Tax Increases on the Horizon
In our most recent client bulletin, we discussed the possibility of no action by Congress — to extend the Bush-era income and estate tax cuts before Election Day — resulting in one of the largest tax increases in history.
Well, Congress has decided to do just that and “Punt on Taxes” as headlined in the September 24th issue of the Wall Street Journal and again on September 29 in an article titled “Walloping the Middle Class.” “It’s official: Democrats in Congress will adjourn at the end of this week and leave unsettled what happens with income tax rates next year.”
Review our client bulletin to compare the 2010 tax rates with those that will take effect in 2011, unless a future change is made.
If you’d like to learn more about how this change will impact you, please don’t hesitate to contact us.
President, Principal, and Senior Financial Advisor
Live Long & Prosper
By Jerry Miccolis, Chief Investment Officer, Principal and Senior Financial Advisor
As we continually advise our clients, the average American is living longer and longer. And that fact highlights the need for appropriate long-term investment planning, including realistic lifetime cash flow analysis.
These days, the average individual is placing more and more money in “safe” havens like bonds, cash, and CDs. While this is understandable human behavior in times of greater market turbulence, this is precisely the wrong thing to do in the face of lengthening lifetimes. Such”safe” investments will not provide you with adequate protection against inflation. And for most people, the biggest threat to a comfortable retirement is inflation — not short-term market volatility.
All investors – regardless of age — should inform their retirement planning with an underutilized tool: an actuarial life-expectancy table.
These tables have some real eye-openers. For example, if you are a 65-year-old male, you have a 50% chance of living to 85 or older (88 if you’re a female) and a 25% chance of living to 92 or beyond (94 if female). A couple at 65 have a 50% chance that at least one spouse survives to age 92 and a 25% chance that one will survive to age 97. If you’re over age 65, you can expect to live to even more advanced ages. And updated tables that will emerge from the 2010 census will likely extend those life expectancies even further.
Most people understate their life expectancies — and thus their investment horizons — by at least a decade. To achieve a retirement portfolio that will meet your needs through your expected lifespan without exposing you to too much risk, you need a portfolio of diverse investments that work together to both exploit and tame market volatility.
A truly diversified portfolio should include stocks, bonds, real estate, commodities, managed futures, and absolute-return strategies, plus some explicit portfolio protection. And you need to rebalance these asset classes regularly. Our clients’ portfolios reflect these facts; do you know someone who may not have all the facts? Please share this newsletter with them and feel free to contact us directly should they need help.
Actuarial information is from 2000 and is provided by the Society of Actuaries.
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Jerry Miccolis, CFA, CFP, FCAS, MAAA, is one of America’s leading authorities on asset allocation. Jerry is also the co-author of Asset Allocation For Dummies (Wiley 2009) and one of the originators of Enterprise Risk Management.
Did You Know:
Proceed with caution… China has 1/5 of the world’s population, is the world’s second largest economy, is the largest auto market, and is the biggest consumer of energy. Their current economic growth rate is 11%. Source: The Directors Letter.
One must watch our November elections as the major consequence of heightened protectionist rhetoric from the US towards China will have a direct impact on our financial markets, cause greater volatility and further decline the investor’s risk appetite.
“The pace of appreciation [of the renminbi] has been too slow and the extent of appreciation too limited. We are examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly.”– Treasury Secretary Timothy Geithner at a Senate Banking Committee, September 16
“We cannot imagine how many Chinese factories will go bankrupt, how many Chinese workers willlose their jobs, and how many migrant workers will return to the countryside [should China acquiesce todemands for a 20 percent to 40 percent gain].China would suffer major social upheaval.”
– Chinese Premier Wen Jiabao to reporters at a United Nations conference, September 22
News & Noteworthy:
We were pleased to sponsor the Basking Ridge Country Club’s “Golf for a Cure” to support breast cancer research, and the annual “Circle of Life Golf Outing” also at Basking Ridge Country Club. The Circle of Life Foundation provides palliative and end-of-life care for children with chronic or life-limiting illnesses.
Also, we have become active in the Harding Township community. We were proud sponsors of The Grand Opening of the Kemmerer Library building in New Vernon, New Jersey on May 14th and recently sponsored their Annual Concert on the Lawn on Oct 3rd.
On September 29, Brinton Eaton conducted a webinar on Portfolio Safety Nets. To view the presentation, visit our Library www.brintoneaton.com/library/topics-of-interest/.
Brinton Eaton maintains its focus on education with informative webinars and many additional events planned for the fourth quarter — stay tuned!
BE In the News:
Brinton Eaton continues to garner prominent local and national news media attention. For example, we’ve been quoted and featured in the Wall Street Journal, New York Times, U.S. News & World Report, Chicago Tribune and many other publications over the past several months, and in videos posted on the online versions of the Wall Street Journal, MarketWatch, and Barron’s.
To read a few of these news items, please visit the “In the News” page of our site, located at www.brintoneaton.com/media/in-the-news-2/.
BE Team Update:
We’re pleased to announce that we have enhanced the firm’s client service capabilities with three key promotions and two new hires. Promotions include Marina Goodman to Investment Strategist, David Hill to Financial Advisor and Abigail Scandlen to Financial Advisor.
New hires include Janet Critchley, CPA/PFS, as a Financial Analyst and Matthew DiQuollo as a Financial Analyst. Janet has 25 years experience in tax compliance, planning and research, and financial planning. Matthew brings a decade of experience in capital markets trading, both in brokerage and asset management.
Brinton Eaton helps affluent clients protect, grow, administer and ultimately transfer their legacy. We aim to provide a worry-free state of mind that enables you to continue to lead a financially independent and deeply rewarding life as well as leave a legacy for generations.
If you are not already a Brinton Eaton client, and are interested, contact us for a no-obligation consultation.