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In addition to providing excellent financial services, Strong Valley's own Founding Principal, Adam Tirapelle, was once a standout collegiate wrestler earning three All-American honors and an NCAA National Championship in 2001. Now he's an official Hall of Famer. Way to go Adam!
“Adam Tirapelle helped Illinois finish fifth at the 2001 NCAA Wrestling Championships by taking the individual title at 149 pounds. It was Illinois’s best placing nationally since 1946. Tirapelle earned All-America honors three times and was the 2000 Big Ten Champion at 149 pounds. He holds the school-record with 15 pins in 1999-2000, ranks second on Illinois single-season wins list with 39, second in career wins with 127, is third in career pins with 33 and sixth in all-time win percentage (.858). Tirapelle qualified for the NCAA Championships all four years at Illinois, finishing second in 2000 and third in 1999 in addition to his 2001 title. One of the great leaders for the Illini, he was a three-time team captain and two-time Most Valuable Wrestler. Tirapelle was the 2001 Illinois Dike Eddleman Male Athlete of the Year. He currently resides in Clovis, California.”
View on FightingIllini.com website. (link)
On December 7, 2001, a Gallup Poll ran the following headline:
“Americans Say Sept. 11 Will Be More Historically Significant Than Pearl Harbor.”
That December 7th day when Gallop ran that headline marked the 60th anniversary of the attack on Pearl Harbor. But it was also just a few months after the September 11th attacks in New York and Washington – when many Americans were comparing the events in 1941 to those that had just occurred.
Ask yourself: which event had a more significant effect on the United States? The attack on Pearl Harbor in December 1941 or the attacks on the World Trade Center and the Pentagon in September 2001?
According to Gallup, 72% say 9/11. And before someone asks about Americans 65 and older – those with memories of both Pearl Harbor and the war that followed – consider this: those 65 and older say 9/11 will have a greater impact on America too.
While there are chilling similarities between Pearl Harbor and 9/11, there are plenty of important differences. Differences that need to be discussed with an open mind and within historical context.
The reality is that while 9/11 might seem like yesterday to most, students in 2019’s high school senior class were not yet born on Sept. 11, 2001. To them 9/11 is history – just like Pearl Harbor.
Twenty years from now, history books might suggest that 9/11 touched our lives and our children’s lives far longer and with more impact than Pearl Harbor ever did. Maybe even longer than World War II.
The fact is that each generation gives different meaning to the same historical events based on whatever issues they are currently concerned about. So, never forget the words of Thomas Jefferson:
“I like the dreams of the future better than the history of the past.”
Hurricane Ida made landfall near Port Fourchon, Louisiana, on Sunday, August 29th as an extremely dangerous Category 4 hurricane packing winds of 150 mph, the National Hurricane Center said.
And for the residents of Louisiana, Ida was a somber reminder of the damage caused by Hurricane Katrina – because Ida made landfall on the 16th anniversary of Hurricane Katrina.
As if residents didn’t have enough to worry about, Ida was tied as the state's most powerful storm ever with Hurricane Laura from last year and the Last Island Hurricane of 1856 (Katrina made landfall as a Category 3 storm). And Katrina caused upwards of $150 billion in damage, earning it the title of the costliest hurricane of all time.
Whether you rent or own your home, you need insurance to help rebuild if a hurricane, a fire, or a tornado hits you.
But did you know that as a rule, standard homeowners’ and renters’ insurance does not cover flooding caused by extreme weather? And what happens if you need to replace your valuable coin collection after a hurricane if your house blows away?
You need flood insurance if you live in a designated flood zone. But flooding can also occur in inland areas and away from major rivers. Flood insurance is available for renters as well as homeowners, but a special policy is required as flood insurance – like earthquake insurance – is just not a part of standard homeowner's coverage.
If you think you need flood insurance, don’t wait for the arrival of a hurricane to buy a policy – there is a 30-day waiting period before the coverage takes effect.
Many policies don’t cover pricey jewelry, antiques, coins, collectible firearms and other exotic or expensive possessions. Or if they do, it is limited. In fact, some insurers even restrict what they pay to replace top-end computers, according to the National Association of Insurance Commissioners.
Generally, any coverage for these items is an aggregate amount less than a predetermined dollar limit, such as $1,000, for the total loss.
For example, let’s say you have an extensive coin collection worth $50,000. Your spouse has a watch worth $10,000.
Under a normal home policy, a hurricane, fire or tornado causing a total loss of coins and a watch means you may only receive up to $2,000 (assuming the aggregate coverage amount was $1,000 for each).
Your net loss: $58,000.
You could, however, prevent such a hit with an endorsement (aka a rider or in some cases a floater) to your home coverage, a sort of added policy within the main policy.
Essentially an endorsement specifically covers an article of personal property either excluded or not fully covered in the main policy. Also, a policy floater allows you to insure valuable items separately and for higher amounts than under a standard homeowner’s policy.
With such a rider – which comes at additional cost and is often higher in cities – your coverage includes much more, and you can choose your own deductible for the loss. Many endorsements also cover disappearance: if you lose the watch while cleaning the garage, for instance, the rider might cover the loss – which the home policy doesn’t.
Generally, endorsements are an inexpensive way to broaden coverage under an existing policy, though you must get valuables formally appraised to set coverage. Rates will vary according to such factors as the type and documented dollar value of the item covered and where you, the insured, live.
Call or comment below to arrange a time to talk about how we can protect you and your family.
Whether retirement is around the corner or decades away, there are more options than ever to help you plan for it. Let’s look at Individual Retirement Accounts (IRAs) and 401(k) plans, which offer tax benefits that can help you save for your future.
Traditional IRAs are one of the most popular retirement savings vehicles. In 2021, you can contribute up to $6,000 to your traditional IRA. (Note: the limit applies to the total of all IRAs that a person may hold in a given tax year).
If you are age 50 or older, you can make additional “catch-up” contributions of up to $1,000. Earnings have the potential for tax-deferred growth, and contributions may be tax deductible, depending on your income and participation in an employer-sponsored retirement plan.
Because IRAs are intended to help you save for retirement, rules govern when you can begin accessing funds. Distributions before the age of 59½ may be subject to a 10% Federal income tax penalty, in addition to the income tax that will be due. However, there are exceptions to the 10% penalty, such as withdrawals to pay for qualified higher education expenses or to fund up to $10,000 of your first home.
Roth IRAs operate differently from traditional IRAs. Contributions are not tax deductible, but earnings have the potential for tax-deferred growth and qualified distributions are tax free.
You are eligible to make a full contribution ($6,000 in 2021, or $7,000 for those age 50 and older) to a Roth IRA if your modified adjusted gross income (MAGI) does not exceed $139,000 for single filers or $206,000 for joint filers in 2021 (contributions phase out for those within certain income ranges too).
As with traditional IRAs, a 10% Federal income tax penalty may apply to distributions taken from your Roth IRA before the age of 59½, unless a qualified exception applies. Furthermore, before tax-free distributions can be received from a Roth IRA, the account must be five years old.
You also may convert an existing traditional IRA to a Roth IRA. The distribution from your traditional IRA will be taxed in the year of conversion, but you won’t be penalized for the early withdrawal, provided you keep the converted funds in the Roth IRA for at least five years.
The 401(k) is a retirement plan offered by thousands of employers to facilitate retirement savings for their employees. As a participating employee, you can contribute the lesser of $19,500 in 2021 or a percentage of salary as defined by the plan.
Those age 50 and older can contribute an additional $6,500. In some cases, your employer may match your contributions up to a certain percentage. This increases your principal at no cost to you.
Contributions to a 401(k) are pre-tax, which means you don’t pay taxes until you withdraw money from the plan. This may be attractive for those who expect to be in a lower tax bracket during retirement than during their working years. In addition, your contributions have the potential to grow on a tax-deferred basis. As with IRAs, nonqualified withdrawals from a 401(k) before the age of 59½ are subject to a 10% Federal income tax penalty, unless a qualified exception applies.
Some employers may also offer a Roth 401(k) option, which allows workers to make Roth IRA-type contributions to their 401(k) plan without the income restrictions and lower contribution limits that apply to Roth IRAs. The contribution limits are the same as for traditional 401(k)s, but salary deferrals to Roth 401(k)s are not tax deductible. Qualified distributions are tax free.
Under the Small Business Jobs Act of 2010, participants in 401(k) plans are now permitted to roll over funds into Roth accounts within their plans. Any eligible funds transferred from traditional to Roth 401(k) accounts are taxed in the year of conversion. It is also important to keep in mind that any employer matching contributions must be made to the traditional side of a 401(k) account, not a Roth.
These are just some of the retirement savings options available. Remember, early planning puts time on your side. Call me to arrange a time when we might discuss which options are best for you and your retirement goals.
On March 23rd, the massive, skyscraper-sized container ship named the Ever Given ran aground and got stuck in Egypt’s Suez Canal. It took about a week for more than a dozen tugboats, dredgers, engineers, salvage teams, and a full moon that brought an unusually high tide to free the behemoth.
While it’s still not clear exactly how it got stuck in the first place, experts theorize that the Ever Given lost control amidst strong winds and sandstorms. But the Ever Given’s management firm did rule out any mechanical or engine failure. Now some are suggesting that “technical or human errors” may have caused the ship to run aground, costing Egypt about $15 million a day in lost revenues.
The Ever Given, one of the largest container ships in the world, is 400 meters long (that’s over 1,300 feet), weighs 200,000 tonnes (a tonne is heavier than a ton by the way) and has the ability to carry over 20,000 shipping containers (it was carrying 18,300). It’s massive.
Do your aspirational retirement goals feel like the massive Ever Given? And are you a 40 or 50 year old captain that is now stuck? Here is a basic list of must-dos to help unstick your retirement-ship so that you might see smoother sailing.
People in their 40s and 50s should really look at maximizing everything they can do to prepare for retirement. This is especially true as our life expectancy grows longer, thanks to improvements in medical science. You should aim to maintain a reasonable retirement lifestyle for two or three decades after you “retire.” And that takes diligent saving and careful planning.
Maximizing your contributions to retirement accounts, such as 401(k)s, is the first step, The annual contribution limit is $19,500. If you reach 50, there is an additional catch-up contribution of $6,500.
If the choice is between saving for retirement and saving for college, give retirement the first priority. There are loans for education, but not for retirement.
Understanding your spending is key to determine when you can retire. Any kind of retirement plan is not going to work if you don’t know how much you spend.
By evaluating your spending, you know how much you need and how much extra money you may have to fund other financial goals in retirement.
Knowing the Social Security rules makes a huge difference, because the age you start claiming it determines your benefit income for the rest of your life.
If you begin collecting Social Security before full retirement age, you permanently reduce your monthly benefit. If you don’t know the rules, you can easily be passing up thousands of dollars of benefits.
The key to successful financial planning lies in following wise investment strategies, custom tailored to your personal aspirations. And while your financial plan should be tied to your long–term goals, short–term events (like high winds and sandstorms) need to be addressed too.
Your financial advisor can help you keep your emotions out of your investing decisions and keep you from running your retirement-ship aground.
That way you can rest comfortably at night knowing that your money is working toward your goals. Not toward hiring tugboats and dredges to dig you out.
A lot of 401(k) investors end up making the same mistakes when choosing their investments. The results are low returns and unbalanced portfolios. Avoiding these four mistakes is a good start for getting more out of your 401(k).
There is no easy answer to how you should allocate your 401(k). You have to make these decisions on your own based on your personal risk tolerance, investment choices and the allocation of your other investments.
Many 401(k) plan participants are either overwhelmed by the list of investment choices or are simply afraid to take any risk in their investments, and so put all of their savings into a money market or stable value fund. Sometimes the money market fund is the default option for their employer’s plan -- meaning their money ends up there, earning very low interest. Nobody bothers to change it.
Money market and stable value funds are basically fancy words for cash, a low risk, low return investment, and the return from cash usually lags behind inflation. This means that a 401(k) in these safe investments will probably decline in value over time. For many folks, the investment horizon is long, so you can tolerate some volatility to get the higher returns later.
Another common mistake made by investors in their 401(k)s is to invest an equal portion into each available investment option. This is called the 1/N Rule.
There are many problems with taking this approach. First, you do not need to invest in every option available in your plan. Especially now that target date retirement funds (mutual funds that change allocation based on your estimated retirement date, growing more conservative as you age) have become popular, you do not need to invest in every bond fund and every stock fund to achieve diversification. Also, each investment option has been selected based in its individual characteristics, not based on how all of the options work together.
Your employer is not suggesting that you should invest in every option, and certainly not in each equally. Every plan has a different investment line-up.
For example, let’s say your company has one money market fund, one bond fund, and eight stock funds. An equal investment into each fund results in an overall allocation of 80% stocks, 10% bonds, and 10% cash, a pretty aggressive portfolio. The employer’s intent is not to encourage each participant, regardless of age, risk tolerance, and time to retirement, to have an 80/20 allocation.
Many companies allow employees to purchase company stock in their retirement plans. As tempting as it might be to bet on a company you know very well (hey, you work there, right?), you should minimize your investment in company stock. Remember Enron, Bear Stearns and Lehman Brothers? Those employees lost their jobs and their retirement savings in one day when their companies went bankrupt.
If you are going to be laid off from your job, your company is probably in trouble, and its stock will also be low. Why would you want to bet your income and your future retirement on one company?
Investments in diversified bond and stock mutual funds will reduce this risk. As a rule of thumb, keep your investment in company stock below 10% of the total account.
When you enroll in a 401(k) plan, your employer should provide you with the recent performance of every investment option in the plan. Most investors are naturally risk-averse, and shy away from investment options that have been down recently.
The performance of small-cap and international stocks has been less than domestic large-cap stocks recently. But these funds are still excellent choices for increasing portfolio diversification. They have characteristics that can improve the overall returns and lessen the volatility of your portfolio.
Remember, risk and return are directly related. Don’t rule out investment options based on past performance alone. You might want to consult with your employer’s human resources manager or whoever manages the company’s benefits plan for help choosing the best allocation.
Or another smart move: Hire a financial advisor, who can help you figure out which mix is right for you.
What will inflation be in the coming years? The real answer is that it varies according to your age and spending patterns. Inflation wallops someone with kids in college, and might be hardly noticeable to stay-at-home types. And recent inflation will stun someone looking for a used car, but might be a yawner for someone shopping for a new car.
Inflation is a sustained increase in prices for general goods and services in the economy and is typically measured annually. Theoretically speaking, as inflation rises, every dollar you own buys a smaller amount of a good or service.
While the reported inflation rate (typically reported as the CPI or Consumer Price Index) is important for Social Security income calculations, which rise with the index, it may not accurately reflect your individual inflation rate.
On June 10th, the U.S. Bureau of Labor Statistics announced that the Consumer Price Index increased 0.6% in May after rising 0.8% in April.
But maybe more importantly, the BLS reported that the overall inflation rate rose to 5% this past year, which is the largest 12-month increase since a 5.4% increase for the period ending August 2008. But that 5% annual inflation figure masks a huge range among the individual components of inflation – and will hit each of us differently.
Consider that:
In other words, if you are in the market for a new car, you’re in luck, as the inflation on new cars (3.3%) is less than the overall inflation rate (5.4%). But if you are in the market for a used car or truck, prepare for sticker shock as used cars and trucks have increased about 6x faster than the currently high inflation rate.
Oh, and to insure your car? Well that’s way up in price too.
On the other hand, the cost of medical care has slowed down (glass-half-full).
We get to choose some financial expenses and lifestyle choices, although others we must accept. People planning to retire commonly ask how to calculate the future rate of inflation because projecting what price increases lie ahead is central to anticipating annual income needs.
Sadly, there is no magic number. And often times the assumed number can be flawed and can vary significantly from one family to the next.
For example, if you enjoy travelling, you will likely incur many service expenses including hotels, dining and transportation, thus you should expect travel inflation will be higher than the reported CPI. Travel expenses tend to increase in the early years of retirement and slow later on as people take fewer trips.
On the other hand, if you are a homebody who does your own yardwork and property improvements, then you will likely encounter lower inflation levels relative to your traveling friends (although lumber prices have skyrocketed over the past year).
The key point is that your personal inflation rate is unique based on your age and your lifestyle. The headline CPI number is important only as a general gauge.
The more we consider prices as they relate to goods of the economy – and the lifestyle of the investor – the more accurate we can be in estimating an inflation number. For now, car dealerships are loving the higher prices for used cars and trucks.
Talk to your financial advisor to make sure you accurately project for inflation as you think about your retirement plans.
Will the proposed policies of the Biden Administration have a negative or positive impact on your healthcare? A prevailing view – by about half of the country – is that a Biden Administration will have a positive impact. Another prevailing view – also by about half of the country – is that it will be negative.
Well, no matter your political affiliation, the impact that the Biden Administration will have on your healthcare won’t be settled for quite some time. But more importantly, you should remember that no matter the big-picture changes, healthcare – like retirement planning – is personal.
Nevertheless, let’s examine a few of President Biden’s policies that will likely impact healthcare in general – as it might help you determine whether the impact will be negative or positive to you and your family.
First, remember that no political party has been exclusively great or awful for healthcare – just as no political party has been exclusively great or awful for the stock markets. And while many might view Republican presidents as more bullish and Democratic presidents as more bearish, the data just doesn’t support those views.
Further, while presidential policies do matter, the reality is that policies will not impact individuals and families uniformly. In a country of 328 million, some will benefit from certain policies more and others will benefit less.
According to the U.S. Census Bureau, 9.2% of Americans (that’s about 30 million) did not have health insurance at any point during the year 2019. The better news is that more than 90% of Americans did have health insurance coverage for all or part of 2019 (2020 data not compiled yet). Further:
While the details are still emerging (and might change by the time you’re reading this), at 30,000-feet, the Biden Administration aims to expand Obamacare so that 97% of Americans are insured. And the proposed cost is estimated at $750 billion over 10 years.
Big picture, the Biden proposals call for:
Keep in mind that Biden Administration is still negotiating the details with Congress and there will be a number of changes throughout the next few months.
Further, remember that no matter your political affiliation, the impact that the Biden Administration’s policies will have on your health care won’t be settled for quite some time.
Finally, never forget that health care – like retirement planning – is very personal.
If you have questions, talk to your advisor.