ProVise Bullets

As the snow finally began melting in the North, the negative impact on the economy also began to melt away. While the weak jobs number for March was revised downward from 126,000 to only 85,000, the April jobs number bounced back with 223,000 non-farm jobs. Private jobs, primarily represented by services, healthcare, and construction, produced all but 10,000 jobs which were created by government. The headline unemployment number dropped to 5.4%, the lowest since the beginning of the financial crisis in 2008. While the work week hours remained static at 34.5 hours (a negative), the average wage increased by 2.2% from a year earlier, a positive sign given the weak wage increases of the past few years. What does all of this mean? Well, as the saying goes, it depends. The downward revision of the March number might mean the Fed is definitely not going to raise rates in June, and maybe not even in September. On the other hand, it means the economy survived another brutal winter and a big rebound like last year might occur. We find ourselves looking for a rocky spring and summer in the market while the rebound is still debated, but by year end many of the negative attributes like lower oil prices and a stronger dollar will be mitigated. In short, we are not heading into a recession and the market needs to rest while earnings catch up.

· A few years ago the folks at PIMCO Total Return Bond Fund were sitting on top of the world. They managed $292.9 billion at their zenith and held the title of the world’s largest bond fund. But from that point, after a couple of tough performance years, we learned of the internal strife that was tearing the organization apart. Make no mistake, there were/are great managers at PIMCO, but internal feuding severely damaged the reputation of the fund’s managers. Now after 24 months of withdrawals and redemptions, including $5.6 billion last month, PIMCO lost the title of world’s largest bond fund. With assets of “only” $110.4 billion, they passed the mantle to Vanguard’s Total Bond Index Fund which now has $117.3 billion. Getting to the top is one thing, but staying there is another thing.

· So Gen X and Gen Y, are you expecting to fund your retirement with an inheritance from Mom and Dad? Aw, come on, isn’t that the real reason that you have not started saving as much as you should to fund your own retirement? Well, have we got some bad news for you. According to a survey by HSBC Holdings PLC of 16,000 people in 15 countries (1000 from the US), 23% of pre-retirees would like to spend their last dollar with their last breath and let the kids figure it out on their own. Only 9% of the pre-retirees found it important to leave a legacy for the children. However, even those who want to spend it all think it is important to help children and grandchildren financially during their retirement.

· One of the many questions we often need to help clients answer as they head into retirement is whether to pay off the mortgage or not. For many people, it generally makes financial sense after taxes to keep the mortgage, but traditionally most people just don’t want to make that payment every month. It just “feels good” not to have a payment every month. But today given the low interest rates and a six year bull market, many retirees are choosing to keep the mortgage or obtain one if they are buying a retirement home. A recent study by Merrill Lynch and Age Wave reveals that 64% of retirees expect to move at least once and 37% have already done so. Twenty-seven percent are seriously thinking about it. And not all of this comes as a result of downsizing as 30% of those who have already moved upsized to a larger home primarily to make room for visitors and family. For those who do take out a mortgage, or keep one, it is important to understand all of the fine points before making this important decision.

· When Mom, Dad, Grandma, and Grandpa retired, 65 was the generally accepted age. It was the norm for a long time. In the early days of working, many Baby Boomers said they wanted to retire by 55 and a handful did, but many others continued working because they wanted to or had to. While some had excellent plans, life has a way of getting in the way. In a recent survey, the Employee Benefit Research Institute discovered that 50% quit working earlier than they expected. Health issues were the culprit in 60% of those situations, while 27% cited changes at the company, and most interestingly, 22% stopped to care for a family member. Additionally, New York Life found in their own survey that 51% of retirees wished they had retired sooner so that they could have enjoyed retirement while they were younger and healthier. On average they wanted to retire four years earlier than they did. Retirement is not at a certain age anymore, it is a time in life that comes to each person differently. For some retirement is that time in life when work becomes optional, but for others they are forced into it, while others never seem to get there at all. In all cases, however, people are better prepared when they have a plan that addresses the most anticipated contingencies. Is it time to update your retirement plan? Give us a call to schedule an appointment. (Source: Investment News)

· So you have updated your estate plan and are pleased with yourself for getting this important project done. It isn’t easy to think about planning for what happens after you are gone, but a lack of planning is even worse. By many accounts, almost 50% of all decedents die without a will which means the distribution of assets will occur based on state law. In most cases this isn’t what you want, so congratulations on getting it done. But now that you are finished with the attorney are you really done? Yes for some, but for others, absolutely not. What else could be left? Have you thought about sitting down with the kids and making sure they understand all that you have done? No, we don’t mean you have to go into all of the intimate details of your personal finances, but we do mean giving them a high level overview of your personal wishes for final arrangements and an explanation in general terms of what will happen.

As an example, when one client of ours visited with his children and shared that he had prepared a list of personal items of who would get what, one of the children said, “I hope you put me down for the cast iron skillet”! Who would have thought something so small could be so important. It turned out that his mother each year for his birthday made him a pineapple upside down cake in the skillet and it was important. Not all situations are so simple with respect to the distribution of assets. Are you the owner of a closely held business in which one child is involved and others are not? Do you have a plan? Are you worried about your daughter being married to “that bum”, or a son married to “that woman”, so you decided to leave their assets in a trust rather than outright? Are you excluding a child, or perhaps favoring others? What about the child that does/is taking care of you in your later years…do the other children appreciate how you might treat the caretaker differently? Maybe you want to give it all to charity; will the kids understand? The list goes on and on.


©5/15/15 ProVise Management Group, LLC

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