Anyone who has gone through the process of mapping out their retirement knows there can be a lot to keep in mind. Saving, investing, anticipating medical costs, and making sure you have enough tucked away for years to come is just the start. One question many people overlook is: “Should I pay off my mortgage before I retire?” The answer is more complicated than you may think.

Opportunity Cost

Imagine you have $300,000 set aside to pay off your mortgage. But rather than using those funds to pay off your mortgage, you instead invest that money. Sure it’s tempting to stop making a monthly payment, but what if that $300,000 earned a hypothetical 6% for the next five years. You would have a little more than $400,000. Yes, your house may appreciate in value over the same period of time, but you should consider all your choices for that lump-sum of money.¹

Eradicate (Other) Debt

Before you pay down your mortgage, any extra cash might be better suited to paying off other kinds of debt that carry higher interest rates, especially non-deductible debt, such as credit card balances.²

Make Your Mortgage Work

Some homeowners benefit from a mortgage interest deduction on their taxes. Here’s how it works: the amount you pay in mortgage interest is deducted from your gross income, which reduces your federal income tax burden. But remember, the further along you are toward paying off your mortgage, the less interest you’re paying. If you’re unsure if you’ll be able to take advantage of this mortgage benefit, it’s best to consult your financial professional.^3,4

Retire Your Mortgage

Don’t Throw Your Money Away

Your monthly mortgage payment may be a large part of your available capital, especially in retirement. Eliminating unnecessary subsidies can significantly reduce the amount of cash you need to meet monthly expenses.

Uninteresting Interest

Depending on the length of your mortgage term and the size of your debt, you may be paying a substantial amount in interest.

True, you may lose the mortgage interest tax deduction, but remember as you get closer to paying off your loan: more of each monthly payment goes to principal and less to interest. In other words, the amount you can deduct from taxes decreases.⁵

Home Is Where the Heart Is

There’s a value to your home beyond money. It’s where you raised your children, made fond memories, and you may want it to remain in the family. Paying off the mortgage may help make your home part of your legacy. Afterall, some things you just can’t put a price on.

The warmth of the holiday meal beckons. Thanksgiving is a time for gathering with loved ones and observing gratitude.

So, as you gather around the table, look around and give thanks for the family and friends surrounding you. Give thanks, too, for those who may be far away and those who have passed into memory.

The people in our lives make us who we are, enriching our experiences and giving our days meaning. Taking the time to share a special moment with them is one of life’s great experiences.

This is also true for the people who choose to work with us. Thank you for making me part of your team this past year and in the future. It’s a pleasure, and I look forward to speaking with you soon.

Information vs. instinct. When it comes to investing, many people believe they have a “knack” for choosing good investments. But what exactly is that “knack” based on? The fact is, the choices we make with our assets can be strongly influenced by factors, many of them emotional, that we may not even be aware of.

Investing involves risks. Remember that Investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Deal du jour. You’ve heard the whispers, the “next greatest thing” is out there, and you can get on board, but only if you hurry. Sound familiar? The prospect of being on the ground floor of the next big thing can be thrilling. But while there really are great new opportunities out there once in a while, those “hot new investments” can often go south quickly. Jumping on board without all the information can be a mistake. A disciplined investor may turn away from spur-of-the-moment trends and seek out solid, proven investments with consistent returns.

Risky business. Many people claim not to be risk-takers, but that isn’t always the case. Most disciplined investors aren’t reluctant to take a risk. But they will attempt to manage losses. By keeping your final goals in mind as you weigh both the potential gain and potential loss, you may be able to better assess what risks you are prepared to take.

You can’t always know what’s coming. Some investors attempt to predict the future based on the past. As we all know, just because a stock rose yesterday, that doesn’t mean it will rise again today. In fact, performance does not guarantee future results.

The gut-driven investor. Some investors tend to pull out of investments the moment they lose money, then invest again once they feel “driven” to do so. While they may do some research, they are ultimately acting on impulse. This method of investing may result in losses.

Eliminating emotion. Many investors “stir up” their investments when major events happen, including births, marriages, or deaths. They seem to get a renewed interest in their stocks and/or begin to second-guess the effectiveness of their long-term strategies. A financial professional can help you focus on your long-term objectives and may help you manage being influenced by short-term whims.

October’s Consumer Price Index (CPI) had some encouraging news for investors, but others asked, “Is this a game changer or another head fake?”

While it’s a bit early to know the answer, it was great to see that inflation rose at a slower-than-expected rate in October. The financial markets welcomed the report as investors hoped the news might influence the Fed’s decision about future rate adjustments.

Fed Chair Powell knows that few financial events can be as devastating as high inflation over time – especially for those living on a fixed income. So, the Fed has been committed to raising short-term rates this year to slow the economy and, in turn, slow inflation.

So, if you held my feet to the fire, would I say the CPI report was a game changer or a head fake? Well, I’m 100% optimistic that the Fed is committed to managing inflation and the current CPI trend appears to be moving in a constructive direction.

The Internal Revenue Service (IRS) has released new limits for certain retirement accounts for the coming year. After months of high inflation and financial uncertainty, some of these cost-of-living-based adjustments have reached near-record levels.

Keep in mind that this update is for informational purposes only, so please consult with an accounting or tax professional before making any changes to your 2023 tax strategy. You can also contact your financial professional, who may be able to provide you with information about the pending changes.

Individual Retirement Accounts (IRAs)

Traditional IRA contribution limits are up $500 in 2023 to $6,500. Catch-up contributions for those over age 50 remain at $1,000, bringing the total limit to $7,500.

Remember, once you reach age 72, you must begin taking required minimum distributions from a Traditional IRA in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.

Roth IRAs

The income phase-out range for Roth IRA contributions increases to $138,000-$153,000 for single filers and heads of household, a $9,000 increase. For married couples filing jointly, phase-out will be $218,000 to $228,000, a $14,000 increase. Married individuals filing separately see their phase-out range remain at $0-10,000.

To qualify for the tax-free and penalty-free withdrawal of earnings, Roth 401(k) distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawal can also be taken under certain other circumstances, such as the owner’s death.

Workplace Retirement Accounts

Those with 401(k), 403(b), 457 plans, and similar accounts will see a $2,000 increase for 2023, the limit rising to $22,500. Those aged 50 and older will now have the ability to contribute an extra $7,500, bringing their total limit to $30,000.

Once you reach age 72 you must begin taking required minimum distributions from your 401(k) or other defined-contribution plans in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.

SIMPLE Accounts

A $1,500 increase in limits for 2023 gives individuals contributing to this incentive match plan a $15,500 stop light.

Much like a traditional IRA, once you reach age 72, you must begin taking required minimum distributions from a SIMPLE account in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.

As a reminder, this article is for informational purposes only. Consult with an accounting or tax professional before making any changes to your 2023 tax strategy.

The midterm elections have come and gone, and although the results don’t appear as one-sided as many predicted, it seems one party will narrowly take control of the House, while the Senate is now controlled by the Democrats.

It’s uncertain whether the early results will influence the stock market, especially since the final results in many races are still being tabulated. Interestingly, in 17 of the 19 midterms since 1946, markets performed better in the six months following an election than they did in the six months leading up to it. Past performance does not guarantee future results.¹ 

The truth is, it’s too soon to tell how the midterm results will impact investors. Over the coming months, Congress will pick up several key issues that may influence the markets, such as the debt ceiling for example.

Critical events like the midterm elections are just one of the many major occurrences we anticipate and consider when building your portfolio. If you have any questions about current or future market conditions, don’t hesitate to ask! We’re always happy to help.

is now controlled by the Democrats

The financial markets are on edge this year each time Fed Chair Jerome Powell takes the podium following a Federal Open Market Committee (FOMC) meeting.

The chart below shows that the Standard & Poor’s 500 stock index has gained or lost an average of 1.9% following the first six two-day FOMC meetings in 2022. And after the most recent November 2nd meeting, stocks see-sawed throughout the session but eventually ended the day sharply lower after hearing from the Fed Chair.

Initially, investors cheered when the official FOMC statement suggested that the Fed would consider all data before adjusting rates again. But Powell crushed the enthusiasm in his post-meeting press conference, saying the current inflation data did not support any change in the Fed’s position.

In many ways, Powell’s tough talk is understandable. Throughout 2021, he told investors that inflation was “transitory” and the FOMC made no change to monetary policy. But in 2022, inflation has been stubbornly high, and it’s the Fed’s job to maintain price stability. So, in some ways, Powell wants to restore the Fed’s credibility.

As you may have heard me say, “Don’t worry about the horse; just load the wagon.” Now is a time to stay focused on “your wagon,” and we’ll keep an eye on the “horses” at the FOMC.

The midterm elections are underway. In many states, ballots have been delivered and, in several cases, already returned by Americans exercising one of the most sacred of their Constitutional rights.

Election Day is always the Tuesday following the first Monday in November. So, if you haven’t voted yet, you must cast your ballot today.

The results of elections almost always influence the economy, whether that be an immediate reaction from Wall Street or a long-term reaction due to policy changes. Midterm elections, in particular, can shake things up.

It’s too early to tell what major or minor changes might be coming, but some change is inevitable.

Such changes are among the many factors we consider when building your portfolio. The U.S. has major elections every two years, and it’s best to be prepared for some market volatility as the election results come in.

If travel for you is less about escaping life and more about living it, then consider these vacation ideas:

By Car

East Coast of Australia: There may be no better way to experience this amazing continent than by driving along its east coast, stretching from Melbourne in the south to Cairns to the north. This 2,500-mile drive carries you through rainforests, cities, mountains, and the outback, with the blue waters of the Pacific as a constant companion. Be sure to carve out time for the Great Barrier Reef, snorkeling, kayaking, and hiking along the way.

By Ship

Northwest Passage: For hundreds of years explorers tried, and failed, to find the fabled Northwest Passage. Travelers can now discover what eluded so many brave adventurers. Begin your journey in Greenland, sail past its fjords, and you’re on your way. As you penetrate deep into the Arctic, you’ll scrape against icebergs and marvel at the harshness and sublime beauty at the top of the world. But, it’s not just ice. See the remains of explorations that came before you and the polar bears that call this home.

By Foot

Camino de Santiago, Spain: Sometimes adventure is a journey to discover ourselves. This medieval pilgrimage through France, Spain, and Portugal to the Cathedral of Santiago de Compostela in northwest Spain can take you weeks or months. Travelers can recover from a day’s walk at one of some 300 refugios that offer food, drink, and a clean place to sleep. It’s a mystical experience that gives you time to reflect on life, learn about yourself, and connect with kindred spirits.

Once in a Lifetime

Botswana, Africa: One of the most sparsely populated nations on earth, Botswana is dominated by the Kalahari Desert and the Okavango Delta, the world’s largest inland delta and now a UNESCO World Heritage site. The Okavango is the ideal spot to safari as its waters attract a richness of wildlife that is unmatched on the continent. The country’s focus on minimizing human impact means that your African experience will be both primal and transcendent.

You may have heard the phrase “contrarian investing,” but did you know that one of the most reliable contrary indicators is individual investors?

Retail investors often do the wrong thing at the wrong time. But this year, they have been mostly correct in their bearish view. In the chart below, you can see that for most of 2022, individuals have had little confidence in the stock market.

Warren Buffett has one of Wall Street’s most famous quotes about contrarian investing. He suggested investors “be fearful when others are greedy and greedy when others are fearful.” So is it time to be greedy, or is it best to remain fearful?

When we created your portfolio strategy, we anticipated there would be periods of market volatility. With your investing dollars, we’re not looking to time the market based on sentiment. Instead, we want to help you pursue your goals based on your time horizon and risk tolerance.