It’s tax time and if you haven’t filed yet, you’re probably wondering whether you will be receiving a refund or owing more. Many are uncertain about how the new tax laws will affect them.  Don’t confuse a change in your refund with a change in your total tax liability.  The key is to compare taxes paid in 2017 to taxes paid in 2018 – that (not your refund) will tell you how the tax law affected your household.

April 15th is the deadline to fund your Roth IRA, SEP IRA and Traditional IRA for tax year 2018. If your taxes are prepared by a professional make sure both your advisor and tax preparer know what you have decided to do in terms of contributions. If you prepare your taxes yourself, and determine that you can contribute to a Roth or IRA, make sure you do so BEFORE the 15th. Most payments must be posted or postmarked by the 15th. Every investment firm may have different deadlines depending on the custodian (place your investments are held) so double check. And DON’T WAIT!! Make sure it’s done as soon as possible to prevent any errors. The last thing you want is to have to refile your taxes.

For SEP IRA’s (Self Employed Plan) you do have an extension if you filed for an extension on your taxes. IRA’s and Roth IRA’s DO NOT have an extension. They must be deposited by the 15th of April, regardless of whether you filed an extension.

Don’t assume you contributions are done automatically –call and make sure you have made those contributions and that they correspond to what is filled out on your tax form. Forms from custodians that verify your contributions aren’t mailed until May, but it’s too late to change anything by then. The maximum contribution for 2018 is $5,500 for Roth and IRA contributions, increasing by $500/year to $6,000 for 2019.

In December, the US stock market dipped BELOW a rather important trading floor in equity valuations, as well as seeing the possibility of an INVERTED bond curve (short term bonds yielding more than long-term bonds).  This has already reversed and is why bonds and equity prices are down at the same time.

And even more recently the stock market is responding to slowing manufacturing, shut down and trade talks.  Then the market moves higher on the Federal Reserve statements of possibly less interest rate moves higher next year.  Wage growth is up, highest in 10 years and job numbers are up. Most of this is short term noise.  Some of the bright spots are increasing incomes and higher retail sales.

U.S. Markets:  U.S. stocks recorded their fourth consecutive week of positive returns, continuing to build on their very strong start to 2019.  The gains pulled most of the large-cap benchmarks out of correction territory, back to within 10% of their recent highs.  However, the NASDAQ Composite and the smaller-cap benchmarks remained below that threshold.  The Dow Jones Industrial Average surged 710 points, or 3.0%, last week closing at 24,706.  The technology-heavy NASDAQ Composite rallied 2.7% ending the week at 7,157.  By market cap, the large cap S&P 500 rose 2.9%, while the mid cap S&P 400 added 3.0% and the small cap Russell 2000 gained 2.4%.

International Markets:  Like the U.S., major international markets were also in the green across the board.  Canada’s TSX Composite rose 2.4% while the UK’s FTSE managed a 0.7% gain despite Prime Minister Theresa May’s Brexit deal failing to gain approval.  On Europe’s mainland, France’s CAC 40 rose 2.0%, Germany’s DAX added 2.9%, and Italy’s Milan FTSE gained 2.2%.  In Asia, China’s Shanghai Composite rose 1.7%, while Japan’s Nikkei gained 1.5%.  As grouped by Morgan Stanley Capital International, emerging markets rose 2.0% last week and developed markets gained 1.7%.

Commodities:  Given that precious metals are traditionally a “safe-haven” in times of market weakness, it comes as no surprise that they finished down for the week in which equities were strong.  Gold retreated 0.5%, closing at $1282.60 an ounce, while Silver fell -1.6% to $15.40 an ounce.  Oil continued its sharp rebound, rising 4.8% to $54.04 per barrel of West Texas Intermediate crude—its third consecutive weekly gain.  Copper, viewed by some analysts as a gauge of world economic health due to its variety of industrial uses, finished the week up 2.1%.

U.S. Economic News:  The number of Americans applying for first-time unemployment benefits fell slightly last week to a five-week low, though more federal workers sought financial assistance due to the government shutdown.  The Labor Department reported initial jobless claims declined by 3,000 to 213,000, lower than the consensus forecast of a 220,000 reading.  New claims fell to their lowest level since early December and are nearing the 50-year low of 202,000 reached last September.  The less-volatile monthly moving average of new claims declined by 1,000 to 220,750.  Continuing claims, which counts the number of people already receiving unemployment benefits, rose by 18,000 to 1.74 million.  That number is reported with a one-week delay.

There are plenty of things to be optimistic about, however, as you approach the “retirement red zone” (5 years preceding your retirement through 5 years after your retirement).  Now is a time you may want to be more cautious with your life savings, especially if you are planning on beginning withdrawals soon.  Most of you have diversified portfolios with us and we’ve already adjusted.  However, if you have assets that are not managed by us, make sure you let us know.

We suggest you take a close look at your personal situation and let us know if anything has changed.  Our philosophy here is to make sure you aren’t as exposed to the stock market if you are taking withdrawals.

For those of you with a plan, this is what we built it for.  More than likely our suggestion would be to do nothing.  For those of you that are not sure please call or email us if you would like to discuss this or schedule an in-person visit if you wish to meet here at our office.

Keep in mind that every single person’s individual situation is unique and there are multiple things to consider including timeline, income needs, personal goals and objectives.

Now is the time for anyone on Medicare to consider whether changes need to be made in their coverage. The annual Open Enrollment period ends Dec. 7th, 2018. You may have seen commercials advertising how easy it is to change your plan. But wait, is it necessary? Have you moved? Has your health changed? Have your prescriptions changed? Has you financial situation changed? Have you run into problems with finding providers?

If you answered “yes” to any of the above questions you should probably investigate whether a change makes sense for 2019.
If you are eligible for Medicare and did not enroll in Medicare B or Part D, there may be penalties. You have 3 months before and 3 months after the month you turn 65 to enroll. After that you accrue penalties that will be with you for your lifetime on Medicare. If you’re in this boat, do not delay!

What is Medicare?
Medicare can seem like an alphabet soup: Parts A and B comprise “traditional” Medicare coverage. Part A is for in-patient care and Part B covers out-patient services. Part D is for prescription drugs. These building blocks of Medicare, however, have deductibles and do not provide 100% coverage. Most people opt to supplement traditional Medicare with a MediGap (Supplement) plan and a Part D prescription plan or choose a Medicare Advantage plan that packages all their Medicare benefits and includes prescription coverage. In all cases, the Part B premium ($135.50 in 2019) must be paid.
Medicare Advantage programs are available through private health insurance companies with networks of local providers; monthly premiums can range from $0 to $200. Then you “pay-as-you-go” – a copay or percentage coinsurance each time you access a medical service. Advantage plans cover everything that Medicare covers and additionally can offer extra benefits – limited dental, vision, hearing and even gym memberships. And drug coverage is included with the plan.

With Medigap (Supplement) plans you can choose different levels of coverage but, once you pay the monthly premium (in the $150-$200 range for 65 year olds and likely to increase with age), there are no copays or deductibles for any medically necessary services that traditional Medicare covers. It’s a “pre-paid” plan and the cost for your health care is known and predictable. Since it doesn’t include Rx coverage, most people choose to add a Part D plan. Usually there are no extra benefits such as those offered by Advantage plans. And, while Advantage plans have to accept any applicant; Medigap plans can – after a person’s first six months on Medicare – deny coverage for health reasons to new applicants. While any year you could switch from a MediGap to an Advantage plan, you might not be able to go the opposite direction.

Traveling?
Advantage plans have contracted networks of local providers. HMO plans limit coverage to their local network; PPO plans allow you to go outside the network for somewhat higher copays. MediGap (Supplement) plans are national rather than local and will cover any provider who accepts Medicare and may be a better choice for snowbirds or others who expect to spend time out of the area. All plans, however, will provide emergency coverage, often world-wide, but may require you to return to your local network providers to receive follow-up care. Usually separate travel insurance is recommended for international travel.

Need Help?
Lots to think about but it can make a big difference in your costs and health over the long run. Need help sorting out your options? SHIBA volunteers are trained to help. Call 541-812-0849 to schedule an appointment; there are some times still available next Monday, December 2.