From the Desk of Dale Crossley and Evan Shear

We hope this email finds you and your loved ones safe and well. For our last 2021 edition of The Journey, you’ll find helpful articles on Medicare open enrollment, Social Security increases and a delicious chicken cacciatore recipe. We'd like to wrap up the year with last-minute tax and Required Minimum Distribution (RMD) reminders and a bit about the recently passed infrastructure bill. 

Before the year ends, it’s a good time to make sure that you’ve set yourself up properly from a tax standpoint for 2022. Check with us to see if you can benefit from tax-loss harvesting which is selling a losing investment to offset gains. It’s also important to pay attention if you’re at or near the next tax bracket. If so, we can discuss ways that you can reduce taxable income now as the year comes to an end. We also want to remind you of RMDs for 2021. Last year, there was a special RMD waiver due to the CARES Act, but that’s no longer the case. If you are 72 or older as of December 31, 2021, please remember to take your RMD by year-end to avoid a penalty (if you are turning 72 in 2021 and this is your first RMD, you have until April 1, 2022). To read about all these year-end strategies in detail, we've included Make Your Final Tax-Saving Moves Before Dec. 31 in our newsletter.

As we close out 2021, we also want to acknowledge the bipartisan Infrastructure Investment and Jobs Act Bill that just passed. The $1.2 trillion bill will fund the building and repairing of roads, bridges, railroads, and ports, as well as make broadband investments throughout the country. If the reconciliation budget comes through in December, which remains to be seen, building and infrastructure initiatives in America will be greater than experienced during the New Deal era. These projects will not begin overnight, so most effects on the economy and investments will be beyond 2022. 

The second part of the original bill supports social infrastructure such as healthcare, childcare and housing. The Build Back Better Act proposes an additional $1.2 trillion in spending totaling $3 trillion for both packages. Both sides are still not in agreement on this additional bill. As 2022 begins, we’ll be hearing much commentary on how these bills might influence the economy moving forward. To read more about these bills, we’re sharing the article America has an infrastructure bill. What happens next?

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. All opinions are as of this date and are subject to change without notice. Past performance is not a guarantee of future results.

Cooking time 30 minutes

Serving size 4-6

Difficulty level Easy

Chicken Cacciatore

In Italian cuisine, “alla cacciatora” refers to a meal prepared “hunter-style”, a rustic style. In fact, it comes from the tradition of farmers and hunters, which was and is still based on the consumption of their own products they grow and produce. So many regions from the centre of Italy claim to have originated this dish, which really varies among them. For instance, some use tomato sauce, some not. We won’t tell you we are giving you the ‘national’ recipe, but of course we are giving you the Roman one, which we definitely believe, but don’t tell this to a Tuscan, is the most authentic.

Ingredients

1.5 kg (3.5 lbs) whole chicken with skin (you can also buy chicken pieces, bone in, skin on)

250 gr (8.8 oz) pitted green olives

2 medium-sized red onions

180 gr (6.3 oz) salted capers

½ cup of table white wine

3 rosemary sprigs

EVOO

Mediterranean Sea Salt

Ground black pepper

Setting up:

Finely chopped onions, capers and olives.

Directions

If using a whole chicken, cut into thighs, legs and breasts.

Heat a large sauté pan. Brown the chicken, and as soon as a golden patina is reached on both sides, add EVOO, finely chopped onions, capers, olives and rosemary sprigs. Stir it. Pour in the white wine and let it blend into the sauce. Once the alcoholic part has been reduced, season with salt and ground black pepper, stir and then cook over medium heat for about 15 minutes. 

This dish perfectly pairs with Chianti DOCG

Article printed from LA CUCINA SABINA: https://www.lacucinasabina.com

URL to article: https://www.lacucinasabina.com/recipe/chicken-cacciatore/

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Make Your Final Tax-Saving Moves Before Dec. 31

Proactive investors know that the months before year-end can be an ideal time to make strategic adjustments.

While keeping in mind your long-term investment goals, meet with your advisor and coordinate with your tax professional to examine nuances and changes that could impact your typical year-end planning.

Mind your RMDs

Be thoughtful about required minimum distributions (RMDs) to ensure that you comply with the rules – especially as some of those rules have shifted throughout the course of the pandemic.

Last year, the CARES Act waived all RMD obligations. But for 2021, requirements are back to normal. Investors that reach a certain age – 70 1/2 for those born before July 1, 1949; 72 for those born after – are required to take RMDs from their IRAs. You’ll face a hefty 50% tax penalty on amounts not withdrawn from your IRA to meet the RMD, so be sure to speak with your advisor to ensure you’ve met your obligations.

A few reminders for future distribution planning:

• RMDs can be automated with your advisor to help ensure you don’t miss applicable deadlines.
• Your first RMD can be delayed until April 1 of the year after you turn 72. If you delay, however, you must also take your second RMD in the same tax year. This can inflate your income, which may affect your tax bracket.
• Subsequent RMDs must be taken no later than December 31 of each calendar year.
• Qualified charitable distributions allow traditional IRA owners who transfer RMDs to qualified charities to exclude the amount donated from their adjusted gross incomes, up to $100,000.
• Be mindful of how taking a distribution will impact your taxable income or tax bracket. If you have space left in your bracket or a down income year, you may want to consider taking additional distributions.

To harvest or not to harvest

Evaluate whether you could benefit from tax-loss harvesting – selling a losing investment to offset gains. The first $3,000 (single or married filing jointly) offsets ordinary income. Excess losses also can be carried forward to future years. With your advisor, examine the following subtleties when aiming to decrease your tax bill:

• Short-term gains are taxed at a higher marginal rate; aim to reduce those first.
• Don’t disrupt your long-term investment strategy when harvesting losses.
• Be aware of “wash sale” rules that affect new purchases before and after the sale of a security. If you sell a security at a loss but purchase another “substantially identical” security – within 30 days before or after the sale date – the IRS likely will consider that a wash sale and disallow the loss deduction. The IRS will look at all your accounts – 401(k), IRA, etc. – when determining if a wash sale occurred.

Manage your income and deductions

Those at or near the next tax bracket should pay close attention to anything that might bump them up and plan to reduce taxable income before the end of the year.

• Determine if it makes sense to accelerate deductions or defer income, potentially allowing you to minimize your current tax liability. Some companies may give you an opportunity to defer bonuses and so forth into a future year as well.
• Certain retirement plans also can help you defer taxes. Contributing to a traditional 401(k) allows you to pay income tax only when you withdraw money from the plan in the future, at which point your income and tax rate may be lower or you may have more deductions available to offset the income.*
• Evaluate your income sources – earned income, corporate bonds, municipal bonds, qualified dividends, etc. – to help reduce the overall tax impact.

Evaluate life changes

From welcoming a new family member to moving to a new state, any number of life changes may have impacted your circumstances over the past year. Bring your financial advisor up to speed on major life changes and ask how they could affect your year-end planning.

• Moving can significantly impact tax and estate planning, especially if you’ve relocated from a high income tax state to a low income tax state, from a state with a state income tax to one without (or vice versa), or if you’ve moved to a state with increased asset protection. Note that moving expenses themselves are no longer deductible for most taxpayers.
• Give thought to your family members’ life changes as well as your own – job changes, births, deaths, weddings and divorces, for example, can all necessitate changes – and consider updating your estate documents accordingly.

Next steps

Consider these to-dos as you prepare to make the most of year-end financial moves, and discuss with your financial advisor and tax professional:

• Manage your income and deductions, paying close atten­tion to your marginal tax bracket.
• Evaluate your investments, keeping in mind whether you could benefit from tax-loss harvesting.
• Make a list of the life changes you and your family have experienced during the year.

*Withdrawals prior to age 59 1/2 may also be subject to a 10% federal penalty tax. RMDs are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Trading vs. Investing... Growing vs. Protecting

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

Trading and investing (as it pertains to bonds held in your investment portfolio) may seemingly be equivalent but they are inherently quite different. Trading is tactical and results often rely on dynamic timing, accurate forecasting and economic data attentiveness. Expected possible consequences to more volatile trading are potentially greater gains but also greater losses. Investing is much less active, often strategically long-term and significantly more predictable. Fixed income disciplinary disciples often utilize bonds as investments, not trading vehicles.

There are numerous “distractions” amplified by drama-driven media outlets that can be disruptive forces when investing. It may be inefficient to underestimate the power of fear and emotion on economic conditions. Take for example the 2020 pandemic. Is your garage or basement chockfull of toilet paper, hand sanitizer or paper towels? The fear of running out initiated a hoarding of goods. The hoarding of goods contributed to the shortage itself. Some folks had plenty of supply while others had none.

Now think of the current supply chain issue. When a corporation or factory relies on a particular material for production of their product, fear of a shortage or logistic problems amplify the supply deficiency when they amass greater than needed materials. Some stores over-stock while others are left slighted and disadvantaged.

The Federal debt-ceiling is another current distraction. Although the Senate approved legislation late last week to raise the debt ceiling, it is a short-term fix that kicks the can down the road for two months before it resurfaces again. This self-imposed legislative rule was created by Congress, and can be eliminated by Congress or amended at any time by congress. The notion that Congress would ever let our U.S. debt default over an arguably political-based rule used more for political grandstanding than as a useful economic tool, is absurd. Yet, this distraction periodically induces market movement.

The common denominator is that momentary distractions may affect trading decisions but rarely should alter fixed income investing. Successful trading relies on timing the market in anticipation that opportune appreciation contributes to income generation. Investing is not about timing the market, but about time in the market. Distractions escalate and diminish recurrently, yet strategic long-term individual bonds perform their task of principal protection irrespective of the commotion or momentary distractions.

To learn more about the risks and rewards of investing in fixed income, please access the Securities Industry and Financial Markets Association’s “Learn More” section of investinginbonds.com, FINRA’s “Smart Bond Investing” section of finra.org, and the Municipal Securities Rulemaking Board’s (MSRB) Electronic Municipal Market Access System (EMMA) “Education Center” section of emma.msrb.org.

The author of this material is a Trader in the Fixed Income Department of Raymond James & Associates (RJA), and is not an Analyst. Any opinions expressed may differ from opinions expressed by other departments of RJA, including our Equity Research Department, and are subject to change without notice. The data and information contained herein was obtained from sources considered to be reliable, but RJA does not guarantee its accuracy and/or completeness. Neither the information nor any opinions expressed constitute a solicitation for the purchase or sale of any security referred to herein. This material may include analysis of sectors, securities and/or derivatives that RJA may have positions, long or short, held proprietarily. RJA or its affiliates may execute transactions which may not be consistent with the report’s conclusions. RJA may also have performed investment banking services for the issuers of such securities. Investors should discuss the risks inherent in bonds with their Raymond James Financial Advisor. Risks include, but are not limited to, changes in interest rates, liquidity, credit quality, volatility, and duration. Past performance is no assurance of future results.

Stocks are appropriate for investors who have a more aggressive investment objective, since they fluctuate in value and involve risks including the possible loss of capital. Dividends will fluctuate and are not guaranteed. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Where Medicare Falls Short

Get wise about maintaining your health – and wealth – in retirement. Medicare provides a lot of coverage, but it doesn’t cover everything.

You may have a clear vision of your ideal retirement, but that dream could be challenged by unexpected healthcare costs. Even with Medicare, quality healthcare can come with a hefty price tag. There are still premiums, copayments, deductibles and other out-of-pocket expenses that must be accounted for.

To better estimate and plan for your future medical costs, take a look at what Medicare may not cover.

Hearing and vision

Hearing aids can range from $900 to more than $6,000 each, depending on the technology. They also need to be replaced every five years or so and require maintenance and batteries. Medicare covers hearing tests when medically necessary (think vertigo or injury), but otherwise you’re on your own. A typical hearing test can cost up to $250 without insurance; it’s about the same cost for a hearing aid fitting or consultation, too.

Traditional Medicare also doesn’t usually cover the cost of glasses, contact lenses, or eye exams, though there are some exceptions for those who have had cataract surgery.

Dental care

Routine dental care, including dentures, is not covered by Medicare or supplemental health insurance. The American Dental Association estimated that the average cost of two exams and cleanings and a set of X-rays is about $288. It’s estimated that an average retired couple will spend $18,590 out of pocket for dental services without additional insurance.

Mental health

Many retirees struggle with finding a sense of purpose when they transition into retirement, and this can lead to anxiety, stress or depression. Unfortunately, Medicare may not provide enough support. Part B allows for an annual health screening and therapy should you receive an official diagnosis. Medicare covers 80% of the cost after you meet your deductible; you’ll be responsible for the other 20%, which can range from $50 to $250 an hour with an approved provider.

Coverage abroad

Like to travel overseas? You might be under-covered. Traditional Medicare generally does not provide coverage for hospital or medical costs outside the United States. Residents of Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa and the Northern Mariana Islands are covered, and in some cases, inpatient hospital services in Canada or Mexico may also be covered.

If your wanderlust takes you further abroad, consider short-term travel insurance or a Medigap policy that covers foreign emergencies, such as plans C through J. Just be aware that the coverage applies for a limited time and doesn’t cover all expenses. A deductible and lifetime maximum apply.

Long-term care

Medicare, for the most part, doesn’t cover long-term or custodial care for help with everyday tasks like dressing or bathing. However, some 70% of us will need some form of long-term care either in a specialized facility or at home. The median cost of nursing home care in 2020 was $93,075 – even higher for a private room – according to the Genworth Cost of Care survey, and the median cost of a home health aide was $150 a day. Long-term care insurance can help you manage this risk by covering a range of nursing, social and rehabilitative services for people who need ongoing assistance due to a chronic illness or disability. Talk to your advisor about when it makes sense to invest in a policy, what coverage you might need for skilled, intermediate and custodial care, and whether it makes sense to pay your LTC premiums from a health savings account (HSA). Of course, supplemental insurance might help in many cases, but even that comes at a cost, and the premiums are subject to inflation over time.

Covering your bases

You have several options when it comes to planning for the expenses mentioned above. A broad approach may be allocating a lump sum of money to cover the average lifetime healthcare costs. However, not everyone is able to set aside hundreds of thousands of dollars to fund future healthcare needs. Even if you can, it may take away from your general retirement savings, leaving you with a smaller pool of assets to fund the lifestyle you’ve worked so hard for.

It may be more practical to estimate your and your spouse’s projected health needs based on your family history and state of health. You and your advisor can start with a baseline for a person your age and adjust from there depending on how conservative you wish to be. Keep in mind, the longer you expect to live, the higher your costs could be, so you may want to use more aggressive numbers in your estimations.

You may also consider a hybrid approach, estimating costs, buying enough insurance to cover most of your anticipated needs and then setting aside a smaller cash reserve for the unexpected.

It may be advantageous to use a health savings account (HSA) while you can. HSAs are associated with high-deductible health insurance plans, and the money saved within them can be used for many of the costs outlined above as well as other qualifying health expenses. Distributions for qualified medical expenses are also tax-exempt. You can’t contribute once enrolled in Medicare, even if you’re still working – but you can use any HSA funds you already have and roll over unused amounts.

Think through, too, how life insurance could play a role. Most permanent life insurance policies allow partial withdrawals or loans for healthcare expenses. The caveat here is that any unpaid loan amounts will reduce the future benefit to your heirs.

If you’re still working, you may be covered by an employer-sponsored plan, but you’ll need to determine how your benefits work with Medicare and what your spouse may be entitled to. Some previous employers also extend insurance benefits to retirees.

To your health

It pays to understand what you can and can’t expect from Medicare so that unexpected medical expenses don’t eat into your retirement savings. Rely on your financial advisor to help clarify issues, add in contingency plans to your retirement income strategy and point you toward helpful resources.

Sources: Centers for Medicare & Medicaid Services; medicare.gov; aarp.com; time.com/money; kiplinger.com; "How Much Does Therapy or Counseling Cost?" Depression RSS2, March 29, 2016; costhelper.com

These policies have exclusions and/or limitations. The cost and availability of Long Term Care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance. Guarantees are based on the claims paying ability of the insurance company.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.