15b. Write/print “QCD” next to line 15 to alert the IRS as to the nature of the distribution.
State and local sales taxes may be now be claimed as federal itemized deductions on an ongoing basis in lieu of state and local income taxes. This is particularly advantageous for folks in Florida who pay no state income tax. For folks who do not track their annual sales tax history, the IRS provides a simple table to estimate total sales tax based on income. For big-ticket purchases, such as an auto, the IRS allows taxpayers to add sales tax for such purchases to the table amount.
There is something here for just about everyone who pays federal income taxes. Make sure you are aware of these provisions when filing your 2016 taxes.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Let’s skip to number 3 because most people are likely unaware of the benefits from this simple yet lucrative aspect of successful investing.
To begin, determine your long-term financial goals and develop a globally diversified asset class portfolio that supports reaching them. For example, if your investments must grow significantly in order to comfortably sustain annual withdrawals throughout retirement, sufficient exposure to stocks may need to be maintained.
Once the proper asset allocation has been established for your portfolio, each year some market segments will do better than others which will cause the original allocation to get out of whack. Rebalancing the portfolio merely gets it back aligned. This will involve selling funds (if you now own a higher percentage of the total than targeted) or buying funds (if it’s now lower). That’s it. Many investors find January to be a good month to establish disciplined annual rebalancing since they will know their portfolio is allocated as intended at the start of every New Year.
Absolutely, which is the whole point -- regularly selling high and buying low. What drives profits for businesses applies equally to your investments. That’s why it is also important to avoid costly funds as well as taxes generated by frequent trading since every dollar spent on costs and taxes is a dollar less earned from the investments. To illustrate, suppose your asset allocation is currently 60% stocks and 40% bonds. Then, after a good year for equities, the allocation drifts higher to 70% stocks and 30% bonds. Rebalancing would entail selling some of the stock exposure and using the proceeds to buy bonds, with the goal being to get back to the strategic 60/40 allocation.
Essentially, disciplined portfolio rebalancing takes the emotion out of market timing decisions (that are often misinformed) in exchange for a more proven behavior. The portfolio will not wander off from intended allocations which helps contain risk exposure and also leads to more reliable results. Regularly selling securities for gains contributes to a positive investment return while providing proceeds to buy more of funds that are relatively cheaper, thereby contributing to additional future gains. Plus, the portfolio is kept at a risk level the investor is likely more comfortable with.
As a bonus, you’ll usually end up with more money over the long run which increases the reward for saving and investing. Studies we conducted for rolling 20-year periods since 1979 with a multi-asset class portfolio showed that annual rebalancing led to a higher ending total and lower risk/volatility about 80% of the time compared to equivalent portfolios left unattended. The average increase was more than 1/3 of the original balance.
In other words, on average, regularly rebalancing a starting $500,000 portfolio grew the eventual balance after 20 years an additional $150,000 vs. one not rebalanced.*
In a word, no. Developing an intelligently diversified, low-cost investment portfolio that will reliably achieve your long-term financial goals can be quite a task. Furthermore, not only is remembering to rebalance the same time each year challenging, actually selling funds that have been your best winners and then using the gains to buy recent losers is understandably more than most folks can stomach. After all, when stocks plummeted 50% during the recent 2008 financial crisis, were you eager to load up and buy more? That’s what the appropriate professional investment manager will do, however. Each year, rain or shine, the portfolio will be rebalanced back to its strategic allocation in order to maximize the probability of reaching your cherished long-term goals.
*Analysis: Canandaigua National Bank & Trust; Hypothetical example based on lump sum returns of an account starting at $100,000, weighted evenly among the S&P 500, Russell 2000, Russell 2000 Value, U.S. REITs, MSCI EAFE, World ex-U.S. Value, and U.S. Gov’t/Credit Intermediate Bonds.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
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]]>Regardless of your required beginning date, you must take subsequent distributions by December 31 of each calendar year. You'll continue to take the annual distributions each year until your death or until your account balance is reduced to zero. You can always withdraw more than the required minimum amount in any given year. However, if you withdraw less, you will be subject to a 50 percent federal penalty on the difference between the amount you should have taken and what you actually took.
The basic calculation for individual accounts provides that the required minimum distribution is determined by dividing the account balance by the distribution period. For lifetime required minimum distributions, there is a uniform distribution period for almost all individuals of the same age. The uniform lifetime distribution period table is based on the joint life and last survivor life expectancy of you and a hypothetical beneficiary 10 years younger.
However, if your sole beneficiary is your spouse and he or she is more than 10 years younger than you, a longer distribution period measured by the joint life and last survivor life expectancy of you and your spouse is permitted to be used. However, the specific rules on required minimum distribution calculations are complicated, and you should consult a tax professional regarding your situation.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
However, there are some exceptions to this rule. Premature IRA withdrawals made by a disabled person may be exempt from the penalty. If an IRA owner dies before age 59½, distributions paid to you as a beneficiary of the account are not subject to the penalty. If you need supplementary income, you can take IRA distributions as a series of "substantially equal payments" over your life expectancy or the joint life expectancy of you and your beneficiary. These distributions will avoid the penalty as long as you don't modify the payments within certain time frames. Subject to limits and conditions, the penalty tax generally will not apply to IRA distributions taken to pay qualifying medical expenses, health insurance premiums while unemployed, higher education costs, and qualified first-time home-buyer expenses (up to $10,000 lifetime from all your IRAs). It also does not apply to amounts rolled over from one IRA to another (assuming you follow the rules for rollovers), to conversions of traditional IRAs to Roth IRAs, to amounts that the IRS levies from your IRA to cover your tax bill, or to qualified reservist distributions. Other exceptions may also apply.
Qualified distributions from your Roth IRAs are federal income tax--and penalty tax--free. Distributions are qualified if you satisfy a five-year holding period, and you are (a) age 59½, (b) disabled, (c) deceased, or (d) you have qualified first time home-buyer expenses. The taxable portion of nonqualified distributions from your Roth IRAs is subject to the same 10 percent penalty rules that apply to traditional IRAs. (Special rules may apply if you take a nonqualified distribution from your Roth IRA within five years of a conversion.)
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Maybe “when” is not the first question. Maybe the timing of retirement is more dependent on the answers to the question “how”. How will you afford retirement?
Do you have enough retirement income to cover your anticipated expenses? Understanding the expense question may be harder than it looks. Simple living expenses are easy to nail down, but what about healthcare?
If you retire before age 65, you’re not eligible for Medicare and will need to factor in the cost of healthcare in the interim. Since some expenses might go away in retirement, like mortgages, are you allowing for fun activities like travel? And the big one – how long do you expect to live? If you live to be 120, you’ll be spending a lot more in retirement! Finally, if inflation is 3% per year, your expenses will double in roughly 23 years. You get the idea – the expense side requires some careful thought.
How about your income in retirement? The old rule of thumb says that you can initially take 4% of your savings each year. Considering the recent stock market movements, 4% might be a little high, but let’s use it as an estimate and do the math. If you need $50,000 initially from your savings the first few years (4% of your savings), you will need to save $1,250,000.
You can also supplement your retirement income with Social Security. The longer you wait to take those benefits, however, the better they are – by far! Add your Social Security to your savings withdrawal, plus any pensions or other income and that brings you to your gross income. Then, you have to back out income taxes to arrive at the money needed to pay your retirement expenses.
Now that we have a good starting point, let’s make it more realistic. Investment returns are not the same every year, darn it. If in the early years of retirement the returns are low, it will affect your ability to withdraw without affecting the overall plan. There could also be unexpected health care issues that cause some out-of-pocket expenses. You get it; there are lots of variables that could affect the best laid plan. If you create a range of income and expenses, it might allow for navigating through some unexpected storms.
So now we have a range and the numbers look about right. Time to retire? Almost – but one more thing: we need to think about life in retirement and what that looks and feels like. For all the planning we’ve done to get us to this point, we often neglect to plan for not working. After the initial honeymoon of retirement wears off, then what? A purpose in life is so important to our mental and physical health. Developing a plan for what we will actually do in retirement is as important as the financial plan to support it.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
The first step in paving the path toward financial success is to ensure your budget is accommodative of the financial changes that come with the birth of a child. In addition to your living expenses increasing, there also may be a shift in the family income if you decide to work less, or not at all, in order to care for your baby. The major expenses that increase include, child care, groceries, household, medical, and clothing.
As you revise your budget, it is also critical to ensure you have three to six months’ worth of living expenses for unexpected cash outlays, such as an illness, a major auto repair or losing your job. The good news is that you will get some financial benefits at tax time to help defray the costs of raising a child.
You should begin saving for your child’s education as early as possible, and the good news is there are many ways to do this effectively. You can utilize a savings or money market account, making monthly contributions, or take advantage of various investment vehicles including a tax-advantaged 529 College Savings Plan.
One of the most overlooked issues I see with new parents is that of estate planning. It is crucial to the welfare of your child that there is a contingency plan for the unlikely (and hard to fathom) event that you die before your child grows up. Therefore, it is time for you to draw up a will or revise it accordingly. Issues include:
The best way to begin an estate plan is with a good attorney who specializes in this type of work. Keep in mind the initial task is very daunting, but it tends to bring one peace of mind.
The last critical planning element for new parents is a thorough review of health care, life and disability insurance to ensure you’re covered in the event of an untimely death of a parent or if you are unable to work for an extended period of time. Many experts recommend that you have life insurance equal to five-to-ten times your annual salary, and disability insurance will likely replace 50-70 percent of your earnings in the event you need it.
Perhaps less obvious, but vitally important, is a review of your health care coverage—ideally before you become pregnant—to understand exactly what is covered. This will prevent surprise expenses, as you will incur a lot more medical costs during your pregnancy.
All of these decisions should be reviewed periodically to ensure everything is still relevant to your situation.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
It amazes me that so many folks do not understand its value and, consequently, do not employ it as part of their retirement savings plan.
When should the Roth be used? Like most other financial questions, it depends.
One rule of thumb suggests that putting money aside in a Roth-type account only makes sense when one expects his/her future marginal income tax rate to be higher than current. But this advice generally is paired with the option to put the money aside, instead, in a traditional IRA/401(k). This either-or exercise does not consider the Roth as an attractive stand-alone option.
Another challenge to this rule is uncertainty around future income tax rates. The current political landscape leaves most of us clueless as to what marginal tax bracket we might find ourselves in ten, twenty, thirty years out.
A tempting, but dangerous, exercise is to use one of the many Roth conversion calculators found on the internet. Such calculators spit out exact numbers with a yes-or-no recommendation, giving the results the appearance of ultimate precision. But, change just one or two assumptions and the resulting recommendation can do a “180”.
Setting rules of thumb and the allure of calculators aside, we’ll review the tax advantages of a Roth-type account and consider some of the factors that might lead you to consider Roth vehicles in your retirement plan.
Unlike contributions to a traditional IRA/401(k) plan, Roth contributions are made after-tax. Such investments, once in a Roth account, can grow and are shielded from income taxes forever – as long as certain rules are followed.
Second, contrary to rules for traditional IRAs/401(k)s, Required Minimum Distributions (RMDs) are not required starting at age 70-1/2. Although this is not the case for Roth 401(k) accounts, once a Roth 401(k) is rolled over to a Roth IRA, RMDs are no longer in the picture.
Additionally, contributions (principal) can always be taken out without tax or penalty. Distributions are considered principal first. However, we do not recommend premature distributions from an account intended to fund retirement.
We recommend that folks approaching retirement have a reasonable mix of all three types of accounts – pre-tax, tax-free (Roth), and taxable. This is known as tax-risk diversification and is something I addressed in detail in a past column. All three have their pros as well as cons. My view is that the pros for Roth accounts far outweigh any cons, making them a critical part of any retirement portfolio.
As long as the income cap is not exceeded, establishing and contributing to a Roth IRA is easy to do. And for those whose employer offers a Roth 401(k), this is an ideal pathway for Roth savings – high contribution limits and no income cap.
This is the tricky part. This consideration arises typically after retirement starts. Should I do a wholesale IRA-to-Roth IRA conversion? Should I meter it out over time? Forget the rules of thumb. Forget the conversion calculators. This decision depends on individual circumstances. Here are some real-life examples from our work with clients:
As always, don’t try to develop optimal Roth strategies, short or long-term, on your own. Be sure to work with a trusted financial professional to help chart your course.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>During accumulation, it is common to use a variety of vehicles to build up retirement wealth – 401(k)-type retirement plans, IRAs, Roth IRAs, investment accounts, savings accounts, CDs, etc. It is also common, and advised, to have significant exposure to the global stock market – somewhere in the 70%-100% range – with the remainder invested in bonds (or bond funds) and cash.
The accumulation phase generally exhibits a rocky ride, given the high exposure to stocks, but such exposure provides the best opportunity for asset growth. Throughout this phase, volatility is your friend if you dollar-cost-average in to your accounts. This means adding constant dollars to your accounts on a regular basis so that you buy more shares when the market is down.
In the distribution phase, it is generally advised to simplify and consolidate the myriad number of accounts that seem to multiply during one’s lifetime. This makes the tracking of such accounts easier. It also allows for a more focused and cohesive investment strategy.
Typically, in retirement, we recommend maintaining a healthy exposure to the global stock market, say, in the 50%-70% range, in order to keep assets growing at a rate greater than inflation.
In this phase, portfolio volatility is your enemy. This is because you are negative dollar-cost-averaging – removing constant dollars, adjusted for inflation, on a regular basis. Here, volatility can reduce your effective rate of return.
Another factor of extreme importance during this phase is to control the distribution rate such that retirement savings are not exhausted during your lifetime.
Finally, most planners agree, it is important to organize accounts in a distribution mode into three “buckets” – stock, bond, and cash buckets. The idea is to draw all distributions from cash, and bonds if necessary, but not from the stock bucket. The stock bucket can then be partially liquidated, from time-to-time, to the extent necessary to replenish the cash – but only when the market is up.
Such a strategy can give you peace of mind by minimizing the impact of volatility on the long-term health and viability of your retirement portfolio.
Many financial planners suggest having 2-4 years of cash in the cash bucket to weather long market cycles. Unfortunately, this produces a “cash drag” on portfolio performance.
To counter this drag, we recommend the following distribution strategy as optimal:
The key to making this work is the disciplined act of rebalancing the stock-bond portfolio at the time cash is extracted through partial portfolio liquidation.
Even in the occasional years when this strategy results in partial stock liquidation in down market years, the realized capital loss is minimal.
Skeptical? Do the math, then let’s talk.
Much of my time with clients is spent walking them through and helping them manage a deliberate retirement distribution strategy. Making it work correctly takes patience and discipline. Don’t try this on your own. The stakes are too high.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>If you are the designated beneficiary (i.e., you are named as beneficiary in the IRA or plan documents), you can take post-death distributions over your remaining life expectancy, spreading out distributions over a number of years. This life expectancy calculation will give you the minimum amount you must withdraw from the IRA or plan each year (you can always withdraw more than required in any year). Yearly distributions from the IRA or plan must begin by December 31 of the year following the year of the owner's or participant's death. If there are other designated beneficiaries and separate accounts have not been set up, the oldest beneficiary must be used for the life expectancy calculation. (Note: An employer-sponsored retirement plan can specify the distribution method that beneficiaries must use.)
You may have other options as well. If the IRA owner or plan participant died before he or she began taking required minimum distributions, you can generally elect to distribute the entire interest in the IRA or plan within five years of the owner's or participant's death. (In this case, you don't have to begin taking distributions the year after death.) If the IRA owner or plan participant died after beginning to take required minimum distributions, you may be able to spread distributions over the owner's or participant's remaining life expectancy (calculated in the year of death) if that period is longer than your own life expectancy. (Be sure to first withdraw the RMD for the year of death, if not yet taken by the IRA owner/plan participant.) Again, however, keep in mind that an employer-sponsored retirement plan can specify the distribution method that beneficiaries must use. If your choices are limited by a plan, you may have the ability to transfer the plan funds to an IRA established in the deceased IRA owner's or plan participant's name--the rules that apply to inherited IRAs would apply to the transferred funds.
You may also have additional options if you are a surviving spouse and a designated beneficiary of the IRA or plan. You can roll over inherited traditional IRA or plan funds into your own traditional IRA or retirement plan. If you're the sole beneficiary you can also leave the funds in an inherited IRA and treat it as your own IRA. In either case you can then name beneficiaries of your choice and defer taking distributions until the required age (usually 70½). You can generally also roll over ("convert") non-Roth distributions from an employer plan into a Roth IRA (you'll generally pay tax upon the "conversion" but qualified distributions from the Roth IRA will be tax free).
If you're a nonspouse beneficiary, you generally have far fewer options. For example, you can't roll over a distribution from an employer retirement plan into your own IRA or plan account but you can generally directly roll the distribution over into an inherited IRA (complex rules apply). Like spouse beneficiaries, you can also roll over ("convert") non-Roth distributions from an employer plan into an inherited Roth IRA (however, you must do so in a direct rollover).
Certain restrictions apply to rollovers, however. For example, you cannot roll over required minimum distribution amounts (i.e., distributions required in the year of death). Also, inherited Roth IRAs can only be rolled over into a Roth IRA, and inherited Roth 401(k)/403(b)/457(b) accounts can only be rolled into another Roth 401(k)/403(b)/457(b) account that accepts rollovers, or into Roth IRAs.
Finally, Roth IRAs are subject to similar rules. If you inherit a Roth IRA, you can take distributions over a five-year period (following the Roth IRA owner's death) or over your remaining life expectancy. If you are a surviving spouse beneficiary, you may be able roll the assets over to your own Roth IRA or, if you're the sole beneficiary, treat the Roth IRA as your own. This is significant because, as a Roth IRA owner, you do not have to take any distributions from the Roth IRA during your life. Distributions from an inherited Roth IRA are usually free from income tax if made at least five years after the deceased IRA owner first contributed to any Roth IRA (other than an inherited Roth IRA).
Caution: When evaluating whether to initiate a rollover always be sure to (1) ask about possible surrender charges that may be imposed by both the distributing plan and the receiving plan, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of an employer plan. The rules governing inherited IRAs and employer-sponsored plan accounts are complex. Consult a tax advisor for more information.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
]]>Retroactive to tax-year 2015, the act enhanced or made “permanent” a number of these provisions and further extended others temporarily. I use the term “permanent” somewhat tongue-in-cheek. As we all know when it comes to tax laws, nothing is really permanent.
Below is a summary of some of the more-popular personal tax provisions impacted by the legislation.
IRAs are tax-efficient goldmines when it comes to charitable giving. For nine years, Congress allowed taxpayers age 70-1/2 and older to transfer up to $100K annually directly from IRAs to charities. Such transfers, known as Qualified Charitable Distributions (QCDs), are treated as non-taxable distributions.
Congress had been erratic in allowing QCDs, first in four consecutive 2-year periods, then most recently in 2014. They are now allowed on an ongoing basis.
There are several advantages to giving in this manner. Perhaps the greatest is that required minimum distributions (RMDs) may be used to fund these transfers. For folks who do not need their RMDs for household cash flow, such transfers allow both RMD and charitable interests to be satisfied simultaneously.
Since a QCD is not taxable, gifts made in this manner cannot also be listed as itemized deductions. No double dipping. But, there are a number of advantages to minimizing Adjusted Gross Income (AGI), which a QCD does quite nicely. An example is the multi-tiered schedule for Medicare Part B premiums which increase dramatically at higher AGIs.
Note that QCDs are not allowed for gifts to donor-advised funds. Also, such transfers do not apply to employer retirement plans such as 401(k)s.
State and local sales taxes may be now be claimed as federal itemized deductions on an ongoing basis in lieu of state and local income taxes. This is particularly advantageous for retirees who pay no NYS income tax. For example, Social Security benefits and government and NYS teachers’ pensions are tax-free in New York. The same is true for the first $20,000 per taxpayer for IRA distributions and non-government employer pensions combined.
For folks who do not track their annual sales tax history, the IRS provides a simple table to estimate total sales tax based on AGI. For big-ticket purchases, such as an auto, the IRS allows taxpayers to add sales tax for such purchases to the table amount.
Landowners who donate a conservation easement on real property can claim a federal income tax deduction equal to the difference in appraised property value before and after the easement. This provision was both enhanced and made permanent.
Enhancements include raising the maximum deduction in any one year from 30% to 50% of AGI (100% for farmers) and increasing the number of years over which a donor can take deductions from 6 to 16 years. The latter benefits low-income taxpayers who may be land-rich but cash-poor.
There is something here for just about everyone who pays federal income taxes. To learn more about how these changes affect you, talk with your tax preparer and financial planner.
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters.
We have the capability to help you plan for different Social Security filing scenarios. We can also estimate how much more household income would result. Read on for some Social Security basics, but we do encourage you to contact us for an appointment.
Keep in mind that if you collect Social Security before your full retirement age, your benefit will be permanently reduced throughout. Depending on the year you were born, this amounts to receiving between 25 and 30 percent less per month if you collect benefits at age 62 versus waiting until “full retirement age” to begin collecting benefits. However, this doesn't necessarily mean that collecting benefits at age 62 is unwise. If your life expectancy is short, for example, you may actually end up with more money if you start collecting Social Security benefits at age 62. If we only had a crystal ball! Hence, the benefit of weighing your options!
There are also good reasons to wait until full retirement age (or beyond) to start collecting benefits. For example, if you work full-time past age 62, you may have the opportunity to increase your eventual retirement benefit, particularly if you are in your peak earnings years, as your benefit will be figured using your 35 highest earnings years.
Additionally, if at retirement your income will be restricted, you may want to receive as much as possible from Social Security each month at that point; waiting may be worthwhile for you. If you can wait past full retirement age to begin collecting benefits, you will receive delayed retirement credits (up until age 70) that will permanently increase your benefit. At this time, for each year you delay starting benefits beyond age 66, 8% of your full-retirement-age benefit is added to your payment.
Points to consider include whether other people will be eligible to receive benefits based on your work record, your eligibility for Medicare, your estimated life expectancy, and tax implications. The Social Security Administration (SSA) has several online benefit estimators available at www.ssa.gov.
Please feel free to contact us with any questions you have at 941-366-7222.
©2016 Broadridge Investor Communication Solutions, Inc. All rights reserved.
]]>However, there’s another very important diversification factor that’s often neglected: diversifying across account types (tax-deferred, taxable, and tax-free).
Tax-deferred accounts typically consist of 401(k)/403(b)/457 employer plans and IRAs. Contributions are generally tax-deductible, and earnings and growth are tax-deferred. Income taxes are paid when distributions are made.
Taxable accounts include bank and investment accounts. Income taxes have already been paid on the principal, but are then paid annually on the interest and dividend earnings, and on gains realized from security sales.
Tax-free accounts include the greatest gifts ever given to the American taxpayer by Congress: the Roth IRA and Roth 401(k). None of the generated income or capital gains on securities sales is taxable, as long as some simple timing and age rules are followed.
Each of the three accounts has its advantages and disadvantages—but except in unusual circumstances, I encourage clients to develop a mix of all three. This allows people to maximize financial flexibility during their working and retirement years, while minimizing the impact of the few associated downsides of each account type.
When accumulating assets, I typically suggest the following priority, once an adequate cash emergency fund is in place:
Please feel free to contact us with any questions you have at 941-366-7222.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>By taking the time to clear out and organize your financial records, you'll be able to find what you need exactly when you need it.
If you tend to keep stuff because you "might need it someday," your desk or home office is probably overflowing with nonessential documents. One of the first steps in determining what records to keep is to ask yourself, "Why do I need to keep this?"
Documents you should keep are likely to be those that are difficult to obtain, such as:
On the other hand, if you have documents and records that are easily duplicated elsewhere, such as online banking and credit-card statements, you probably do not need to keep paper copies of the same information.
Generally, a good rule of thumb is to keep financial records and documents only as long as necessary. For example, you may want to keep ATM and credit-card receipts only temporarily, until you've reconciled them with your bank and/or credit-card statement. On the other hand, if a document is legal in nature and/or difficult to replace, you'll want to keep it for a longer period or even indefinitely.
Some financial records may have more specific timetables. For example, the IRS generally recommends that taxpayers keep federal tax returns and supporting documents for a minimum of three years up to seven years after the date of filing. Certain circumstances may even warrant keeping your tax records indefinitely.
Listed below are some recommendations on how long to keep specific documents:
Records to keep for one year or less:
Keep in mind that the above recommendations are general guidelines, and your personal circumstances may warrant keeping these documents for shorter or longer periods of time.
An easy way to prevent paperwork from piling up is to remember the phrase "out with the old, in with the new." For example, when you receive this year's auto insurance policy, discard the one from last year. When you receive your annual investment statement, discard the monthly or quarterly statements you've been keeping. In addition, review your files at least once a year to keep your filing system on the right track.
Finally, when you are ready to get rid of certain records and documents, don't just throw them in the garbage. To protect sensitive information, you should invest in a good quality shredder to destroy your documents, especially if they contain Social Security numbers, account numbers, or other personal information.
You could go the traditional route and use a simple set of labeled folders in a file drawer. More important documents should be kept in a fire-resistant file cabinet, safe, or safe-deposit box.
If space is tight and you need to reduce clutter, you might consider electronic storage for some of your financial records. You can save copies of online documents or scan documents and convert them to electronic form. You'll want to keep backup copies on a portable storage device or hard drive and make sure that your computer files are secure.
You could also use a cloud storage service that encrypts your uploaded information and stores it remotely. If you use cloud storage, make sure to use a reliable company that has a good reputation and offers automatic backup and technical support.
Once you've found a place to keep your records, it may be helpful to organize and store them according to specific categories (e.g., banking, insurance, proof of identity), which will make it even easier to access what you might need.
Another option for organizing your financial records is to create a personal document locator, which is simply a detailed list of where you have stored your financial records. This list can be helpful whenever you are trying to locate a specific document and can also assist your loved ones in locating your financial records in the event of an emergency. Typically, a personal document locator will include the following information:
Please feel free to contact us with any questions you have at 941-366-7222.
Source: ©2016 Broadridge Investor Communication Solutions, Inc.
]]>Cloud storage--using Internet-based service providers to store digital assets such as books, music, videos, photos, and even important documents including financial statements and contracts, has become increasingly popular in recent years. But is it right for you?
Opinions vary on whether to store your most sensitive information in the cloud. While some experts say you should physically store items you're not willing to lose or expose publicly, others contend that high-security cloud options are available as an alternative or additional storage method, and have the added benefit of preserving the records in the event of a natural disaster at your home.
If you're thinking about cloud storage for your financial documents, consider the following:
Source: ©2016 Broadridge Investor Communication Solutions, Inc. This material provided by Jennifer N. Weidner, Esq.
]]>This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Medicare has a phone number (800-633-4227) and website (www.medicare.gov) chock full of useful information. There are also excellent independent advisors available to help you through the Medicare maze. Just give us a call and we’ll be happy to answer your questions or steer you in the right direction.
*Sources: Social Security website ssa.gov; Congressional Research Service report, September 29, 2015; Forbes, November 2, 2015
Risk is often described by using terms like volatility or standard deviation which can cloud the true meaning for our clients. True risk is the permanent loss of principal or outliving your money. Volatility and standard deviation are only temporary fluctuations, they are natural and in fact the very essence of what makes free markets work. Markets move in a 3-steps-forward and two-steps-backward fashion, always gaining ground over the long run. Too often investors turn these temporary steps backward into permanent losses by allowing fear to incite bad decision making, and selling at or near a bottom. When volatility is looked at from the perspective of a long term investor, it is your friend, as large drops in the market give you an opportunity to buy quality assets on the cheap and then reap the rewards.
The historical data is clear on this issue. After inflation and taxes equities beat fixed income handsomely across an investor’s life cycle. On average fixed income barely beats inflation which leads to a negligible increase in purchasing power for decades to come. Therefore equities drive the growth of your principal and your ability to reach your goals. Short term, high quality fixed income does hold a place in the portfolio however. It can be a stable or (non-correlating) asset. So when volatility creates a drop in equity prices you’ll have a stable asset in your fixed income holdings from which you can raise cash to purchase equities at a reduced price.
Equities alone won’t build wealth if you don’t let them. Your behavior is the biggest factor in your success. Your reactions to market movements are more important than the assets you own. One way to help manage your behavior is by turning off the financial news. It is hard to stay optimistic and follow your financial plan when the news is about one crisis after another. Fear attracts viewers, so fear is what the media sells, but in the face of this fear we all tend to feel safer in a group. Following the herd has always led to poor investment performance and bad decision making. Stick to the principles outlined above and let your portfolio work for you. Don’t let the media send you off course.
All asset classes ebb and flow through various market cycles. What’s hot today will fail tomorrow. Fear, and greed will create peaks and troughs where we least expect it. Not only is this true for markets and sectors, but it is equally true for various investment styles, strategies, and investor sentiment. When looked at through the eyes of a well-diversified portfolio however, we see these highs and lows, across various asset classes as opportunities to rebalance (i.e., selling high and buying low within the portfolio).
A good advisor coaches you on the fundamentals of the game. He or she knows the rules, keeps you from making mistakes and can help you recover from setbacks. A good advisor creates the game plan, adjusts the game plan when necessary, and coordinates the actions of the team. A good advisor is aligned with your goals and is accountable for his or her actions. Your advisor is there for you when times are tough and works hard to see you through to a winning season.
Taking these thoughts and wrapping them around a well-executed financial plan - anchored to a good advisor - is what leads to success. Understanding the value of this process has led us to provide every client with a Financial Planning Officer, an Investment Officer, and a Relationship Manager. This assures that our clients are well advised in all various aspects of wealth management. Managing wealth is a lot like managing a great baseball team—you don’t win by expecting to hit a home run every time you’re at bat. You win by remaining disciplined, eliminating errors, and executing your best game plan.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
The Canandaigua National Trust Company of Florida (CNTF) Board of Directors has appointed Sue A. Jacobson as Director.
Jacobson, originally from Elmira, New York received a Bachelor of Arts (B.A.) in Psychology from the University of Rochester, and her Master of Science (M.S.) in Social Administration from Case Western University’s Mandel School of Applied Social Sciences. Jacobson earned her Juris Doctor (J.D.), cum laude, from Albany Law School of Union University, where she was a member of the Justinian Honor Society and personal research assistant to the Dean of the law school.
Jacobson began her law career as a Confidential Law Research Assistant to the Justices of the New York State Supreme Court, Appellate Division, Third Department, in Albany, New York. After living and practicing law for many years in Rochester, New York, Sue moved to Sarasota in 1999. She continued to practice law in Sarasota until 2012, when she retired.
Jacobson is past Chair of the Board of Directors of Jewish Family and Children’s Service of the Suncoast and the Immediate Past President of the West Coast Florida Region of American Jewish Committee. She is currently a member and Secretary of the Board of Trustees of Pines of Sarasota Foundation and a member of the Board of Directors of the New College Foundation.
Just starting your first job? Chances are you face a number of financial challenges. College loans, rent, and car payments all compete for your hard-earned paycheck. Can you even consider contributing to your retirement plan now? Before you answer, think about this: The time ahead of you could be your greatest advantage. Through the power of compounding--or the ability of investment returns to earn returns themselves--time can work for you.
Example: Say at age 20, you begin investing $3,000 each year for retirement. At age 65, you would have invested $135,000. If you assume a 6% average annual rate of return, you would have accumulated $638,231 by that age. However, if you wait until age 45 to invest that $3,000 each year, and earn the same 6% annual average, by age 65 you would have invested $60,000 and accumulated $110,357. By starting earlier, you would have invested $75,000 more but would have accumulated more than half a million dollars more. That's compounding at work. Even if you can't afford $3,000 a year right now, remember that even smaller amounts add up through compounding.
Finally, time offers an additional benefit to young adults: the ability to potentially withstand greater short-term losses in pursuit of long-term gains. You may be able to invest more aggressively than your older colleagues, placing a larger portion of your retirement portfolio in stocks to strive for higher long-term returns.
At this life stage, even more obligations compete for your money--mortgages, college savings, higher grocery bills, home repairs, and child care, to name a few. Although it can be tempting to cut your retirement plan contributions to help make ends meet, try to avoid the temptation. Retirement needs to be a high priority throughout your life.
If you plan to take time out of the workforce to raise children, consider temporarily increasing your plan contributions before leaving and after you return to help make up for the lost time and savings.
Also, while you're still decades away from retirement, you may have time to ride out market swings, so you may still be able to invest relatively aggressively in your plan. Be sure to fully reassess your risk tolerance before making any decisions.
This stage of your career brings both challenges and opportunities. College bills may be invading your mailbox. You may have to take time off unexpectedly to care for yourself or a family member. And those pesky home repairs never seem to go away.
On the other hand, with 20+ years of experience behind you, you could be earning the highest salary of your career. Now may be an ideal time to step up your retirement savings. If you're age 50 or older, you can contribute up to $24,000 to your plan in 2015, versus a maximum of $18,000 if you're under age 50. (Some plans impose lower limits.)
It's time to begin thinking about when and how to tap your plan assets. You might also want to adjust your allocation, striving to protect more of what you've accumulated while still aiming for a bit of growth.
A financial professional can become a very important ally at this life stage. Your discussions may address health care and insurance, social security withdrawal strategies, taxes, living expenses, income-producing investment vehicles, other sources of income, and estate planning.
You'll also want to familiarize yourself with required minimum distributions (RMDs). The IRS requires you to begin taking RMDs from your plan by April 1 of the year following the year you reach age 70½, unless you continue working for your employer.
Throughout your career, you may face other decisions involving your plan. Would Roth or traditional pretax contributions be better for you? Should you consider a loan or hardship withdrawal from your plan, if permitted, in an emergency? When should you alter your asset allocation? Along the way, a financial professional can provide an important third-party view, helping to temper the emotions that may cloud your decisions.
Please feel free to contact us with any questions or for a review of your retirement plan at 941-366-7222.
Source: ©2015 Broadridge Investor Communication Solutions, Inc.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Following is a brief summary of some common biases influencing even the most experienced investors. Can you relate to any of these?
The human brain has evolved over millennia into a complex decision-making tool, allowing us to retrieve past experiences and process information so quickly that we can respond almost instantaneously to perceived threats and opportunities. However, when it comes to your finances, these gut feelings may not be your strongest ally, and in fact may work against you. Before jumping to any conclusions about your finances, consider what biases may be at work beneath your conscious radar. If you have any questions about your financial picture, I encourage you to contact us at 941-366-7222.
Source: ©2015 Broadridge Investor Communication Solutions, Inc.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Some government programs aimed at assisting the disabled, such as Medicaid and Supplemental Social Security Income (SSI), are needs-based. That means if the disabled individual has access to more than a specified level of resources (generally $2,000), he or she will not be eligible to receive such benefits. In 1993, Congress officially approved the use of SNTs to maximize the use of all available resources, both private and governmental, to provide more fully for the needs of the disabled.
For persons of limited means, government programs may constitute the primary, if not the only, source of funding for their current and future needs. However, government assistance may also be available to families who have resources available to meet their loved one's basic needs. These families may be fortunate enough to be able to use their personal resources to provide for non-basic needs as well. With an SNT, the disabled person is able to first tap into any government benefits to which he or she is entitled, and then can spend personal resources as a secondary source for additional support and comfort.
There are three types of SNTs: a self-settled or first-party SNT, a pooled SNT, and a third-party SNT.
A self-settled or first-party SNT is created for the sole benefit of a disabled person who is under age 65. The trust must be established by the disabled person's parent, grandparent, or guardian, or by the court, but it cannot be created by the disabled person. However, the disabled person can fund the trust. For example, the disabled person could fund the trust with money that has been inherited or received in settlement of a lawsuit, or as a result of a divorce.
As previously stated, in order to qualify for Medicaid or SSI, the person who is enrolling must have a limited amount of income and resources. Generally, Medicaid and SSI will look back 60 months to see if assets have been transferred to someone else in order to qualify for benefits, and if so, a penalty is imposed. The penalty will be that the person who is enrolling won't be able to receive benefits for a certain amount of time. Transferring assets to an SNT, however, does not trigger these look-back provisions.
The other benefit of this SNT, of course, is that assets in the trust will not be countable as resources for eligibility purposes. One disadvantage, however, is that upon the disabled individual's death, any money or assets remaining in the trust must be used to reimburse the government for Medicaid benefits extended to the individual during his or her lifetime.
A pooled SNT is a trust that is managed by a nonprofit organization. Funds are pooled for investment purposes, but separate subaccounts are maintained for each disabled beneficiary. A pooled SNT works in the same way as a self-settled or first-party SNT. However, with a pooled SNT, the disabled individual can create the account for himself or herself.
Furthermore, any funds remaining in the account upon the individual's death can be used to pay back Medicaid, or they can remain in the pooled SNT to help others in the pool, depending on state law.
A third-party SNT is a trust created by a disabled person's parent or other third party, but this type of SNT has no payback requirement. The person establishing the trust must not have a duty to support the disabled child, so the child must be age 21 or older, depending on state law. There is no requirement that the disabled person be under the age of 65. However, transfers to a third-party SNT may or may not trigger the Medicaid or SSI penalty period. Again, it depends on state law.
An SNT requires careful drafting and administration to avoid disqualification for government benefits. Please feel free to contact us with any questions at 941-366-7222.
Source: ©2015 Broadridge Investor Communication Solutions, Inc.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Even if you're divorced, you may still collect benefits on your ex-spouse's Social Security earnings record if:
If you've been divorced for at least two years, and the other requirements have been met, you can receive benefits on your ex-spouse's record even if he or she has not yet applied for benefits.
If you begin receiving benefits at your full retirement age (66 to 67, depending on your year of birth), your spousal benefit is equal to 50% of your ex-spouse's full retirement benefit (or disability benefit). For example, if your ex-spouse's benefit at full retirement age is $1,500, then your spousal benefit is $750. However, there are several factors that may affect how much you ultimately receive.
Are you eligible for benefits based on your own earnings record? If so, then the Social Security Administration (SSA) will pay that amount first. But if you can receive a higher benefit based on your ex-spouse's record, then you'll receive a combination of benefits that equals the higher amount.
Will you begin receiving benefits before or after your full retirement age? You can receive benefits as early as age 62, but your monthly benefit will be reduced (reduction applies whether the benefit is based on your own earnings record or on your ex-spouse's). If you decide to receive benefits later than your full retirement age, your benefit will increase by 8% for each year you wait past your full retirement age, up until age 70 (increase applies only if benefit is based on your own earnings record).
Will you work after you begin receiving benefits? If you're under full retirement age, your earnings may reduce your Social Security benefit if they are more than the annual earnings limit that applies.
Are you eligible for a pension based on work not covered by Social Security? If so, your Social Security benefit may be reduced.
Planning tip: If you decide not to collect retirement benefits until full retirement age, you may be able to maximize your Social Security income by claiming your spousal benefit first. By opting to receive your spousal benefit at full retirement age, you can delay claiming benefits based on your own earnings record (up until age 70) in order to earn delayed retirement credits. This can boost your benefit by as much as 32%. Because deciding when to begin receiving Social Security benefits is a complicated decision and may have tax consequences, consult a professional.
Benefits for a divorced spouse are calculated independently from those of a current spouse, so your benefit won't be affected if your spouse remarries. However, if you remarry, then you generally can't collect benefits on your ex-spouse's record unless your current marriage ends. Any spousal benefits you receive will instead be based on your current spouse's earnings record.
If your marriage lasted 10 years or more, you may be eligible for a survivor benefit based on your ex-spouse's earnings record.
For more information on how divorce may affect your Social Security benefits, contact the SSA at (800) 772-1213 or visit socialsecurity.gov.
Source: ©2015 Broadridge Investor Communication Solutions, Inc.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Jennings worked as the Chief Executive Officer for the WestCoast Black Theatre Troupe. Here she conducted analysis of finances, internal operations, productions and fund raising capabilities to determine the viability of the struggling organization. Jennings developed a strategic plan to stabilize the organization.
She recruited a new Board of Trustees and advisory board of well-connected community leaders. The WestCoast Black Theatre Troupe has a promising future.
Jennings founded Sarasota Bank. In her 14 years she held titles of President, CEO, Chairman of the Board, and Director.
She also helped start Liberty National Bank, in Bradenton, Florida; where she was a Senior Vice President, Chief Lending Officer, and Director.
Jennings is active in the community, serving on numerous not-for-profit boards and committees in the Greater Sarasota and Manatee area. Throughout her career she has also been the recipient of numerous awards and honors. In 2013, she received the Humanitarian Award from Howard University Club, and the Boundary Crosser Award from Sarasota County Openly Plans for Excellence (SCOPE).
Simplistically, you’ll be just fine if debts are minimal, reliable health insurance benefits are in place, expenses are moderate, and you have a good pension or healthy retirement savings balance. Just be sure the savings are sensibly invested and don’t overlook the ravages of inflation, which causes prices to double every 25 years. Even in retirement, maintain sufficient diversified exposure to the global stock market and keep initial annual withdrawals down to around 4-5%. Other considerations that are often not thought about but should:
Hopefully, you really enjoyed your career. If so, you may initially experience a sense of loss not being with your work colleagues or feeling like you no longer will be making a difference in the lives of others. That might actually suggest you have a great deal to offer and just need some time to reflect on how best to reinvest your time, talents and energies. Being genuinely useful is often an effective antidote for feelings of apathy or anxiety. Fortunately, with your increased free time available in retirement, there will ample opportunities to put your many skills to good use!
It is such a challenge while working and maybe raising a family to get away and explore the many wonderful places worth travelling to in the United States and beyond. Perhaps now is the time to actually enjoy taking some of those long dreamed-of trips. How can you go wrong visiting places like the Grand Canyon, Yellowstone National Park, key Civil War battle sights, or New England in autumn -- not to mention the historical richness and variety of Europe?
Or, how about throwing yourself into a charity project. With so many less fortunate, what could be more useful and rewarding? Most nonprofit organizations in the area are yearning for volunteers and there are handy websites to match you with the desired opportunity. Some categories always needing help include those involving Animals, Women’s Groups, Veterans, Children & Family, Arts, Hospices & Hospitals, and Spiritual Organizations.
Ideas for how best to spend your retirement years will surely start flourishing in due time. A clear financial plan and intelligent investment strategy will go a long way toward laying the foundation to give you the freedom to go after some of your dreams. The more knowledge and confidence you have in your financial strength, the more realistic and reassured you will be in planning for this next phase of your life.
Getting ready for possibly 30 or more years of retirement is not always as simple as it might have seemed when working and collecting a steady paycheck. There are a number of financial and emotional factors that should be thoughtfully considered. Before long, however, you may find you are busier and more fulfilled than you were during past days of toiling and saving for your golden years.
You don’t need a 50 page plan to gauge your readiness for retirement, but it would be a good idea to get some solid objective insights as to the amount you can sustainably spend and how to intelligently invest your savings so your resources last the rest of your life. A dedicated member of our team of experienced Financial Planning Officers can provide a review of your retirement readiness. If you’d like to schedule a meeting, please contact us today.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Also, some seniors may be reluctant to discuss finances because it can reinforce a sense of loss; this could be especially true if they can no longer drive or participate in activities they enjoy. Admitting that they need help with financial issues may make them feel as though one more area is no longer under their control.
Parents also may be uncomfortable discussing finances with only one child, preferring to involve all siblings. In this case, you may need to either try to reach a consensus about which child is best equipped to help, or divide responsibilities among siblings.
In some cases, parents may respond to the idea that taking action sooner rather than later can help prevent the loss of much of their hard-earned savings to taxes or scams.
You might start providing assistance in stages. Offer to review checking account statements and/or credit card bills to ensure they’re not paying for services they want to cancel or didn’t request; this may give you insight into the overall state of their finances. Because seniors may be more willing to discuss issues such as health insurance and preferences regarding long-term care or end-of-life decisions before other topics, building trust in these areas could increase comfort levels on both sides with other matters.
Whatever approach you take, one of the key challenges of this process is to respect a parent’s dignity while protecting his or her ongoing well-being.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>If you would like to learn more about our capabilities as successor trustee, please let your advisor know or call us at 941-366-7222. We would be pleased to talk or meet with you.
*www.disabilitycanhappen.org, Disability Statistics, July 2013.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Diversification does not mean having similar accounts spread out over multiple financial institutions. Doing so generally results in substantial duplication and normally does not achieve the desired allocation benefits.
There is another diversification factor of high importance that is often neglected – diversifying across account types – pre-tax, after-tax, and tax free.
Pre-tax accounts typically consist of 401(k)/403(b)/457 employer plans and various forms of IRAs. Contributions generally are tax-deductible, and earnings and growth are tax-deferred. Income taxes are paid when distributions are made.
After-tax accounts include savings and checking accounts, non-IRA CDs, and investment accounts. Here, income taxes have already been paid on the principal, but taxes are then paid annually on the interest and dividend earnings and on gains realized from sales of securities.
Finally, tax-free accounts are represented by one of the greatest gifts ever given to the American taxpayer by Congress – the Roth IRA and Roth 401(k). For assets held in such accounts, none of the generated income or capital gains on securities sales is taxable, as long as some simple timing and age rules are followed.
Note that I am ignoring, for the sake of keeping this discussion simple, deferred annuities and tax-free municipal bonds which are variations on this general theme.
Except in unusual circumstances, I typically encourage clients to approach retirement with a mix of all three types of accounts.
To appreciate the value in doing so, it is important to understand some of the pros and cons of each type.
Pre-Tax – Pros: immediate tax deduction for contributions; tax-deferred income and growth; easy, disciplined way to save for retirement; employers often offer match contributions for employer plans; first $20K/year of distributions not taxed in NYS; can be left to heirs.
Pre-Tax – Cons: distributions taxed at ordinary rates; required annual distributions starting at age 70-1/2; 10% penalty for distributions prior to age 59-1/2, with a few exceptions; required distributions can have negative income tax consequences – taxability of Social Security at lower income levels and phase-out of itemized deductions and personal exemptions at higher levels; can also trigger additional 3.8% Medicare tax at higher levels; annual contributions limited by ceiling dollar amount; no step-up in basis at death; non-spouse heirs required to take annual distributions.
After-Tax – Pros: always under the owner’s control; highly-flexible; favorable federal tax rates for long-term capital gains and qualified dividends; can be gifted to spouse, family, charity; no annual contribution ceiling; can be left to heirs; full step-up in basis at death.
After-Tax – Cons: contributions not tax-deductible; annual interest/dividend income taxable; income taxes also generated by regular account rebalancing and changes in the investments including securities sales;
Tax-Free – Pros: no income taxes ever, if simple rules are followed; reasonably-flexible; no required annual distributions; easy, disciplined way to save for retirement; no tax or penalty associated with removing principal, regardless of age or timeframe; can be left to heirs; heirs can continue accounts tax-free.
Tax-Free – Cons: contributions not tax-deductible; dollar ceiling on annual contributions; non-spouse heirs required to take annual distributions.
When a client is accumulating assets, I usually suggest the following order of priority in setting money aside for retirement:
What is an appropriate allocation for the third step? It depends on individual circumstances. There is no standard rule of thumb.
The idea is to have a reasonable mix to take advantage of the “pros” and not be disadvantaged by a preponderance of the “cons”. For example, it is not unusual to find a retiree with most of his/her assets in a pre-tax form – not a particularly good situation.
As we always advise, be sure to partner with a trusted financial planner to determine the account-type allocation strategy best for you.
Is it better to leave your funds in a 401(k) plan (your current plan or a new employer’s plan) or roll them over into an IRA?
Each retirement savings vehicle has advantages and disadvantages. Here are some points to consider:
Finally, no matter which option you choose, you may want to discuss your particular situation with a tax professional (as well as your plan administrator) before deciding what to do with the funds in your 401(k).
Source: ©2015 Broadridge Investor Communication Solutions, Inc. This material provided by Mark Mazzochetti, CISP.]]>
The math is simple here. The number 1 is very powerful. A modest delay, while perhaps not desirable in the short term, can make a great difference in the long term.
Another mathematical reality related to retirement is lifespan. People are living longer.
At age 65, a male has an average life expectancy of 17 years and a female, 20 years. A 65-year-old man has a 30% chance of living to 90, and a 65-year-old woman has a 40% chance of reaching 90, according to Professor Ron Gebhardtsbauer at Penn State University. A 2011 report by the Census Bureau says that a person at 90 has a further life expectancy of almost five years.
With medical science continuing to advance, these numbers will be conservative in a few years. All of this suggests that when planning for retirement, timeframes ranging from 20-to-30-to-40 years need to be on the radar screen.
The key to making retirement doable, from a financial perspective, is to ensure that distributions from the nest egg over such a timeframe are managed in a way that the money does not run out.
Again, reach for the calculator. We have commented in previous articles about a rule of thumb verified by countless studies in the financial planning literature. While the specifics vary by author, it goes something like this:
For the initial year or two of retirement, limit distributions from all investment resources to no more than about 4%-5% of the total balance. In future years, increase the distribution by inflation to maintain constant purchasing power. For years in which savings/investments suffer an investment loss, forgo the increase in the following year’s distribution. Be sure your overall investments follow a disciplined balanced investment approach – 50%-60% stock-related with broad global diversification and periodic rebalancing. Avoid market timing.
The above then represents cash flow available to the household from your invested resources. Other ongoing income sources may include Social Security, a pension, earned income from part-time work, and distributions from immediate annuities. Outflow is represented by recurring expenses and income taxes.
If projected outflows exceed inflows, something has to give, or you may ultimately run out of money. What might give? We are right back to where we started – possibly delaying the start of retirement or reducing your spending target.
The time to crunch the numbers is before retiring, in the planning stages. It may be too late to effectively reverse course after retiring.
In most cases, learning too late that you jumped into retirement too soon results in having to settle for a less-than-desired retirement standard of living. This is hard to live with for the next 20-30-40 years – and avoidable in most cases simply by planning ahead.
If you are concerned that you will need to do the math on your own, you can breathe easy. Most folks do not want the full burden of retirement planning on their shoulders alone. The consequences of making a mistake are too great. Seek out a fee-based financial planner to help you with the task. Partnering with a trusted advisor is the best way to ensure that you are on the right path.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>Many states abandoned their state estate tax entirely or have tethered their state exemption to the federal exemption. Meanwhile, New York appeared to be “asleep at the wheel,” with no revision to the exemption from estate tax of $1,000,000. Florida, for example, does not have a state estate tax. This made moving out of New York State to a state like Florida an appealing concept: a $5,000,000 estate would save approximately $400,000 that would be otherwise paid in New York estate tax simply by relocating domicile!
In an effort to stem the tide of taxpayer emigration, New York at long last modified its state estate tax exemption. In true New York fashion, however, the laws are complicated and continue to perplex even sophisticated advisors.
For estates of decedents dying between April 1, 2014 and March 31, 2015, the New York exemption is $2,062,500. The following year the exemption increases to $3,125,000; the year after that it increases to $4,187,500; and the exemption increases to $5,250,000 the next year. Starting January 1, 2019, the New York estate tax exemption will be aligned to the federal estate tax exemption, which is then likely to be around $5,900,000. For now, the top tax rate of 16% remains the same as before.
The increase in state exemption will alleviate state estate tax for individuals and couples whose assets are less than the new exemption amounts. However, it’s not a slam dunk for the purpose of encouraging people to remain residents of New York, for two reasons.
First, there is a spousal portability feature in the federal estate tax law, such that a surviving spouse can use the first spouse’s unused exemption as well as the exemption in his or her own estate, effectively doubling the exemption available to the second estate. The New York exemption is not portable between spouses. Therefore, a surviving spouse who has approximately $10,000,000 of assets can avoid federal estate tax by applying the unused exemption from the first spouse, but that same spouse in New York would be subject to fairly significant New York estate tax.
Second, the New York law provides that if an estate is worth more than 105% of the New York exemption amount, the estate would pay the same tax as if the laws had never been revised and the exemption were still only $1,000,000. (Also, if the estate were between 100% and 105%, the estate would begin to lose exemption value fairly rapidly.) If you’ve heard the term “estate tax cliff” recently, it refers to this particular issue.
You can see, therefore, that once the New York exemption matches the federal exemption, the tax impetus to move out of state will no longer exist for someone who has less than that amount. However, an individual with assets in excess of that amount will still have reasons to consider changing domicile to a more tax-friendly state.
Alternatively, that person may wish to engage in some estate planning strategies to reduce their taxable estate. It’s important to consult your advisors regarding such strategies to ensure they are implemented properly, as the recent New York tax law changes also implemented a few other quirks, such as including certain gifts made by a New York resident between April 1, 2014 and December 31, 2018 in his or her gross taxable estate. Income taxability of certain types of estate planning trusts is affected by the new laws, as is the taxability of certain types of New York property owned by non-residents.
We would be delighted to talk with you further should you have any questions on how the new laws affect your estate planning considerations.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.]]>This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>You can start retirement benefits based on your work record as early as age 62. However, if your cash flow allows, waiting until the current full retirement age (FRA) of 66 or even until age 70 will pay off big time. Monthly benefits at age 62 are 25% lower than if you were to wait until age 66 to start. Further, waiting until age 70 to start boosts your monthly benefit by 32% vs. starting at age 66.
Other factors that impact this timing decision include your health, family history, whether or not you are still working, your marital status, age and earnings history of the other spouse if married, and the adequacy of other sources of income.
Benefits given up by waiting can be considered as the cost of generating higher Social Security benefits later on. This cost of waiting can generate a much larger, guaranteed, inflation-adjusted lifetime income stream compared to a purchasing a lifetime inflation-adjusted fixed annuity through an insurance company.
Reduced benefits can start as early as age 60. One can defer taking “own” benefits all the way to age 70 even though survivor benefits might be taken first. Here, remarriage after age 60 will not prevent eligibility for survivor benefits.
And while Social Security personnel are equipped to describe options and answer questions, they are not allowed to provide advice or help you design that optimal strategy.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
An estate plan is a map that reflects the way you want your personal and financial affairs to be handled in case of your incapacity or death. It allows you to control what happens to your property if you die or become incapacitated.
If you're married, the odds are that you're going to outlive your husband. That's significant for a couple of reasons. First, it means that if your husband dies before you, you'll likely inherit his estate. More importantly, though, it means that to a large extent, you'll probably have the last word about the final disposition of all of the assets you've accumulated during your marriage.
Estate planning may be especially needed if you have minor children; your net worth exceeds the federal transfer tax exemption amount ($5,340,000 in 2014, $5,250,000 in 2013) or, if less, your state's exemption amount; you own property in more than one state; financial privacy is a concern; or you own a business.
Incapacity can happen to anyone at any time, but your risk generally increases as you grow older. You have to consider what would happen if, for example, you were unable to make decisions or conduct your own affairs. Failing to plan may mean a court would have to appoint a guardian, and the guardian might make decisions that would be different from what you would have wanted.
Health-care directives can help others make sound decisions about your health when you are unable to. These might include:
There are also tools that help others manage your property when you are unable to, including:
A will is quite often the cornerstone of an estate plan. It is a legal document that directs how your property is to be distributed when you die. It also allows you to name an executor to carry out your wishes as specified in the will and a guardian for your minor children. You can also create a trust in your will. The will should be written, signed by you, and witnessed.
Most wills have to be probated. The will is filed with the probate court. The executor collects assets, pays debts and taxes owed, and distributes any remaining property to the rightful heirs. The rules vary from state to state, but in some states, smaller estates are exempt from probate or qualify for an expedited process.
For most estates, there's little reason for avoiding probate, as the actual time and costs involved are modest. And, there are actually a couple of benefits to probate. Because the court supervises the process, you have some assurance that your wishes will be abided by. And probate offers some protection against creditors, since creditors are generally required to make their claims against the estate in a timely manner.
However, there are a number of reasons for avoiding probate as well. For some complex estates, probate can take up to two or more years to complete and tie up property that your family may need, while running up executor fees, attorney fees, and insurance costs. And, if you have real estate in more than one state, probate may be required in each state. Also, wills and other documents submitted for probate become part of the public record, which may be undesirable if you or your family members have privacy concerns.
There are ways for you to avoid probate, if that is your wish. Probate may be avoided by owning property jointly with rights of survivorship; by completing beneficiary designations for property such as IRAs, retirement plans, and life insurance; by putting property in an inter vivos trust; and by making lifetime gifts.
Whether or not you have a will, some property passes automatically to a joint owner or to a designated beneficiary. For example, you can transfer property such as IRAs, retirement plan benefits, and life insurance by naming a beneficiary. Property that you own jointly with right of survivorship will automatically pass to the surviving owners at your death. Property held in trust will pass according to the terms you set out in the trust.
Property that does not pass by beneficiary designation, joint ownership, will, or trust passes according to state intestacy laws. These laws vary from state to state. The state laws for intestate succession specify how property will pass, generally in certain proportions to various related persons. For example, a typical state law might specify that property pass one-half to a surviving spouse, with the remainder passing equally to all children.
A trust is a versatile estate planning tool that can protect against incapacity; avoid probate; minimize taxes; allow professional management of assets; provide safeguards for minor children, elderly parents, and other beneficiaries; and protect assets from future creditors. Most importantly, trusts can provide a means to administer property on an ongoing basis according to your wishes, even after your death.
A trust is a legal entity where someone, known as the grantor, arranges with another person, known as the trustee, to hold property for the benefit of a third party, known as the beneficiary. The grantor names the beneficiary and trustee, and establishes the rules the trustee must follow in a document called a trust agreement. With a trust, you can provide various interests to different beneficiaries. For example, you might provide income to your children for life, with the remainder going to your grandchildren.
You can create a trust while you are alive (a living or inter vivos trust) or at your death (a testamentary trust). A trust you create during your life can be either revocable or irrevocable. You retain the right to change or revoke a revocable trust. An irrevocable trust cannot be changed or revoked. A trust you create at death is irrevocable.
When you dispose of your property during your lifetime or at your death, your transfers may be subject to federal gift tax, federal estate tax, and federal generation-skipping transfer (GST) tax. Your transfers may also be subject to state taxes.
Making gifts during one's life is a common estate planning strategy that can serve to avoid probate and minimize transfer taxes. One way to do this is to take advantage of the annual gift tax exclusion, which lets you give up to $14,000 (in 2013 and 2014) to as many individuals as you want gift tax free. In addition, there are several other gift tax exclusions and deductions available to help you minimize transfer taxes. Making a gift can also let you see the recipient enjoying the benefit of your gift while you are still alive.
*National Vital Statistics Report, Volume 61, Number 4, May 2013.
Source: Broadridge Investor Communication Solutions, Inc.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>There are several reasons you may need to provide for a trust in your estate plan. You may want to set aside assets for someone who is receiving government benefits, for example, and a supplemental needs trust would keep the assets you designate to that person from disqualifying him or her from receiving those governmental benefits. You may wish to provide for the protection and preservation of assets designated to minor children and young adults, or to direct how assets are held and spent as between your children and a spouse who is not their parent. Or you may have been advised that a trust would be necessary to minimize estate taxes in your estate.
In addition, because of their familiar relationship to the beneficiaries, it can be a challenge for a family member serving as trustee to maintain objectivity among beneficiaries and administer the trust as provided for in the trust document. Engaging a corporate fiduciary can relieve the family members from such predicaments.
Whatever the reason for the trust, you now need to decide on a trustee. A bank having trust powers can act as Trustee. An individual can act as Trustee, as long as he or she is adult and competent and fit to act, and otherwise meets state law requirements. There are circumstances in which an individual may be well-suited to serve as Trustee, and circumstances in which a bank Trustee is more appropriate to act, or at least be set up as an alternate if an individual Trustee can’t serve or ceases to serve. Banks and individuals can also act together as Co-Trustees.
The responsibilities of a Trustee are significant and complex. A Trustee is charged with the management of the trust assets pursuant to the Prudent Investor Standard under state law, and can be held liable if they fail to ensure the portfolio is appropriately invested, with a prudent asset allocation and growth-to-income ratio based on the specific needs of the trust beneficiaries.
If the trust beneficiaries entitled to income from the trust are not the same beneficiaries as those who are to receive the remainder of the trust assets upon the termination of the trust, the Trustee must balance the competing interests of all beneficiaries and administer and manage the trust impartially as between them. If the Trustee, for example, favors the income beneficiary over the remainder beneficiary by investing in only income-producing assets instead of assets designed to increase in value over time, the remainder beneficiary can object and the Trustee can be required to remunerate the remainder beneficiary – from his or her own personal funds, in certain circumstances.
In addition to managing the assets of the trust, the Trustee is responsible for the preparation and filing of all tax returns and court-required accountings for the trust, and ensuring that all items of income and principal are correctly reported on the trust statements.
The Trustee is also responsible for making any discretionary distributions from the principal assets of the trust to the beneficiaries in accordance with the terms of the trust document. If the Trustee makes distributions to beneficiaries that are unauthorized or are inappropriate under the circumstances, the Trustee can be held liable for the return of the assets to the trust. In general, the Trustee is charged with the responsibility of knowing and applying all state trust laws appropriately to the trust.
When deciding between an individual Trustee and a bank Trustee, note that a bank Trustee is held to a higher fiduciary standard than most individual Trustees by the courts that review trustee activity. A bank Trustee is also “always going to be there,” versus an individual who may become incapacitated or die during his or her term of service.
With all of its benefits, you might expect that a bank Trustee would be expensive. Not so! Unless you provide that a Trustee is to serve without compensation, an individual Trustee would be entitled to take a statutory commission for his or her services, which is taxable to them as ordinary earned income. An individual Trustee would also likely have to engage an investment advisor to manage the trust investments and the trust would pay an additional fee to that advisor.
Our bank Trustee fee is approximately the same as a typical investment advisor’s fee, and you get all of the additional benefits of a corporate Trustee, such as:
The Patient Protection and Affordable Care Act, enacted in 2010, contains some provisions that directly affect our nation’s age 65 and older population. If you’re a retiree or a senior, you may be concerned about how these reforms are affecting your access to health care and insurance benefits. The following is an overview of some of the associated health-care reform legislation provisions.
Not surprisingly, the concerns of retirees and seniors center on potential cuts in Medicare benefits. At the outset, the new legislation did not affect Medicare’s guaranteed benefits. However, two goals of the health-care legislation were to slow the increasing cost of Medicare premiums paid by beneficiaries and to ensure that Medicare will not run out of funds.
To help achieve these goals, cuts in Medicare spending are occurring over a ten-year period, beginning in 2011. In particular, these reductions target Medicare Advantage programs – Medicare benefits provided through private insurers but subsidized by the federal government.
These cuts are intended to bring the cost of federal subsidies for Medicare Advantage plans in line with costs for comparable benefits for Medicare beneficiaries. The cuts may reduce or eliminate some of the extra benefits an Advantage plan may offer, such as dental or vision care, and premiums may increase.
But Medicare Advantage plans cannot reduce primary Medicare benefits, nor can they impose deductibles and co-payments that are greater than what is allowed under the traditional Medicare program for comparable benefits.
The legislation also improved some traditional Medicare benefits. Prior to the new legislation, traditional Medicare paid 80% of the cost for a one-time physical for new enrollees within the first 12 months of enrollment. Now, Medicare enrollees receive free annual wellness exams; preventive care tests such as screenings for high blood pressure, diabetes, and certain forms of cancer; and a personalized prevention assessment/plan to address particular health risk factors.
Medicare Part D beneficiaries previously were required to pay for the entire cost of prescription drugs out-of-pocket after reaching a gap in annual coverage, referred to as the “donut hole”. Starting in 2010, beneficiaries began to enjoy a phased-in reduction in co-payments for drugs within the donut hole. By 2020, a combination of federal subsidies and a reduction in co-payments will reduce out-of-pocket costs for medications in the gap from 100% to 25%. However, individuals with annual incomes greater than $85,000 and couples with incomes exceeding $170,000 now pay additional Part D premiums as the federal subsidy offsetting some of the cost of Medicare Part D premiums is reduced.
The Independence at Home demonstration program, implemented in 2012, is a test program that provides Medicare beneficiaries with chronic conditions the opportunity to receive primary care services at home. This is intended to reduce costs associated with emergency room visits and hospital readmissions, and generally improve the efficiency of care.
While in-home care may be a preference, often a nursing facility is the better or only alternative. In the past, consumers had very little information available in order to compare nursing homes. The health-care legislation addresses the need for more transparency regarding nursing facilities. For example, nursing homes now are required to disclose their owners, operators, and financers. The government is now also collecting and reporting information about how well a particular nursing home is staffed, including the number of hours of nursing care residents receive, staff turnover rates, and how much facilities spend on wages and benefits.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>It’s no secret that I like Roth IRAs…a lot.
The Roth IRA was established by the Taxpayer Relief Act of 1997 and named for its chief legislative sponsor, Senator William Roth of Delaware. It is one of the most-beneficial gifts ever bestowed by Congress upon the American taxpayer.
Yet, many folks are not familiar with its features and, as a result, do not take advantage of its benefits.
Roth IRAs generally are funded during one’s working years by making annual contributions. The 2014 maximum IRA contribution is unchanged from last year – $5,500 plus $1,000 “catch-up” for taxpayers age 50 or older. Contributions can only be made in a given year by workers who have W-2 or net self-employment earned income equal to or greater than the contribution. Spouses of workers may also contribute.
The maximum annual contribution can be allocated in any ratio between traditional IRAs and Roth IRAs.
The primary difference between the two is that Roth IRAs are funded with after-tax dollars. Further, Roth IRAs are tax-free accounts. No income tax will ever be paid on the money in the account, provided that certain conditions are met.
Traditional IRAs generally are funded with pre-tax money. Such contributions are tax-deductible in the year of the contribution. When withdrawn in retirement, distributions are then taxed.
More recently, Congress allowed employers to offer Roth 401(k)s in addition to traditional 401(k)s. As with IRAs, the former is funded with after-tax money and the latter with pre-tax money. The 2014 maximum contribution into a Roth 401(k) is $17,500 with $5,500 “catch-up”.
The conventional wisdom is that people who expect to face the same or higher tax rates during their retirement years should direct as much money as possible into Roth IRAs and Roth 401(k)s, if employer plans allow the latter.
But, none of us has a crystal ball to know what Congress and NYS are going to do with tax rates. Also, this guidance may discourage those who believe their tax rates may be lower in retirement from building a strong Roth position.
My recommendation usually goes beyond the tax-rate criterion. It is my judgment that folks saving for retirement should focus on the first two of the following types of assets:
Why emphasize the building of after-tax and tax-free assets vs. pre-tax? At retirement, the retiree will have significantly more spending power with, say, $500,000 in a combination of after-tax and tax-free accounts vs. $500,000 in pre-tax accounts.
Accordingly, my recommended order of preference for working folks saving for retirement is: First, max out traditional 401(k) contributions annually to the level of any employer match; second, max out Roth IRA contributions; third, consider contributing to a Roth 401(k), if available; and fourth, direct any remaining savings primarily to after-tax accounts.
The only advantage, in my view, for building pre-tax assets is the tax deduction at the time of contribution. But, if one is saving for retirement, why not maximize the spending power of the money at retirement vs. benefitting from a tax deduction now for the same number of dollars set aside during one’s working years?
There is an issue for high earners. While they can contribute annually to employer Roth 401(k) plans if available, regardless of income, high earners cannot make Roth IRA contributions this year if their 2014 modified adjusted gross income exceeds $129,000 for unmarried taxpayers or $191,000 for married taxpayers.
But there is a workaround if high income prevents you from making Roth IRA contributions.
First, make a non-deductible (after-tax) contribution to a traditional IRA. There is no income restriction.
Next, immediately convert the non-deductible traditional IRA balance into Roth status. Since the non-deductible contribution is after-tax money, there will be no income tax owed on the conversion, and your money is now in a Roth IRA.
There are three watch-outs:
This article does not address the wisdom of converting pre-tax IRAs and traditional 401(s) into Roth IRAs. That is another topic for another day.
As always, be sure to consult with a trusted financial planner and tax advisor to map out a Roth strategy that works best for your circumstances.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.]]>A chocolate cake. Pasta. A pancake. They're all very different, but they generally involve flour, eggs, and perhaps a liquid. Depending on how much of each ingredient you use, you can get very different outcomes. The same is true of your investments. Balancing a portfolio means combining various types of investments using a recipe that's right for you.
The combination of investments you choose can be as important as your specific investments. The mix of various asset classes, such as stocks, bonds, and cash alternatives, accounts for most of the ups and downs of a portfolio's returns.
There's another reason to think about the mix of investments in your portfolio. Each type of investment has specific strengths and weaknesses that enable it to play a specific role in your overall investing strategy. Some investments may be chosen for their growth potential. Others may provide regular income. Still others may offer safety or simply serve as a temporary place to park your money. And some investments even try to fill more than one role. Because you probably have multiple needs and desires, you need some combination of investment types.
Balancing how much of each you should include is one of your most important tasks as an investor. That balance between growth, income, and safety is called your asset allocation, and it can help you manage the level and type of risks you face.
Ideally, you should strive for an overall combination of investments that minimizes the risk you take in trying to achieve a targeted rate of return. This often means balancing more conservative investments against others that are designed to provide a higher return but that also involve more risk. For example, let's say you want to get a 7.5% return on your money. Your financial professional tells you that in the past, stock market returns have averaged about 10% annually, and bonds roughly 5%. One way to try to achieve your 7.5% return would be by choosing a 50-50 mix of stocks and bonds. It might not work out that way, of course. This is only a hypothetical illustration, not a real portfolio, and there's no guarantee that either stocks or bonds will perform as they have in the past. But asset allocation gives you a place to start.
Even within an asset class, consider how your assets are allocated. For example, if you're investing in stocks, you could allocate a certain amount to large-cap stocks and a different percentage to stocks of smaller companies. Or you might allocate based on geography, putting some money in U.S. stocks and some in foreign companies. Bond investments might be allocated by various maturities, with some money in bonds that mature quickly and some in longer-term bonds. Or you might favor tax-free bonds over taxable ones, depending on your tax status and the type of account in which the bonds are held.
There are various approaches to calculating an asset allocation that makes the most sense for you. The most popular approach is to look at what you're investing for and how long you have to reach each goal. Those goals get balanced against your need for money to live on. The more secure your immediate income and the longer you have to achieve your investing goals, the more aggressively you might be able to invest for them. Your asset allocation might have a greater percentage of stocks than either bonds or cash, for example. Or you might be in the opposite situation. If you're stretched financially and would have to tap your investments in an emergency, you'll need to balance that fact against your longer-term goals. In addition to establishing an emergency fund, you may need to invest more conservatively than you might otherwise want to.
Don't forget about the impact of inflation on your savings. As time goes by, your money will probably buy less and less unless your portfolio at least keeps pace with the inflation rate.
Your asset allocation should balance your financial goals with your emotional needs. If the way your money is invested keeps you awake worrying at night, you may need to rethink your investing goals and whether the strategy you're pursuing is worth the lost sleep.
Your tax status might affect your asset allocation, though your decisions shouldn't be based solely on tax concerns.
Even if your asset allocation was right for you when you chose it, it may not be right for you now. It should change as your circumstances do and as new ways to invest are introduced. A piece of clothing you wore 10 years ago may not fit now; you just might need to update your asset allocation, too.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
©2014 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Nathan E. VanBortel. Securities are offered through, and advisors are registered with Cetera Investment Services LLC, member FINRA/SIPC. Advisory Services are offered through OBS Financial Services, Inc. Cetera Investment Services LLC is independent of OBS Financial Services, Inc. and Canandaigua National Bank & Trust. Not FDIC Insured Not Bank Guaranteed May Lose Value Not a Bank Deposit Not Insured by any Federal Government Agency
When I was in private practice, I made sure my estate planning clients understood that their Wills only governed the disposition of assets they owned in their sole individual name with no beneficiary designation. Beneficiary designations and property titling are equally important in the planning process, and need to be accurate in order to “weave into” the overall estate plan to produce the intended results. No matter how much care is put into the Will, the estate plan can be easily unraveled with a simple erroneous beneficiary designation or property titling.
In the last ten years, transfer-on-death (“TOD”) titling on securities and accounts has become increasingly common. TOD accounts are bank or investment accounts which name a beneficiary to receive the account assets upon the account owner’s death. The titling is accomplished simply by naming a beneficiary within the account title, such as “John Smith TOD John Smith, Jr.” With a TOD account, therefore, the account ownership passes immediately to the named beneficiary on the account owner’s death. The TOD titling is fully revocable and revocation doesn’t require consent of the named beneficiary, so the account owner retains full control over the account until death. Compare this lifetime sole control to a joint account: creating a joint account gives the joint owner an immediate interest in the account and access to the funds. Through joint ownership, beneficiary designations and TOD titling, it may be possible to avoid a formal probate estate administration.
However, clients should be mindful of possible planning pitfalls related to TOD titling. The terms of the account agreement govern the titling issues. Where the account agreement is silent, New York laws apply. For example, if Jane Smith named her spouse as TOD recipient of her account and thereafter divorces her spouse, the account agreement may require her to affirmatively change the titling if she doesn’t want her former spouse to receive the account at her death. If the account agreement is silent, New York law provides that the TOD titling is automatically revoked upon divorce, and if the account owner still wants the former spouse to receive the account, she must re-affirm the titling after divorce. Similar conflicts may exist between account agreements and state law on what happens if a named TOD recipient predeceases the account owner.
If an account owner provided for a spousal trust in his or her Will or trusts for children and/or grandchildren, TOD titling can effectively undo the plan. Because the TOD titling will result in the account passing outside the Will, the trusts under the Will would not receive funding from the account, resulting in unused tax exemptions and young beneficiaries receiving funds outright at age 21. In addition, a TOD titling may be created on a whim to deal with a specific purpose when setting up an account, having a result of deviating from the overall intended estate plan on the owner’s death.
When considering TOD titling, an account owner should consider what the source of his or her estate expenses and potential tax liabilities will be. If all assets pass by virtue of beneficiary designation and TOD titling, there will be no remaining estate assets to cover funeral and administrative expenses, final bills, legal expenses and tax payments. Creditors can attach the accounts with TOD titling and beneficiary designations and will go after the recipients of the assets for payment, which can create a significant legal mess and be unpleasant and stressful for the recipients.
Lastly, it is important to note that TOD designations can be revoked in an account owner’s Will. If an account owner wishes to revoke a TOD title, however, it would be better to change the TOD title on the account rather than to revoke it by Will. Banks and brokerage houses are likely to release funds on a TOD account to the named recipient without knowing that the titling has been revoked by the account owner’s Will. This can result in a potentially awkward situation in which the Executor of the Estate must reclaim the account assets from an individual who thought he was the intended recipient.
How We Can Help
TOD titling requires the same level of thoughtful consideration as a client’s overall estate plan. Clients who are working with an advisor should be sure to discuss all titling and beneficiary designations, and seek advice as to how to best implement them into the plan.
Please contact me or your advisor with any questions you may have regarding Transfer-on-Death account registrations at 941-366-7222 ext. 50608.
Jennifer brings over 20 years of trust & estate planning and administration experience. She joined us in 2014 as Vice President and Trust Administration Officer. In this role, Jennifer will be supporting the business initiatives of Canandaigua National Trust Company of Florida along with the planning and administration of client fiduciary accounts, including those with our affiliate, Canandaigua National Bank & Trust.
Jennifer comes to us from the law firm of Boylan Code, where as partner in their Trust & Estate Group she specialized in trust and estate planning & administration, and transfer tax planning for high net worth individuals and business owners.
Jennifer obtained her Juris Doctor from the University of Buffalo and her undergraduate degree from Brandeis University. Jennifer is active in the community serving past and present leadership roles at the NYS Bar Association, Monroe County Bar Association, Estate Planning Council of Rochester, Foodlink, Inc., Rochester Rehabilitation Center, and the Monroe Community College Foundation.
We are pleased to welcome Jennifer to the team!
After announcing that benefits increased 1.5% for 2014, the Social Security Administration provided some other information that may be of interest.
The average benefit payable to retired workers is an estimated $1,294 a month (as of January 2014). Retired couples who both receive benefits get $2,111 on average.
The maximum benefit for a worker retiring at full retirement age (FRA) is $2,642 a month.
The 6.2% Social Security payroll tax applies to the first $117,000 of 2014 earnings. Self-employed individuals pay 12.4% on the first $117,000 of earnings.
Social Security recipients who haven’t reached FRA generally can earn as much as $15,480 this year before their benefits will be reduced ($41,400 if reaching FRA in 2014).
Seeking guidance on your Social Security strategy? Contact us today.
It’s no April Fool’s joke. New York state doubled its estate tax exemption as of today. And it’s set to rise gradually through 2019—if you hang on that long–to eventually match the generous federal exemption, projected to be $5.9 million by then. That will sure make planning much easier for a lot of folks, but there are still big traps in the new law to watch out for.
One trap in New York is a new “cliff,” so called because if it’s triggered you basically fall into a state estate tax abyss.
Before April 1, 2014, the amount an individual could leave at death without owing state estate tax in New York was $1 million, one of the lowest exemption amounts in the 19 states (plus the District of Columbia) that impose state level death taxes. That meant you’d pay New York estate tax (at up to a 16% top rate) on your assets above $1 million.
As of April 1, 2014, the exemption amount is $2,062,500. That shields way more people from the state levy. But if you die with just 5% more than $2,062,500, you face a cliff. That means you’re taxed on the full value of your estate, not just the amount over the exemption amount.
Fall off the cliff in New York and you can be subject to a 164% marginal estate tax rate.
Here’s an example of how the new law could translate into a marginal New York estate tax rate of nearly 164%, courtesy of the New York State Society of CPAs in this comment letter on the proposed law. By the time the exemption is $5.25 million in 2017 and 2018, a decedent with a New York taxable estate of $5,512,500 (that’s 5% more than the exemption), would pay New York estate tax of $430,050. In effect, there is a New York estate tax of $430,050 on the extra $262,500. “We do not believe that this cliff is consistent with the Governor’s objectives of making New York a more favorable environment for New Yorkers during their golden years,” the letter says. Oh well.
Here’s the rundown of the new exemption schedule:
For deaths as of April 1, 2014 and before April 1, 2015, the exemption is $2,062,500.
For deaths as of April 1, 2015 and before April 1, 2016, the exemption is $3,125,000.
For deaths as of April 1, 2016 and before April 1, 2017, the exemption is $4,187,500.
For deaths as of April 1, 2017 and before January 1, 2019, the exemption is $5,250,000.
As of January 1, 2019 and after, the exemption amount will be linked to the federal amount, which the IRS sets each year based on inflation adjustments—it’s projected to be $5.9 million in 2019. The top rate remains at 16%. (The original budget and the Senate bill had proposed a top rate of 10%.)
In addition to the cliff, there are other problems with the new law. For one, there is no portability provision like in the federal law—that allows a surviving spouse to shelter twice as much without the use of complicated trusts–notes Sharon Klein, managing director of Family Office Services & Wealth Strategies with Wilmington Trust.
There’s a three-year look-back for taxable gifts (those gifts are pulled back into your estate) for gifts made on or after April 1 and before Jan. 1, 2019, but not including any gift made when the decedent wasn’t a New York state resident.
There are basis questions, depreciation questions, and different treatments of estate planning transactions under federal and New York income tax laws, says Donald Hamburg, an estate lawyer with Golenbock Eiseman Assor Bell & Peskoe in New York City. “What’s troubling is that there are so many open questions. It’s a highly complex set of rules,” he says.
In working with clients, we take a number of factors into account to help them choose the lump-sum vs. lifetime-annuity option that is best suited for their circumstances. Each situation is unique and requires a careful analysis. Some of the factors impacting the decision include:
Funding level of the employer’s pension plan and long-term financial strength and viability of the employer. Shaky plans would tilt the decision toward lump sum.
One important consideration is that pension income generally is constant. The income stream does not change to keep pace with inflation. Pension-income spending power will likely drop in half over a 20-25-year timeframe.
If the lump-sum option is chosen, the money must be removed from the plan. Here are some choices, similar to options available with a 401(k) plan:
Unless you are facing a catastrophic financial emergency, don’t even think of this option! This is clearly a last resort.
First, these assets are a key piece of your retirement nest egg. Second, if you take the cash outright, the distribution will be subject to income taxes at ordinary rates. Additionally, if you are under the age of 59-1/2, distributions generally are subject to a 10% early-withdrawal penalty, although the penalty is waived for distributions made to an employee who attained the age of 55 before leaving the company.
This generally is the most attractive option.
Rolling over to an IRA carries with it no tax consequences if transferred directly from the pension plan to your IRA trustee. An IRA will offer you a wide choice of investments. But be sure to select your advisor and associated financial firm carefully. Doing so will make all the difference in the world to your financial health over the subsequent years.
Choosing the lump sum and subsequent IRA rollover does not prevent you from later electing a lifetime income option, perhaps at a higher income than offered initially by the employer pension plan, anticipating higher interest rates in the future.
How – by purchasing an immediate fixed annuity within the IRA. This is not to suggest that this option is ideal. But it does allow one to access the income option later through a commercial insurance company vs. the original employer pension plan.
This also can be an attractive option for the lump sum, depending on circumstances.
As with any conversion of pre-tax money into a Roth IRA, income taxes are payable on the conversion amount in the year of transfer. So, be mindful that such a rollover will have tax consequences. But once the money is in the Roth IRA, all income and appreciation are tax-free for life as long as certain conditions are met.
Choices are always good, but be sure to seek competent financial guidance before making your choice.
If they both apply early at age 62, they will receive a total of $1,158,300, assuming no change in the current Social Security benefit formula. If they both wait and apply at 70, with Jane receiving a spousal benefit from 66 to 70 (requiring Bob to “file and suspend” at age 66), they'll receive a total of $1,604,400, a difference of $446,100.
This can be considered the value of Social Security's longevity insurance feature – enhanced protection for both spouses in case they both live to ripe old ages. But the opportunity requires waiting until age 70 to claim their own benefits.
Jane’s benefit will cease at Bob’s death and be replaced by Bob’s benefit at that time – the survivor benefit. If they both had applied at age 62, the household would receive $843,300 over their joint lifetimes. Again, if they both wait until age 70 before applying for their own benefits, with Jane receiving a spousal benefit from 66 to 70, the household would receive a total of $1,050,000 over their joint lifetimes, a difference of $206,700.
If Jane had started her own benefits at age 62, the difference would be $247,500, a bit greater, given that Bob died before Jane reached her “breakeven” age of 78-79, beyond which it would have been better for her to delay benefits rather than start early at 62.
This can be considered the value of Social Security's life insurance feature – enhanced protection for the surviving spouse in case he/she lives to a ripe old age. Here, the opportunity requires the higher earner to wait until age 70 to claim own benefits.
The above examples do not consider annual COLAs. When factored in at, say, a 2.8% assumed annual rate, the longevity and life insurance features are close to three times the above numbers.
The last illustration above deals with when Jane should start benefits. This depends on Bob’s life expectancy. If his health is poor and he is not likely to live long, Jane might better start benefits early at age 62 because her reduced benefit will not be permanent. The same is true if he is significantly older. Jane likely will switch to the survivor benefit before her “breakeven” age. But if Bob is in good health with a strong family health history, Jane will likely receive her own benefit for many years before switching to the survivor benefit. In this case, it may be prudent for Jane to delay her own benefits to age 70 and take spousal benefits between ages 66 and 70.
Regardless, it will be to the couple’s advantage for Bob to delay starting his benefits until age 70, since his higher benefit will be the survivor benefit regardless of order of death.
The delayed-filing strategy would not work if both die early. This is why factors such as health, family history, need for cash flow, among others, must be considered when mapping out a Social Security claiming plan. Relative ages of the two spouses also must be taken into account. The above strategies are not as straightforward, for example, if the higher-earning spouse is younger.
As always, we caution folks not to try this without seeking competent advice from a trusted financial planner. Contact us with any questions at 941-366-7222.
Other, non-financial factors also are at play here. Many times, continuing to work enhances a person’s quality of life, particularly if that person enjoys work and the daily mental/social stimulation that comes from it.
In addition to the benefits listed above, let’s explore some of the other options and opportunities available to folks who decide they want (or need) to work through their late 60s and into their 70s or even 80s.
While minimum distributions are required for traditional, SEP, and SIMPLE IRAs and previous-employer 401(k)/403(b) plans after reaching age 70-1/2, the same is not true for plans associated with a current employer. If you are still working, participating in a current employer plan, and are not a 5% or greater owner of the company, RMDs are not required!
Better yet, some employer plans accept rollovers from previous-employer plans and IRAs. A good strategy here is to roll all such accounts over to the current employer plan and avoid all RMDs, if household cash flow allows. This can continue for years until you retire for good, allowing more time to let this consolidation of pre-tax money appreciate.
After leaving the workforce permanently, 401(k)/403(b) RMDs must then start. This is true for both Roth and traditional employer plans. The nice feature about a Roth employer plan is that once rolled over into a Roth IRA, RMDs are no longer required. As we all know, the same is not true for a rollover into a traditional IRA.
As long as earned income continues and income limits are not exceeded, contributions to traditional IRAs may continue to age 70-1/2, beyond which point contributions are off-limits. Contributions to 401(k)/403(b) plans, SEP IRAs, and SIMPE IRAs, however, may continue if still working.
You also can continue to make Roth IRA contributions regardless of age, provided there is enough earned income to cover the contribution and modified adjusted gross income does not exceed a given limit. If married and working, you can make Roth IRA contributions for you and your non-working spouse, provided your earned income is equal to or higher than the total amount contributed.
If you are still working at age 65 and beyond, there are some choices to be made regarding health insurance. Assuming the company employs 20 or more people, there are two choices:
Choose the plan that works best for you in terms of cost and coverage. Be aware that Medicare Part B, and more-recently Part D, premiums are indexed to household income.
As we always advise, be sure to partner with a trusted financial planning professional to help chart your course through working-beyond-age-65 waters. Contact us with any questions at 941-366-7222.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Starting with 2013 tax year a new 39.6% federal income tax rate applies if your taxable income exceeds $400,000 (single) or $450,000 (married filing jointly). If you cross that threshold, a new 20% maximum tax rate applies on long-term capital gains and qualifying dividends. If your adjusted gross income is more than $250,000 (single) or $300,000 (married filing jointly), your personal and dependency exemptions may be reduced or eliminated, and your itemized deductions may be limited.
If your wages exceed $200,000 (single) or $250,000 (married filing jointly), the hospital insurance (HI) portion of the payroll tax is increased by 0.9%. Also, a 3.8% Medicare contribution tax generally applies to some or all of your net investment income if your modified adjusted gross
income exceeds those
dollar thresholds.
You have until April 15, 2014 to make Traditional IRA, Roth IRA, or SEP IRA contributions for the 2013 tax year. (However, if you file an extension, you have until October 15, 2014 to fund a SEP IRA). Make sure that you’re taking full advantage of tax-advantaged retirement savings vehicles.
Tax information presented is not to be considered as tax advice and cannot be used for the purpose of avoiding tax penalties. Neither Canandaigua National Trust Company of Florida nor its affiliated Companies provide tax, legal, or accounting advice. Please consult your personal tax advisor, attorney, or accountant for advice on these matters. This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
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Whether you simply resolved last year to save more or you set a specific financial goal (for example, saving 15% of your income for retirement), it’s time to find out how you did. Start by taking a look at your account balances. How much did you save for college or retirement? Were you able to increase your emergency fund? If you were saving for a large purchase, did you save as much as you expected? Challenge yourself in the new year to save a little bit more so that you can make steady financial progress.
Review any investment statements you’ve received. How have your investments performed in comparison to general market conditions, against industry benchmarks, and in relationship to your expectations and needs? Do you need to make any adjustments based on your own circumstances, your tolerance for risk, or because of market conditions?
Tracking your spending is just as important as tracking your savings, but it’s hard to do when you’re caught up in an endless cycle of paying down your debt and then borrowing more money, over and over again. Fortunately, end of year mortgage statements, credit card statements, and vehicle financing statements will all spell out the amount of debt you still owe and how much you’ve really been able to pay off. You may even find that you’re making more progress than you think. Keep these statements so that you have an easy way to track your progress next year.
If you’re covered by Social Security, the W-2 you receive from your employer by the end of January will show how much you paid into the Social Security system via payroll taxes collected. If you’re self-employed, you report and pay these taxes (called self-employment taxes) yourself. These taxes help fund future Social Security benefits, but many people have no idea what they can expect to receive from Social Security in the future. This year, get in the habit of checking your Social Security statement annually to find out how much you’ve been contributing to the Social Security system and what future benefits you might expect, based on current law. To access your statement, sign up for a mySocialSecurity account at the Social Security Administration’s website,
www.socialsecurity.gov.
Once you’ve reviewed your account balances and financial statements, your next step is to look at your whole financial picture. Taking into account your income, your savings and investments, and your debt load, did your finances improve over the course of the year? If not, why not?
Then it’s time to think about the changes you would like to make for next year. Start by considering the following questions:
Using what you’ve learned about your finances--good and bad--to set your course for next year can help you ensure that your financial position in the new year is stronger than ever.
Our team of experienced financial planners can help you review all aspects of your personal finances and plan to meet your financial goals. Contact us today with any questions at 585-419-0670.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
Do you expect to have less income in 2014? If your employer is willing and you can wait for the money, consider delaying taxable income, such as a year-end bonus or sales commission, until after the end of the year. In addition to delaying taxes, waiting to receive income may allow you to retain tax breaks that are reduced or eliminated at higher income levels. It can also keep you from moving into a higher tax bracket in 2013.
You can increase your itemized deduction for charitable contributions if you make donations to your favorite charities by December 31. By donating with a credit card, you’ll be entitled to the deduction on your 2013 income-tax return, even though you won’t receive the bill until 2014. (Deduction limits apply.)
Consider increasing your pretax contributions to your employer’s retirement savings plan. Deferring more of your pay can lower your tax bill, since you don’t pay current taxes on your contributions.
You may also be able to deduct all or part of the contributions you make to a traditional individual retirement account by April 15, 2014, on your 2013 income-tax return. The limit for 2013 contributions is $5,500 ($6,500 if you’re age 50 or older). Talk to your tax advisor about the deduction requirements.
A consistently underperforming investment that has lost value since you acquired it may be a good “sell” candidate, especially if it shows no signs of improving. Capital losses are fully deductible to offset capital gains and up to $3,000 of ordinary income each year ($1,500 if married, filing separately). Excess losses that you can’t deduct for 2013 can be carried over for deduction in future years, subject to the same limitations.
Don’t make taxes your only reason for selling an investment. Consider the impact on your overall portfolio before you decide.
If you do plan to sell an underperforming investment, it may also be a good time to take your profits on an appreciated investment. Using your losses to offset your gains can be a smart tax move.
You can deduct unreimbursed medical expenses only to the extent they exceed a floor amount equal to 10% of your adjusted gross income (AGI). (The AGI floor is 7.5% if you or your spouse is age 65 or older.) Bunching two years of expenses into one year may help you exceed the floor. If possible, consider rescheduling medical appointments and procedures that were planned for early 2014 to late 2013, and pay out-of-pocket costs before year-end if doing so will provide a tax deduction.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
If they both apply early at age 62, they will receive a total of $1,158,300, assuming no change in the current Social Security benefit formula. If they both wait and apply at 70, with Jane receiving a spousal benefit from 66 to 70 (requiring Bob to “file and suspend” at age 66), they'll receive a total of $1,604,400, a difference of $446,100.
This can be considered the value of Social Security's longevity insurance feature – enhanced protection for both spouses in case they both live to ripe old ages. But the opportunity requires waiting until age 70 to claim their own benefits.
Jane’s benefit will cease at Bob’s death and be replaced by Bob’s benefit at that time – the survivor benefit. If they both had applied at age 62, the household would receive $843,300 over their joint lifetimes. Again, if they both wait until age 70 before applying for their own benefits, with Jane receiving a spousal benefit from 66 to 70, the household would receive a total of $1,050,000 over their joint lifetimes, a difference of $206,700.
If Jane had started her own benefits at age 62, the difference would be $247,500, a bit greater, given that Bob died before Jane reached her “breakeven” age of 78-79, beyond which it would have been better for her to delay benefits rather than start early at 62.
This can be considered the value of Social Security's life insurance feature – enhanced protection for the surviving spouse in case he/she lives to a ripe old age. Here, the opportunity requires the higher earner to wait until age 70 to claim own benefits.
The above examples do not consider annual COLAs. When factored in at, say, a 2.8% assumed annual rate, the longevity and life insurance features are close to three times the above numbers.
The last illustration above deals with when Jane should start benefits. This depends on Bob’s life expectancy. If his health is poor and he is not likely to live long, Jane might better start benefits early at age 62 because her reduced benefit will not be permanent. The same is true if he is significantly older. Jane likely will switch to the survivor benefit before her “breakeven” age. But if Bob is in good health with a strong family health history, Jane will likely receive her own benefit for many years before switching to the survivor benefit. In this case, it may be prudent for Jane to delay her own benefits to age 70 and take spousal benefits between ages 66 and 70.
Regardless, it will be to the couple’s advantage for Bob to delay starting his benefits until age 70, since his higher benefit will be the survivor benefit regardless of order of death.
The delayed-filing strategy would not work if both die early. This is why factors such as health, family history, need for cash flow, among others, must be considered when mapping out a Social Security claiming plan. Relative ages of the two spouses also must be taken into account. The above strategies are not as straightforward, for example, if the higher-earning spouse is younger.
As always, we caution folks not to try this without seeking competent advice from a trusted financial planner. Contact us with any questions at 941-366-7222.
It will be important for you to discuss your estate planning goals with each other and your professional advisors. You may decide you should establish one or more trusts, especially if children are involved. Trusts are useful and flexible planning tools that can help you provide for your surviving spouse and children and accomplish other objectives.
If you plan to remarry and have any questions on your estate, contact an experienced trust and estate professional at 941-366-7222.
Other, non-financial factors also are at play here. Many times, continuing to work enhances a person’s quality of life, particularly if that person enjoys work and the daily mental/social stimulation that comes from it.
In addition to the benefits listed above, let’s explore some of the other options and opportunities available to folks who decide they want (or need) to work through their late 60s and into their 70s or even 80s.
While minimum distributions are required for traditional, SEP, and SIMPLE IRAs and previous-employer 401(k)/403(b) plans after reaching age 70-1/2, the same is not true for plans associated with a current employer. If you are still working, participating in a current employer plan, and are not a 5% or greater owner of the company, RMDs are not required!
Better yet, some employer plans accept rollovers from previous-employer plans and IRAs. A good strategy here is to roll all such accounts over to the current employer plan and avoid all RMDs, if household cash flow allows. This can continue for years until you retire for good, allowing more time to let this consolidation of pre-tax money appreciate.
After leaving the workforce permanently, 401(k)/403(b) RMDs must then start. This is true for both Roth and traditional employer plans. The nice feature about a Roth employer plan is that once rolled over into a Roth IRA, RMDs are no longer required. As we all know, the same is not true for a rollover into a traditional IRA.
As long as earned income continues and income limits are not exceeded, contributions to traditional IRAs may continue to age 70-1/2, beyond which point contributions are off-limits. Contributions to 401(k)/403(b) plans, SEP IRAs, and SIMPE IRAs, however, may continue if still working.
You also can continue to make Roth IRA contributions regardless of age, provided there is enough earned income to cover the contribution and modified adjusted gross income does not exceed a given limit. If married and working, you can make Roth IRA contributions for you and your non-working spouse, provided your earned income is equal to or higher than the total amount contributed.
If you are still working at age 65 and beyond, there are some choices to be made regarding health insurance. Assuming the company employs 20 or more people, there are two choices:
Choose the plan that works best for you in terms of cost and coverage. Be aware that Medicare Part B, and more-recently Part D, premiums are indexed to household income.
As we always advise, be sure to partner with a trusted financial planning professional to help chart your course through working-beyond-age-65 waters. Contact us with any questions at 941-366-7222
It is important to bear in mind that various online service providers have different policies regarding what will happen on the death of an account holder. While everyone generally has to click a box and accept the terms and conditions before an account will be opened online, few people actually read the whole agreement or consider its impact under various circumstances down the road. Google has just introduced an “Inactive Account Manager” feature which enables the user to give consent to transfer data to an executor or other designee. Other service providers are bound to follow. In the meantime, the Courts have typically upheld the online contracts when cases have been presented. Further complicating matters is the fact that different States have a variety of statutes and policies addressing the treatment of digital assets. As is often the case, the legislation has not kept pace with this fast changing arena. On both the federal and State level, there is proposed legislation that will give fiduciaries the authority to manage and distribute digital assets, but until that happens, the contracts with the various service providers will prevail in most cases.
So now that you’ve recognized the importance of maintaining records about your digital assets, how do you accomplish that? An inventory of these assets should be established and updated as passwords change, accounts open and close, etc. This would include the website, login information and answers to security questions.
The next issue is where to store this information, since you’ve now put all of your highly confidential account access information into one document. Providing it to a family member now (even if that individual will be your Attorney in Fact or Executor in the future) may not be the wisest choice. Consider a parent giving access to their online bank account to one child so they can help with bill paying and monitoring transactions. While that child may be extremely trustworthy and conscientious, the other children may disagree and make accusations about misuse of funds, or even worse, that child’s circumstances may change and they actually do misappropriate funds for their own use.
Attorneys are now routinely advising their clients to do an inventory of both their physical and digital assets when going through the estate planning process. This document can be stored with your Will and other legal documents, but should be reviewed on a regular basis to keep it current. Another alternative is web sites that offer password storage options, but your fiduciary or attorney will need to know where to find it.
Our trust and estate advisors average more than 20 years experience in helping clients maximize their legacy and ease the burden on loved ones at a difficult time. Contact us today with any questions about your estate plan at 941-366-7222
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
]]>This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance is not indicative of future investment results. Any investment involves potential risk, including potential loss of capital. Before making any investment decision, please consult your legal, tax and financial advisors. Non-deposit investment products are not bank deposits and are not insured or guaranteed by Canandaigua National Trust Company of Florida, or any federal or state government or agency and are subject to investment risks, including possible loss of principal amount invested.
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Your retirement “paycheck” will likely be funded, in part, from sources providing regular monthly payments - Social Security, one or more pensions for those fortunate enough to have employer-sponsored defined benefit pension plans, and perhaps an immediate fixed annuity using a portion of your accumulated assets.
A second source of regular income, at least temporarily, might come from part-time employment following retirement from a primary career. This is becoming a more popular option as life expectancies increase and people find that they enjoy some sort of transition between fulltime work and no work.
Finally, distributions from employer-sponsored (401(k)/403(b)/457) plans, individual retirement accounts (IRAs and Roth IRAs), and after-tax investments/savings can help supplement your regular income sources.
A combination of all of the above will constitute your “paycheck”.
Experts used to suggest 70%-80% of pre-retirement income as a rule-of-thumb target. Many planners today recommend closer to 100%. While it is true that pre-retirement expenses associated with Social Security withholding and savings contributions will be lower (or even zero) in retirement, other expenses associated with increased travel/leisure activities and health care needs may be correspondingly higher.
Most important – Be sure that what you want is consistent with what you can afford. A balanced cash flow must be planned for. Living above your means does not work anytime, particularly in retirement!
Studies have shown that a balanced portfolio – somewhere in the 50% stocks and 50% fixed income (bonds-cash) range – is about right for retirement. Your personal risk tolerance might drive this ratio up or down a bit. Such a mix recognizes that regular distributions will be taken from the portfolio during retirement, a much different situation from the pre-retirement accumulation phase when a higher fraction of stocks is generally more appropriate.
Such a mix also enjoys reduced volatility, since stocks and fixed income investments typically move in different directions during bear and bull market cycles. Lower volatility helps preserve capital in accounts from which distributions are taken regularly.
It is important that both the stock and fixed income portions of the portfolio be broadly diversified across a wide spectrum of US and foreign investment asset classes in order to achieve the best risk-adjusted return.
Retirement experts lean toward a conservative withdrawal rate. They don’t all agree on what withdrawal rate is “safe”, but 4%-5% is a common recommendation. The objective is to ensure that you don’t outlive your money.
One suggested approach is to start distributions at this level, then increase the distribution each year by inflation. By doing so, annual distributions provide constant spending power.
Developing a retirement “paycheck” plan that is right for you depends on your goals and unique financial and personal situation. Consider partnering with one of our financial planners to help chart your path forward.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
Living trusts are also very good mechanisms for managing your finances if you should ever become disabled. You can set up a living trust, transfer your assets to it but keep full control by naming yourself as trustee, and also name a reliable co-trustee, such as your adult child. Your co-trustee will be able to manage the trust assets for you if that ever becomes necessary. On the other hand, creating a durable power of attorney can also be an effective way to provide for management of your assets if you become disabled.
Against the positives — probate avoidance and disability protection — you should weigh what a living trust won’t accomplish and its potential disadvantages.
Revocable living trusts don’t save taxes. You’ll still have to pay income taxes on income earned by the trust assets. The trust property will be included in your gross estate, too — and will be just as vulnerable to estate taxes as your non-trust assets will be.
Another misconception about a revocable living trust is that it can protect your assets from creditors. In fact, you can be sued and lose your property whether you own it inside or outside of a revocable trust.
In many states, probate is not a very expensive or difficult process. And, while living trusts help avoid probate costs, they have costs of their own, including legal fees and administrative costs (and paperwork, too). Unless your estate will be very large, the potential probate cost savings may not exceed the costs of creating and administering the trust.
Some of your assets, including property that’s owned jointly with right of survivorship and retirement plan savings and life insurance payable to a named beneficiary, are already probate-proof. Such assets will pass automatically to their new owners on your death.
Even with a living trust, you still need to have a will because it’s likely that some of your assets won’t be included in your trust. A will is also necessary if you want to name a guardian for your minor children.
Creating a revocable living trust may be a good decision or it may not. Only your specific financial and family circumstances can determine the answer.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
You probably have two general goals for your retirement savings. Your first goal is to have enough money to cover your basic living expenses: rent or mortgage, food, utilities, taxes, transportation, insurance, and so on. Your second goal is to have enough to pay for the extra things you’d like to do during retirement: travel, pursue hobbies, spend time with family, relocate, or any other plans you’ve dreamed about.
You probably have a good idea of how much your basic expenses will be, but what about the extras? Think about how much they will cost. If it’s more than you think you’ll be able to afford, you should consider increasing your retirement plan contribution while you’re still working.
You’re probably covered by your employer’s plan right now, but what about after you retire? Health-care coverage can take a big chunk out of your retirement income. Medicare provides only basic coverage — and you have to pay for it. Unless your employer offers retiree health insurance, you’ll probably want to buy a supplemental policy as well.
Your financial professional can assist you with designing a spending plan. First, write down all the expenses — basic and extra — that you expect to have in retirement. Then, estimate your retirement income from all sources — pensions, employer retirement plans, individual retirement accounts, Social Security, etc. Will you have enough income? If not, start thinking of ways to increase it. Contributing more to your plan, continuing to work for a few additional years, or getting a part-time job in retirement are possibilities to consider.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
As an investor, you want to earn a reasonable rate of return on your investments without exposing your portfolio to excessive risk. That requires you to determine your investment time horizon and risk tolerance. Ask yourself how long it will be before you need the money you’re investing. Then ask what impact a big loss would have on your future plans. With this insight, you’ll be more likely to invest your money in keeping with your risk profile and you’ll be less inclined to chase performance or follow investment fads.
Life insurance protects your loved ones in the event of your death. Your beneficiaries can use proceeds from life insurance for immediate cash flow needs, income replacement, and to pay any estate taxes that may be due.
Don’t forget to review — at least annually — the amount of insurance coverage you have on your home, vehicles, and other personal and business property. And umbrella liability insurance is a cost-effective way to protect your assets in case a lawsuit against you is successful.
The laws that govern federal income-, gift-, and estate-tax rates — and the amount of assets that you may pass free of transfer taxes — change frequently. Many of these changes could have an impact on your wealth and the size of the inheritance you intend to pass on to your loved ones. To avoid unpleasant financial surprises, it makes sense to have your estate planning documents professionally reviewed on a regular basis and following any major life event.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
Yours + Mine = Ours
Spouses frequently have different attitudes about money. Lots of couples maintain separate bank accounts so they can manage money individually. As long as the bills get paid, they generally don’t have a problem. But what about investing?
Couples often have different attitudes about investing, too. One might be an aggressive investor with a portfolio full of stocks. The other might be risk averse, holding mostly low risk investments. If they both contribute to retirement savings plans at work, should they coordinate their investment strategies? Or should they each make their own investment decisions?
The Big Picture
Even if you and your spouse prefer to make individual investment decisions, ideally you’ll work together to develop an overall strategy for meeting your joint goals. Take a look at all your retirement investments to see how your combined assets are allocated* among the different investment types. Then decide together whether your combined asset allocation is appropriate for your joint goals and investing time frames. If you have investments outside of your retirement plans, include them in your asset allocation decisions.
Talk It Over
Check your combined asset allocation at least once a year. If it has shifted, you may need to rebalance. Tweaking the investments in just one of your accounts may accomplish the results you want.
As you get closer to retirement, your risk tolerance may change, leading you both in a more conservative direction. At that point — and at every point along the way — coordinating your investments will help you and your spouse reach your retirement savings goal.
* Asset allocation does not guarantee a profit or protect against losses.
His, Hers, and Theirs
His Hers Theirs
Bonds 10% 40% 25%
Stocks 90% 40% 65%
Cash alternatives 0% 20% 10%
These hypothetical portfolios are for illustration only. They assume spouses have equal amounts invested. Cash alternative investments may not be federally guaranteed or insured, and it is possible to lose money by investing in cash alternatives. Returns on cash alternative investments may not keep pace with inflation, so you could lose purchasing power.
Source: NPI
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
]]>Unless you are among the fortunate few who can count on receiving a generous pension, you’ll want to start preparing for life without a regular paycheck well in advance of your retirement date. Even if you intend to continue working indefinitely, you still should be ready for the possibility that ill health or other unexpected circumstances could force you into retirement.
People do get by on Social Security, but not comfortably. The average retirement benefit is $1,229 a month ($14,748 a year) for individuals. The maximum benefit for a worker retiring at full retirement age is $2,513 a month ($30,156 a year). Clearly, Social Security benefits standing alone are enough to support only a modest retirement lifestyle.
After years of mortgage payments and price appreciation, many people have substantial equity in their homes by the time they retire. What about using home equity to help finance your retirement? It’s a possibility, but to get your hands on that cash, you’ll either have to borrow against the equity or sell your home.
Taking on additional debt just before retirement usually isn’t smart. While you’d receive some quick cash, the loan would have to be repaid. And selling would involve moving. Is that something you’d be willing to do? If selling seems like a viable option, be sure to gauge how much equity you’re likely to have left over after you get a new place. It may be less than you think.
There’s really no way around it. Bottom line, saving and investing are critical to retirement planning. Sitting down with us to discuss your financial situation could be what it takes to get your retirement planning in gear.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
State income taxes can take a bite out of your retirement savings. Moving to a low- or no-tax state could save you a substantial amount of money. If you relocate to a state with an income tax, find out in advance how much you can expect to pay.
Currently, the federal estate-tax exemption is $5 million*. But some states also impose estate taxes, often with a much lower exemption amount than at the federal level. If estate taxes are a concern, check state laws before you move.
Income and estate aren’t the only taxes you need to consider. Look at state and local sales and property taxes as well. States that are popular relocation destinations may experience rising property values, which can mean higher property taxes. Be sure to evaluate the whole tax situation, not just one aspect of it.
A number of states, including Florida, offer tax breaks to retirees, such as excluding distributions from qualified retirement plans, individual retirement accounts, and trusts from state income taxes.
Specifically, Florida has long been an attractive option with no state income tax, and no estate or inheritance tax, for trusts domiciled in Florida. Because Florida does not tax trust income or capital gains, over time this can have a significant positive impact to your trust, in particular for generation skipping trusts.
Based in Sarasota, we can help re-establish your trust assets in Florida as your Trustee to benefit from potential tax savings. Contact us at 941-366-7222 to learn more.
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Below are several benefits of consolidating your Retirement Accounts into a single Rollover IRA:
Maintaining retirement accounts with different financial institutions can make it very difficult to maintain a consistent, comprehensive investment strategy. Consolidating your assets into one Rollover IRA will help you maintain a single investment strategy that is in-line with your investment goals, risk tolerance and time horizon.
401(k) or other employer-sponsored qualified plans have limited investment choices. By consolidating into a Rollover IRA you will have access to a full range of investment vehicles at your disposal to create a well diversified asset allocation that best meets your personal risk tolerance and financial goals.
401(k) or other employer-sponsored qualified plans may impose limits on account transactions and even when you are able to access your funds. When you consolidate into a Rollover IRA, many of those restrictions and limitations can be avoided. You are now in control of when you can access your funds. Also, with the exception of states with community property laws that govern the property rights of married individuals, IRA account owners have sole control over who they name in their beneficiary designations; not the case with beneficiary designations in 401(k) or other employer-sponsored qualified plans.
By consolidating your assets into one Rollover IRA, you will receive a single account statement instead of several statements from various financial institutions, making it much easier to keep track and monitor your progress and investment results.
As you approach retirement, having your assets in a single Rollover IRA will enable you to establish an all-inclusive withdrawal strategy.
When you reach age 70½, you will be required to start withdrawing a RMD each year from your Traditional IRAs and employer-sponsored qualified plans. That calculation can be confusing when you have multiple accounts at different financial institutions. By consolidating all your accounts into one Rollover IRA, the calculations are considerably easier and withdrawals are simpler.
Regardless of how many different types of retirement accounts you have, the following accounts may be eligible for consolidation into a Rollover IRA:
IRAs held at financial institutions (Banks, Credit Unions, Mutual Fund Companies, etc.)
Assets of former employer-sponsored retirement plans including:
Consolidating your retirement accounts into one Rollover IRA can help you take control of your financial future. By establishing a relationship with Canandaigua National Trust Company of Florida, we become your Trusted Advisor and you’ll receive a higher level of personal service through our Pledge of Accountability, which includes a money back guarantee.* Our experienced team of Investment Advisors helps you achieve your long-term goals. If you would like to discuss Rollover IRA options in more detail, please call us today at 941-366-7222.
*Pledge of Accountability Fee Refund Rules. You, our Client, are entitled to have the Annual Fee charged by CNTF for management of your CNTF Account returned should we fail to deliver on the “Pledge of Accountability” requirements as described above. The Annual Fee is defined as the then prevailing fee charged by CNTF under the terms of your Account Agreement based on the market value of the assets under management as of March 31 of any given calendar year up to $10,000. Our Pledge of Accountability to you will be effective after you have signed and returned the Pledge to your CNTF Relationship Manager. Only individual accounts where CNTF has full discretion qualify. Custody, Self-Directed and IRA Self-Directed accounts are excluded. To be eligible, your Account must be opened for a minimum of 1 year.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
For more information, contact Paul today.
Paul Tarantino 941.366.7222 ext. 50720 ptarantino@cnbank.com |
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.
Even some of the “survivors” like Citigroup, Bank of America, and AIG have seen their market capitalization evaporate by 90% or more (not to mention their virtually non-existent dividend yields). Disciplined investors know that diversifying their holdings is the best way to avoid the financial ruin that the risk of a single concentrated position can bring.
Another lesson from the Great Recession was expense control. This can apply to corporations and individuals alike. Companies recovering most rapidly from the recession were the ones that quickly realized a pending financial storm was brewing and took the steps to strengthen their balance sheets. This was accomplished by reducing spending on less essential projects as well as reducing the number of jobs, causing the current unemployment rate to swell to over 9%. It is not easy for companies to make these decisions but the discipline to do so during difficult economic times can mean the difference between moving ahead once the recovery has begun or falling behind competitors.
For individuals, the Personal Savings Rate (PSR) has been increasing steadily since April 2008 when the PSR went over 4% for the first time since the late 1990’s. Spending and overall consumer credit both contracted during the Great Recession as well. Consumers have tightened their financial belts and are thinking twice before adding to their debt or reducing their savings. This discipline does not help our economy recover but it does keep more people prepared to weather a temporary job loss or other financial set-back.
Other lessons we learned from this Great Recession include adjusting expectations for future market returns. During the 1980’s and 1990’s (the Great Bull Market) it was common to expect annual returns from investments of 10% or more. Expected returns today, for a portfolio of 70% stocks and 30% bonds are now in the 8-9% range. The discipline to review current spending needs vs. wants, taking into account this lower return outlook, starts to put some conservative trends into these analyses but also affects the level of savings that might be required to meet those goals.
While the recession may be “officially” over, for millions of Americans the recession goes on. As investors, we can all learn from the excesses of the past and develop a disciplined approach to our future. History has a habit of repeating itself and those who learn from the lessons of the past are more likely to have success in the future. Investment professionals who have studied these lessons can often provide the proper insight during the stressful periods of market uncertainty. Such guidance helps to remove the emotion to act irrationally and replace it with education and advice to take advantage of the uncertain times.
This material is provided for general information purposes only and is not a recommendation or solicitation to buy or sell any particular security, product or service. Past performance discussed does not predict future results. Investments are not bank deposits, are not obligations of, or guaranteed by Canandaigua National Trust Company of Florida and are not FDIC insured. Investments are subject to investment risks, including possible loss of principal amount invested. Investments may be offered through affiliate companies.