1. Begin your College Education in Fall of 2020 at the school you originally planned?
  2. Enroll at your local Community College for the first year or two, then transfer to another university or college where you can earn your diploma from?
  3. Take a “GAP YEAR”?

With all of the UNKNOWNS and UNCERTAINCIES, most Universities and Colleges are not yet clear on what the Fall 2020 semester will be.  There is a possibility that they will offer only remote learning and no on-campus living.  OR, it is still possible that schools will reopen (possibly) with limited classroom access for physical attendance, exercising social distancing and strict precautionary measures with specific limitations for safety.

  1. Your original College enrollment – If you decide this is what you want to do, your school will most definitely work to make sure you get the best college education and experience possible. It may not be the “typical or traditional” semester, but you should be confident that your University/College will provide the education you expect and deserve.  We suggest to contact your school for the latest and most updated information about your Fall 2020 semester.
  2. Community College – Some students may opt to enroll in their local Community College for their initial year (or two). This can possibly save some tuition costs while taking some core (or mandatory) classes that could be transferrable to their next school of choice from which they will earn a degree.

Finance and Career Counselors are always on hand to discuss students’ options and help guide them to make the right decision for themselves.

More information on this is cited on CNBC:

Community colleges could see a surge in popularity amid Covid-19

https://www.cnbc.com/2020/04/22/students-consider-starting-out-at-community-college-amid-coronavirus.html

  1. Take a “GAP YEAR” – Some students (especially during this COVID-19 pandemic) may be considering deferral of beginning college, or applying for a “Gap Year”.

Taking a “Gap Year” may be a consideration or viable solution for those students who are not absolutely sure how to proceed with their college education.  There can be many reasons why a student is confused or conflicted about beginning the next phase of their higher education.

All Universities and Colleges have Guidance/Career Counselors and Finance Counselors on staff and are there to help students when making these decisions.  If you would like to discuss all options, you should contact your school to make a (virtual) appointment.

More information on this (including Pros and CONS), cited on AccreditedSchoolsOnline.org.

Taking a Gap Year Before College

https://www.accreditedschoolsonline.org/resources/taking-a-gap-year-before-college/

and/or from: The Wall Street Journal

Gap Year Ideas for College Students

https://www.nytimes.com/2020/04/23/well/family/college-students-gap-year-coronavirus.html

Change your lens…change your story. Like putting a wide lens on a camera, choosing a different perspective can not only broaden our current perception of events but influence our behavior to produce more positive and long-lasting outcomes. We often let not only the history of our lives but the fear of the unknown control how we view present situations. These limiting perspectives often prevent us from seeing the true breadth of possibilities that lie before us. This narrow lens keeps our vision limited and restrained but in times of uncertainty, when it is easy to feel out of control and our stress levels begin to rise, the lens through which we choose to view the situation can be our most powerful tool. During difficult times, simply by realizing you choose your perspective, you empower yourself to influence the outcomes. Below are a few tips for changing your lens to better shape your narrative.

 

The Optimist’s Perspective

When we are stuck in a pessimistic perspective, which we can very quickly gravitate to in uncertain times, it prevents us from being curious and creative with the way we think about the future and the choices we have to forge a new path forward. What if, instead, we choose an optimistic perspective? What if we choose not to focus on anxiety and worry of the unknown and instead focus on positive outcomes by noticing what we can control? We empower ourselves to be optimistic realists who take positive steps towards conquering the challenges we face. We look instead through a lens of hope as we shift our vision to the big picture and find inspiration to get there one accomplishment at a time.

 

Focus on Resilience

“I’m sorry for what I said during quarantine.” No doubt this will become a popular meme post Covid era. During these unique and trying times we are all experiencing challenges in some way, shape or form. Our limits are being tested. Our patience, willpower and resolve are all on trial. Rather than looking through the lens of self-criticism, what if instead, you choose a growth mind set and find lessons in these missteps. What are we learning about ourselves? What have you overcome? What can you overcome? Some of the situations we find ourselves in may even be temporary. It’s an opportune time to take inventory of our blessings and be grateful for what we do have, including our own resilience.

 

See the Opportunity

Many of us are finding ourselves in new situations that are unfamiliar, unchartered and even unusual. It’s human nature for fear to take over the choices we make and it can quickly shape outcomes into disappointing results. There is opportunity here…to do things differently. Try new things. Take small risks. What are you noticing that has been missing from your life? What steps can you take to change that? When this is over and some normalcy returns to our lives, how will your life look? How do you want it to look?

Things to consider when planning for special needs

As parents, we all want what is best for our children. For parents of children with special needs, the financial planning process can become extremely stressful and confusing. Many parents often take extended periods of time to create an action plan due to confusion, anxiety, and a variety of obstacles. But if parents are able to navigate through the many decisions and find the right strategy for their family, special needs planning can give comfort knowing there is a plan in place. Planning for a child with special needs is most effective when it is implemented in stages based on the child’s age. The following questions and insights can be discussed with your Financial Advisor to help you to map out together a clear plan for your family.

Questions to discuss when building a special needs Financial Plan

  1. What are the major expenses and concerns today as well as in the future?
  2. Where will the child live after parents are retired or have passed on?
  3. How will the future needs of any additional children and the parent’s retirement plans be affected?
  4. What is the child’s ability to take care of themselves physically and financially?
  5. What government assistance is the child eligible for?
  6. What are the intentions for education?

Assistance from Government Programs

It is essential to prioritize eligibility in the beginning of the financial planning phase with your advisor. These programs can provide great relief considering the high costs of lifetime funding and living expenses for the parents.

  1. Supplemental Security Income (SSI): Federal program designed to aid individuals with special needs with little to no income to meet basic needs. Children become eligible once turning 18 unless the parent’s assets are below standards.
  2. Medicaid: an individual who qualifies for SSI is automatically eligible for Medicaid. This program will provide medical and prescription needs, this is essential due to coverage for special needs being very limited
  3. Social Security Survivor/Disability Insurance (SSDI): funded through Federal government based on FICA taxes. Each payment is calculated from all FICA earnings made by the individual’s parents. It is required that a child is diagnosed prior to turning 22 years of age

Able Account

  • Eligible for individuals and their families to use by contributing funds which will grow tax deferred and distribute tax free when it is for a qualified expense
  • 2020 current contribution limit is $15,000 without reporting as a gift to the IRS
  • SSI benefits are subject to change if the account value exceeds $100,000. If so, benefits would be on hold until the account falls below $100,000.
  • Similar to a 529 plan, there are several conservative, moderate, and aggressive investment choices

Special Needs Trust

  • A trust designed to manage assets dedicated towards a special needs individual while protecting access to eligible government programs
  • First & Third-Party Trusts
    • First Party: irrevocable trust holding the assets of the individual with special needs. This can include an inheritance or settlement
    • Third Party: established by parent/guardian for the benefit of a special needs individual
      • Legal language specifies that the trustee will use their discretion of the trust to enhance the quality of life

Implementing a customized financial plan that best suits your family’s situation is the most important step you can take to having peace of mind. Examining potential situations, reviewing financial & estate planning documents, and going over the long term goals of all parties involved will help lay the foundation for an action plan.

Right now, due to quarantine, we are stuck in our homes and it sometimes feels as though it will never end. But there will be life after quarantine is over, and there is no better time to prepare for it than now. If you could go anywhere or do anything, what would it be? What do you want your life to look like? What is important to you?

When thinking about what you want, it is necessary to consider both the big picture and the details. Perhaps being at home has made you realize that you want to travel. Maybe you want to go on multiple small trips a year, or one bigger trip annually.   Perhaps, it’s even a once in a lifetime trip around the world that you desire. Each of these options requires different financial considerations. The cost, how frequently you will need the money, and how soon the funds need to be available, are all financial considerations that change based on what you want your travel plans to look like.

You may hate traveling and view your home as your oasis, but being home has you noticing things you haven’t before and inspiring you to make some changes. These changes can range from a new coat of paint, to renovating a bathroom, to an addition, or even deciding that your home is too small or too big to fit your current needs. Putting some money aside weekly to save up, getting a mortgage or Home Equity Line of Credit (HELOC), or withdrawing funds from a savings or brokerage account are just some options to obtain these goals.   It’s important to be sure that you are using the best financial plan for you to fulfill your needs.

The recent rise in unemployment may have you looking at your budget and deciding it is time to reduce your spending and overall debt, or wishing you had a bigger financial security net. Having your children or grandchildren virtually going to school at home may have you thinking about wanting to help them through college and potentially opening a Uniform Trust to Minors Act (UTMA) account or 529 account for them. The additional time at home may have urged you to spend more time on your hobbies, or finding a love for a new hobby. If you grant yourself the time to evaluate what you value, and determine your goals, you can accomplish more than you might even be able to imagine.

Most people have more than one goal they would like to obtain. It is important to consider what you value most and prioritize your goals. Then, a plan can be created to help you reach those goals. This way you can be sure that what you value most is receiving most of your attention. Everyone has different goals, values, and needs. How they are met changes from person to person and family to family. There are no right or wrong goals, only what is right for you and your family.

Things can happen to derail your plans. Some obstacles may be small and possibly avoidable, some may seem insurmountable, some you will never see coming. Three months ago, no one would have imagined our lives looking the way they do at this moment. This does not mean that your goals cannot or will not come to fruition. The important thing is to accept that things beyond your control happen, forgive yourself for mistakes you make, adjust the plan when necessary, and continue to keep moving toward your goal.

At Lighthouse Financial Advisors we know our client’s values and goals are important to them and make it a point to help you get to where you want to be in life. LFA is lucky to have clients who share pictures of their journeys with us. Some pictures have been taken in their backyards, others are from around the world. You can view some of their pictures on our website at the link below. Life is a journey, not a destination. Enjoy it!

https://lighthousepro.wpengine.com/clients-enjoying-the-journey/

On Wednesday, April 15, 2020 80 million Americans received their Stimulus funds via direct deposit. As the COVID-19 Relief funds are arriving in the hands of Americans that need it most, scammers are working hard to make attempts to get their hands on this money.  As the IRS Commissioner Chuck Rettig said, people need to take extra care during this period. Scammers are opportunists that historically take advantage of people when they are most vulnerable or in a state of need. The 2 trillion-dollar relief fund is a great place for them to go. The folks that are receiving relief from the Covid-19 Stimulus Package are generally more vulnerable than the average tax payer as it applies to individuals that make less than $75,000 year, a majority of whom are senior citizens and represent one of the most vulnerable groups in terms of fraud. It is important to become educated and to educate those around you about the scams that are out there to be able to avoid them properly. Below are examples of some of the most common signs of a scam and how to protect yourself against them.

  • A call from the “IRS” asking for a “small payment to ensure they have the right account information” or someone asking for your account information outright. Do not give it to them. The information for the direct depositing of your payment is based off of the information you provided on your tax return. The IRS would not call you for this information. There is also no check to make sure they have the right account information by taking a small amount first.
  • A fake check comes to you via mail. Then a sender calls you to verify your account information to “deposit it”. As mentioned already, the IRS would not do this.
  • You’re asked by the scammer to sign over the funds to the caller and they will get the funds to you via a cashier’s check, deposit, etc. This seems obvious, but scammers can be very convincing about this being the only way for you to receive the funds.
  • You receive an email or text about verifying account information. Once again, the IRS would not do this. Ignore them and report them if possible.
  • Scammers contacting you to help you receive your payment faster. This is most pertinent to those that did not have a direct deposit on file and are expecting a check in the mail. As mentioned above, the IRS would not contact you for this reason. Ignore and report of possible.

Other helpful tips:

 

Sources:

https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know

https://www.advisorperspectives.com/articles/2020/04/15/irs-braces-for-scammer-onslaught-accompanying-stimulus-payments?bt_ee=gZBK8I0v96uW0WjEpkgvskYy8VO6i66i8xy9oRvRV%2FJLC87DNzh9GYFeloqe0IhF&bt_ts=1587124155277

https://www.irs.gov/newsroom/irs-issues-warning-about-coronavirus-related-scams-watch-out-for-schemes-tied-to-economic-impact-payments

https://fortune.com/2020/04/16/coronavirus-scams-stimulus-checks-secret-service-covid-19/

https://www.aarp.org/money/scams-fraud/info-2020/stimulus-checks-scams.html

https://www.irs.gov/privacy-disclosure/report-phishing

https://www.bloomberg.com/news/articles/2020-04-15/recipients-of-virus-payments-include-the-recently-deceased

https://www.irs.gov/coronavirus/get-my-payment

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

https://www.irs.gov/tax-professionals/verify-the-status-of-an-enrolled-agent

https://www.irs.gov/pub/irs-news/at-01-39.pdf

To relieve the financial pressure many Americans are experiencing, the federal government has started to issue $1,200 payments to certain Individual Taxpayers, and $2,400 to married couples.  These payments have been a centerpiece of the $2.2 trillion rescue package meant to provide a buffer against the coronavirus pandemic that has closed much of the U.S. economy.

The U.S. Department of the Treasury and IRS expect roughly 80 million Americans will receive their payments via direct deposit by today (Wednesday, April 15.) These payments are being automatically issued to eligible 2019 or 2018 federal tax return filers who received a refund using direct deposit.

 

Who is eligible to receive a payment?

U.S. residents will receive a payment of $1,200 for individual or head of household filers, and $2,400 for married filing jointly if they are not a dependent of another taxpayer and have a work-eligible Social Security number with adjusted gross income up to:

  • $75,000 for individuals
  • $112,500 for head of household filers and
  • $150,000 for married couples filing joint returns

Taxpayers will receive a reduced payment if their AGI is between:

  • $75,000 and $99,000 if their filing status was single or married filing separately
  • 112,500 and $136,500 for head of household
  • $150,000 and $198,000 if their filing status was married filing jointly

The amount of the reduced payment will be based upon the taxpayer’s specific adjusted gross income.  Please use calculator found on the link below that will help provide an estimated total you can expect to receive if your AGI falls somewhere in the phaseout amount:

https://www.kiplinger.com/tool/taxes/T023-S001-stimulus-check-calculator-2020/index.php

Additionally, if you have children who qualify for the child tax credit (they must be 16 years old or younger), you will receive an additional $500 for each child.

 

Who is not eligible to receive a payment?

Taxpayers will not qualify for an Economic Impact Payment if any of the following apply:

  • Your adjusted gross income is greater than
    • $99,000 if your filing status was single or married filing separately
    • $136,500 for head of household
    • $198,000 if your filing status was married filing jointly
  • You can be claimed as a dependent on someone else’s return. For example, this would include a child, student or older dependent who can be claimed on a parent’s return.
  • You do not have a valid Social Security number.

 

Is there any action required to receive payment if you’re under the required AGI income limits?

Individuals who’ve filed their 2018- or 2019-Income Tax return:

  • No action is needed in you’ve already filed your 2019 Income Tax return.
  • Also, no immediate action is required if you’ve filed your 2018 Income Tax Return, but not your 2019 Income Tax Return. The IRS will use information from your 2018 tax filings to determine the Economic Impact Payment calculations.

Individuals who are not required to file a tax return:

  • Recipients of Social Security retirement benefits, Social Security disability insurance (SSDI), Social Security survivor benefits and Railroad Retirement and Survivor Benefits that are under the income requirements to file Income Tax Return – no immediate action is necessary.
    • These recipients will receive their Stimulus payments as a direct deposit or by paper check, just as they would normally receive their benefits detailed above.

 

No Direct Deposit established with the IRS?

For those that have not previously participated in direct deposit with the IRS, physical checks will be mailed as early as April 24th at a rate of five million checks per week throughout the summer.  To allow taxpayers to track the status of their payment, the IRS will be launching an online application called “Get My Payment”. In addition to sharing the status of their payments, this FREE app will allow taxpayers who filed their tax return in 2018 or 2019 but did not provide their banking information to submit their direct deposit information to receive their payment immediately.

 

This is the latest available information as of today, and as more information becomes available LFA will continue to keep you updated. If you or a loved one have any questions or concerns please never hesitate to reach out.

We are living through an unprecedented event. Schools, businesses, and parks are closed. People are stuck in their homes and are unable to visit friends and family. Children are being taught in virtual classrooms. Life itself and every aspect of life is challenged. This situation, just like the Covid-19 virus, is unique…however we can look to the past for perspective.

Oil & Gold – In the early 1970s people believed the dollar was backed by gold. In 1973 the system collapsed and people had to make a mental shift that money holds value because we all agree it does. Our economy was dependent on foreign fuel when OPEC stopped shipping oil to US in 1973. This caused inflation and forced people to wait for hours in line just to get gas. Then the world changed, congress passed fuel efficiency rules and we, as a country, came to the realization that we needed more energy independence. These life lessons have forced us to be better prepared and rethink our systems going forward.

WWII – During WWII, it is not that people didn’t have money to spend, but rather that they had nothing to spend it on. Back then, people were pulled from the economy to go to or contribute to the war. In 1937 the market dropped 35%, then went up, then back down for many years. Cities were being destroyed, 70-85 million lives were lost, yet from 1942-1945, the market returned 20% per year during the darkest days of a generation. The dollar doubled from the beginning to the end of the war. Companies will find a way to be profitable. An extreme example, if they cannot make cars, then they will make tanks. Markets are resilient, because companies are resilient, because we are resilient.

Home – Another way to think of the stock market is like your house.  The daily price movements are not meant to be watched every day. It doesn’t matter what those daily price movements are, what matters is the long-term outcome. We are all bombarded by market news, notifications we didn’t ask for, and relentless media noise. When emotions are high it is easy to let them cloud your judgment. It is okay to feel the way you do, but be sure to disentangle your emotions from your investment decisions. We as your financial advisor and friend are here to help you along the way.

Global Diversification Matters – Last decade the US market did better, the previous decade the International market did better. So far in 2020 the US is not in the top 10. China had the best 1st quarter in 2020. As of now, Denmark is #1, followed by China.

Stock Market Big Picture – For every seller, there is still a buyer. For every pessimist, there is an optimist. There is no universal agreement on where the market is going. Continuous adjustments are made based on new data.

Bear markets last longer than bull markets, but many bull markets experience a 20% decline every 8-11 years. This is to be expected, it is the price of admission.

When the now overwhelms you, look to the future. The market is likely to recover before the “smoke clears”. 2009 was the worst year of the recession, but then the market went up over 25% before the recession was over.

Markets are choppy and have a huge range of volatility within a year, with a historical average of a 9-10% return, but these actual returns rarely occur. Historically after a 20% decline, the 1 year average return is 14.21%, 3 year return 11.58%, and 5 year return of 11.76%.

There can be a strong appeal to market timing but it is a fallacy, as one needs to make two right decisions….and just when the stress of being in the market is too much, remember being out of the market can be just as painful!

All we can do is take care of ourselves and those around us…so we go back to the process, rebalance your portfolio when necessary, harvest losses, and make sure short- term cash flow is met.  We are all here for you, please continue to reach out and we’ll get through this together.

As we try and  work our way through the pandemic, it can be very overwhelming looking for the end. One idea is to take an approach of “day to day”.

  1. It’s hard to do, but try every day to do something positive
  2. Number 1 priority – Keep yourself, family, and the people around you safe
    1. Try every day to do something positive
    2. Family
    3. Yourself (mental & physical)
    4. Co-worker’s & your company
    5. A Client
    6. Your community

 

Then break the day down –

  1. Wake up – a gift
  2. Make it to breakfast
  3. Make it to lunch
  4. Make it to dinner
  5. Relax & repeat

Hang in there and try to laugh a little every day.

On Friday March 27th, President Trump signed a $2 trillion financial stimulus known as the CARES Act. This immense package is designed at the federal level to help Americans who will be directly impacted by Covid-19 by providing aid to individuals, support to small business sectors, expanded provisions for health care, updated tax deadlines, and education provisions. Many individuals are still currently battling with substantial student loan payments. However, during these unprecedented times, the CARES act has adopted a few measures to help provide temporary relief.

Key Federal student loan provisions & how they will affect you:

  • 6-month grace period on current Federal student loan payments till September 30th
    • Note: this does not apply to private custodians (ex: Discover, Earnest, Sallie Mae)
      • If you have private loans, we still recommend reaching out to them to see if there are any options available, including forbearance
    • This legislation treats each month during the grace period as if a payment was made towards loan forgiveness
    • No interest will be compounded during the interim, applied to principal only
    • You must manually check your Federal custodial payment portal; this will not automatically change an autopay plan if you need to delay your payments
  • Employers can exclude student loan repayments from compensation
    • Employers can contribute up to $5,250 annually toward an employee’s student loans and it is not included in the employee’s income (applies currently to only 2020), meaning it is not taxed
  • Look for potential student loan refinancing
    • With recent cuts from the Federal Reserve, this can be a great opportunity to lock in a new rate and start saving on your monthly payments.
      • Need a credit score of at least 650 to qualify and have enough monthly income to make payments
    • If you are quoted rates that are higher than anticipated, look into having a cosigner such as a parent/guardian to see if you are granted a lower rate
  • If you are a current student, contact your bursars/financial aid office at your educational institution to check to see if there have been any changes.

All of these recent provisions can be helpful ways to lower some financial burden on student loans. With the addition of the $1,200 stimulus check, aid to vulnerable economic sectors, Federal student loan relief, tax relief, and other various additions, the US government intends that the CARES Act can provide some stability in an unprecedented time of hardship. As history has shown, we are strong and are always capable of overcoming the toughest of challenges.

We know many of our clients are working through dealing with the implications of Covid-19 on their businesses and day–to-day realities of managing work at a time like this. It is easy to succumb to the stress undoubtedly brought on by the uncertainty and unpredictability that current events present us with day by day – even minute by minute. We hope you and your family are staying healthy, safe and are remembering to take the time to practice self-care in all it’s forms: physically, emotionally, spiritually and financially. 

Yesterday, the Senate passed a historic $2 trillion deal, the Coronavirus Aid, Relief and Economic Security (CARES) Act, which provides economic relief for Americans, businesses and many industries in response to the growing coronavirus pandemic.  It is a comprehensive package that includes many provisions intended to mitigate the economic downturn the country is currently facing.  The CARES Act builds upon the Families First Coronavirus Response Act which was passed two weeks ago.  Notable for our clients are several changes to the 2020 tax code.

Below are some highlights we feel might be relevant to you and your families:

Checks to Individuals:  The bill provides for direct payments of $1200 per adult or $2400 for married couples filing jointly and an additional $500 per child.  These grants start to phase out for individuals with an adjusted gross income above $75,000 ($150,000 for joint filers and $112,500 for heads of household).  These recovery rebates are being treated as advance refunds of a 2020 tax credit. This credit is one-time, but policymakers may consider additional rebates if the downturn is prolonged.  Read more here.

Unemployment Benefits: A temporary Pandemic Unemployment Assistance program extends benefits from 26 to 39 weeks in most states.  There is also a provision included for an additional $600 a week increase for the first four months.  Benefits are extended to contract workers, freelancers and other nontraditional workers who are unemployed, partially unemployed or unable to work because of Covid-19.

Small Business Interruption Loans:  The bill expands small business eligibility for business under 500 employees.  Loans can be used for payroll as well as paid sick, medical or family leave, mortgage and rent payments, utilities and other debts. There are also provisions for payroll tax delays

Special Rules for Retirement:  The bill allows for tax favored “coronavirus-related distributions from certain retirement plans of up to $100,000 (10% early withdrawal penalty does not apply).  Income attributable to those distributions would be subject to tax over three years (as opposed to one).  In addition, Required Minimum Distributions are waived for 2020. This is a major provision for those not needing the cash flow in 2020.

Charitable Contributions:  Allows for contributions up to $300 to be treated as above-the-line deductions meaning that you do not have to itemize deductions in order to claim first $300 of charitable contributions.  Limits on cash donations are also temporarily suspended for individuals and corporations.  There is no longer a 50% AGI limit for individuals and the 10% limit for corporations is increased to 255 of taxable income.

Student Loans:  Students are allowed to suspend their monthly payments through Sept 30th 2020 without any interest accruing.

The expansive bill also provides for many other benefits such as a payroll tax credit for employers, payroll tax payment delays, corporate tax payment delays and modified net operating losses limitations.   We anticipate many of our clients will have questions and welcome your calls.  We are here to help.  Please do not hesitate to reach out with any questions or concerns.  We will continue to keep you updated.

Remember, there is nothing permanent except change. Take some time for yourself, filter out the noise, stay the course.