10 Things You Must Know About Medicare

Heading into your retirement years brings a slew of new topics to grapple with, and one of the most maddening may be Medicare. Figuring out when to enroll, what to enroll in and what coverage will be best for you can be daunting. To help you wade easily into the waters, here are ten essential things you need to know about Medicare.

Medicare Comes with a Cost

Medicare is divided into parts. Part A, which pays for hospital services, is free if either you or your spouse paid Medicare payroll taxes for at least ten years. (People who aren't eligible for free Part A can pay a monthly premium of several hundred dollars.) Part B covers doctor visits and outpatient services, and it comes with a monthly price tag -- for most people in 2017, that monthly cost is about $109. New enrollees pay $134 per month. Part D, which covers prescription drug costs, also has a monthly charge that varies depending on which plan you choose; the average Part D premium is $34 a month. In addition to premium costs, you'll also be subject to co-payments, deductibles and other out-of-pocket costs.

You Can Fill the Gap

Beneficiaries of traditional Medicare will likely want to sign up for a Medigap supplemental insurance plan offered by private insurance companies to help cover deductibles, co-payments and other gaps. You can switch Medigap plans at any time, but you could be charged more or denied coverage based on your health if you choose or change plans more than six months after you first signed up for Part B. Medigap policies are identified by letters A through N. Each policy that goes by the same letter must offer the same basic benefits, and usually the only difference between same-letter policies is the cost. Plan F is the most popular policy because of its comprehensive coverage. A 65-year-old man could pay from $1,067 to $6,772 in 2017 for Plan F depending on the insurer, according to Weiss Ratings.

There Is an All-in-One Option

You can choose to sign up for traditional Medicare -- Parts A, B and D, and a supplemental Medigap policy. Or you can go an alternative route by signing up for Medicare Advantage, which provides medical and prescription drug coverage through private insurance companies. Also called Part C, Medicare Advantage has a monthly cost, in addition to the Part B premium, that varies depending on which plan you choose. With Medicare Advantage, you don't need to sign up for Part D or buy a Medigap policy. Like traditional Medicare, you'll also be subject to co-payments, deductibles and other out-of-pocket costs, although the total costs tend to be lower than for traditional Medicare. In many cases, Advantage policies charge lower premiums but have higher cost-sharing. Your choice of providers may be more limited with Medicare Advantage than with traditional Medicare.

High Incomers Pay More

If you choose traditional Medicare and your income is above a certain threshold, you'll pay more for Parts B and D. Premiums for both parts can come with a surcharge when your adjusted gross income (plus tax-exempt interest) is more than $85,000 if you are single or $170,000 if married filing jointly. In 2017, high earners pay $187.50 to $428.60 per month for Part B, depending on their income level, and they also pay extra for Part D coverage, from $13.30 to $76.20 on top of their regular premiums.

When to Sign Up

You are eligible for Medicare when you turn 65. If you are already taking Social Security benefits, you will be automatically enrolled in Parts A and B. You can choose to turn down Part B, since it has a monthly cost; if you keep it, the cost will be deducted from Social Security if you already claimed benefits.

For those who have not started Social Security, you will have to sign yourself up for Parts A and B. The seven-month initial enrollment period begins three months before the month you turn 65 and ends three months after your birthday month. To ensure coverage starts by the time you turn 65, sign up in the first three months.

If you are still working and have health insurance through your employer (or if you're covered by your working spouse's employer coverage) you may be able to delay signing up for Medicare. But you will need to follow the rules, and must sign up for Medicare within eight months of losing your employer's coverage, to avoid significant penalties when you do eventually enroll.

A Quartet of Enrollment Periods

There are several enrollment periods, in addition to the seven-month initial enrollment period. If you missed signing up for Part B during that initial enrollment period and you aren't working (or aren't covered by your spouse's employer coverage), you can sign up for Part B during the general enrollment period that runs from January 1 to March 31 and coverage will begin on July 1. But you will have to pay a 10% penalty for life for each 12-month period you delay in signing up for Part B. Those who are covered by a current employer's plan, though, can sign up later without penalty during a special enrollment period, which lasts for eight months after you lose that employer coverage (regardless of whether you have retiree health benefits or COBRA).

If you miss your special enrollment period, you will need to wait to the general enrollment period to sign up. Open enrollment, which runs from October 15 to December 7 every year, allows you to change Part D plans or Medicare Advantage plans for the following year, if you choose to do so. (People can now change Medicare Advantage plans outside of open enrollment if they switch into a plan given a five-star quality rating by the government.)

Costs in the Doughnut Hole Are Shrinking

One cost for Medicare is decreasing -- the dreaded Part D "doughnut hole." That is the period during which you must pay out of pocket for your drugs. For 2017, the coverage gap begins when a beneficiary's total drug costs reach $3,700. While in the doughnut hole, you'll receive a 60% discount on brand-name drugs and a 49% federal subsidy for generic drugs in 2017. Catastrophic coverage, with the government picking up most costs, begins when a patient's out-of-pocket costs reach $4,950.

You Get More Free Preventive Services

Medicare beneficiaries can receive a number of free preventive services. You get an annual free "wellness" visit to develop or update a personalized prevention plan. Beneficiaries also get a free cardiovascular screening every five years, annual mammograms, annual flu shots, and screenings for cervical, prostate and colorectal cancers.

For additional information on Medicare, visit the Medicare website at https://www.medicare.gov/

Copyright © 2017 The Kiplinger Washington Editors. All rights reserved. Distributed by Financial Media Exchange.  Reprinted with permission.

Trusts... So Confusing! Not Really... Here's a Primer.

Many of us may perceive trusts as a complex subject better left to our attorney. However, a trust is simply a contract initiated by a grantor who agrees to transfer assets to a beneficiary, who then receives the assets as stipulated in the trust contract. A trustee, who may also be the grantor, manages the trust assets and ensures the stipulated terms of the trust are faithfully executed. A trust is designed to help individuals manage a variety of family and tax-related estate planning concerns. Here are a few ways in which trusts can be used:

Revocable Living Trust: A revocable living trust is an estate planning trust that deeds property to an heir but allows the grantor to retain control over the property during his or her lifetime. Upon the grantor's death, the property passes to the beneficiary, avoiding probate, which is the judicial process wherein a court appoints an executor to carry out the provisions of a will. While the revocable living trust does not provide tax savings for the grantor during his or her lifetime, the trust becomes 'irrevocable' upon death, and the beneficiary is then entitled to tax advantages.

Irrevocable Living Trust: An irrevocable living trust is an estate planning trust wherein the grantor does not retain control of assets or property. Through the transfer of assets or property into the trust, the grantor may be eligible for certain tax savings. An irrevocable living trust may also be used to avoid probate. Irrevocable Life Insurance Trust (ILIT). An irrevocable life insurance trust is designed to provide tax savings through the ownership of a life insurance policy. Assets in the trust are generally not considered part of the grantor's estate. ILITs may be funded or unfunded. With a funded ILIT, income-generating assets are transferred into the trust, and the generated income is then used to pay the premiums on the life insurance policy. With an unfunded ILIT, the grantor makes yearly gifts to the trust, and this money is then used to pay the premiums on the life insurance policy.

Credit Shelter Trust: A credit shelter trust, also called a bypass trust, is an estate planning tool used to protect assets from successive estate taxes. While current law permits an unlimited amount of assets and property to pass to a surviving spouse without being subject to Federal estate taxes, children and other beneficiaries must pay taxes for inheritances valued in excess of the applicable estate tax exclusion amount, which is $5.43 million per individual in 2015. If a married couple wishes to take advantage of a credit shelter trust, they generally arrange for certain assets to pass into the trust for the benefit of the surviving spouse, rather than passing all assets directly to the spouse. This trust, which would not be considered part of the surviving spouse's estate—and generally does not exceed the applicable exclusion amount—may pay the surviving spouse income for life and then, upon his or her death, may pass to a beneficiary, such as a child, free of estate taxes if under the exclusion limit. In addition, the gross estate of the surviving spouse upon his or her death could pass to the same beneficiary, and up to $5.43 million in 2015 would be free of estate taxes.

Charitable Remainder Trust (CRT): A charitable remainder trust is an arrangement in which assets are donated to a charity but the grantor continues to use the property and/or receives income from it. A CRT may allow the grantor to avoid capital gains taxes on highly appreciated assets; receive an income stream based on the full, fair market value (FMV) of those assets; receive an immediate charitable deduction; and ultimately, benefit the charity of his or her choice.

Dynasty Trust: This trust is often used by individuals to pass wealth to their grandchildren free of generation-skipping transfer taxes.

 A trust can be an effective way to accomplish your long-term estate planning goals, but often involve complicated tax laws. Consult with your tax and legal professionals about your particular situation and how a trust may enable you to share your wealth with family, friends, or charities.

This Primer reprinted with permission from Financial Media Exchange.  Copyright 2015 Liberty Publishing.

Draft a Retirement Wish List for Your Financial Adviser

Before your first visit, most financial professionals will ask you to pull together a lot of paperwork. They'll want to see tax returns, retirement account statements, Social Security benefit statements and so on.

But it's just as important -- maybe more important when meeting with a retirement specialist -- that you gather your thoughts before you go. A good adviser will want to learn all about you: what you want to accomplish in retirement, what kind of lifestyle you hope to have and what you worry about most. You might think the answers are top of mind -- after all, you've probably been thinking about this for a decade or more. But you'd be surprised at how many people go blank when their adviser stops talking about his experience and abilities and says, "Now, let's chat about you."

When we put together a comprehensive retirement plan for our clients, the starting place is always with your retirement wish list. So get out a notepad or laptop, and start now!

Ask yourself: In a perfect world, when will I retire? Do you like your job? Do you have health issues? Do you need more time to save money? Make sure you and your spouse are on the same page, so you're working toward the goal together.

What are my short-, mid- and long-term financial goals? Surveys tell us the No. 1 worry of today's retirees is that they'll run out of money, so we know they're preparing for a long haul. But, what about the first years of retirement? Think about how much income you'll need at each stage of your life. What are my needs, wants and wishes? Be clear on the differences between what you need to have and what you'd like to have so you know from the start what is most important to you.

Where will I retire? Do you want to stay in the same town you're in now, or are you ready for a change - a move to a mountain cabin or someplace warm? Will you want to downsize, or will you try to age in place?

If I had all the money I would ever need, how would I spend my time? Having a clear plan for how you'll fill your days is crucial to your mental and physical health. All those hours you used to spend working will now be free for other activities. Do you have hobbies? Will you volunteer? Some of our clients can't believe how busy they are in retirement. Others have nothing but idle time on their hands; they're bored and miserable.

How much money does it cost to live today? Some people have never made a budget, but in retirement planning, it's a must. If you plan to maintain a lifestyle similar to the one you have while working, you have to consider inflation, taxes and health care costs. What about health care? What would happen to your financial picture if you got sick for an extended period? What would happen to your spouse's financial wellbeing? Do you have a plan for how you'll pay for longterm care? Will my wishes be carried out in the event of disability or death? Do you and your spouse have a will, durable powers of attorney and a living trust, and are all those documents current?

These answers are crucial to understanding your desired lifestyle, and whether you'll be financially, physically and emotionally ready for retirement -- so take the time to consider each one. You may not know the answers to all of them – that’s what an advisor is for!  However, taking the time to think these issues will identify the questions you need your advisor to help answer.

Make that first meeting with your adviser as meaningful as possible. Be sure you come prepared!

Copyright © 2017 The Kiplinger Washington Editors. All rights reserved. Distributed by Financial Media Exchange, reposted with permission.

What is it Like to Live in an RV After Retirement?

We are pleased to include an article from a guest blogger, Phil Bradford, who generously donated his time to write about the RV experience.

What is it Like to Live in an RV After Retirement?

By Phil Bradford, Guest Blogger

Has living in a recreational vehicle been your dream sometimes? It may not be too late. Now that you have retired, you can have location flexibility and time to enjoy nature and enjoy life to the fullest.

Researchers have revealed that between the years 2000 and 2014, after the economy began to recover from the tech bubble crisis, the RV industry grew by about 115%. Data also indicates that from Baby Boomers to Millennials, people all over the nation have embraced this adventurous lifestyle, and retired people are not left behind.

Advantages of living in an RV after retirement

If you and your partner want to explore your retirement days in an RV, here are some advantages to help you think that you’ve making the right decision.

Travel and rest wherever you like

One of the biggest advantages of living in an RV is the flexibility to move from one place to another as per your wish, stop where you want to, and spend the night where you feel like without any reservations. However, it’s better or sometimes necessary to park your vehicle in a camping ground.

It just might be the perfect way to spend your retirement days and enjoy a new chapter in your life.

Get lots of time for yourself and your family members

If you think that there’s no social life when you live in an RV, you don’t know the whole story. Many camping grounds have swimming pools, jacuzzis, workout rooms along with places to throw parties. You can also spend spare time fishing or visiting the flea markets. RV owners are generally quite friendly, and often meet new friends in campgrounds, and remain friends for long after.

You will also get enough time to pursue your hobbies, which you couldn't do during your working days. You just have to clean your RV which will usually take less than 10 minutes; no need to mow the lawns and do the household chores to keep your house tidy and clean.

Save money on rent and utilities

The new trailer units cost around $8,000 and you can purchase a used motorhome at around $20,000. However, a luxury Fifth Wheel travel trailer can be more than $50,000. So, you can choose your option according to how much you want to spend.

A used tow or pull vehicle can cost around $20,000.

Now comes a campground where you’d have to park your recreational vehicle. A decent campground can cost around $225 per month. However, it can go up to $700 or more per month depending on the area and the facilities.

Utility bills - Usually it is less than $100 per month. So, you’ll save quite a bit on your utility bills by choosing RV over a conventional home.

You get to stay in a secured place

When you stay in an RV, you are surrounded with quite a bit of other people. You don’t have to stay secluded in a home.

Moreover, campgrounds usually provide good security and the patrolling facility is also available in some of them.

In times of natural disasters, you can just drive your vehicle to a different destination, and be stress-free.

And, if you don’t like a campground, you can just hook up and leave for a new destination.

Disadvantages of choosing an RV over a conventional home after you retire

It is true that living in a recreational vehicle is a dream come true for many of you retirees, but make yourself aware of the disadvantages, too. It will help you make the necessary arrangements or plan your life before you think about selling your home and buying an RV.

Difficult to get good WiFi in the campgrounds

Most of the campgrounds don’t have a good WiFi connection. So, make sure you have a smartphone with proper hotspot capability and bandwidth so that you’re connected to the world. Moreover, be prepared to view television through the hotspot.

So, have a talk with the service providers and explain to them that you need good bandwidth to enjoy these facilities on the move.

Less space for your stuff

Another major problem which you have to deal with is space crunch. No matter how big your RV is, it can’t provide you with as much space as your home. By the time you retire, it’s likely that you’ve accumulated quite a bit of stuff. So, consider that factor and be prepared to get rid of things so that you can live comfortably in a recreational vehicle.

RV travel - Useful tips and what you need to know

Here are some travel tips for you who want to opt for safe but adventurous golden days.

Monthly expenses you have to bear

Most RV parks charge about $15 - $50 for a night but, you might get one even at $10. However, they usually offer a discount rate if you take it for a month.

If you want to experience an RV lifestyle, at first, you can rent one and check out whether or not you like it. It is better to be acquainted with living in an RV before selling your home, which might have taken years to build 100% equity.

Rental costs usually vary depending on the type of RV you choose; however, it is usually around $30 - $300 per day.

You can check out on the internet to find the organizations who rent such RVs and you can choose one as per your preferences.

One useful tip: When you are roaming around in an RV, for say a month, try to rent out your house (or a part of it) and earn significant dollars.

Yearly maintenance costs you should be aware of

For a small travel trailer, you may have to shell out about $100 for the tires every 5 years. However, if you’re buying a diesel pusher motorhome, then you have to change the oil and filters after about every 5,000 miles, which may amount to $100 - $200. Make sure you opt for an extended warranty for sudden maintenance which you’ve not included in your budget.

Select destination before driving due to the fuel cost

The cost of fuel is one of the major costs one should be concerned about when choosing an RV over a conventional home. You have to budget the cost as per the size of your vehicle.

·         The diesel RVs give a mileage of about 10 MPG.

·         You can expect about 15 MPG for a smaller Class B one.

·         A moderate-sized Class C vehicle might give about 12-14 MPG.

·         While buying large gas RVs, be prepared for less than 10 MPG.

However, it also depends on the condition of the vehicle.

You need to consider another important thing when you decide to roam around in an RV. Gather knowledge about the place you’re visiting so that you’re aware of the fuel cost. It’s usually higher in the prime cities and the cost usually fluctuates depending on the weekdays and weekends.

It’s not difficult mathematical calculations. Just take into account these things, budget accordingly, consult with your retirement financial planner, and enjoy life in a recreational vehicle.

Phil Bradford is a Freelance Professional Finance Writer

The Fiduciary Rule and What it Means for You

The Fiduciary Rule



For years Department of Labor (DOL) regulated the quality of financial advice rendered regarding retirement accounts under The Employee Retirement Income Security Act of 1974 or “ERISA”. Not surprisingly many things have changed since 1974, the way people save and manage their retirement nest eggs is no exception. The biggest trend we witnessed since ‘74 is the decrease in Defined Benefit Plan use; the good ol’ days when people worked for one company all of their lives and comfortably retired on a pension, are nearly gone. On the other side we witnessed a great surge in the use of IRAs and 401K plans, or Defined Contribution Plans. The landscape has changed and rules governing retirement savings and advice had to change as well.


The “DOL Fiduciary Rule” was published on April 8th, 2016 and set to be applicable as of April 10th, 2017 then delayed for 60 days till June 9th, 2017 allowing financial services companies and professionals time to prepare. Certain portions of the new regulations are set to be implemented on January 1st of 2018. Currently we are witnessing a well publicized back-and-forth to rescind/change/delay the new regulations; each side with their own very valid reasons, as it usually is in politics. Let’s take a closer look at what changes new regulations might bring to the industry.

The Difference

In 1974 The ERISA established a Suitability Standard which states that a broker can make recommendations to investors that are suitable based on one’s personal situation, but does not require that recommendation to be in ones best interest. For example; let’s say you walk into a Toyota dealership and list features you want in your new vehicle, and it is best described as a Ford F-150 Pickup Truck. Under the old rules the salesperson could recommend a Toyota Tundra, make the sale and collect the commission. You walked away with a car that is somewhat suitable to your needs, but it is not what’s best for you. It is easier to see if something does not fit your needs when it comes to something as tangible as an automobile, but can be a whole lot more difficult when dealing with intangible and often confusing financial products. The Fiduciary Standard requires that advisers act in good faith and trust, and put client’s interest ahead of their own, even if doing so is not in the fiduciary’s best interest. So, under the Fiduciary Standard the salesperson would be legally bound to tell you that you were really describing a Ford F-150 Pickup Truck and that it was not something they could sell you since all they sell are Toyotas. No sale and no commission to the car salesmen but the client would then walk over to the Ford dealership and purchase the car that matches their needs perfectly and is therefore in their best interest to own.


The intent of the ERISA was to regulate retirement savings, advice and practices related thereto; same intent extends to the new Fiduciary Standard. That means that any and all financial professionals offering advice, management and/or products for retirement accounts such as your typical Traditional and ROTH IRAs or more complex 401K, 403B or 457B Plans, etc. are covered and subject to the Fiduciary Standard. The new rule however, does not cover taxable transactional accounts or accounts funded with after-tax dollars. Which means that your typical non-qualified investment account is not covered by the new rules and your stockbroker does not have to have your best interest at heart when calling you with another “winner”, buyer beware.

Movement within Financial Services Industry

At this point one might be thinking: Has there never been anyone in the financial services industry that had the moral compass to put their client’s interests first? The answer is “Yes”, there has; and the number of firms/individuals is rapidly growing with or without the help of the new Fiduciary Standard rule. Companies that identify as Registered Investment Advisers or “RIAs” have had their client’s best interests at heart long before any discussions about making it a law took place on the Capitol Hill. The idea behind RIAs that makes them appealing to savers and investors is that RIAs are built on even more stringent Fiduciary Standards than the new law puts in place. The idea of aligning clients’ interests with those of the company which serves them has been the major driver of company growth and a differential factor from your stereotypical Wall Street broker. RIA’s do not charge commissions which eliminates a myriad of potential problems and abuses; selling or buying investments just to generate income for the company or the broker, discriminating products based on how much they pay the broker despite the performance, selling products that are completely unnecessary or even harmful to the client, etc.

The Effect

There has been a strong push from those who oppose the new regulations to do away with the rule completely or to modify it to limit its reach and impact. One of the reasons often cited by the opposition is the added costs and expenses the consumers and the financial services industry would have to face. The financial services industry had a little over a year to get their ducks in a row and become compliant with the new regulations. A lot of money has been spent developing new policies, procedures and marketing plans on Wall Street, even if the rule is completely nixed, there will be a lasting effect. Another unintended effect is a whole lot more educated consumers as a result of media’s coverage of the ongoing back-and-forth. People now know there are companies that put their client’s interests before their own and will choose to do business with them over companies that are there just to make a quick sale. Whether the rule is changed or completely abandoned, educated consumers voting with their dollars might be the best outcome.

Paragon Wealth Strategies is proud to be a Registered Investment Advisor and a fiduciary, growing WITH our clients and not at the expense OF people who entrust us with their lives before and during retirement. Paragon Wealth Strategies goes above and beyond the Fiduciary Standard rule by requiring every advisor to have a Certified Financial Planner designation and to continuously improve their competency level by ongoing education opportunities.

Michael M. Mikonis, CFP® is a CERTIFIED FINANCIAL PLANNER ™ practitioner at PARAGON Wealth Strategies, LLC.  His entire bio can be viewed here: https://www.wealthguards.com/michael-m-mikonis-cfp

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Paragon Wealth Strategies, LLC), or any non-investment related content, made reference to directly or indirectly in this newsletter will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Paragon Wealth Strategies, LLC.  To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing.  Paragon Wealth Strategies, LLC is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.  If you are a Paragon Wealth Strategies, LLC client, please remember to contact Paragon Wealth Strategies, LLC, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. A copy of the Paragon Wealth Strategies, LLC's current written disclosure statement discussing our advisory services and fees is available upon request.

Happy New Year! What holds 2017?

What a year 2016 was – starting off the year with an immediate 14% plummet in the stock market, for no real reason other than to keep us all guessing.  Afterwards, the market recovered quickly only to settle into those ever-maddening “doldrums” that we had been stuck in for 2 years… basically going nowhere.  Finally, going into the end of the year, the market took off – emboldened by the possibility that a change in economic policy from a “tax and shift” strategy to a policy designed to enhance the economy’s top line revenue would bring the changes necessary to get the economy firing on all cylinders again.

In general, the economic data has not been bad of late – but nothing to get particularly excited about, either.  Much of the growth in bottom-line corporate earnings that we have seen lately has resulted more from cost-cutting than from developing new markets.  Signs that the economy has transitioned from the middle stage of the economic cycle (the “prosperity” or “sustained growth” phase) into the “Late Stage” of the economic cycle are becoming more and more apparent. 

The fact is that this particular expansion, beginning after the Great Recession ended in early 2009 – has been one of the most anemic expansion since the National Bureau of Economic Research (NBER) started tracking expansions economic cycles.  However, a close look at the economic indicators leaves considerable room for optimism.  The yield curve (a line that shows the difference in short-term and long-term interest rates) remains steep – meaning that consumers and businesses are still hungry for capital and are willing to pay more for it.   Housing starts and permits issued for new homes are continuing to trend higher, as well as are orders for durable goods, both signs of increasing future economic activity.

Donald Trump’s election has stimulated tons of speculation concerning a notably different economic policy than the previous one.  While there has been much hand-wringing amongst his detractors and up-whooping amongst his supporters – the fact remains that he has everyone’s attention and there is a different “feel” in the investment community now than was present a few months ago.  Most (but certainly not all) economists believe that Trump’s proposals will actually grow the economy and create jobs.  However, the fact that it represents a sharp break from the “globalization” policy that has generally been in place for the last 24 years will no doubt create some uncertainty – which will translate to volatility.  Additionally, it has been several decades since similar policies were tried, and the effects may be different from what economists expect – both good and bad – and we will discover them together.

At 89 months, our current expansion is the 3d longest on record, with the expansion from 1961 – 1969 being the second longest at 106 months.  While it is certainly possible that this expansion can grow to become the longest one on record, it is also likely that eventually we will again go through a recession.  Most recessions are nowhere as painful as the last two have been, and it is entirely possible that the next recession will be a merely a short slowdown versus a long and drawn-out period of pain.  Either way, we continue to monitor all of the economic data and recession probability models in order to be ready to transition to our Recession Protocols.  However – at present – the economic data looks strong and our recommendation is to remain invested at the maximum risk tolerance that is appropriate for each person.

Going forward, it is important to realize that gains from here until the end of the economic cycle are likely to be sporadic – with only several months’ performance driving the entire year’s gains.  It is also very likely that bonds and bond funds will struggle to generate meaningful returns as the Fed finally embarks on a series of interest rate increases in order to be in a position to make a “soft landing” possible when the next recession emerges.  As such, it is likely that a risk level that constitutes at least 40% equities (stocks) will be necessary to generate any return that can beat inflation.

To Roth or Not to Roth... That is the Question

As a fee-only financial planning firm, we spend significant time assisting clients with tax planning - planning one's actions in order to minimize the impact of taxes on one's financial situation.  As such, one of the decisions we must often address is whether or not a client should use a Roth IRA, or convert funds from a traditional IRA to a Roth IRA.  Generally this question is answered on an annual basis.

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Paragon Wealth Strategies
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Phone: (904) 861-0093