Newsletters
Fifty-four percent of American workers have saved less than $25,000 for retirement, and 43% have saved less than $10,000.1
Will you outlive your retirement income? How much liability insurance should you have? Should you add stocks to your portfolio? Are your financial expectations for the coming year realistic?
Our financial newsletters are designed to provide helpful information on a wide variety of financial topics. Simply click on one of the newsletter topics below to read the article in its entirety.
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December
HOT TOPIC: European News Causes Market Mood Swings
In recent weeks, the yields on Italian bonds spiked to more than 7%, suggesting the sovereign debt crisis was spreading to a much larger economy and eluding the European Union’s efforts to contain it. The U.S. stock and bond markets have responded to the headlines coming out of Europe. This article explores the role of political risk in U.S. financial market volatility.
Be Ready for a Change in Interest Rates
Fluctuating interest rates can be challenging for bond investors who want to reinvest their principal. When rates are low, they may have to accept lower yields; when rates rise when principal is tied up, they may not be able to benefit. One strategy to help manage reinvestment risk is to build a bond ladder.
Leaving Your Home Out of the Retirement Equation
Plummeting home prices and increased borrowing cut U.S. home equity by more than 60% during the Great Recession — and housing prices have not yet recovered. This article considers the potential drawbacks of depending on home equity to help fund retirement.
Another Year, Another AMT Patch
The 2010 Tax Relief Act adjusted AMT exemption levels for 2010 and 2011 to help prevent an estimated 21 million middle-income taxpayers from being subject to the alternative minimum tax. Will Congress enact another patch for 2012?
The Financial State of the States
Many state and local governments have struggled with lower tax receipts and large budget deficits — during and after the recession. This article offers a closer look at the financial pressures facing the states and how the methods used to address budget shortfalls could ultimately serve as a drag on the national economy.
Help Chart the Future of Your Family Business
The transition from one generation to the next is considered to be one of the biggest risks to the survival of a family-owned business. A thoughtful succession strategy not only outlines when and how ownership should be transferred but also takes tax implications, family relationships, and other sensitive issues into account.
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November
HOT TOPIC: Understanding the Three New U.S. Trade Agreements
Congress recently approved trade agreements with South Korea, Columbia, and Panama. They are the first U.S. trade agreements in four years. This article examines the pros and cons of the agreements and how they may stimulate the U.S. economy.
To Roll or Not to Roll: It's Your Choice
Some employers are encouraging departing employees to leave their retirement savings in their employer plans. But employees should make any decisions based on their own needs and concerns, not the former employer's. Read about the pros and cons of rolling over retirement plan assets to an IRA.
Giving Strategies That Can Give Back
Americans gave more than $290 billion to charity in 2010, despite the slow economy. About 73% of charitable donations came directly from individuals. This article explains how a charitable remainder trust and a charitable lead trust could be used to provide more control over gifts while potentially benefiting the giver and his or her heirs.
Variable Annuities and Your Retirement Strategy
An insurance product may appeal to pre-retirees who want to invest more of their current incomes for retirement and defer taxes on market gains. A variable annuity enables investors to pursue investment gains with the option to purchase guarantees (for an additional cost) to help protect against the downside risks of investing in the markets.
The Dynamics That Can Drive Inflation
High unemployment and slow wage growth seem to have kept consumer spending and core inflation from growing very rapidly in the first half of 2011. This article reminds investors to keep the potential risk of inflation in mind, because even modest price increases compounded over time can erode the purchasing power of the assets in their portfolios.
Is Your Business Ready for a Structure Change
Periodically, business owners may want to reconsider whether their current business structure is meeting the needs of their companies. For business owners seeking to expand their operations and reduce their exposure to risk, a popular entity has been the limited liability company. This article describes some additional benefits associated with LLCs.
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October
HOT TOPIC: Will Federal Reserve Tactics Help the Ailing U.S. Economy?
This article looks at policy tools that the Federal Reserve has used in the past and may use going forward in its attempts to spur economic growth. It also explains the possible implications of a long-term, low-interest-rate environment for investors, savers, and retirees.
Ways to Save More
About two out of three American workers are saving for retirement, but less than half are confident that they will save enough money to live comfortably during their retirement years. This article includes suggestions for readers to take small steps that could make a big difference when they are ready to retire.
ETFs for the Conservative Investor
The number of exchange-traded funds has grown rapidly in the last decade. Total ETF assets exceeded $1 trillion in March 2011, an increase of more than $200 million over the previous year. This article explains the potential benefits of ETFs and why some of them might appeal to the risk-averse.
New Opportunity Under the Federal Gift Tax
The 2010 Tax Relief Act raised the lifetime gift-tax exclusion to $5 million. This means it could be a good time to make the most of tax-free gift transfers. If so, it's important to understand the annual and lifetime gift exemption limits, as well as which gifts might not be subject to them.
Tax-Efficient Investments for the Tax-Averse
Raising taxes is one of many ideas that have been proposed to help reduce mounting federal budget deficits. Readers who are concerned about the prospect of higher taxes in the future may want to consider the tax advantages associated with municipal bonds and tax-exempt mutual funds.
Protection from a Range of Liability Claims
It's projected that American companies will face $183 billion in tort costs in 2011, and $152 billion of that will land on the books of small businesses. Fortunately, there are several forms of business liability insurance that can help offset these unforeseen costs.
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August
HOT TOPIC: Why Global Investors Are Worried About European Debt
European officials are working on a bailout deal to help debt-laden Greece avoid default, but some are worried a broader eurozone financial crisis may be waiting in the wings. How likely is a Greek sovereign debt default, and how could it affect European and U.S. financial markets?
What Kind of Investor Are You?
Although most Americans seem to understand that investment involves risk, there is a wide spectrum in how much risk each investor is willing to assume. Among the factors to consider are comfort level, time horizon, and net worth. This article helps investors to consider their appropriate level of risk.
Rising Popularity of Roth IRA as Retirement Vehicle
Investment in the Roth IRA has been growing dramatically. Fueling the growth of this popular investment vehicle are tax-free distributions in retirement and no mandatory withdrawals due to age. Compare the trade-offs of Roth IRAs with traditional IRAs, including eligibility limitations, annual contribution limits, and withdrawal considerations.
Earning Income from Mutual Funds
More than half of working Americans are concerned that they may not have enough money to live comfortably during retirement. Although mutual funds are often thought of as a tool to build savings, they can also be used to generate income. This article examines the potential income benefits of bond funds, equity or stock income funds, and hybrid funds.
Evaluating Life Insurance Needs
It's a good idea for people to evaluate their life insurance coverage to help ensure it keeps pace with their needs. Not only do major life events affect the amount of coverage that may be needed, but inflation can reduce the purchasing power of the death benefit and a greater benefit may be needed to cover estate taxes and other debts.
When Key Players Can't Work
If a company is a two-owner business or its success relies on a few key players, key-person life or disability insurance could possibly offset the risk that the premature disability or death of a major contributor could ruin its future prospects.
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July
HOT TOPIC: Are Housing Troubles Standing in the Way of Growth?
In the wake of past recessions, the housing industry provided a meaningful economic boost. This time around, the pace of the recovery has been more sluggish than expected, and ongoing weakness in the housing sector may be to blame.
Tips for Surviving the Estate Tax
The federal estate tax was reinstated retroactively to January 1, 2010, by the 2010 Tax Relief Act. However, the favorable provisions are scheduled to expire at the end of 2012, when estates exceeding $1 million could be subject to the federal levy.
Finding a Good Time to Invest
When a prominent stock market index closes above an important threshold, many investors who have been sitting on the sidelines may see it as good time to invest, but they may have missed a significant part of the rally. Waiting for the "right" moment to invest could prove to be a costly and ineffective strategy.
Favorable Dividend and Capital Gains Tax Rates Extended—for Now
The 2010 Tax Relief Act extended the 15% maximum tax rates on qualified dividends and long-term capital gains through December 31, 2012. But without further legislation, dividends will be taxed at ordinary income tax rates and capital gains tax rates will return to 20% (23.8% for investors in the two highest tax brackets) in 2013.
Managing Cash When Interest Rates Are Low
It's generally a good idea to keep three to six months of income in an emergency fund, but where should cash be kept when interest rates are low? This article discusses the advantages and disadvantages of savings accounts, certificates of deposit, and money market funds.
Put It in Writing
A high level of job satisfaction is fairly typical of business owners, but it can also be a hindrance if it keeps them from thinking about a planned exit strategy. A written exit plan could help you avoid surprises.
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June
Using a Variable Annuity for Guaranteed Income
One recommendation from the White House Task Force on Middle Class Working Families was for retirees to consider purchasing annuities to help provide a stable income. Investors who want their retirement portfolios to go the distance might want to learn more about variable annuities.
The Difference Between the Debt and the Deficit
The terms "debt" and "deficit" are often used interchangeably to describe the federal government's financial situation, yet they have significantly different meanings. This explanation of the budget deficit and the national debt may help readers understand the conversation.
Deciding When to Begin
Waiting until full retirement age (or up to age 70) to claim Social Security may result in significantly higher monthly benefits. At age 62, the earliest age to claim Social Security, the amount received could be only 70% of the benefit received at "full retirement age" (which ranges from age 65 to 67 depending on year of birth).
Understanding the Appeal of Mutual Funds for High-Income Households
Mutual fund ownership increases directly with household income. In fact, 81% of households with incomes of $200,000 or more own mutual funds. What is it about mutual funds that attracts affluent investors?
Tax Law Keeps S Corporations Attractive
S corporations are more common than C corporations and partnerships, perhaps because they are not subject to the corporate tax. Instead, profits and losses flow directly to shareholders, who are currently taxed at lower individual income tax rates. Read why reorganizing as an S corporation may be a smart move.
HOT TOPIC: Current Economic Conditions and the Prospect for Inflation
Inflation jumped up to 3.2% in April. That’s still below the 50-year average but it may be little consolation for anyone who has been to a gas station or a grocery store recently.
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May
HOT TOPIC: Debating the Debt Ceiling
There has been substantial debate in Congress over raising the ceiling on the national debt. Although many Americans could be adversely affected if Congress decided not to increase the debt ceiling, this is unlikely to happen.
Fixed for Life
More than 40% of Americans ages 36 and older are at risk of running out of money in retirement, according to a retirement readiness study. In fact, almost one-third of people with upper-middle incomes and 13% with high incomes may not be able to pay for basic retirement expenses and uninsured health-care costs after two decades in retirement.
Giving the Gift of Knowledge
A college education is still a good investment. Consider this statistic: The overall unemployment rate reached as high as 9.9% in 2010, but for workers with a bachelor's degree or higher, it did not exceed 5.1%. But a college education can be expensive. There is a tax-advantaged way to accumulate money for a child's or grandchild's education: a Section 529 plan.
Help an Inheritance Help You
When Americans were asked what they would do with a large inheritance, 48% said they would save it; only 8% said they would spend it on things they've always wanted. Could the Great Recession be changing attitudes about money? There are some options to consider for those who expect to receive, or have already received, an inheritance.
Never Retire? Don't Count on It
In a recent survey, just 40% of wealthy individuals indicated they are totally confident they will have enough money for retirement. The other 60% said they will shun traditional retirement and work as long as possible. However, it could be dangerous to believe that a retirement income shortfall can be overcome by working past the traditional retirement age.
Building a Business Versus Building Wealth
The market for small businesses has been less than ideal over the past few years. Thus a business owner's efforts to build a successful business may not always translate to an increase in personal wealth. One way to insulate a business owner's personal financial situation from the fluctuating small-business market is by investing outside the company.
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April
HOT TOPIC: Eye on Japan's Recovery Within a Recovery
Japan’s economy hasn’t been on solid ground since the 1990s, but now it must grapple with rebuilding after an earthquake, tsunami, and nuclear accident that have caused economic losses expected to surpass $300 billion. What is the outlook for Japan and the effects the nation's disasters could have on the world economy and financial markets?
Consider Your Retirement Needs, but Don't Forget Your Retirement Wants
A rule of thumb is that workers will need to replace about 80% of their pre-retirement incomes to maintain their standard of living in retirement. But they may need more than 80% to fund a lifestyle that they can truly look forward to. As people grow older, what once may have been considered luxuries can become basic needs.
Making Money Market Funds Work for You
Some investors turn to money market funds when they are concerned about market volatility. Although money market funds may carry less risk than stocks, investing in them as a reaction to market volatility also carries the risk of missing out on potential gains when the market begins to recover.
Dispelling Umbrella Insurance Myths
Many people may think their chances of being hit with a multimillion-dollar lawsuit are fairly slim. Besides, wouldn't the liability coverage on their homeowners and auto insurance policies be enough to protect them against a claim or a lawsuit? Unfortunately, there are misconceptions about umbrella liability insurance that could cause someone to be underinsured.
How Interest Rates Can Influence Financial Decisions
The Federal Reserve has relied on its control of short-term interest rates to influence economic activity. Adjusting interest rates might seem to be an overly simple solution for steering the world's most powerful economy, but few mechanisms can influence behavior more effectively than interest rates.
Protect Your Business with a Disaster Readiness Plan
Most people think of hurricanes, tornados, and earthquakes as events that could seriously affect the operations of a business and result in shortages of goods and materials. But even a fire or a flood in the warehouse can cause operations to come to a grinding halt. By one estimate, one-quarter of businesses never reopen after a major calamity.
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March
HOT TOPIC: The Federal Estate Tax Is Back and May Be Here to Stay
The estate tax has been reinstated after being allowed to lapse in 2010. The new estate tax provisions are the most generous in decades — but they are temporary. A far more stringent estate tax is slated to take effect after 2012. Fortunately, a properly structured trust may help some families reduce their potential exposure to the estate tax.
Help Keep Your Estate Out of Probate
Anyone who has seen an estate go through probate knows that it's the legal equivalent of having a tooth pulled. But just like tooth decay, probate may not be entirely avoidable.
Protecting What May Be Your Most Valuable Asset
Statistics indicate 43% of 40-year-olds will suffer at least one long-term disability (lasting 90 days or longer) before age 65. Disability income insurance could help protect your most valuable asset: your ability to earn an income.
Roth IRA Conversion Mistakes Can Be Costly
One popular way to fund a Roth IRA is by transferring assets from a traditional IRA or an employer-sponsored retirement plan. This type of transaction, called a Roth IRA conversion, is simple in theory but can be complicated in practice. If you make certain mistakes, you could lose some key advantages.
Exchange-Traded Funds: In a Class by Themselves
In 2010, the combined assets of the nation's ETFs topped more than $800 billion. ETFs are unique investments that share some similarities with mutual funds but trade like stocks. ETFs have some appealing characteristics, including trading flexibility, potentially lower expense ratios, tax efficiency, and diversification.
Another Economic Stimulus
Temporary incentives could affect businesses of all sizes. Although Congress was unable to tackle the controversial issue of future income tax rates before the 2010 midterms, it quietly passed a little-noticed tax package, the Small Business Jobs Act of 2009 (H.R. 5297), that may benefit small businesses and even individual taxpayers.
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