Campbell Wealth Management - December 2019

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People focus on the fact that they have to pay taxes on their gains and forget about the big picture: The market is constantly fluctuating. On top of that, their portfolio might not be balanced. Having the right mix of investments, over time, can prove far more crucial, than holding onto an investment because you don’t want to pay the tax on it. A well-balanced portfolio has a better chance of surviving a major dip in the market (and potentially a recession) than one that isn’t balanced at all. When these types of issues pop up, it makes me happy to know that we have systems and processes in place to handle them. We’ve put a lot of time and effort getting these systems in place and making sure they work. It’s an effort I’ve very thankful for. As this year comes to a close, I’m also very thankful for our clients as well as our incredibly strong team who is here to help you achieve your goals. We’re excited to see what 2020 has in store. From all of us at Campbell Wealth Management, have the happiest of holidays and a wonderful New Year!

a hit, they may lose some money, but they may potentially avoid significant losses. Our aim is to help them be confident in pursuing their retirement more or less as they planned it. This group also asked questions about estate planning and the documents involved. While they understood that it’s important to have documents in place, such as a will, they seemed less sure about the bigger picture. Having a will in place is one thing, but how you set up your beneficiaries and how various assets, accounts, and insurance policies are distributed, is something else entirely. It goes beyond just naming people and who gets what. I see people make mistakes with the estate planning documents every day — including not keeping those documents updated. The devil is in the details and if you ignore (or forget about) the details, your beneficiaries could end up with a legal battle on their hands. Finally, taxes. Often, when we meet with a potential new client, they may not want to sell a certain investment because they’re concerned about the associated taxes. I remind them that while the market is currently high, they will pay some tax now, or maybe over the next few years, but if they choose to wait, they might not have to pay tax at all. That might sound good until you realize that you don’t pay tax because there are no gains. Many retirees rely on pensions in addition to savings, investments, and Social Security. However, pensions are rapidly becoming a thing of the past, and it’s leaving a lot of retirees and pre-retirees feeling frustrated. In October, General Electric began freezing the pensions of more than 20,000 current salaried employees. The company also offered to buy out over 100,000 former employees who had yet to start receiving their benefits. For current GE employees who are impacted by the freeze (which goes into effect on Dec. 31), they will no longer be accruing pension benefits. As it stands, retirees already receiving pension benefits should see those benefits remain unchanged. However, GE is far from alone in freezing pension benefits. Major companies like DuPont and IBM have done the same. According to the U.S. Department of Labor, the number of pension plans with 100 or more participants has dropped like a rock. At their height, there were nearly 26,000 active plans in 1983. In 2016, that number was around 8,400 — a number that is continuing to trend downward. For many people approaching retirement, this can have serious repercussions. But if your current or former employer initiates a freeze, it’s FROZENOVER The New Reality of Pension Plans?

Kelly Campbell

crucial to follow up and know exactly how you’ll be affected. Most freezes do not impact retirees who are already collecting their pension. Instead, it

prevents newer employees from participating in the pension program.

If you have questions, talk to the employer. Don’t leave questions hanging in the air. If your retirement plan included a specific amount of pension money, you may need to adjust your plan to account for any changes to your pension or, at the very least, have a back-up plan should your employer or former employer change the terms of their pension plan. As frustrating as it can be, seeing a reduction in pension benefits is a part of today’s reality. The best many of us can do is plan for that future and do what we can to reduce the negative impact it has on retirement.

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