The Waiting...

Carlanne M. Chavanne, CFP

Anyone who knows the pangs of anticipation can relate to the lyrics in Tom Petty’s song, The Waiting when he sings “The waiting is the hardest part”. He has been quoted as saying that this song is about waiting for your dreams, whatever they may be, yet not knowing if they will come to pass. He also said it’s a song about optimism.  

As the year draws to a close, many of us are anticipating a fresh start, with a new year full of hope and renewed optimism.  2020 has been challenging, but there are still opportunities to make things better and plan for a brighter future.  Also, there is an election to be decided, which may possibly require all of us to patiently wait a little longer for a final result. 

Which begs the question – historically, how has a presidential election impacted the economy?   

Data from nearly 100 years of US presidential terms shows a consistent upward march for US equities, regardless of the administration in place. In the 23 presidential election years since 1929, the markets have been up 19 times, with an average increase of 11.3%.1 This is an important lesson on the benefits of taking a long-term approach to investing.  

     Source: Dimensional Fund Advisors

Timely Tips 

The holiday season is just around the corner and the year will be coming to a close before we know it. Here are some important things to consider as we close out 2020 and get ready for the arrival of 2021. 

Cash Flow Planning

  • Are you able to save more? If you have a Health Savings Account (HSA) through your employer, you may be able to contribute up to $3,550 ($7,100 for a family) and an additional $1,000, if over age 55, to help plan for medical costs now or in retirement

  • If you have an employer retirement plan, such as a 401(k), you may be able to save more for the year - let’s run the numbers to make sure you are maximizing your benefits

Charitable Planning

  • Are you making year-end charitable contributions to potentially help reduce your tax burden?  The CARES Act has specific benefits and impacts that apply to 2020

  • Donor-Advised Fund - might be a good option if you want to have a greater say in the charities you choose

Tax Planning 

  • Do you expect your income to increase in the future? Or decrease in the future? Consider ways to minimize your current or future tax liability through Roth conversions and maximizing 401(k) contributions by year-end  

  • Are you on the threshold of a higher tax bracket? If so, consider strategies to defer income or accelerate deductions, and available options to manage capital gains and losses to help stay in the lower bracket

Education/Estate Planning

  • Are you contributing to a 529 plan or contemplating starting one? You can contribute up to $15,000/year to a beneficiary’s 529 account or make a lump-sum contribution of up to $75,000, gift tax-free

  • Any changes to your family/heirs that would require updates to your will and trust? Consider reviewing your estate plan

Let’s schedule a time to discuss what is going on in your life, and make sure that 2021 starts off on the right financial foot.

News and Upcoming Events

  • November 1 – Open Enrollment Starts 
  • November – On-going Medicare Open Enrollment through December 7  
  • November 26 - Thanksgiving Day!  Make memories in person or virtually with those we love and give thanks for all that we have
  • Reminder:  Required Minimum Distributions have been waived for 2020 
  • December 31, 2020 - last day to make tax moves for 2020.  Planning your income and expenses year by year is a really useful method of managing your income tax effectively. By incurring expenses a year early (accelerating expenses) or delaying them until the following year, you can make significant changes to your tax values!  

Financial Planning Articles of Interest

2021 Social Security Cost of Living Adjustments and Related tax changes
Open Enrollment Tips to Consider when Choosing a Health Insurance Plan
You'll Spend Thousands on Healthcare this year.  Can HSA or HRA help?
The Giving Season!  5 Ways to Maximize your Year-End Giving Strategy

Yes, sometimes, the waiting is the hardest part, but 2021 will bring its own rewards and opportunities. If 2020 has taught us anything, it is to appreciate and give thanks for those around us, and to have confidence in our ability to get through the tough times together.  

Stay safe, 

Carolanne M. Chavanne, CFP

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By Carlanne M. Chavanne, CFP

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