​Worried about the direction the financial markets have taken over the past few months? You’re not alone. After nine consecutive years of growth, the markets ended 2018 on a down note. The S&P 500 finished the year down more than 6 percent, the first time it has ever finished a year negative after being positive through the first three quarters.1
 
In fact, some indexes have already entered bear market territory. The Nasdaq dropped more than 23 percent from its Aug. 29 high. The Wilshire 5000 and Russell 2000 also dropped more than 20 percent from their respective peaks in early September.1
 
If you’re approaching retirement, these losses could be stressful. When you’re younger and just starting your career, you have time to absorb losses and recover. That may not be the case if you’re only a few years from retirement. You’ll soon need to use your assets to generate income. A substantial decline may force you to delay retirement or make cuts to your planned lifestyle.
 
Fortunately, there are steps you can take to protect your nest egg and your retirement. Below are three tools that can help you reduce your exposure to downside risk. Talk to your financial professional to see how these may play a role in your financial strategy.

Fixed Indexed Annuity 

When it comes to investing, risk and return usually go hand in hand. Those assets that offer the most potential return often come with the highest exposure to risk. Assets that have little risk also offer little potential growth. It’s difficult to find growth opportunities that don’t have downside market risk.
 
There are some tools available, though. One is a fixed indexed annuity. In a fixed indexed annuity, allows your money the potential to grow on a tax-deferred basis. The potential growth comes in the form of interest credited to the contract typically annually.
 
Your interest credited each year is based on the return of a specific external index, like the S&P 500. The better the index performs in a given period, the higher the potential for the interest credits, up to a certain limit. If the index performs poorly, you may receive less or zero interest, but your contract won’t decline in value.
 
Fixed indexed annuities have guarantees* on the value of the contract. That means you’ll never lose premium because of market declines. A fixed indexed annuity could be an effective way to plan for retirement income without exposing yourself to market risk.

Deferred Income Annuity 

Are you concerned about your ability to generate retirement income in the future? Or are you worried that your retirement income isn’t guaranteed*? A deferred income annuity, also known as a longevity annuity, could be an effective option.
 
With a deferred income annuity, you contribute a lump-sum amount and pick a date in the future to begin receiving income. At the specified time, the annuity company will begin paying you an income stream that’s guaranteed* for life, no matter how long you live. Work with your financial professional to project your income and see if a deferred income annuity can help you fill any gaps.

Life Insurance 
​
You’ve probably purchased life insurance at some point in your life with the goal of protecting your spouse, children or other loved ones. Life insurance is a highly effective protection tool, but it can also do more.
 
Some life insurance policies have a cash value account. Each time you make a premium payment, a portion goes into the cash value. Those funds grow on a tax-deferred basis over time. The growth usually comes in the form of dividends or interest, depending on the policy. You can also use the life insurance policy to generate tax-free income in retirement via loans or withdrawals.
 
If you have a life insurance policy, you may want to explore how you can use it to achieve low-risk, tax-deferred growth and possibly create supplemental income in the future. Or you may want to look at new policies and see how they can help you protect your assets.
 
Ready to protect your nest egg? Let’s talk about it. Contact us at Sprouse Financial Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.nasdaq.com/article/is-a-recession-coming-heres-how-to-survive-cm1081931
 
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18412 - 2019/1/16

Valentine’s Day is supposed to be a day for romance and reconnection. For many couples, however, this time of year could be marked by disagreements about money. Nearly half of all married couples argue about financial issues.1
 
With the new year just starting and tax season right around the corner, many people use this time to evaluate their spending, earnings and financial performance over the previous year. That analysis could reopen sore spots about money management.
 
The performance of the financial markets over the past few months could also be a source for disagreement among couples, especially those who have differing investment styles. After starting strong for the first three quarters of the year, the S&P 500 finished with an epic meltdown in the fourth quarter. The index ended the year down 7 percent, the first time in history it’s finished the year negative after being positive for the first three quarters.2
 
Do you and your spouse disagree about investing styles? Does one of you take a more aggressive stance while the other prefers to play it safe? Below are a few helpful tips on how you and your spouse can meet in the middle and get past your investment-related disagreements:
​
Draft an investment policy statement. 

Many couples disagree about their investment approach because they’ve never developed a formal investment strategy. They generally know they want to save for retirement, but they’ve never discussed their specific objectives or tactics. An investment policy statement does just that.
 
Your investment policy statement is a written document that states your goals, acceptable risks and the steps you will take to reach your objectives. It outlines which types of investments are appropriate for your strategy and which are not. You can use your investment policy statement as a guide for making future decisions.
 
The process of developing the investment policy statement could be beneficial for many couples. You’re forced to share your differing opinions and compromise to reach a strategy. Those conversations could help you work out differences and find areas where you agree, which could diffuse future arguments.

Develop a retirement income plan. 

Often, arguments are fueled by uncertainty about the future. You’re unsure of when you’ll be able to retire or how much more you need to save, so that heightens your anxiety and sharpens disagreements. You may be able to avoid arguments by eliminating the uncertainty.
 
Work with your financial professional to develop a retirement income plan. You can project your future retirement income from sources such as Social Security, an employer pension and even your own savings. You can also build a retirement budget to estimate your spending. These two projections should give you an idea of how close you are to reaching your goals, how much more you need to save and how much risk you should take to achieve growth.

Don’t avoid the conversation. 

Have you and your spouse agreed to disagree about your differing investment styles? Do you avoid the conversation? Or do you go it alone with your individual accounts so you don’t have to discuss issues that may lead to disagreement?
 
While you may not want to disagree or argue, it’s also not helpful to avoid the conversation. If you each have differing styles and don’t have a cohesive plan, you could be missing out on opportunity.
 
For example, assume your spouse is aggressive with his or her investment style and takes on a substantial amount of risk. Perhaps you’re conservative and choose assets that offer little return potential but also have little chance of loss. You may feel that the “go it alone” approach works because you each invest according to your comfort level and you avoid arguments.

By avoiding the conversation, however, you may be missing out on opportunities to meet in the middle and achieve better performance. For example, you could find an allocation that has growth potential and reduced risk. You could use tools such as annuities that offer growth without downside exposure. The only way to find these opportunities is to discuss your differing approaches and look for middle ground.

Work with a professional. 
​
Finally, you may find it helpful to bring in a third party, like a financial professional. They can give objective, impartial feedback and also provide information and analysis that may change your approach. They can also help you develop a retirement strategy and an investment policy statement to guide your decision-making.
 
Ready to overcome your investment disagreements with your spouse? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
1https://nypost.com/2017/08/03/the-reasons-most-couples-argue-about-money/
2https://www.cnbc.com/2018/12/31/the-sp-500-will-make-history-when-it-ends-the-year-with-a-loss.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18408 - 2019/1/14

It’s that time again. A new year is here, which means a volatile 2018 is in the rearview mirror. The markets suffered a steep drop at the end of last year after climbing steadily through the first three quarters. A number of factors contributed to the markets’ fourth-quarter tumble, including tariffs, interest rate hikes and trouble in the tech sector.
 
A new year doesn’t mean those challenges are gone, but it does represent a fresh start. And if history is any guide, January can be a strong month for investors. According to a study from LPL Research, in the 68 years from 1950 through 2017, January has been a positive month for the S&P 500 41 times. It’s been negative 27 times.1
 
As any investor knows, history doesn’t guarantee future performance. However, there does seem to be a correlation between market performance in January and the rest of the year.
​
How do January returns impact the rest of the year?
 
According to LPL Research, there’s a relationship between January returns and market returns over the remainder of the year. Its research showed that during years in which there was a positive January return, the market had an average return of 12.2 percent over the next 11 months. When the January return was negative, the S&P 500 returned only 1.2 percent the rest of the year.1
 
If January returns are more than 5 percent, the correlation is even more pronounced. In those years, the market had an average return of 15.8 percent over the next 11 months. In fact, when January has a return of more than 5 percent, the rest of the year is positive 91.7 percent of the time.1

What is the January effect?
 
Why has January been positive more often than not? And why does January’s return seem to impact the rest of the year? There are no definitive answers to these questions, but there are theories.

There’s an idea called the “January effect,” which suggests that January returns may be the product of tax strategy. Investors sell stocks in December to harvest tax losses before the end of the year. That depresses prices and creates a buying opportunity in January. Because investors sold at the end of the year, there’s cash on the table to buy in the beginning of the next year.
 
Of course, this is just a theory. There’s no way to conclusively prove whether the January effect is a real phenomenon. Even if it could be proved, it’s never wise to change your long-term investment strategy based on short-term opportunities.
 
If you’re concerned about the volatility in 2018 or the coming year, now is a great time to meet with a financial professional. They can help you review your strategy and possibly make changes that reduce your risk exposure and allow you to take advantage of opportunities.
 
Ready to evaluate your investment strategy? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you analyze your needs and goals and implement a plan. Let’s connect soon and start the conversation.
 
1https://www.thestreet.com/story/14469889/1/stock-market-s-strong-january-performance-bodes-well-for-the-rest-of-the-year.html
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18345 - 2018/12/31

A new year is here, and with it comes a flood of year-end tax documents like W-2s, 1099s and others. Before you know it, the April 15 tax filing deadline will be upon us, and it will be time to submit your return.

It’s always wise to meet with your financial professional at the beginning of the year. It gives you an opportunity to discuss the past year, your goals for the coming year and your tax strategy. However, a consultation with your financial professional could be especially helpful this year.
 
The Tax Cuts and Jobs Act was signed into law in late 2017 by President Trump. While some of its changes went into effect last year, 2018 was the first full calendar year under the new law. The return you file in April will likely be the first that reflects much of the law’s changes. Below are a few of the biggest changes and how they could affect your return:
​
Increased Standard Deduction
 
The new tax law impacted a wide range of credits and deductions, from the deduction of medical expenses to credits for child care. Those who itemize deductions may have felt the brunt of these changes.
 
However, the tax law significantly increased the standard deduction. In 2017 the standard deduction was $6,350 for single filers and $12,700 for married couples. The new law increased those numbers to $12,000 and $24,000, respectively.1
 
Given the changes to itemized deductions and the increased standard deduction, you may want to consult with a financial or tax professional before you file your return. If you’ve traditionally itemized deductions in the past, that may no longer make sense.

New Tax Brackets
 
The new tax law also made significant changes to the tax brackets. There are still seven different brackets, just as there were before the passage of the law. And the lowest rate is still 10 percent. The top income tax rate is down to 37 percent, however, from 39.6 percent.2 There are similar cuts throughout the rest of the brackets as well.
 
The law also made changes to the income levels for each bracket. Generally, the bracket levels were increased throughout the tax code, which means you have to earn more before moving into a higher bracket. Under the old tax code, for example, a married couple earning $250,000 would be in the 33 percent bracket. Under the new law, that same couple would be in the 24 percent bracket. A single individual earning $80,000 would be in the 28 percent bracket under the old law but is now in the 22 percent bracket.2

Itemized Deduction Changes
 
As mentioned, the new tax law increased the standard deduction amounts. However, those increases came at the expense of many itemized deductions. The new law eliminated or reduced many common deductions, including those for state and local taxes, real estate taxes, mortgage and home equity loan interest, and even fees to accountants and other advisers.
 
However, there could be other opportunities to boost your itemized deductions above the standard deduction level. Charitable donations are still deductible, as are medical expenses assuming they exceed the 7.5 percent threshold. If you’re a business owner, you can deduct many of your expenses, including up to 20 percent of your income assuming you meet earnings thresholds.3
 
Ready to develop your tax strategy? Let’s connect soon and talk about taxes and your entire financial picture. Contact us today at Sprouse Financial Group. We can help you analyze your needs and goals and implement a plan.
 
1https://www.nerdwallet.com/blog/taxes/standard-deduction/
2https://www.hrblock.com/tax-center/irs/tax-reform/new-tax-brackets/
3https://money.usnews.com/investing/investing-101/articles/know-these-6-federal-tax-changes-to-avoid-a-surprise-in-2019
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18326 - 2018/12/26

Did you recently inherit an IRA from a loved one? An IRA is an effective savings tool because it offers tax-deferred growth, which means that earnings inside the account aren’t taxed until a distribution is made. In a Roth IRA, earnings may never be taxed.
 
That tax deferral can help an IRA owner accumulate assets more quickly than they may in a taxable account. However, as a beneficiary on the IRA, you may have important tax considerations you should think about before you file your beneficiary claim.
 
Many beneficiaries take their benefit as a lump sum. It’s understandable why that’s a tempting option. However, before you take your benefit as a check, you may want to think about all your options. Below are a few IRA beneficiary options. Consult with your financial professional to see which best aligns with your needs and goals.
 
Roll it into your own IRA. 

This option is only available for spousal beneficiaries. If you are the beneficiary on your spouse’s IRA, you have the option to roll the death benefit into your own IRA. You avoid taxes on the distribution and the inherited amount becomes a part of your IRA as if it were your own contributions.
 
This is a popular and helpful option because it’s simple. You can keep all your assets in one account, which may make it easier to manage your income and your investment strategy. Plus all the rule regarding distributions are based on your age rather than your spouse’s, so it may be easier to stay within required minimum distribution guidelines.
​
Create an inherited IRA. 

If you’re an IRA beneficiary, but you’re not the spouse of the individual who passed away, you may be tempted to take the benefit as a lump sum payout. However, doing so could create a sizable tax liability, especially if the account is a traditional IRA. Distributions from traditional IRAs are taxable as income. The payout could push you into a higher tax bracket.
 
An alternative is to create an inherited IRA. The account is titled in your name as beneficiary of the loved one who passed away. You get to keep the funds in the account but are required to take minimum distributions each year. This allows you to keep growing the assets on a tax-deferred basis while spreading out the tax liability over many years. If you don’t need the money right away, this could be a wise option.

Take the lump sum benefit. 
​
Finally, you always have the option to take the benefit as a lump sum. Again, if the account is a traditional IRA, you’ll likely face income taxes on the distributed amount. Those taxes could be significant so it’s important to consult with a financial professional.
 
If the account is a Roth IRA, the distribution is tax-free. However, you still may want to consult with a professional, so you can plan on how to use the windfall to best meet your financial goals.
 
Ready to develop a strategy for your inherited IRA? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18279 - 2018/11/28

Are you considering an early inheritance for your children, grandchildren or other loved ones? It’s becoming a popular idea. A recent Merrill Lynch study of people age 50 and older found that 60 percent would prefer to give an early inheritance rather than wait until after death to distribute assets.1
 
The idea of an early inheritance may be appealing because it allows you to see how your legacy is used. You could pay for a grandchild’s college tuition or fund your child’s business idea. You may be able to help your children catch up on retirement savings or overcome financial difficulties.
 
However, an early inheritance can also cause problems. You could give too much and create challenges for your own financial stability. Your gift could cause conflict within the family. There could be tax consequences.
 
Below are a few issues and complications to think about as you plan your early inheritance strategy. A financial professional can also help you develop a plan that protects you, your legacy and your loved ones.
​
Make sure you can afford it. 
​
You may feel like you can afford to give an early inheritance because you have plenty of assets. Often, when people retire, they have more money than they’ve ever had in their lives. It may seem like it would be impossible to spend your savings.
 
However, there could be risks in retirement that you haven’t expected. For example, you may need long-term care. The U.S. Department of Health and Human Services projects that 70 percent of seniors will need long-term care, which can cost thousands of dollars per month.2
 
You also may spend more than you expect on health care. Fidelity estimates that the average retired couple will spend $280,000 on health care costs above and beyond what’s covered by Medicare.3
 
Before you give an early inheritance, make sure you have a plan in place for these costs. A long-term care insurance policy may be an effective tool.

Have a conversation with your heirs about your plan. 

It’s likely that your family may welcome their early inheritance. They’ll probably appreciate the financial help. That’s not always the case, though. Some children may prefer a traditional inheritance. Others may not be responsible enough to handle a windfall. Some recipients may feel that others don’t deserve a gift.
 
It’s important to have an open conversation with your family about your plans. Solicit their feedback and input without making promises. You may want to develop different plans for each of your children. You also may want to consider a trust, so the assets can be managed and distributed according to your wishes.

Work with a professional and develop a strategy. 

You have the right to give your money to whomever you want, right? Not necessarily. If you give more than $15,000 to an individual in any given year, you may have to pay a gift tax. A married couple can give as much as $30,000 to each individual. Keep in mind: Gifts that are used to pay for medical bills or tuition aren’t included in the taxable amount.4
 
Before gifting your assets, it may be helpful to speak with a financial professional about structuring the gifts in a way that maximizes value for you and your recipients. A professional may also recommend tools that make the process more efficient for all involved.
 
Ready to chart your early inheritance strategy? Let’s talk about it. Contact us today at Sprouse Financial Group. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
 
1https://www.ml.com/articles/why-make-your-heirs-wait.html
2https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html
3https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs
4https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
 
18274 - 2018/11/27