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Growing a Strong Financial Future
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2006 Markets
At the time of this writing, the stock market is enjoying a rally based on falling oil prices, a hoped for easing of interest rates and stronger consumer confidence. The Dow closed just 53 points below its record high. However, Alfred E. Goldman, chief market strategist at A.G. Edwards suggests a cautious look forward, saying, “I don’t think we’re going to go up, up and away from here.”
Commodities investors have experienced a drop of around 11% since the beginning of August. Amaranth Advisors, a Greenwich Connecticut based hedge fund, is reporting $6 billion of losses on bad natural gas bets. This is a reminder that commodities remain a volatile sector, although an appropriate diversification for more aggressive investors. The Conference Board Consumer Confidence Index rose in September. The housing market has clearly cooled in many areas of the country. California home sales were down dramatically in August and many analysts expect softer prices by the end of 2006, if your area is not already experiencing them. America is ranked #1 among 42 countries for the highest percentage of citizens (22%) who have no money left after paying bills and spending discretionary dollars. The country that ranked the best was Thailand, with only 3% of its citizens cash strapped. Be one of those who understands that slow, steady investing is a time tested road to financial security. A Quote To Bring A Smile To Your Face
Living LongerWe believe many of our clients will live well into their 90’s and build our financial plans accordingly. Although family history is important in your lifespan, many Americans are living longer and healthier lives. Here are some statistics to ponder from the American Academy of Actuaries.
We believe everyone should plan to reach an advanced old age and build an asset base that allows a comfortable lifestyle. As George Burns said, “Retirement at 65 is ridiculous. When I was 65, I still had pimples.” As you probably remember, he died at age 100!! Caregiving ContractsThere is a new trend in caring for the elderly: caregiver contracts. The contract is a formal agreement set up by a lawyer. Adult children or other relatives are hired to care for ailing or elderly family members, usually for a modest salary. The compensation is considered taxable income. What Services Are Included The caregiver gets paid for the hours he or she cares for the elderly family member. This may include arranging doctor’s appointments, buying food, paying bills, keeping the house clean and reimbursement for travel. Caregiving Now It is estimated that over 44 million adult caregivers now work without a contract and for no compensation. On average they provide 21 hours of care every week for an average of over four years. Many of these caregivers have other family or outside jobs and have to make constant adjustments to keep everything balanced. Problems between siblings often arise in these situations where one is providing more caregiving than the others. Discussing the contract with other family members can minimize family squabbles later. Qualifying for Medicaid Legislation passed this year has made it more complicated to qualify for Medicaid when the elderly make outright gifts to family members. Properly constructed caregiving contracts should not be considered gifts, since the elder is receiving a real service. How to Draw Up A Contract. The contract needs to follow certain standards. It must be in writing and done ahead of Medicaid qualification. It is a good idea to do it while the elder is still of sound mind. The caregiver cannot receive an inflated compensation. The contract should specify the duties and link them to reasonable wages, although the caregiver is allowed to accept discounted wages if he or she so chooses.The contract should describe how the caregiver is paid: weekly, monthly or in a lump sum based on life expectancy. It may be wise to build in safeguards; for example the paychecks can go into an escrow account instead of directly to the caregiver. Mission StatementWiiken & Gorman pledges to use our expertise to help clients imagine a better financial future and develop a plan to experience more financial security and happiness in their lives. |
Financial Tips
Charitable GivingTaxpayers who are 70 1/2 or older can give up to $100,000 a year from an IRA directly to a qualified charity. Typically the taxpayer gets an exclusion for the donation as long as the money is paid directly. The donation counts toward the required minimum distribution for that year. So far this rule applies only to 2006 and 2007. After August 17, 2006, gifts of clothing and household items are deductible only if they are in “good” condition or better. You might take photos of the donations and keep a more detailed inventory to prove the condition of your items More Identity Theft TipsPhishing: Do not respond to e-mails from financial institutions no matter how legitimate they look. There are many skillful phishers who are looking for your password and account numbers. Unsolicited E-mail: If you get an unsolicited commercial e-mail, do not respond. You may end up with a malicious software secretly installed on your computer. Free Software: Do not download any free software unless you are sure of the source. This even applies to free security software, which may be malicious software in disguise. Marriage and Financial PlanningTwo new surveys from Money magazine and PNC Financial suggest that married couples are clueless about how the other sees their financial picture.
We believe that a good financial plan reached by consensus can overcome all of the listed communication problems and bring about better financial security.
Mutual Fund NewsOn August 28th Pax World announced it plans to acquire the socially responsible group Citizens Funds. The deal is subject to shareholder approval. Some companies involved in the mutual fund scandals are at the distribution phase of settlement (Pilgrim Baxter is an example.) To find out if you are eligible for any compensation, visit this SEC site and click on the fund family in question for an updated report.
ManagementWiiken & Gorman manages money in pension plans, IRAs, personal accounts, and trusts. We charge a retainer fee for portfolio development, monitoring and reporting. We also help with financial life planning issues that arise. Please call us if you would like to work with us in this capacity. The minimum portfolio size is $500,000 and we welcome your business. About Your Planners  Paula and Mike attended the West Regional Conference of NAPFA in Portland September 14-17. Apart from networking with planners from all over the Western States, there were good sessions on College Planning and Elder Law. Paula spent 13 days in Iceland on a hiking tour in mid August. It was a peak experience, traveling through scenic national parks on pristine trails. Mike spent a recent weekend in Pismo Beach with his Men’s Book Group discussing the issues of male health and aging.Fee Schedule 2005We feel privileged to serve our clients and try to respond to phone calls, letters and e-mails in a timely manner. Wiiken & Gorman thinks that each client deserves a carefully reasoned response to every question and we bill accordingly. If you would like a copy of our most recent fee sheet, please let us know and we will be happy to provide one. Please contact Wiiken & Gorman if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Financial planning is a process and we are here to help you transition through important life changes. |
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Copyright 2004-2006 Wiiken & Gorman
Updated 12 October 2006