Advice for Savvy Retirement Planning

Snapchat Stock

Snapchat parent company Snap Inc. (SNAP) initiated their public offering on Thursday amid a flurry of interest in their stock. According to their IPO documents filed Thursday, Snapchat lost roughly $514 million dollars in fiscal year 2016.

Company Founder and CEO, Evan Spiegel, indicated that it is possible that they “may never achieve or maintain profitability,” due to the financial effort involved in re-investing in their business.

Snapchat StockIn their filing, SNAP indicated that “We began commercial operations in 2011 and for all of our history we have experienced net losses and negative cash flows from operations. If our revenue does not grow at a greater rate than our expenses, we will not be able to achieve and maintain profitability.”

The loss of $514 million in 2016 comes against revenues of roughly $400 million. So they are still losing FAR more than they are bringing in on an annual basis. Despite increasing revenues from $58 million in 2015 (compared to a net loss of $372 million), their losses continue to widen.

By comparison, when Facebook launched their IPO in 2012, the company was already profitable, to the tune of $1 billion a year (against a $100 billion+ valuation for it’s IPO).

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About Robert Henderson and Lansdowne Wealth Management

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

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The British Are Leaving!

Brexit!

Markets around the world on Friday are reeling from the historic vote that will launch the U.K. back into independence from the European Union, and saw British PM David Cameron resign his position. In a tightly contested vote, having originally been projected as a “Stay” outcome, currencies and stock markets across Europe and all over the world are opening sharply down this morning. The vote was followed by the single worst crash of the British Pound against the U.S. Dollar in history.

BrexitIn pre-market trading, U.S. stock market futures were down across the board over 3%, with 10-year Treasury yields down nearly 8%. European markets are all across the board, with the German DAX Index down over 8%.

Not unlike many short-term market setbacks, what is driving the currency and market drops worldwide is the intense level of uncertainty surrounding the British exit. Separation from the European Union would take years to accomplish, and could face many hurdles along the way. It is quite possible that British leaders could renegotiate terms of the deal, and even present a new vote, which could cause citizens to switch their vote.

The short to mid-term implications for the markets are increased volatility, on a significant scale. However, there is no indication that this is any reason to panic or begin selling positions in response to the vote. While there may be tremendous uncertainty and volatility in the short-term, this is unlikely to have long-lasting implications for the global economy.

This morning we are looking closely at cash positions in portfolios, eyeing opportunities to enter quality stock positions at very good prices. In addition, this is a great opportunity for adjusting stock/bond allocations, as the substantial drop in Treasury yields will precipitate a rise in bond prices. This could potentially set up a situation allowing us to sell bonds at high prices, and enter quality stock positions at distressed prices. Much will depend on how markets behave throughout the day.

We will keep you updated as the Euro situation unfolds.

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About Robert Henderson and Lansdowne Wealth Management

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

How to Save for Retirement Later in Life

This Article Originally Appeared in NewRetirement.com

We’re guessing there might be one or two readers out there who are overwhelmed by the amount of money they need to save to retire comfortably.

But there’s no need to panic, says Robert Henderson, president of Lansdowne Wealth Management in Mystic, Conn.

“It’s one step at a time,” he says. “There are options to minimize your retirement shortfall. And the SOONER you take action, the better.”

Robert recently checked in to outline the steps you can take to make sure you’re covered in your golden years – whether you started saving in your 20s or are catching up in your 50s. Read on to learn more:

Tell us about Lansdowne Wealth Management…what services do you offer?

We are a fee-only Registered Investment Advisor (RIA) in the state of Connecticut. Our primary services consist of investment management, financial planning, and divorce planning.

What sets you apart from other wealth management firms out there?

Robert HendersonIn our area, there are very few fee-only planning firms. While fee-only planning is not for everyone, I have found that many individuals have been specifically seeking out fee-only planners.
 In addition, my focus on planning and consulting in the divorce industry is unique. While I have many peers around the country that also specialize in this niche, I am one of very few in my local area that focuses on dealing with divorce, and more specifically women going through divorce. I credit this specialty to my patience and willingness to work on the “tough” cases.

What do you think are the smartest things we can do to prepare for retirement?

In my experience working with pre-retirees and retirees, I would say the most important things are focusing on paying down debt (though not necessarily mortgage debt), developing a sustainable lifestyle (sustainable from a financial perspective), and preparing for ALL aspects of retirement (i.e., researching healthcare, estate planning, long-term care, tax planning, etc.).

What are the biggest mistakes you see your clients (or Americans in general) making with regards to retirement?

Without a doubt, I see too many people who “live in the moment” during the pre-retirement years (i.e., 50s and 60s) and create a lifestyle that is simply unsustainable in retirement. And when they finally reach retirement, they have a very hard time scaling back on that lifestyle. I also see a fair number of people retiring too early. If you are used to earning and spending a $150-200K combined household income, and you only save $750K saved for retirement (plus social security and maybe even a small pension), you might be looking at only replacing 50 percent of your income. Had you learned to live on much less of that income, then you would be looking at replacing 75-100 percent of it.

In your opinion, what should Americans be concerned about the most today when it comes to saving for retirement?

People need to re-evaluate what they want their working years and retirement years to look like. Longevity is a big problem in America. People live longer, but this also means more need for retirement income and healthcare and long-term care costs.

What advice do you have for those who didn’t start saving for retirement until later in life…is there anyway to make up for lost time?

Sure. Generally when people have a big gap, I try to focus on a multi-faceted approach (as opposed to telling people they need to set aside a huge percentage of their income for retirement).

While every situation is unique, you could:

1. Work a few extra years in your primary career (this allows you to save more and have fewer years to provide for in retirement)
2. Plan to work part time in retirement for a while. These days, most healthy 65-year-olds have plenty of years left to work if they choose. And you don’t need to earn a lot. Sometimes it’s just spending money doing something you enjoy. It also has the added benefit of being flexible, keeping you engaged, and keeping you from spending money.
3. Ramp up your savings. This one is obvious, but bears mentioning. You certainly don’t want to add debt in order to prioritize added savings. But sock away as much as possible.
4. Focus on minimizing your lifestyle. Maybe it means downsizing your house when appropriate, moving to a less expensive area, buying a less expensive car, selling some of the stuff you don’t need or use anymore (e.g., boats, RVs, motorcycles, etc.). And maybe it means finding less expensive ways of enjoying your retirement.
5. Paying down debt.

What are your favorite types of investments for older Americans closing in on retirement?

I try not to get married to any one particular investment or strategy. The economic, interest rate, and investment climate is constantly changing. Fifteen or 20 years ago, you could buy short-term CDs and earn 5 percent. For conservative retirees, that was a great option. Even five years ago, I was still recommending fixed annuities for the shorter end of client portfolios. Today, CDs and fixed annuities pay virtually nothing and are merely short-term savings vehicles. The point is, one size never fits all. However, certain themes are always strong. For example, quality, dividend-paying stocks are – in most cases – a component of all of our portfolios.

What types of investments do you avoid?

I am not a fan of insurance products as investments. Various forms of permanent insurance can be critical in certain situations (e.g., estate planning or businesses continuity planning), but for the most part do not represent good “investments” in the truest sense. 

I also steer clear of illiquid investments such as non-traded REITs and private equity. While there are certain investors where these may be appropriate, for the vast majority of people, quality stocks, bonds, mutual funds, ETFs, CDs, and certain types of annuities should comprise most of their portfolios.

What do you think the future of retirement looks like for us?

The difference between retirement 30 years ago versus today is that today’s retiree needs to be more “self-directed.” You have to make your own savings decisions during your working years, your own investment decisions throughout your life, health and long-term care decisions are critical (and costly), and make important lifestyle decisions (when to retire, what type of lifestyle to lead). Gone are the days where Social Security, Medicare, and your employer (pension) took care of your retirement years.

Connect with Robert on Facebook, Google+, LinkedIn, Pinterest and Twitter.

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About Robert Henderson and Lansdowne Wealth Management

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

An Important Market Update – Is the Sky Falling?

The Sky is Falling

Well, not quite. In the past week, we have seen the S&P 500 (the broad U.S. stock market, generally speaking) drop roughly 7%. This represents nearly the entire drop in the S&P on the year. Prior to this past week, the market was more or less flat year-to-date, oscillating up and down after a strong start to the year. Foreign markets are faring no better, and in many cases dropping precipitously. Such is the case with China’s Shanghai Index, down more than 40% from its peak in June. On an intra-day basis (prior to intra-day recoveries), the S&P actually dropped into correction territory (down 10% from peak).

What’s Causing the Corrections?

Unlike major corrections, the current drop is being fueled by a number of factors. But the primary drivers seem to be weakness in the Chinese economy, concerns about the Fed raising interest rates, and the current weakness in oil prices. But the reality is that, despite all the speculation, nobody really knows why the market moved the way it did the past several days. Realistically, it was nothing more than pent up market emotions coming to a head.

Moments like this demonstrate the importance of a well-diversified portfolio. Over-reliance on any particular asset class, sector, or “theme” can wreak havoc on a portfolio. At the same time, significant selloffs create an opportunity for investment managers to buy quality investments at a discount, or at least at a reasonable price.

What’s The Outlook?

While the continued global economic recovery has been slow and gradual, it has also been consistent (and persistent). From the perspective of most economists, virtually nothing has changed about the overall economy to prompt any type of bear market scenario. Employment continues to improve (albeit slowly), consumers are continuing to spend, and debt levels are not considered a problem.

Fortunately, unlike recent bear markets, there is no major impetus for concern. Oil prices could certainly be a problem, but the upside of low oil prices is more cash in consumers’ pockets to spend. We’ve been talking about Fed rate adjustments for years, so most of that concern should be emotionally priced into the market. Of course it all falls back to China. A major downshift in economic activity in China could have wide implications. But despite that, the US economy still looks robust.

The bottom line is that there is no tech bubble bursting like we saw 15 years ago, and no subprime mortgage crisis to contend with. What we have is a fear about prices. Investors are concerned about being caught with over-priced assets in an over-priced market. But other than during market bubbles, high stock market prices are generally not a cause of major stock market declines. What we CAN expect is continued volatility, well into the fall.

What it Means for Portfolios

Not a lot. It’s important not to make knee-jerk reactions to what are periodic and normal market drops. The markets has gone up relatively uninterrupted the past seven years, with a handful of material drops along the way, most notably in April 2010, August 2011, May & October 2012, and September 2014. So this drop seems right on schedule. While it may prove to be nothing more than a routine pullback, it could certainly evolve into something a bit more sinister. History would not suggest that, but it’s not beyond possibility.

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

Connect with me on FacebookGoogle+LinkedInPinterest and Twitter.

 

 

Market Update for May 2015

Robert HendersonMAY 2015 ECONOMIC COMMENTARY AND CAPITAL MARKET UPDATE

Recap: The U.S. economy grew at a 0.2% annual rate in the first quarter. It was the worst economic performance in a year, with evidence of a slowing international trade sector and anemic business investment. A sharp deceleration in hiring in March also ended a year long stretch of heady job creation, raising concerns about broader economic growth amid mounting evidence of a slowdown. Closely watched indicators of consumer spending, capital investment and manufacturing output have all slumped in recent months. A strong dollar has restrained U.S. exports and could continue to drag down broader growth. Much of the recent sluggishness may be chalked up to harsh winter weather across much of the eastern U.S., but the signs of weakness don’t end there. The spending boost from cheaper gasoline appeared to have faded or at least not materialized yet. Low oil prices have led to oil-field layoffs.

Despite these poor numbers, the weakness in consumer spending can be chalked up to weather related effects since underlying economic fundamentals remained on solid ground. Monthly employment figures have averaged 275,000 jobs a month over the last twelve-months – its strongest pace in 15 years – while the unemployment rate has steadily edged lower. Helping to accelerate employment gains have been the number of job openings that have reached new cyclical highs with each passing month. Moreover, as employment opportunities have become increasingly plentiful, the number of people leaving positions for new opportunities has also hit new post-recession highs, highlighting the impact that improving labor market conditions have had on overall sentiment.

This confidence has manifested in consumers, as evidenced by the Conference Board’s Consumer Confidence index, which surged to 101.3 in March before dropping slightly in April. This rise in consumer confidence alongside gains to household income appeared to have filtered through to vehicle sales in April.

Housing data has also started to show signs of a spring thaw. Pending home sales have increased while mortgage applications have also turned decisively higher in recent months. And while housing construction data has remained soft so far this year, building permits – a leading indicator for housing starts – has continued to point to a pick-up in building activity in the months ahead. Putting all of these factors together makes a solid case for an uptick in economic growth over the remaining three quarters of 2015.

GDP: Real GDP grew by just 0.2% (annualized) in the first quarter of 2015. The downturn in economic growth reflected a number of one-off factors. Harsh winter weather had its impact on consumer spending as well as the delivery of equipment and inputs to production. Second, the West Coast dock workers’ strike disrupted supply chains and again altered the strength of consumer spending and production. Third, the one-time shock of lower oil prices influenced the pace of business investment for equipment and structures as well as energy sector hiring and, ultimately, corporate profits. More lasting has been the impact of the rising dollar, which continued to weigh on net-exports and likely will do so in the quarters ahead.

Q1 2015 GDP Growth

Q1 2015 GDP Growth

 

Going forward, economic activity is expected to pick up in the second quarter as the adverse impact of temporary factors, such as poor weather and the West coast port disruptions subside.

Retail Sales: Retail sales rose 0.9% (month-over-month) in March. Gains were broad-based, with 9 out of 13 sub-components rising in the month. Besides autos, sales of building materials and garden equipment also delivered sizable gains. After rising in February, sales at gas stations fell 0.6%. Reflecting declining prices, sales at gas stations have fallen for 9 out of the past 10 months.

Following three consecutive monthly declines, consumers staged a comeback in March, with both headline and, more importantly, core numbers posting gains. Given the rebound in March, consumer spending should continue to rise in the months ahead, supported by robust real income growth, high consumer confidence and improved household balance sheets.

Q1 2015 Retail Sales

Q1 2015 Retail Sales


ISM manufacturing index:
The combination of harsh winter weather, the West Coast port stoppage, plunging oil prices and the soaring dollar has proven to be a devastating mix for the nation’s factories. The Institute for Supply Management (ISM) manufacturing index fell by 1.4 points to 51.5 in March, marking the slowest pace of expansion since May 2013. Eight out of the index’s ten subcomponents edged lower in the month. The backlog of orders, employment, exports and imports led the declines. New orders and inventory also retreated with inventories falling more than the new orders. The spread between the two—which tends to be a leading indicator of future activity—has widened ever so slightly, increasing from 0.0 to 0.3 points.

This is the fifth decline in the ISM manufacturing index in as many months. While the index still remains above the 50-point threshold, which corresponds to expanding manufacturing activity, ongoing declines suggest that the pace of expansion has continued to taper. However, the steady rise in real disposable income growth in the United States—supported by robust job growth and low inflation—will induce higher spending in the month’s ahead, providing support to American manufacturers.

Q1 2015 ISM Manufacturing

Q1 2015 ISM Manufacturing


ISM non-manufacturing index:
The ISM non-manufacturing index edged slightly lower in March to 56.5. However, as the value remained well above 50, it is in the expansion zone and indicates moderate economic growth. There was an increase in new orders and backlogs and the employment index. Prices paid rose for the first time in three months, suggesting some firming in inflation.

The modest decline in the non-manufacturing index over the past few months indicates that the manufacturing sector has taken the brunt of the dollar’s appreciation and port-related disruptions, while the service sector has been affected much less.

Q1 2015 ISM Non-Manufacturing

Q1 2015 ISM Non-Manufacturing


Inflation:
Underlying U.S. inflation appeared to be firming despite slower economic growth, a potentially reassuring sign for the Federal Reserve as it weighs when to start raising interest rates. U.S. consumer prices increased for the second consecutive month in March after falling through much of the winter. The CPI increased 0.2% in March from a month earlier that matched the increase the previous month, which was the biggest rise since June.

The overall price gauge has trended downward since last summer when oil prices began to tumble. But the momentum appears to have shifted. Stabilizing energy prices have helped recent headline inflation measures move higher. This shift is expected to continue in the coming months as the early effects of low oil prices wane further. On the other hand, the core prices, excluding the volatile food and energy categories – have climbed 1.8% over the past year, reflecting higher costs for housing and medical care.

Small Business Optimism index: The NFIB’s small business optimism index unexpectedly declined in March, falling by 2.8 points to 95.2. All 10 of the major sub-components recorded declines in the month, with the largest deterioration coming from the percent of firms expecting the economy to improve and current job openings. The net percent of surveyed firms expecting to increase employment make new capital outlays and boost inventories over the next several months all recorded sizeable declines

The pullback in the percent of firms planning to hire is particularly discouraging, especially coming on the heels of last month’s weak payrolls report. Given the forward-looking nature of this subcomponent, the decline in March suggests that there may be more than lagged weather effects weighing on last month’s slowdown in employment.

Going forward, the overall economic backdrop should remain favorable for small and medium sized businesses. This is because of favorable accessibility to credit, a low interest rate environment and low commodity prices. These factors should provide a boost to overall household income and, in turn, support future sales growth.

US Dollar: For most of 2015, the dollar continued to rise rapidly. According to the Wall Street Journal SJ Dollar Index, the U.S. currency strengthened 12% against rivals in 2014, and gained more than 8% through the end of April. But the dollar’s rally has faltered in recent weeks. Despite the recent pullback, we still expect the dollar to appreciate as the U.S. economy maintains a faster growth rate than that of Europe and Japan though the rate of ascent should slow. The euro and yen will continue to struggle under powerful monetary easing measures, ranging from low – and even negative – interest rates to massive government asset purchase programs.

Trade: The U.S. deficit in trade in goods and services surged from $35.9 billion in February to $51.4 billion in March. Both exports (0.9% M/M) and imports (7.7%) rose in the month, with far greater movement in the latter. March’s sharp decline in the deficit was impacted by the port disruptions on the West Coast. However, there were also other reasons for lackluster export growth. Specifically, slow growth in some of the country’s major trading partners and the appreciation of the dollar, which rose more than 15 percent on a trade-weighted basis between the end of June 2014 and mid-March 2015.

In terms of the second quarter, this trade number starts the economy on a very poor footing. Even with a large upward turn in monthly indicators, second quarter real GDP growth could come in at a relatively subdued level, which would mean a weaker first half of the year than in 2014.

Fed: The Fed has attributed the economy’s sharp first-quarter slowdown to transitory factors, in effect signaling an increase in short-term interest rates remains on the table; although the timing has become more uncertain. The Fed now needs time to make sure its expectation of a rebound proves correct after a spate of soft economic data. The chances of a rate increase by midyear have diminished.

The Fed sees the risks to the economic outlook as balanced—an important sign that they aren’t at this point alarmed about the first-quarter slowdown. They believe that conditions are ripe for consumer spending to pick up in the months ahead, in part because employment, incomes and confidence have risen and falling gasoline prices have boosted household purchasing power.

International: So far, the European Central Bank’s quantitative easing program appears to have been successful at shoring up confidence and boosting economic activity in the Eurozone. Much of the impetus has been related to the sharply lower euro, which has declined over 20% in the past year. The lower currency has boosted exports. With imports unchanged, this has left the trade surplus higher for the single-currency area. Industrial production also surprised to the upside in March. The lower euro has helped inflation, which has remained slightly negative on a year-over-year basis as a result of lower energy costs, but appears to be turning the corner in light of stronger core measures.

The rest of the global economy is still adjusting to a new, more challenging, economic scenario created by the continuous slowdown in growth of the Chinese economy and by the recent collapse of the price of crude oil. The economies that are suffering most are those that have relied heavily on exports of commodities to China and the rest of the global economy. Those economies will now need to rely more on their domestic consumer markets to do the heavy lifting as external markets will remain constrained for some time. However, this is easier said than done, as many of these economies also relied on the revenues generated by this growth in exports to fund domestic demand.

But not all of the developing countries will be able to easily adapt to this new environment. Those countries that are linked more to the U.S. economy will continue to see relatively strong economic growth but those that relied more on the rest of the global economy will continue to lag behind. At the same time some of these countries put forward policies that were good in times of prosperity but that today are called into question. Perhaps the case of Brazil and its industrial policy is the most vivid example of policies gone awry with the scandal unearthed over the past several months regarding payments for projects contracted by Petrobras.

Outlook: The U.S. economy has been gathering steam, with evidence mounting that it will bounce back up in the second quarter. Auto sales rebounded strongly in recent months, after being depressed by weather in January and February; the housing market has shown signs of a spring thaw; and consumers have remained confident. The job market took a bit of a breather in March, but one months’ weak jobs tally needs to be put in the context of months of very solid hiring and a very harsh winter. Strength in the U.S. labor market will underpin the best pace of consumer spending in a decade in 2015.

Real disposable income should to rise in 2015 with gains reflecting the fundamentals of better job and compensation growth along with lower inflation. Meanwhile, continued gains in household wealth via financial assets and real estate should also support stronger consumer spending, as will easier standards for obtaining consumer credit.

Equipment and structure spending will bear the brunt of the decline in energy and other commodity prices. The slowdown in equipment and structure spending will reflect reduced investment in the mining and energy sectors. However, we do not project this weakness into a national slump as business credit continues to ease and other industries are in stronger positions to increase capital outlays.

Housing starts and residential investment should continue to improve over the course of the year. In addition, government spending continues to exhibit a turnaround after three years of negative impacts on growth.

Net exports are also in a turnaround situation—but this time there is flip from positive to negative. Both income and price effects have been negative. Weaker income effects reflect the sluggish global economic outlook for key trading partners. The price effect reflects the rise in the U.S. dollar exchange value. Add to these the fact that American consumers will boost imports, and the net effect is a negative impact on net exports and GDP growth.

Year-over-year inflation will continue to rise in the year ahead. The base effect of lower energy prices in 2014 will begin to drive up reported year-over-year numbers later this year. The FOMC will likely begin to lift the federal funds rate in the third quarter and we expect that the long-end of the Treasury yield curve will rise, but only partially, in response to a higher funds rate. However, we also anticipate that the credit cycle is ahead of the economic cycle, and decision makers need to be vigilant that investment decisions reflect the rising cost/declining quality of credit going forward. Corporate profit growth should overcome the energy hit and resume its 4%-5% pace for 2015. Finally, US dollar strength should persist over the remainder of 2015.

Sources: The Conference Board, NFIB, Wall Street Journal, Department of Commerce, Department of Labor, Institute for Supply Management

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

See my Google+ Profile

Connect with me on FacebookGoogle+LinkedInPinterest and Twitter.

 

Lansdowne Wealth Management in the News

Robert Henderson

Robert Henderson

Check out some of the articles that Robert Henderson and Lansdowne Wealth Management have published or been quoted in over the years.

Experts Share their #1 Retirement Planning Tip for Startup Founders

Mint.Com – Expert Interview with Bob Henderson on Managing Your Finances During a Divorce

LoanNow.com – Expert Interview with Robert Henderson on Preparing for Retirement

401K Contribution Limits for 2015

USA Today – Is Your Life Insurance Through Work Enough?, Alice Holbrook, NerdWallet

Investment News – Tips for Finding the Dirt During Due Diligence on Funds and Managers, Liz Skinner

Benefits Pro – Orphaned 401(k) Accounts Stacking Up, Paula Aven Gladych

Interest.com – 5 Good Reasons to Open a Roth IRA Right Now, Craig Guillot

NurseZone.com – Nurses Worried About Retirement Prospects, Jennifer Larson

Investment News – Noise of Potential Gov’t Shutdown Worries Advisers, Liz Skinner

Newsmax Finance – Analysts: Govt Shutdown Is Either a Stock Buying Opportunity or a Disaster, John Morgan

U.S. News and World Report – The 10 Most Difficult Retirement Decisions, Emily Brandon

Dividend.com – Financial Planners Every Investor Should Follow on Twitter, Shauna O’Brien

Time – Retirement Planning: How Do You Measure Up?

Benefits Pro – Should Retirement Plans Include Social Security Benefits?, Paula Aven Gladych

Social Security Leveling Options – The Retirement Workshop, Robert Henderson

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

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IRA Contribution Limits 2017

IRA Contribution LimitsIRA Contribution Limits

Each year the IRS publishes updated IRA contribution limits, as well as catch-up contribution limits for the new year. Typically, the limits the IRS sets each year is based on inflation factors (with minimum $500 increases), so they do not necessarily increase the limit each year.

The IRA Contribution Limit for 2017 has been established with NO increase over 2016.

The limit on IRA contributions applies to both deductible and non-deductible Traditional IRA’s, as well as Roth IRA’s. You may contribute to either type (if you qualify), but you are still subject to the same total aggregate contribution limit.

Income Limits Adjusted Up $1,000-2,000

IRA contributions are only allowed if your Modified Adjust Gross Income is below a certain level . For single filers in 2016, that income threshold starts at $118,000 (up from $117,000) and ends at $133,000 (up from $132,000). In that range, your contribution is limited, eventually reaching zero. For married filers in 2016, that income threshold starts at $186,000 (up from $184,000) and ends at $196,000 (up from $194,000).

2017 2016
Roth IRA Contribution Limit $5,500 $5,500
Roth IRA Contribution Limit if 50 or over $6,500 $6,500
Traditional IRA Contribution Limit $5,500 $5,500
Traditional IRA Contribution Limit if 50 or over $6,500 $6,500
Roth IRA Income Limits (for single filers) Phase-out starts at $118,000; ineligible at $133,000 Phase-out starts at $117,000; ineligible at $132,000
Roth IRA Income Limits (for married filers) Phase-out starts at $186,000; ineligible at $196,000 Phase-out starts at $184,000; ineligible at $194,000


READ:
2018 Social Security Inflation Adjustment
401K Contribution Limits
Don’t Buy-and-Forget the Investments in Your 401K Plan

Recent History of IRA Contribution Limits:

As you can see, the IRA contribution limits do not rise dramatically each year. Although over time, if investors are diligent about increasing their contributions, it can certainly make a difference.

  • 2017 – $6,000
  • 2016 – $6,000
  • 2015 – $6,000
  • 2014 – $5,500
  • 2013 – $5,500
  • 2012 – $5,000
  • 2011 – $5,000
  • 2010 – $5,000
  • 2009 – $5,000
  • 2008 – $5,000

Over Age-50 Catch Up IRA Contribution Limits

For those of you that are over age 50 (or turn age 50 before the end of the year), you are allowed an additional IRA “catch-up” contribution. These limits have not adjusted for inflation, but may at some point in the future:

  • 2017 – $1,000
  • 2016 – $1,000
  • 2015 – $1,000
  • 2014 – $1,000
  • 2013 – $1,000
  • 2012 – $1,000
  • 2011 – $1,000
  • 2010 – $1,000
  • 2009 – $1,000
  • 2008 – $1,000

IRA Deduction Limits

Roth IRA contributions are not tax deductible.

Your deduction is allowed in full if you (and your spouse, if you are married) aren’t covered by a retirement plan at work.

If you ARE covered by a retirement plan at work, you can see the income limitations at the IRS website by going here.

IRA Income Limitations for Deductible Contributions:

If you ARE covered by a company sponsored retirement plan:

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
single or
head of household
$61,000 or less a full deduction up to the amount of your contribution limit.
more than $61,000 but less than $71,000 a partial deduction.
$71,000 or more no deduction.
married filing jointly orqualifying widow(er) $98,000 or less a full deduction up to the amount of your contribution limit.
 more than $98,000 but less than $118,000  a partial deduction.
 $118,000 or more  no deduction.
married filing separately  less than $10,000  a partial deduction.
 $10,000 or more  no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

If you are NOT covered by a company sponsored retirement plan:

If Your Filing Status Is… And Your Modified AGI Is… Then You Can Take…
singlehead of householdor qualifying widow(er) any amount a full deduction up to the amount of yourcontribution limit.
married filing jointly or separately with a spouse who is not covered by a plan at work  any amount a full deduction up to the amount of yourcontribution limit.
married filing jointly with a spouse who iscovered by a plan at work $183,000 or less a full deduction up to the amount of yourcontribution limit.
more than $183,000 but less than $193,000 a partial deduction.
$193,000 or more no deduction.
married filing separately with a spouse who is covered by a plan at work  less than $10,000  a partial deduction.
 $10,000 or more  no deduction.
If you file separately and did not live with your spouse at any time during the year, your IRA deduction is determined under the “Single” filing status.

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

If you are an employee or retiree of General Dynamics, Pfizer, or L&M Hospital, and you would like advice and direction on managing your Fidelity 401K or Hewitt 401K plan, please sign up for our monthly newsletter, which provides complimentary ongoing advice, commentary, and model portfolios for each of those plans. You can sign up automatically at Your 401K http://www.lwmwealth.com/services/your401k.html.

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Fee-Only Financial Advisor in CT

Financial Planners in Connecticut

Lansdowne Wealth Management, LLC (“LWM”) is an independent, fee-only financial planning firm based in Mystic, Connecticut that offers financial retirement strategies backed by education, knowledge, and experience. Our clients depend on us to provide personalized, thoughtful service and advice. As a fee-only Registered Investment Advisor, we present you with objective, independent guidance for achieving your goals. Successful individuals and families in southeastern Connecticut, Rhode Island and throughout the United States rely on us to guide the way so they can be confident in their futures.

Our goal is to provide our clients with the most complete Asset and Wealth Management services available. From the very beginning, our objective is to provide individual investors with the same level of sophisticated management as institutional investors. We are proud to say that the services our clients receive rival that of large institutions.

In addition to providing portfolio management services, we also provide our clients with the opportunity to access our comprehensive Fee-Only Financial Planning and Wealth Management services. More details are provided regarding our Asset and Wealth Managements services in our Services section.

401K Advice in CT

For those individuals that are employed at Pfizer, General Dynamics, or L&M Hospital, we have a unique 401K service that allows us to directly manage their Fidelity 401K assets, without removing their assets from the 401K plan.

Robert C. Henderson is the President and a financial advisor at LWM. Prior to founding the firm, Mr. Henderson was a financial advisor with a nationally recognized brokerage firm. His previous experience included numerous senior corporate financial positions, including Director of Finance and Accounting and Controller positions. Mr. Henderson holds a BS degree in Accounting from Bentley University, earned the Accredited Asset Management Specialist (AAMS) designation from the College for Financial Planning, and is a Certified Divorce Financial Analyst (CDFA).

Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

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Best Financial Posts of the Week…

Here is a roundup of some of the best posts of last week on the web:

Roger Wohlner, the Chicago Financial Planner, talks about how to Avoid these 9 Investment Mistakes
http://thechicagofinancialplanner.com/2012/08/08/avoid-these-9-investing-mistakes/

Russ Thornton of Wealthcare for Women talks about the importance of the Sequence of Returns in investing
http://www.wealthcareforwomen.com/return-sequence/

Apparently Standard & Poors didn’t think anyone believed that their ratings are “independent and objective”
http://qz.com/101722/sp-amazingly-says-no-one-should-believe-its-ratings-are-independent-and-objective/

Michael Kitces provides some valuable insight on the problem with annuities and potential healthcare shocks
http://www.kitces.com/blog/archives/572-Solving-The-Annuity-Puzzle-Inflexibility-For-Handling-Potential-Health-Care-Shocks-In-Retirement.html

An article by Yours Truly talking about the purpose and value of a Certified Divorce Financial Analyst
http://lwmwealth.com/blog/2013/07/what-is-a-certified-divorce-financial-analyst/

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Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is a Certified Divorce Financial Analyst® and an Accredited Asset Management Specialist. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog,The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

What is The Taper? Don’t Panic

Mount St. Helens** UPDATE **
12/18/2013

Well, there you have it. The Fed has finally announced it plans to being Tapering their bond buying from $85B a month down to $75B a month. Truth be told, the reduction in bond buying is symbolic, nothing more than market window dressing. In reality, it accomplishes nothing, as materially, they are still buying a whole lot of bonds. But what it does accomplish is to acknowledge that tapering has begun, and allow the market to get over its Tapering Phobia. Going forward, this allows the Fed to essentially reduced bond buying at any point, by virtually any amount, without further spooking investors.

What’s Going On?
So here we go. We’ve had QE, The Fiscal Cliff, the Debt Ceiling, and The Sequester. Now we have…The Taper. Sounds like a series of John Grisham novels. Yesterday, Fed Chairman Ben Bernanke spoke about the Fed’s views on the state of the economy and their strategy moving forward regarding slowing or eliminating of the current quantitative easing measures (QE, or buying of bonds) the Fed has been undertaking.

The major concern, and what prompted the vicious selloff in markets yesterday, which has spilled over into today, is that the Fed has been artificially propping up markets with their QE measures. While many have wanted to dismiss the bond buying process as an invalid reason for the market running up the past year or so, the actions of yesterday and today indicate otherwise.

I Don’t Get It
OK, after the credit debacle in 2008, the Federal Reserve Bank (The Fed) began a series of measures to “re-inflate” the economy. Primarily, they began buying up U.S. Treasuries and mortgage securities (known as Quantitative Easing, or “QE”). They did this in multiple “rounds” (ie. QE1, QE2, etc.). By buying these bonds, it pushes liquidity (cash) into those markets. Typically, Fed bond buying is done to lower short-term interest rates (to prompt borrowing which encourages economic activity). However, since short-term interest rates were at virtually zero, they have used the less-conventional method of buying longer-dated bonds to lower long-term interest rates (ie. mortgages).

The other affect that lowering interest rates has on markets, is that investors seeking reasonable returns have seen their interest income plummet over the past few years, which induces them to seek riskier, higher returning investments in the stock market. By doing so, simple economics plays out and stock prices (by virtue of supply/demand) are pushed higher, regardless of economic underpinnings. In a nutshell, the Fed has been artificially inducing economic activity, pushing down interest rates, and forcing investors into the stock market.

So What Just Happened?
Investors are concerned about what will happen once the Fed turns off the QE faucet. All indications are that the Fed will begin to “taper” their purchases of assets over time, as the economy continues to improve. There are some benchmarks the Fed is using to prompt this “taper” of buying, such as a lower unemployment rate (6.5%), and a target inflation rate (roughly 2.5%).

In yesterday’s speech, Bernanke indicated that the economy may be moving along a bit faster than expected, and that the tapering of bond purchases could begin later this year. This prompted a sharp selloff of stocks AND a dramatic rise in interest rates (which directly reduces the price of bonds). The interesting part about the speech was that there was really nothing new that the Fed reported. The news was essentially the same as what we have been hearing and expecting for quite some time. But with investor psychology being what it is, it appears that most people are now feeling like the recent stock market growth has run its course, and is primed for a pullback. This essentially causes a “herd” mentality in the market and investors begin to exit the markets en masse.

Should We Panic?
Much of what is going on right now is knee-jerk panic selling. Lots of institutional investors (mutual funds, high-frequency traders, etc.) are trying to sell ahead of the crowd. Having said that, I have been talking for a year now about how fragile the economy really is, that the stock market was becoming over-heated, and that a “Day of Reckoning” would come. Unfortunately, we have no idea if that day is now. And keep in mind, we also have no idea how far markets can fall once they begin falling.

What is unfortunate is that right now, quite simply, EVERY asset class is getting hammered (U.S. stocks, global stocks, bonds, gold, silver, commodities, etc.). It is one of those very rare situations where poor conditions for both stocks AND bonds are converging.

The good news for our clients is that we have been taking riskier investments off the table for quite some time, and last week reduced our risk exposure even further. This is not to say that we have no exposure to risk at this point. Portfolios are still invested, but the risk has been scaled back. We will be watching markets very closely, and will pare back our exposure even further should conditions continue to deteriorate. The last thing we want to do is sell off much of our portfolios, only to see markets reverse quickly back up (which happens quite often).

In the short-term we simply have NO way of knowing where the market will go. There are no easy “rules” to follow when looking at the short-term picture. The only rule we try to follow passionately is “don’t lose investor money”.

Rest assured that we are watching all of our portfolios and the markets very closely. Should you have any questions, please don’t hesitate to let me know.

Robert Henderson is the President of Lansdowne Wealth Management, an independent, fee-only advisory firm in Mystic, CT. His firm specializes in financial planning and investment management for retirement, with a special focus on the particular needs of women that are divorced or widowed. He is an Accredited Asset Management Specialist and a Certified Divorce Financial Analyst. Mr. Henderson can be reached at 860-245-5078 or bhenderson@lwmwealth.com. You can also view his personal finance blog, The Retirement Workshop at http://lwmwealth.com/blog and the firm’s website at http://www.lwmwealth.com.

See my Google+ Profile