Dear Clients & Friends,
Happy New Year! Those are words we all might appreciate a little more this year than in years past. Looking back, it’s difficult to fathom the year that was.
A global pandemic that has and continues to affect every aspect of our lives and business. A stock market that saw a historic decline followed by a subsequent dramatic rise. Interest rates at zero. A necessary call to action for equality and inclusion. An election. Lives have been turned upside down. The list of influences impacting how we approached our business and our personal lives in 2020 could go on. The Honan Group at Janney is rooting for a brighter and more beautiful 2021. If 2020 taught us anything, it was resiliency, and so far 2021 has shown us that democracy always wins.
Financial Opportunities Heading Into 2021
While 80% of New Year’s resolutions fail (fair warning: you have probably seen this stat everywhere this month), there’s also something to be said about hopefulness and how it can increase our level of success and our positivity. As you get yourselves organized heading into 2021, we put together a list of a few financial opportunities and pitfalls to keep in mind at every age.
20s & 30s
Being financially literate. By learning as much as you can about saving, budgeting, and investing now, you could benefit from it for the rest of your life.
Saving regularly. Save a portion of every paycheck and then spend what's left over — not the other way around. You can earmark savings for short-, medium-, and long-term goals. A variety of mobile apps can help you track your savings progress.
Being mindful of subscription expenses adding up
Keep on top of services you are paying for (e.g., online streaming, cable, the gym, your smartphone bill, food delivery) and assess whether they still make sense on an annual basis.
Protecting yourself with insurance Consider what would happen if you were unable to work and earn a paycheck. Life insurance and disability income insurance can help protect you and your family.
Do not overspend on housing. Think twice about buying a house or condo that will stretch your budget to the max, even if a lender says you can afford it. Consider building in space for a possible dip in household income that could result from a job change or a leave from the workforce to care for children.
Saving for retirement. Perhaps saving for retirement wasn't on your radar in your 20s, but you shouldn't put it off in your 30s. Start now and you still have 30 years or more to save. Wait much longer and it can be hard to catch up. Start with whatever amount you can afford and add to it as you're able.
Keeping up with the Kardashian’s – Don’t!
More recently, in the era of social media, the Joneses Mentality has grown dramatically with the increased exposure to other peoples' spending habits and our corresponding increased desire to “keep up.” Just because you can manage to PAY for something doesn’t mean you can really afford it. Focus on the importance of becoming debt free and investing to create wealth for your family. You will find it easier to decide when and how often you want to splurge on those vacations. This is the corollary of not saving. If you are struggling to stash away some savings each month and pay for most of your expenses out-of-pocket, then you need to rein in your lifestyle. Start by cutting your discretionary expenses, and then look at ways to reduce your fixed costs.
40s & 50s
Keeping your job skills fresh. Your job is your lifeline to income, employee benefits, and financial security. Look for opportunities to keep your skills up-to-date and stay abreast of new workplace developments and job search technologies.
Prioritize health. By taking steps now to improve your fitness level, diet, and overall health, not only will you feel better today but you may reduce your health-care costs in the future.
Avoid: Funding college over retirement. Don't prioritize saving for college over saving for retirement. If you have limited funds, consider setting aside a portion for college while earmarking the majority for retirement. Closer to college time, have a frank discussion with your child about college options and look for creative ways to help reduce college costs.
Do not try to Keep Up With the Jones’ Avoid spending money you don't have trying to keep up with your friends, family, neighbors, or colleagues. The only financial life you need to think about is your own.
Avoid using your home equity like a bank. The goal is to pay off your mortgage by the time you retire or close to it — a milestone that will be much harder to achieve if you keep moving the goal posts.
The Weight of Too Much Debt
60s & 70s
Avoid co-signing loans for adult children. Co-signing means you're 100% on the hook if your child can't pay — a less-than-ideal situation as you approach retirement.
Try to hold off on dipping into your retirement funds until retirement. It goes without saying that dipping into your retirement funds will reduce your nest egg, a significant tradeoff for purchases that aren't true emergencies.
Knowing your sources of retirement income. As you near retirement, you should know how much money you (and your partner, if applicable) can expect from three sources: your personal retirement accounts (e.g., 401(k) plans and IRAs); pension income from an employer; and Social Security at age 62, full retirement age, and age 70.
Having a will or advance medical directive. No one likes to think about death or catastrophic injury, but these documents can help your loved ones immensely if something unexpected should happen to you.
Resource Room:
The Internal Revenue Service recently announced the tax rates and contribution limits for 2021. Most of the changes to tax figures resulted from inflation adjustments. Attached please find a copy of our partner, Putnam’s “2021 tax rates, schedules, and contribution limits”. This can be used when reviewing your tax situation this coming year. Here is a glimpse into the IRA and Roth IRA and social security limits for 2021.
Join Us:
Internet Security: Safeguarding your Assets
Massive computer hacks and data breaches are now common occurrences — an unfortunate consequence of living in a digital world. Once identity thieves have your information, they can use it to gain access to your bank and credit card accounts, make unauthorized transactions in your name, and subsequently ruin your credit. Now more than ever, it's important to safeguard yourself against identity theft.
Join us for a Janney virtual Webex, from the comfort of your own home or office.
JANUARY 27, 2021 | 12:00 PM
FEATURING
Jeff Lanza is a retired FBI agent, author and an expert in identity theft prevention and cyber security.
MARKET COMMENTARY
Stimulus, Vaccines & Pent-Up Demand Bode Well For 2021
MICHAEL J. HALLORAN, CFA | Equity Strategist
Stocks had their worst week since October last week, with the economic data showing the effects of renewed restrictions as the virus surge continues and as the effects of last spring’s massive CARES Act stimulus wanes. However, we continue to expect further economic improvements in the coming months for several important reasons. We expect the pandemic to fade in the coming months as the vaccine rollouts continue, despite the near-term operational challenges that will ultimately be overcome. We now have two vaccines approved in the U.S. and there is a high probability of one or two more approvals in the coming weeks. We expect the lack of vaccine supply and logistical challenges to quickly become non-issues in the coming months.
While we are seeing some near-term weakness in the economic data, we anticipate this will also be short-lived. While the impact of the massive $2.2 trillion CARES Act may be fading, it was just supplemented by a $900 billion follow-on package. This will provide additional support for the vaccine rollout and for businesses and consumers that have been negatively impacted by the pandemic. Biden just proposed an additional $1.9 trillion package that would provide even further support to the economy. To read more please see attached breakdown of the 2021 outlook.
Thank you for your business!
Good service is always worth sharing. We’re proud we have earned your confidence and trust, and we want to thank you for allowing us to work with you. If you have friends or family who would benefit from our knowledge and experience, I hope you will allow us to contact them. If there is anything we can do to be of additional value and service to you please do not hesitate to reach out.
The Honan Group of Janney Montgomery Scott LLC
50 Portland Pier, Suite 200 Portland, ME 04101
dhonan@janney.com 
207-536-2162
nhonan@janney.com 207-536-2163
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