OCTOBER 2017

Estate-Planning Tips for Baby Boomers

A s the baby boomer genera-tion gradually makes thetransition from their working

years to retirement, it’s time forthem to get serious about estateplanning. But for a variety of rea-sons, many boomers have put offthis essential task, putting them andtheir families at risk. These tips canhelp this generation get back ontrack with estate planning.

1. Know what your childrenexpect — and what you plan togive them. By and large, boomers’parents were conservative savers.They came of age in the GreatDepression, and that formativeexperience often led them to be cau-tious with their money. Many ofthem accumulated far more thanthey ever spent, and they passedthat wealth on to their boomer chil-dren. But many baby boomers aren’ttaking the same approach to money.For one, the world has changed.Even boomers who’ve saved a lot

may end up spending much of whatthey’ve accumulated, since retire-ments are likely to be longer andhealthcare costs expensive. Butthere’s also an attitude difference.Active boomers may be planning onspending much of their hard-earnedmoney on themselves. They believethey’ve done a lot for their childrenalready and don’t feel the need toleave substantial assets to them.That’s fine — it’s your money, afterall — but if you plan on spendingdown most of your assets, you maywant to let your children know. It’s

Dealing with Stock Losses

T ypically, investors find it easier to sell a stock with a gain than to sellone with a loss. When selling a stock with a loss, we must admit we

made a mistake, which is psychologically difficult to do. Thus, investorshave a tendency to hold on to a losing stock, hoping it will eventually getback to at least a breakeven point.

However, this might not be the best strategy for your investmentportfolio. While you are waiting for the stock to get back to breakeven,your money could be in other investments that might earn a higher rateof return.

When evaluating your investments, objectively review the futureprospects of each stock, making decisions to hold or sell on that basisrather than on whether the stock has a gain or loss. You can’t changeyour past investment decisions, but you can come to grips with them soyou can move forward and make appropriate investment decisions forthe future. Please call if you’d like help reevaluating your stock invest-ments. mmm

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U C C E S S

one thing to not leave money to thenext generation, but if they areblindsided by your decisions afteryour death, they may end up feel-ing resentful.

2. Have a plan for the end ofyour life. Many, if not most,boomers are still leading busylifestyles, and they plan to keepdoing so for some time. Boomerswho value staying fit and healthymay not really be thinking aboutwhat will happen to them when the

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Copyright © 2017. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. Thisnewsletter intends to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete analysis ofthese subjects. Professional advisers should be consulted before implementing any options presented. No party assumes liability for any lossor damage resulting from errors or omissions or reliance on or use of this material.

A Registered Investment Advisor

Securities o�ered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services o�ered through Kestra Advisory Services, LLC (Kestra AS) or Bridge Wealth Advisors,

LLC. Kestra IS and Kestra AS are not a�iated with Bridge Wealth Advisors or Gotleib & Associates.

RETIREMENT PLANNING

1120 Route 73, Suite 305 • Mt. Laurel, NJ 08054856.482.6100 • 1.800.644.4204 • Fax 856.482.5362

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inevitabilities of aging finally docatch up. But while taking steps tolive a healthy lifestyle is importantto enjoying a great retirement,boomers shouldn’t stick their headsin the sand and assume they’ll behealthy forever. Sickness and dis-ability can happen, and it will beeasier for you and your family todeal with if you have a plan. Notonly should you think about long-term care and how you’ll pay for it,you should also make sure you haveend-of-life planning documents inplace, like a healthcare power ofattorney and a living will.

3. Make sure your estate plan isup to date. Many boomers haveestate plans they created decadesago. The primary goal of thoseestate plans may have been toensure that their children and sur-viving spouse were protected in theevent of unexpected death. But asyou get older, your estate-planningneeds change. If your children areindependent adults, providing forthem is no longer as critical. Plus, ifit’s been two or three decades sinceyou created your will, your life haslikely changed in other ways too.You may have grandchildren whoyou want to receive part of yourestate or new property that shouldbe incorporated into your will. Oryour family composition might havechanged — you may have beendivorced or widowed, for example.You may even have received ahealth diagnosis that is affectingyour estate planning goals. For allthese reasons and more, boomersneed to sit down and review theirestate plans to make sure they areproperly conveying all their wishes.

4. Decide if and how you want to leave a legacy. Successfulboomers often want to find a way toleave a lasting impact on the worldand support causes and organiza-tions closest to their hearts. If youcount yourself among those forwhom leaving a legacy is important,

Estate-Planning TipsContinued from page 1

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now is the time to start thinkingseriously about how you want toturn those legacy dreams into reali-ty. If your goals are ambitious —like starting a foundation or a chari-ty or endowing a scholarship —you should start planning now. Themore lofty your goals, the moreimportant it is that you take clear,concrete steps to turn your dreams

into reality — like meeting with theleaders of an organization you sup-port and finding out how you canbest help them. After all, you won’tbe able to do this after you aregone.

Not sure how to put theseestate-planning tips into action?Please call if you’d like to discussthis topic in more detail. mmm

Your 401(k) Plan Has Hidden Gems

T ax-deferred contributionsand employer matches make401(k) plans a valuable

retirement planning tool, but thereare other features most people areunaware of that can make it evenmore valuable. Check with your401(k) plan administrator to seewhat other gems may be hiding inyour plan.

Investment Advice — Mostpeople would readily admit thatthey don’t have the knowledge orskills to manage their own invest-ments, but they do not take advan-tage of the various advice optionsthat may be available through their401(k) plan. Almost 40% of plansoffer online advice for investmentrecommendations, but only 6% ofplan participants utilize theseonline advice tools. And whileabout 25% of plans offer managedaccount advice and 68% offer pro-fessional financial advisor services,only about 10% of participants usethem.

Investment Customization —A wide range of investmentoptions are available to provideparticipants with choices based ontheir investment risk tolerance. Onaverage, 401(k) plans offered 18different funds in 2016, yet half ofplan participants contribute to onlyone fund.

Changing Investments —While investment selections can bechanged in your 401(k) at anytime, only 9% of plan participantsactually traded within their plan in2015. On a quarterly basis, you

should review the investments inyour 401(k) to determine how theyare performing in meeting yourinvestment objectives.

Roth 401(k) Plans — In 2015,the Roth 401(k) was available inalmost 60% of plans, but only 15%of participants saved with thisoption. The benefits of investingafter-tax contributions in a Roth401(k) is that contributions may bewithdrawn tax free in retirement.While there are rules around howmuch you can invest in a Roth401(k) plan, tax-free income inretirement is a great way to reduceyour tax liability. Additionally, ifyou roll your Roth 401(k) fundsinto a Roth IRA, there are norequired minimum distributions at70½, giving you more flexibility inmanaging your disbursements.

Catch-Up — About 97% of401(k) plans offer the option tomake catch-up contributions tothose 50 and older, but only 16% ofeligible participants take advan-tage of this option. The maximumannual contribution to a 401(k) in2017 is $18,000, but the catch-upfeature allows a participant to con-tribute an additional $6,000. If youhaven’t been making the maxi-mum contribution and you’re over50, this is your opportunity tomake the most out of your 401(k)with the time you have left.

Please call if you’d like to dis-cuss your 401(k) plan or retirementplanning in general in more detail.mmm

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markets) or decrease (bear markets)in market averages.

Stage 3: Excess – The finalphase of a primary trend is markedby extremely high levels of emo-tion, which are signs the primarytrend is about to change. Theseextremes can be seen in the behav-ior of individual investors: in bullmarkets, even the most conserva-tive investors are buying stocks. Onthe other hand, in the excess stageof a bear market, everyone is con-cerned about safety of principal,while those who bought stocks athigh prices have finally given upand sold their stocks at a loss.

The Indices Confirm theNew Trend

For Charles Dow, the primarytrend was reflected in the DowJones Industrial Average, whichtoday comprises 30 stocks. But Dowalso looked to another index to con-firm the emergence of a new trend.In his day, that was the Dow Rail-road Index. Today, it’s the DowTransportation Index of 20 compa-nies engaged in the shipping andtransportation of manufacturedgoods. The idea was a true changein the trend of business activity inbig manufacturing firms wouldshow up as business for the compa-nies they hired to move their goods.

For the second index to confirmthe first, the Dow theory looks forboth averages to be moving in thesame direction. And new highs orlows in one index are accompaniedby new highs or lows at the sametime or shortly thereafter in theother index.

The Dow theory isn’t intendedto help short-term traders. What it’sdesigned to do is tip off long-terminvestors to changes in trends, sothey can shift their money fromstocks to another asset class such asbonds or cash during a full businesscycle. mmm

The Dow Theory: Curbing Emotional Investing

I n addition to starting the com-pany that publishes The WallStreet Journal, Charles Dow

(1851–1902) also lent his name toone of the most popular U.S. stockmarket indices (the Dow JonesIndustrial Average) and created atheory regarding major shifts instock market trends. While neitherDow nor those who refined his theory after him believed they werecreating a sure-fire way to beat themarket, they did believe followingits principles could at least avoidmistakes associated with greed andfear.

Three AssumptionsBehind the Dow theory is a set

of assumptions about how the stockmarket works:

4The stock market moves inbroad, cyclical trends.

According to Dow, there are prima-ry trends, which are long-lasting(from months to years), and minortrends, which don’t last very longand run in the opposite direction ofthe primary trend. Primary uptrends are bull markets and primarydown trends are bear markets —these primary trends are marked bypeaks and troughs in price charts.Within these broader trends are secondary (minor) countertrendscalled corrections, which can retraceanywhere from 33% to 67% of a primary trend’s movement. Ofcourse, no one ever knows inadvance how long trends will last.

4Primary trends can’t bemanipulated. The Dow theory

holds that primary trends in thestock market as a whole are drivenby forces much bigger than any sin-gle individual, cartel, breakingnews, or rumor.

4Stock indices reflect all avail-able information. The Dow

theory believes that everythingthere is to know about a stock andthe economy at a given moment isfactored into the prices of stocks.This include hopes, fears, andexpectations of factors such as inter-est rates, earnings, revenue, andproduct initiatives. Unexpectedevents can occur, but usually theyaffect the short-term trend, creatingwhat are called reaction rallies thatsoon lose steam, and the primarytrend then resumes.

Three Primary-Trend Phases

According to the Dow theory,major trends consist of three phasesof varying length:

Stage 1: Accumulation or dis-tribution – In this phase, the smartmoney starts major buying or sell-ing programs. Initially, this lookslike a secondary countertrend; buttrading volume on the majorexchanges noticeably increases onup days, while volume tends to belighter on down days. In a bull mar-ket stocks are cheap, but no oneother than value investors seems towant to buy them. In a bear market,there’s a high level of enthusiasmfor stocks, and few people believethe bull market is over.

Stage 2: The big move – In thisphase, there are many more days inwhich the indices move in the direc-tion of the primary trend ratherthan in the opposite direction. Inbull markets, there are strings of updays followed by shorter strings ofdown days. In bear markets, theopposite occurs. The result is a sig-nificant, long-term increase (bull

3 MistakesWhen Saving

Financial Thoughts

Investing Defensively

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H ere are some of the biggest mis-takes people make when trying

to save money. 1. They stop spending — If you

think stopping spending is the bestway to save, you’re only partiallycorrect. Limit your spending —don’t just stop it outright.

2. They buy cheap — Buyingthe cheaper brand of certain itemsmay seem like a way to save somemoney, but it’s almost always a badidea. Over time, you’ll eventuallyhave to replace the item after iteither breaks or starts functioningimproperly, which is why it’ssmarter to buy quality items thefirst time — even if they cost more.

3. They make massive lifechanges — Just like dieting, learn-ing how to save money isn’t some-thing that happens overnight. Thisis why crash diets generally tend toend in failure. The same can be saidfor those who change their spend-ing habits too drastically. Instead,work toward gradually learninghow to save money without dis-rupting your overall lifestyle.

Looking to save money? Pleasecall if you’d like to discuss this inmore detail. mmm

I f market corrections make yourstomach turn, there are someways you can invest to help

provide some protection. Stocks with dividend yields

are a good buffer — Probably themost powerful defense against arocky market are stocks that havehealthy earnings and a good divi-dend payout ratio and yield. Whenstock prices fall, the dividend yieldincreases, because the cash divi-dend becomes a larger percentageof the purchase price of each share.During a volatile market, the dividend yield will increase andinvestors find themselves withexcess cash, so they will start buy-ing shares, which will drive up theprice of the stock. You typically see less damage to high-dividendstocks when the market falls.

Consumer staples are good defensive tools — Some of themost successful stocks are durablegoods, which include products suchas toothpaste, laundry soap, mouth-wash, cereal, etc. Many of these areblue-chip stocks that make up theDow Jones Industrial Average, andthey have very large market capital-ization. The reason they stay rela-tively stable is that no matter howbad the economy gets, the demand

for staples remains pretty constant.It’s highly unlikely that most of uswill stop washing our clothes orbrushing our teeth.

Good companies with repur-chase programs — There are somecompanies that repurchase vastamounts of their own shares. Whenthe market falls, these companiesare buying stock that is being soldby investors, which helps reduce the pressure on the stock price.Long-term shareholders may alsobenefit from repurchases if the stockbecomes undervalued, because thecompany is able to reduce the totaloutstanding shares at a quicker pace due to the lower stock price,increasing future earnings per shareand cash dividends for the remain-ing stock.

Stocks trading at reasonable valuations — Stocks associatedwith value investing fundamentals,such as those with low price/earn-ings ratios, price-to-book ratios,price/sales ratios, and conservativebalance sheets, have proven to holdup well in the long term. If youreview the historical metrics, youwill see that value-based stocksemerge from market downturns relatively intact over the course of time. mmm

R etirement income comes fromthe following sources: 33%

from Social Security benefits, 32%from postretirement work earn-ings, 21% from pensions, 10%from savings and investments,and 4% from other sources(Source: Social Security Adminis-tration, 2014).

The average annual premi-ums for family healthcare cover-age increased from $11,480 in

2006 to $18,142 in 2016, a 58%increase (Source: Money, April2017).

Approximately 800,000Americans lose their spouses eachyear, and 700,000 of those arewomen (Source: U.S. CensusBureau, 2017).

In 2017, the average pay raiseis expected to be 3%. However,top-rated employees typicallyreceive increases that are 77%

larger than average workers(Source: Money, March 2017).

About half of college studentsfrom families earning more than$106,000 per year pay part of theircollege costs through work orloans. However, working morethan 15 hours per week duringthe school year increases thechances of dropping out of col-lege (Source: Money, March 2017).mmm­­