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Quarterly Considerations 06/30/2019

Two Different Stories – The average 401(k) account balance is $92,148, but a more accurate representation of how much workers have saved is the median amount of $22,217, according to Vanguard. As a plan sponsor, boosting auto enrollment and escalation programs may help with retirement readiness.

Not So Fast – In the Thole v. U.S. Bank case, the U.S. Supreme Court will address whether defined benefit (DB) plan participants can sue for fiduciary breaches (such as a prohibited transaction) even if a plan is overfunded and participants did not experience a monetary loss. We will keep you updated as the case progresses.

Endowment Tax – The Federal Reserve (Fed) released rules on July 1st defining how private schools will determine how much they will owe on their investments under the new 1.4 percent excise tax. The tax impacts approximately 25 to 40 private schools with at least 500 tuition-paying students and endowments of at least $500,000 per student.

Social Security Confusion – Recent studies claim that almost all American retirees claim Social Security at the wrong time. Collectively, this translates to missing out on $3.4 trillion in benefits before death. We can help you evaluate your different Social Security claiming options and choose the optimal strategy for you in the context of your overall financial picture.

Fed Watch – While the Federal Open Market Committee (FOMC) did not elect to change rates at its June meeting, various Fed officials have indicated that rate cuts are warranted given potential risks to global growth and inflation that has continued to run below its desired target. Currently, futures are pricing in a greater than 90 percent chance of a 0.25 percentage point rate cut and nearly a 75 percent chance that the federal funds rate will be lower by 0.50 to 0.75 percentage points by year-end. We are here to help you understand the potential short-term impacts of a rate cut amid the perspective of longer-term investment objectives, risk tolerance, and time horizon.

Investing for Change – Have you considered aligning your investment portfolio with your values? In 2018, according to the US SIF Foundation, more than 25 percent of investments under professional management in the U.S. were following mission-aligned investing. We can help you navigate the current environmental, social, and governance investment options and explain how you could achieve a measurable positive impact with your portfolio.

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