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DFA and Vanguard Named to Best Parent Fund Companies List

Morningstar, an independent mutual fund rating company, recently updated their parent ratings on mutual fund companies.  The two primary mutual fund companies we use, Dimensional Fund Advisors (DFA) and Vanguard, were both given a high rating, the top rating available by Morningstar.  Only five total mutual fund companies, of which more than 50 were rated, received the top rating of high. Morningstar reviewed fund companies from several angles such as culture, long-term focus, ownership structure, manager tenure, regulatory infractions and ethical practices, and providing strategies that have served investors well. When speaking about Vanguard, Morningstar’s Alec Lucas said “Vanguard gained its stature by following Jack Bogle's playbook: pairing relatively predictable strategies, both passive and active, with minimal costs. That's enriched Vanguard's investors, and those outside its flock who have benefited from industrywide fee compression.” Daniel Sotiroff wrote about DFA; “Dimensional Fund Advisors continues to be an outstanding steward of its shareholders' capital. …...

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2020 Tax Bracket and Contribution Changes

As the IRS does every year, all the tax brackets are increasing by the annual inflation amount. This is beneficial because it gives the consumer the ability to keep up with the rising cost of living. But don’t worry, it’s really just a regular IRS tax adjustment and not any major overhaul like we had a few years ago. 2020 Tax Brackets for Single Tax Payers Taxable Income Tax Rate $0 - $9,875 10% $9,875 - $40,125 12% $40,125 - $85,525 22% $85,525 - $163,300 24% $163,300 - $207,350 32% $207,350 - $518,400 35% $518,400+ 37% 2020 Tax Brackets for Married Filing Jointly Taxable Income Tax Rate $0 - $19,750 10% $19,750 - $80,250 12% $80,250 - $171,050 22% $171,050 - $326,600 24% $326,600 - $414,700 32% $414,700 - $622,050 35% $622,050+ 37% Head of Household 2020 Tax Brackets Taxable income Tax Rate $0-$14,100 10% $14,100-$53,700 12% $53,700-$85,500 22% $85,500-$163,300 24% $163,300-$207,350 32% $207,350-$518,400 35% $518,400+ 37% Married Filing Separately 2020 Tax Brackets Taxable Income Marginal Tax Rate: $0-$9,875 10% $9,875-$40,125 12% $40,125-$85,525 22% $85,525-$163,300 24% $163,300-$207,350 32% $207,350-$311,025 35% $311,025+ 37% Standard Deduction: The standard deduction is an amount you can deduct from your total taxable income for the tax filing year. The standard deduction has increased in 2020 to the following limits: Single or married filing separately: $12,400 Married...

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Celebrating 40 Years

Today our team gathered at the place where it all started, forty years ago this week! On December 28th, 1979 our initial Certificate of Incorporation was filed with the New York Department of State by our founder, Alan Vogt.  In 1984, our company name was officially changed to Paramount Planning, named after the street Mr. Vogt and his wife Phyllis lived on in Tonawanda.  Forty years later, after two more name changes, that small one-person company has grown to fourteen employees managing more than $427 million in assets for over 620 families, individuals and organizations.  The founding principles of integrity, honesty, diversified investing, and long-term financial strategies instilled by our founder has followed the company throughout, making Level Financial one of the largest locally-owned independent registered investment advisory firms in Western New York. We thank all of our dedicated employees, our loyal clients, and -- most of all -- Mr. Alan Vogt,...

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The Retirement Rules Are Changing

Congress recently passed, and the President recently signed, a bill called the Setting Every Community Up for Retirement Enhancement Act (SECURE Act).  This brings major changes to the retirement landscape that will affect all retirement savers going forward.  These are the most sweeping changes to the retirement rules in my entire 13-year career.  Let’s walk through the most impactful changes: 1) Changes the age to start required minimum distributions from age 70.5 to age 72 This is good news for those who don’t need to take money from their retirement accounts because they are still working or have other funds they can tap for retirement expenses.  This change allows more time to strategically plan for those who retire before 72 and want to take advantage of low tax years by doing Roth conversions.  I can also appreciate the starting date no longer being a “half” age, which is incredibly annoying for most...

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Tax Optimized Retirement Income Strategy: A Three Level Approach

Often, the average investor approaching retirement assumes they will convert their nest egg to a more conservative portfolio and then “live off the interest.”  It’s an attractive concept because it’s simple and it makes us feel safer.  But is it really so?  Simpler, yes; but not necessarily safer.  If you broaden your lens and consider that the greater risk in retirement is the effect of thirty-plus years of inflation, the answer is clearly no. To create cash flow from just interest, an investor would probably have a portfolio filled with fixed income investments (CDs, bonds, REITs and high dividend stocks).  Over thirty years, this portfolio would be more vulnerable to the loss of purchasing power (inflation) when compared to a more broadly diversified allocation that is managed for total return.  Even modest inflation rates can decimate a portfolio’s purchasing power over this length of time. And, retirees are exposed disproportionately to...

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Five Smart Ways to Protect Your Identity and Digital Assets

The other day when talking with some peers at a group function in New York, someone asked a pretty simple but intriguing question: “As a business owner, what really keeps you up at night?” It was interesting to listen to the variety of answers coming from this very capable group of leaders.  Market volatility, political turmoil, ever-changing regulatory requirements, hiring bright new advisors; the list went on and on and on.  Perhaps more fascinating to me during this impromptu round of “Q and A” was how no one had dropped the dreaded c-word.  Cyber-security! There’s nothing as a business owner that presents a greater risk, that is more pervasive, susceptible to soft targets, and damaging than the potential for a data breach.  In financial services, that risk is only amplified. Yes, we are a financial advisory firm entrusted with helping our clients reach their life-long goals, but perhaps even more important –...

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Medicare and Tax Planning: Managing The Premium Surcharge

In a previous blog post (Converting Your Retirement Nest Egg to Income), I argued that higher income individuals must juggle a far more complex and unique set of variables in retirement than they faced in their working years, if they hope to be as efficient as possible with their accumulated wealth.  Many of the variables are tax related and interrelated, in that a change to one may change the others. While complicated, a holistic, forward-looking planning process pays big dividends in tax efficiencies that can stretch your retirement nest egg.  This post will focus on one specific variable; the Medicare Premium Surcharge, called the Income Related Monthly Adjustment Amount or IRMAA. Wait, what does Medicare premiums have to do with retirement tax planning?  At the risk of oversimplifying, here is a quick summary explanation (for those interested, here’s a more detailed look from the IRS): Medicare is our system of retiree health...

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Converting Your Retirement Nest Egg to Income

The moment you realize you don’t actually know how to make your savings last.

Let’s assume that you’re completing a solid career, have earned a good income and through thrift and discipline, accumulated a significant nest egg for retirement.  Sounds good so far, right?  But as you approach retirement, the thought may occur to you: “I don’t really know how to convert this nest egg into retirement income when I stop working”. Well, you’re not alone.  In our experience, there is a fair amount of angst that accompanies this much anticipated life event, and for good reason.  Compared to the working years, there are many unique moving parts and complexities to consider in retirement that most individuals have never had to think about.  Building wealth while earning a healthy income is pretty one dimensional. For most individuals, it’s about setting aside regular long term savings and investments in the most tax effective manner possible.  With relatively high marginal tax brackets, individuals tend to build their retirement nest eggs with pretax contributions first; usually through contributions...

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