This is an unusual year-end tax planning season. The pace of federal tax law reform has increased in the four decades and accelerated since the pandemic.
It’s only mid-September, but please begin to think about year-end tax planning. This is an unusual year for tax planning. Not only has the stock market been volatile but new rules about distributions from IRAs and federally qualified retirement plans (QRPs) – such as 401(k), 403(b) and defined benefit plans –became effective this year, and the newly-enacted Inflation Reduction Act also adds some planning opportunities.
In case you missed it, sweeping new rules on distributions from IRA And Qualified Retirement Plans (QRPs) went into effect at the beginning of 2022.
This is a heads up for anyone deciding on how to designate beneficiaries of an IRA based on advice from an IRA custodian call-center employee.
The unusual financial economic events of the last couple of years have caused great financial disappointment for some Americans.
The extreme financial effects of the COVID-19 pandemic seemed unprecedented to most investors. Over the past two years, Americans witnessed a sudden stop financial crisis in March 2020, the injection of nearly $10 trillion of monetary and fiscal stimulus within a matter of months, and an unanticipated burst of inflation that caught even the Federal Reserve off guard. The truth, however, is that these events seem anomalous only because many historical parallels have disappeared from our collective memory. In fact, there are no living Americans who recall the two most relevant events — the onset of World War I in July 1914 and the post-World War I/Great Influenza inflation of 1919-1920.
Inflation cooled in June, according to Labor Department data. Compared to the +9.1% inflation rate in the 12 months through June 30, the consumer price index (CPI) in the 12 months through July 31 increased by +8.5%. The Standard Poor's 500 rallied +2.1%.
In the three tumultuous months of the second quarter, the Federal Reserve of Atlanta’s algorithm for estimating quarterly economic growth was far more accurate than consensus forecasts by leading economists. That’s unusual.
Volatility in the stock market has increased. Recently we actually hit some down days of -3.6% and -4% in the stock market. That shakes people up. But remember why you bought stocks.
By our count, the bear market of 2022 is the latest of more than 20 market crises that came and went since 1957.
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Feeling Stressed About Money? You’re Not Alone
Published Wednesday, June 8, 2022 at: 7:55 AM EDT
If you’re feeling stressed about inflation, the War in Ukraine, Covid-19 subvariants, you’re not alone.
“Amid historic inflation spike and geopolitical strife, money and economic stress is mounting,” according to the latest results of a poll by the American Psychological Association (APA) and The Harris Poll. “These more recent findings were alarming,” according to APA. “Stress about money is the highest recorded since 2015.”
More adults rate inflation and issues related to the invasion of Ukraine as stressors than any other issue asked about since the Stress in AmericaTM survey began in 2007. Top sources of stress cited by those surveyed were rising gas, energy, grocery, and everyday expenses, followed by supply chain issues and global uncertainty.
Investing is an emotional experience as well as financial. Even if you objectively know you have more than enough money to last the rest of your life, times of high-anxiety can test your ability to tolerate risk and stick with your long term plan.
Even if you are not a good fit as a client, as a trusted source of financial, tax, and investment planning solutions, it would be a privilege to point you to a resource that might be able to help you, if you’re feeling stressed over the economy and your personal financial situation. We’re here to help.
The Federal Reserve raised lending rates by a half-point on May 4 and plans two more half-point rate hikes this summer, on June 15 and July 27 and may impose yet another half-point hike on September 21. The Fed’s power to change rates is a blunt instrument, a crude rudder on the world’s largest economic system. So, the Fed historically raises lending rates in quarter-point increments.
By stacking half-point hikes one after another, the Fed is hoping to convince consumers inflation will not become a long-term problem. But will the Fed raise rates too much and tip the economy into recession?
The latest data on the economy indicate that the Fed just might be able to engineer a soft landing in which it would hike lending rates just enough to slow economic growth but not so much that it causes the economy to shrink.
New-job formation in May was better than expected. Even after the Fed announced that it planned a series of half point hikes, business created more new jobs than predicted. The latest inflation data showed that inflation slowed for the first time in about 18 months.
Meanwhile, purchasing activity at large service sector companies declined in May. The service sector accounts for 89% of U.S. economic growth and it was boiling hot at the end of 2021 but has now declined to a level in line with its historic norm. The data give reason to believe that the Fed could indeed stamp out inflation without causing a recession, but it’s far from clear.
The pandemic has made America’s labor force smaller. People around retirement age – age 62 to 70 -- left the workforce during the pandemic, according to data from independent economist Fritz Meyer, and many are unlikely to return to work. Fewer workers puts pressure on wages and could result in a wage-price spiral in which inflation expectations lead to demand for higher wages, which drives up labor costs and prices.
With the series of rate hikes coming up, economic and stock market uncertainty and a long, hot summer are in the forecast. In this period of high anxiety
The stock market is not a fan of economic drama. As what may be a long, hot summer of 2022 got underway, the Standard & Poor’s 500 stock index closed this Friday at 4,108.54.
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