Posted By Lineweaver Financial Group
December 10, 2024
Category: Market Commentary, Jobs, Market
This month we are focusing on the U.S. labor market. While having cooled from its red-hot state, it has settled into a relatively healthy position. Following a month of hiring disruptions due to hurricanes and strikes, businesses added 227,000 jobs in November. However, the uneven nature of recent job growth has led many to question the true health of the labor market.
Employment growth in 2024 has been concentrated in a few key sectors, primarily health care and government, which have contributed 41% and 21% of this year’s job gains, respectively. Healthcare’s hiring dominance seems less concerning as the sector is still addressing pandemic-related backlogs. However, employment growth dominated by the public sector, which tends to see increased hiring later in the economic cycle, may be viewed as a warning sign. That said, there are important nuances to consider.
Government employment as a sector currently accounts for 14.7% of total payrolls. Of the 21% growth referenced above, 90% has come from state and local levels, which appears less troublesome. Moreover, the sector’s share of payrolls remains below its pre-pandemic (2014 – 2019) average of 15.3%, suggesting its recent outsized growth reflects the continued uneven normalization of the labor market post-pandemic. Outside of these two sectors, sluggish manufacturing activity has been a headwind. Still, some cyclical sectors, including construction, leisure, and transportation, have se
Posted By Lineweaver Financial Group
December 10, 2024
Category: Tax
With the holidays right around the corner, it is a great time to explore tax-friendly ways to give money to loved ones or your favorite charities during the holiday season. The following are some great ways to transfer money to others before the end of the year:
Qualified Charitable Distributions (QCDs)
If charitable giving is already part of your financial plan, then qualified charitable distributions, or QCDs, are a great way to contribute to your favorite charities throughout the year. If you are 70 1/2, you can donate up to $105,000 to a charity directly from your IRA using a QCD in 2024. In 2025 this amount will expand to $108,000. By utilizing QCDs, the taxable portion of your RMD will be reduced dollar for dollar by the amount given to a charitable organization. This will reduce your federal and state taxes without having to itemize your deductions.
Gifting and 529 Plans
In 2024, individuals are allowed to gift up to $18,000 to another individual without having to report it to the IRS. By staying under the $18,000 limit, there will be no future tax implications for estate taxes. The $18,000 limitation is per gift to an individual, meaning you can make multiple gifts to different individuals before the end of the year as long as they are under the limitation. In 2025, the limitation per gift will increase to $19,000.
Gifting to 529 plans is a great way to plan for future education expenses. Gifts to 529 plans are eligible for a state tax deduction. In 2024, Ohio
Posted By Lineweaver Financial Group
November 13, 2024
Category: Market Commentary
As the dust settles post-election, investors are keenly assessing what the next four years might bring. Despite the policy uncertainties that accompany a unified Republican government, the economic outlook remains largely stable. Additionally, market fundamentals look strong and matter more for returns, especially over the long term. The U.S. economy continues to be a straight A student, with GDP growth above trend (3Q24: 2.8% q/q saar), full employment (October unemployment rate: 4.1%), and low inflation (September CPI: 2.4% y/y), as shown in the chart below.
Consumers are maintaining their spending habits despite dissatisfaction with mortgage rates, which are higher than before the pandemic, and the price increases of the past few years. However, this confidence may be shifting, as evidenced by the Consumer Confidence Index's significant monthly increase—the largest since March 2021—rising to 108.7 in October from 99.2 in September. Notably, all five components of the index improved, indicating growing confidence in future job availability and stock market gains.
This economic environment is favorable for equity markets. Declining interest rates and real wage gains are positive for consumer spending, and S&P 500 operating margins are 8% above long-term averages, showcasing the dynamism of U.S. companies. Additionally, secular trends continue to encourage corporate investment. Besides high valuations, there are few
Posted By Lineweaver Financial Group
November 06, 2024
Category: General
A bunch of monsters and ghouls took over the office on Halloween, and we had the photos to prove it! The LWA Team had a blast dressing up for Halloween, but while the season may be all about tricks and treats, it’s also a reminder of the importance of community and teamwork.
Events like these bring us closer together, allowing us to share laughs and enjoy our team members' creative sides. We hope your Halloween was filled with fun, family, and
Posted By Lineweaver Financial Group
October 31, 2024
Category: Tax, Tax Strategy, Tax Brackets, Tax Planning
With the year coming to a close, now is the perfect time to start thinking about tax planning to maximize savings for 2024. Many opportunities for tax adjustments close at year-end, so early preparation can be key to achieving the best possible results. Here are some strategic tax planning tips to consider for the final quarter of the year.
The last quarter offers a unique opportunity to review income, deductions, and potential tax-saving strategies while there's still time to act. For business owners, deferring income until next year or accelerating expenses can provide tax advantages. Charitable contributions and pre-paying taxes are also options to consider. Accelerating certain expenses, like equipment purchases, may allow for deductions in 2024, helping to reduce this year’s taxable income.
Another useful strategy comes in the form of tax loss harvesting, which involves selling securities at a loss to offset capital gains. Although the final position of your portfolio won’t be set until year-end, starting a review now provides time to make adjustments and capture potential tax benefits.
The last few months of the year also provide an ideal time to maximize contributions to retirement accounts like 401(k)s, 403(b)s, and 457 plans. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can still be funded, providing further tax advantages.
If you’ve turned 73 this year, it’s essential to plan for the required minimum dis
Posted By Lineweaver Financial Group
October 17, 2024
Category: Legacy Planning, Inheritance, Beneficiary, Wealth Transfer
While many people equate legacy planning with estate planning, they are not the same. Estate planning is a component, but legacy planning involves more than simply deciding who inherits your assets—it's about ensuring your wealth is passed down efficiently and according to your wishes.
To help you get started, here are four essential questions to ask when preparing your finances to pass to your loved ones.
1. Is Your Beneficiary Information Up-to-Date?
Every financial account you own—from retirement accounts to life insurance policies—requires a beneficiary designation. This can include primary and secondary beneficiaries, and you may even have multiple beneficiaries per account. It’s vital to review this information annually to ensure its accurate and reflects your current wishes.
Ask yourself:
Have there been any life changes, such as a marriage, divorce, or birth, that might affect your choices?
Is the contact information, including addresses and phone numbers, up to date?
It’s also wise to have a conversation with your beneficiaries so they understand what to expect. Additionally, consider assigning a Financial Power of Attorney for each of your accounts, and discuss the responsibility with that individual to make the process as seamless as possible in the event of your passing.
2. Are Your Beneficiaries Aligned with Your Wealth Transfer Strategy?
Our beneficiaries are often family members—children, grandchildren, ni
Posted By Lineweaver Financial Group
October 03, 2024
Category: General, Stock, Finance, Market Commentary
We have been highly constructive on U.S. large-cap stocks in our investment strategies since October 2023. We remain optimistic generally into 2025, but as we enter fall, we think it is prudent to be slightly more cautious as some facts have changed over the last several weeks.
First, our analysis of earnings surprises and estimate revisions has detected some cooling trends, suggesting potential moderation of the earnings advantages that catalyzed much of the rally this year so far. Our research also reveals the autumn period in October through mid-November in presidential election years has tended to be more volatile than usual, with increased vulnerability to downside moves. The elevated uncertainty surrounding the upcoming election adds additional complexity. Given the sharp divide in the parties’ expected policy and the expectations of a close race, many real economy actors are delaying major capital allocations and business-defining bets to after election night. In this state of uncertainty, any lack of market liquidity has the potential to trigger volatility. This may be compounded if the final outcome of the election is delayed, as we saw in 2020. Finally, recent changes in market temperament have also caught our attention and give us pause. Relatively tranquil gains in large-cap stocks for most of the year have been disrupted recently with larger single-day selloffs, rotations, and V-shaped snapbacks, which may be signs of a market more susceptible to headlin
Posted By Lineweaver Financial Group
September 05, 2024
Category: Strategy, Finance, Retirement Plan
When you retire, it's normal to wonder if you'll have enough money to cover all your needs. This can be especially worrying when you're advised to focus on long-term investments to make sure you have enough money for the rest of your life. Don't worry, though - there are several strategies you can use, like the "Three Bucket Strategy," to help with this.
With this strategy, you take your retirement portfolio and divide it into three buckets. The first is used to fund day-to-day expenses. The third bucket funds longevity. And the middle is the go-between or transfer place to refill bucket number one as it is depleted.
Now, let’s break it down further and take a look at bucket one. In there, you’ll find income-producing assets that could include CDs, money market funds, US Treasuries, pensions, fixed annuity, and Social Security funds – all things that will not decrease in value and are accessible when needed. Basically, this bucket is meant to provide money to live. If you place an amount that will cover about two years of expenses in this bucket, you won’t have to be concerned if the economy or investment markets take a dip. But what if you want to plan for longevity?
That’s where bucket three comes in. In this bucket, you will find stocks, high-yield bonds, real estate, and other higher-return assets. All of these are long-term investments geared toward helping you keep from running out of money as the years pass. Co
Posted By Lineweaver Financial Group
August 22, 2024
Category: Financial Advisor, CFP, Finance
When it comes to planning for retirement, managing investments, or simply trying to get your financial house in order, you want a financial advisor who can help get you to your goals. But how do you know when it’s time to make a change and find a new advisor?
First, let’s talk about the red flags. If your financial advisor isn’t communicating with you regularly or isn’t transparent about the fees they’re charging, it’s a sign that it might be time to look elsewhere. Your financial advisor should be proactive, keeping you informed about how your investments are performing, and how any changes in the market might affect your financial goals. If you’re left in the dark, it’s a clear indication that your advisor might not be prioritizing your best interests.
Let’s not forget the importance of trust either. Your financial advisor should be someone you feel comfortable with—someone who listens to your concerns and takes them seriously. While experience, knowledge, and credibility are all important, doing what’s best for the client is perhaps the most important thing a financial advisor can do.
That’s why when you’re evaluating your current advisor, you should check if they’re a CERTIFIED FINANCIAL PLANNER ™ Professional, or CFP®. There are many designations that mean different things, and it’s always important to choose an advisor with demonstrable credentials that align
Posted By Lineweaver Financial Group
August 08, 2024
Category: General, Retirement, Financial Planning
As you near retirement, you're probably thinking a lot about your finances and wondering if your savings will be enough for your retirement years. While it's important to pay attention to your 401(k), IRAs, and Social Security benefits, you might not have considered one of the most important aspects of retirement: the psychological phases you'll go through during retirement.
Understanding the emotional and mental changes that come with retirement can make the experience easier. It can help you not only financially but also enjoy a fulfilling retirement with a sense of purpose and well-being.
In an article on Yahoo Finance, Dr. Riley Moynes, the author of “The Four Phases of Retirement: What to Expect When You’re Retiring,” explains how he interviewed 150 retirees about their experience and outlined key phases that can occur. Click here to read more about his insights and explore the four phases of
Posted By Lineweaver Financial Group
July 26, 2024
Category: Markets, Finance, Outlook
News headlines have been volatile this year with many geopolitical issues, economic worries, and, most recently, President Biden exiting his re-election campaign. Nevertheless, the stock market has done well and continued to “climb the wall of worry.” This reality serves as a good reminder that ignoring most news headlines and political noise is typically the best investment strategy.
Since the start of the year, we have maintained a positive outlook and positioning, especially with U.S. large-cap stocks. That is because of our view that AI-related investments, onshoring, and cooling inflation will benefit earnings for these types of companies the most.
Despite some choppiness, the data tells us this scenario is playing out as expected. With manufacturing surveys softening and business confidence muted, markets may begin to over-discount a sharper slowdown. Nevertheless, we continue to believe that the pace of economic growth is moderating at a goldilocks pace, and inflation is cooling sufficiently to allow the Federal Reserve (Fed) to begin easing before the end of the year. We expect U.S. growth to be close to trend at about 2.0% by the fourth quarter and inflation to continue cooling toward the Fed’s 2% target by mid-2025. This should be a good environment to support our view on equities overall and offer a positive environment for bonds.
Outside the U.S., the European economy is expanding once again, activity in China i
Posted By Lineweaver Financial Group
July 16, 2024
Category: Finance, Legacy, Trust, Will, Estate
Estate and Medicaid planning are crucial components of financial strategy, as they can help protect your assets and secure your legacy. A powerful tool in this domain is the Irrevocable Trust, a fiduciary arrangement that offers numerous benefits while maintaining control over asset distribution. There are many intricacies with irrevocable trusts and they can potentially help enhance your estate-planning efforts.
What is an Irrevocable Trust?
A trust is a legal relationship where a grantor transfers assets to a trustee, who then manages these assets for the benefit of designated beneficiaries. Trusts serve various functions, such as reducing estate taxes, minimizing or avoiding probate, funding charitable gift strategies, and facilitating Medicaid planning.
An Irrevocable Trust, as the name suggests, is a trust that cannot be modified or terminated once it is established. This can allow you to get assets out of your estate, which could potentially be helpful for estate and Medicaid planning. Trusts like these are ultimately about giving you control of your assets, your estate plan, and, ultimately, your legacy.
One possible benefit of an Irrevocable Trust is its ability to help avoid probate court. Unlike a will, which must go through the often lengthy and public probate process, a trust can offer the grantor better control of how, when, and to whom money passes. Many parents find this comforting if they have children who are not good with money or if they simply want to
Posted By Lineweaver Financial Group
June 20, 2024
Category: CFP, Financial Planner, Professional, Finance
When searching for a financial advisor, you might notice the alphabet soup following their names. There are over 100 certifications available to financial professionals, all with different meanings and specializations. But among the most distinguished is a CERTIFIED FINANCIAL PLANNER ™ Professional, or CFP®. There are several reasons why it is considered such an important designation, and one you should look for in your financial planner.
Reason 1: Education, Experience, and Credibility
The CFP® designation, offered by the CFP Board, is significant because it requires an impressive amount of study, experience, and preparation. It takes from nine months to two years of study, and that’s after earning a bachelor’s degree and a minimum of three years of working as a financial professional. A candidate is then required to sit for a rigorous test that covers many different areas of financial planning.
Reason 2: the CFP® Indicates a Holistic Approach
Training and experience for a CFP® don’t end at financial planning. While they receive rigorous experience and training in financial planning, a CFP® also receives education and experience on a wide range of related topics, such as risk management and insurance planning, investment planning, tax planning, and estate planning. This comprehensive experience helps a CERTIFIED FINANCIAL PLANNER ™ Professional to be a sounding board for clients and helps to consider th
Posted By Lineweaver Financial Group
June 13, 2024
Category: Finance, Annuity, Strategy, Annuities
Annuities have been in insurance agents' and financial advisors’ toolkits for decades. It’s a product designed to provide a steady income stream for retirees. It’s no secret that annuities have been a popular option, but are they always the best investment choice? Here’s the rundown of the pros and cons of annuities. Let’s see if they could be suitable for your financial strategy.
Firstly, it's crucial to understand that every financial strategy has its place, including annuities. Many people value the relative financial security annuities can provide. However, annuities come with several drawbacks. One major issue is the lack of liquidity – meaning once you invest money in an annuity, you are often limited as to how and when you can get it out. At the very least, they’ll likely have a surrender charge. Some have even more limitations – like how much they can withdraw each year!
Often, these products aren’t fully explained at the time of purchase, leading to confusion and frustration down the road. By the time you encounter an issue, the original salesperson may no longer be available to assist, leaving you to navigate the complexities on your own.
So, there can be many challenges annuities offer, but how would investors know? Annuity companies are required to report all details to a third-party service. We can access these tools and provide you with a no-obligation annuity intelligence report. Thi
Posted By Lineweaver Financial Group
May 23, 2024
Category: Taxes, Social Security, CDs, Retirement
Recently, we've been hearing from people who have been enrolled in Social Security, seeing their taxes go up, and not understanding why. There are ways to keep more of your retirement income, but first, let’s look at how it can be taxed.
We know that Social Security benefits aren’t tax-free. In fact, up to 85% of the benefits you receive each year could be subject to tax, depending on your household income. Moreover, 100% of your withdrawals from traditional IRAs and traditional 401(k)s will likely be considered taxable income.
When making these withdrawals, we work closely with our clients to ensure they’re taking what they need but not enough to push them into the next tax bracket. We’ve recently encountered individuals who took advantage of high interest rates by putting their money in CDs or money market accounts. The interest on these is taxed at the same federal income tax rate as the money you receive from paid work, which is why people are seeing their income tax rates jump into the next bracket. That's why it's crucial to collaborate with a tax professional to develop a strategy to mitigate that sudden increase, just like we would with IRAs or 401(k)s.
Furthermore, the Tax Cuts and Jobs Act of 2017 is set to sunset on Jan 1, 2026, which could exacerbate the problem further. When the Tax Cuts and Jobs Act of 2017 ends, this means tax rates will revert to their previous higher levels. The act doubled the standard deduction and
Posted By Lineweaver Financial Group
May 01, 2024
Category: Retirement
Workers are not new to the idea of saving as much money as possible for retirement. However, there is less conversation about spending the money they’ve worked hard to save, and that shift can cause stress in any retiree's life.
Major worries among retirees include not being able to spend as much as before retirement, not being able to leave money to beneficiaries, facing unknown healthcare expenses, and outliving their money. If you don’t have a strategy in place to help pay for these expenses, you could end up making a mistake that will cost you more in the long run.
For instance, we talked to a client who wanted to add an addition to her home. Her original plan was to take the money from her IRA to pay for it, which would have been close to $150,000 before tax.
If she proceeded with that, she would have increased her tax bracket, increased taxes on her social security, and increased her Medicare premiums. For example, her Medicare premiums alone would have increased by over $5,000/year.
However, because we were able to coordinate her strategy with our in-house tax team, we were able to suggest a better alternative strategy and engineer a solution that fit her specific needs. We took about one-third of the money from her IRA, which kept her tax bracket and premiums the same. Then, we worked with her to get a home equity line of credit or HELOC. Finally, we were able to use dividends from her portfolio– which
Posted By Lineweaver Financial Group
March 07, 2024
Category: Healthcare, Retirement, Finance
If you're anything like most Americans, healthcare costs can be a big concern when you're planning for retirement. That's why it's essential to keep them in mind as you're getting ready for your golden years.
One common error we notice is people assuming their healthcare expenses will be covered by Medicare in retirement. The truth is, a single 65-year-old could need approximately $157,500 saved after tax to cover health care expenses in retirement, according to a report by Fidelity. And that number jumps to $315,000 for an average retired couple age 65.1
Those figures hinge on various factors such as your work duration, retirement timing and location, health condition, and life expectancy. Nonetheless, it could serve as a valuable target to strive towards.
Another common pitfall we notice is the consistent underestimation of the need and the costs associated with long-term care. Although the extent of long-term care required varies for everyone, data from the Administration on Aging paints a striking picture: at least 70% of individuals aged 65 or older today will inevitably find themselves in need of some level of care.
Every year, Americans are shelling out a whopping $475.1 billion for long-term care. Surprisingly, Medicaid only covers 42% of these costs. This means you'll probably be responsible for a significant portion of the bill, making it crucial to plan ahead.
Another important thing to note is Ohio's latest updates regarding
Posted By Lineweaver Financial Group
February 07, 2024
Category: Election
Given the upcoming presidential election in 2024, we thought it would be a great time to look at data from prior election cycles. We think minimizing emotions and focusing on data is critical when investing. As can be seen in the charts below, whichever party holds office has not typically had much bearing on investment performance over time.
Source: BlackRock
Given this data, we encourage investors to try to tune out the political noise as best as possible in 2024 while maintaining exposure to the market. There will no doubt be volatility throughout this election year, but if history is any guide, staying invested regardless of the election rhetoric and outcome is likely to reward patient investors.
Should you have any questions about your individual portfolio, please don’t hesitate to reach out to one of our team members or your advisor. We’re here to
Posted By Lineweaver Financial Group
January 18, 2024
Category: Finance, Retirement, Planning
Navigating the financial landscape in retirement can be a daunting task. It's like trying to pass through a jungle of expenses – health care, taxes, and long-term care costs all taking a piece of the hard-earned nest egg you've been building for ages. And just when you think you've got it all figured out, here comes the rollercoaster of economic uncertainty.
In the face of such high stakes, it's no wonder the prospect of spending in retirement can be overwhelming. But with our team of financial professionals behind you, you can take steps to help you reclaim control and ease the anxiety associated with post-retirement expenditures.
Embarking on the journey toward retirement becomes much smoother when you proactively create a budget beforehand. This invaluable tool allows you to gauge your anticipated expenditures and income streams once the daily grind is behind you. It's crucial to take stock of the various income sources at your disposal, such as Social Security, pensions, and 401(k)s, while also factoring in inevitable expenses like taxes, health care, and long-term care.
When you're getting budget-savvy for retirement, start by figuring out what's a must-have and what you can let slide. Let's say you're dreaming of a retirement filled with jet-setting adventures. Well, that travel fund needs to be part of the grand budget plan.
And let's not forget the inevitable: taxes. It's a good idea to give taxes a special seat
Posted By Lineweaver Financial Group
January 04, 2024
Category: Resolutions, Finance, Goals, Taxes
We’ve been working with private and corporate clients for nearly 30 years. Every year at this time, we meet new clients who want to drastically overhaul their finances, and set themselves up for increased wealth in the New Year. We’ve put a list of 5 resolutions that we always share and that you can put to work for you, too.
Resolution No. 1
First things first. The base of any good financial plan is insurance because it helps you control risk. You can have the best financial plan in the world, but if something happens to you or your family, you need to be protected to keep your plan in solid footing.
You first want to take the time to make sure all your insurances are in proper order. This includes Life insurance, disability insurance, and even property and casualty. Because we specialize in working with retirees, long-term care is especially important to our clients. According to the U.S. Department of Health and Human Services, 70% of people aged 65 or older are likely to need long-term care at some point.
Finally, you may want to consider an umbrella policy, especially if you have rental or vacation homes.
Resolution No. 2
Your financial goals, both long and short term, should be driven by your personal goals – whether that’s providing for children and grandchildren, sending them to college, passing the family business to the next generation, or preparing for your own retirement and the traveling you want to do, you should