Finding the Good

Covid-19 has flipped the world upside down and people are having trouble finding positivity in a time that is so uncertain, lonesome, and frightening. In the beginning of 2020, when the Coronavirus started secluding people into their homes, all anyone could see was the negatives. How will people work? What will happen to our economy? Where is the good? And as time went on, billions of people being plucked from their normal public life into a more solitary one, we have seen something the world has never seen… Earth healing itself, with our help.

One of the first positive environmental impacts the world recognized occurred early March before the US even went on strict lockdown. China had been dealing with Covid-19 since late 2019 and had already quarantined its population for several weeks at that time. News got out that their air pollution was down to almost a quarter of what it was, same time the year before. It has even been related to what states like Ohio emit a year, which is amazing! China is the biggest producer of greenhouse gases in the world, and tainted air pollution can lead to residents having lung and cardiovascular health issues. With air pollution limited, people can breathe healthier air and potentially live a healthier life, hopefully air is clear for a long period of time, and continue so all around the world.

The Venice canals have been populated by boats and tourists for decades as Italy has become one of the top 10 places to travel in the world. Videos hit the internet in late March of fish and dolphins swimming in the Venice canals for the first time in a long, long time. When people travel these canals, sediment is brought up from the bottom giving the water a murky look, and now it is a clear blue transparent to the life filling it. Oh, and not to mention less litter in these waters from lack of travel on them.

Another positive impact that hits close to home with some of us beach lovers, is that sea turtles are thriving! South Carolina, along with many East Coastline states, deem ‘Nesting Season’ from May 1st to October 31st every year. This is when turtles come upon shore, incubate their eggs for 60 days, and let them hatch peacefully. This process can be tampered with by beachgoers leaving plastic and waste, making it difficult for the baby turtles to push their way into the ocean, artificial light, like flashlights, leading them astray, and people digging the eggs up, even if they are closed off from the public. Since beaches have been closed for months, and some still on curfew, less foot traffic has saved many turtle nests and allowed for more sea turtles to hatch. A few articles even said that most SC beaches have documented 25-30% more nests in the past few months. Click here to view the ‘Sea Turtle Nest Monitoring System’ for South Carolina beaches, online!

This impact can be perceived as both positive and negative depending on the safety of people, and where your heart is regarding animals, but, animals have been seen roaming the streets more than ever! Our world is crawling with important wildlife, and our homes are just as much animals, as they are our own. Frequently throughout history, we have invaded their territory for our benefit and made it completely our own. There have been photographs posted of lions sleeping in the middle of the road in South Africa, when there are usually Safari Tour buses

traveling there. Monkeys have taken over streets in places like India and Thailand, even searching for food in front of stores and restaurants. Thousands upon thousands of birds have flocked to Agua Dulce Beach in Lima, Peru since beachgoers are not staking out on the sand. Deer have been seen sleeping in people’s front yards at night, goats roaming around town, and even our beloved sea turtles fit into this. Click here to view photographs of these examples, and spot a few more!

Many other positive environmental impacts include being able to see Mount Everest and the Taj Mahal from the smog clearing, less waste in our oceans due to boat and cruise travel halting, and many people donating clothes/home goods to charities after de-cluttering during stay at home orders. But, there are also negative effects of the world staying at home and quarantining. Stray animals and wildlife are having a hard time finding food because tons of restaurants feed strays with left overs, and some animals even go dumpster diving. The Brazilian Amazon’s deforestation has increased more than 50% for the first few months of 2020, as it did in 2019. Rainforests around the world have shrank over 6500 kilometers since Covid-19 as nature preserves have not been patrolled or assisted in being taken care of. Migration has also been halted, for people and animals, which is great for the environment and is a pivotal part of nature working its course.

So, what can we do? How can we keep up the good things happening from the pandemic as life goes back to ‘normal,’ and how do we pick up the slack of things that aren’t going so well?

  1. Carpool. Carpooling to and from work, extracurriculars, or even using public transportation will help with emitting carbon dioxide into our air and contributing to the oil crisis, when social distancing is over of course.
  2. Recycle. Recycling has taken a turn for the worst in this pandemic, especially with how much medical waste has occurred. Recycle in your house, reuse some cups or dishes, DIY plastic objects, get a reusable water bottle, and be sure to separate your trash from recyclables. Recycling helps us preserve our natural resources, saves energy, decreases pollution and creates jobs!
  3. Let animals be animals. The world will be a very beautiful place if we help animals and wildlife survive, especially in their own homes like the ocean, rainforests and safari.
  4. Clean up after yourself. Beaches and water streams around the world are cleaner than ever helping wildlife live and even making it more aesthetically pleasing to look at. There have already been tons of viral posts showing absolutely trashed and wrecked beaches after people were allowed back on. That has to end.
  5. Donate. Like our blog last week, many great causes have been put on hold due to the pandemic, and we must do our part to keep the world going round.
  6. Educate yourselves on products you’re purchasing and what company it is from. You won’t believe the morality of some companies of what they are doing to our people, humans and Earth. Shop wisely.
  7. Volunteer your time. Recycling takes time. Saving water in your home, or printing less takes time. Cleaning up your trash takes time. That can be a start that can eventually lead you to volunteering more time and assets.

It is beautiful to see that during this crazy time, the world has some positivity in it from healing itself all the way to helping heal each other. This pandemic has shown us some areas that the Earth has been lacking in, and it is our job as caretakers to keep the world healthy for generations to come. Although Covid-19 has flipped everything upside down, it is on us how we react to it. Let’s do our part, one step at a time! And always, find the good!

https://dwmgmt.com/

It’s the Perfect Time to Help Your Community

The Coronavirus crisis has decimated lives and livelihoods across the globe.  Charities are struggling to help the most vulnerable and are having a hard time keeping up, while many not-for-profits across the company are in precarious financial situations.   For example, there are now more than 36 million Americans unemployed; many of them without enough money for food or shelter.  The Food Bank network is distributing 100 times more food than normal, yet is currently receiving 50% less food from manufacturers.

Scores of charities across the country are sounding the alarm that they could go under if they cannot find alternative funding. Nonprofits large and small have shut down temporarily, cancelled essential fundraising events and watched helplessly as funds have dried up from both individual and corporate donors.  The reality is that many people who would normally donate are now in the need of help themselves.

Furthermore, even before the COVID-19 pandemic, donations to charity were declining.  20 million fewer households donated to charity in 2016 than did in 2000.  In the United States, the charity sector makes up for some 10% of the workforce; making it the third largest industry behind retail and manufacturing according to John Hopkins research.  Even as the economy starts to open up again and reports of potential vaccines are front page news, there’s deep concern that the contraction in giving to charity may last for years.

Fortunately, you readers of the DWM blog are generally in a financial position to make charitable donations and we expect that most of you do, particularly during fundraisers, giving days and at year-end.  We would like to encourage you to consider providing donations and/or your skills to a charity now.

The CARES Act signed into law on March 27th, provides incentives for giving.  Since 90% of taxpayers use the standard deduction, the CARES act provides a specific tax deduction in 2020 for up to $300 in cash contributions.  Furthermore, in 2020, you can deduct all of your contributions up to 100% of your adjusted gross income (normally 60% is the limit). Also, the CARES act eliminated Required Minimum Distributions (RMDs) for IRAs for 2020. However, if you are 70 ½ or older, you can take money from your IRA and make a Qualified Charitable Distribution (QCD) and, therefore, help the charity and not have to claim any income on the distribution.  Lastly, the CARES Act provided a $1,200 economic stimulus to taxpayers with incomes below certain levels. Some recipients of those funds, who don’t need it, are using that money for charity.

Another tax efficient way of giving are Donor-Advised Funds (DAFs), which we have spoken about before.  You fund DAFs and get tax deductions in one year and then “grant” the money to charities in future years.  This allows you to “bunch” your donations and to reduce income taxes in years when you are in high tax brackets. Furthermore, you can use cash for funding or appreciated securities and therefore eliminate the capital gains tax on the donated securities. Funds in a DAF can be invested and grow and there are no minimum distribution requirements.  DAFs are a great planning tool for both income tax and estate taxes.

DAFs have been stepping up grants during the pandemic.  Grants given in March 2020 from DAFs were 36% higher than March 2019.  Donor advised funds are really a sustaining factor at times like this because people have already irrevocably set this money aside for charity so at a time, like now, it can be used.

Here are a few other comments and ideas on how you might be able to help your community:

  • Support the arts. Across the U.S., institutions have closed their doors and many have had to lay off staff. The American Alliance for Museums estimates that museums are losing some $33 million a day and it predicts 30% of them will never reopen without help.
  • Don’t forget animals. Many animal shelters are facing reduced staff and volunteer support.
  • Donate blood. 13,000 blood drives were canceled in the first three months of 2020 resulting in 375,000 fewer blood donations.
  • Put your skills to work. Your organization may be putting together programs to help American families who are struggling. The Foundation for Financial Planning, for example, is raising $1 million and will be providing pro bono financial planning and advice to low-income workers and other groups. I’ve participated in that pro bono work and it is very fulfilling.
  • For those SC taxpayers, consider a donation to help “exceptional needs” students with dyslexia, autism, ADHD or physical and emotional needs. There are 90,000 exceptional students in SC, one out of 12 children. And donations to the ExceptionalSC.org, a 501(c)(3), provides a tax credit to SC taxpayers, up to 60% of their tax liability. As such, this amount is currently considered taxes for your federal tax return.

It’s the perfect time to help your community with your money and/or your skills.  Each of us have our favorite organizations and causes.  Please consider doing something now! In a time of significant need like now, it will definitely be appreciated.

https://dwmgmt.com/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CARES Act Brings “Pennies From Heaven”

We hope each and every one of you and your families are safe and healthy. In response to the unfolding COVID-19 global pandemic, Congress passed the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act last Friday. This $2 trillion emergency fiscal stimulus package (“Pennies from Heaven”) was designed to help ease the economic damage caused by the virus. Below are some of the key provisions that can offer relief to individuals, families and businesses. In a number of situations, it’s important for you to act quickly. Items with time urgency are underlined. The objective is to provide short overviews of the provisions. If there are any questions, we at DWM will try to help.

Recovery Rebates. Perhaps 90% of Americans should receive some amount of Recovery Rebate. The rebate can be as much as $1,200 for a single, $2,400 for a married couple plus $500 for each child under age 17. The only limitation is your Adjusted Gross Income (“AGI”). Singles with AGI of $75,000 or less will receive $1,200 plus extra for eligible children. Married couples with AGI of $150,000 or less will receive $2,400 plus extra for eligible children. Incomes above that will get a lesser amount until completely phased out. The IRS will use the latest tax return filed to make their calculation. If your 2018 tax return has a lower AGI, wait to file your 2019 tax return until the rebates are made. If 2019 is a lesser year than 2018, get 2019 filed immediately. Please understand that the rebate will be “trued up” based on your 2020 return. So, if your income in 2018 and/or 2019 disqualified you from the rebate, you can still get the rebate in 2021 if your 2020 tax return shows you are below the $75,000 or $150,000 threshold. And, for those who received a rebate but ultimately had a larger income in 2020 that would have disqualified them-no worries. The IRS will not “clawback” any rebates. Checks and direct deposits are promised “as soon as possible” which hopefully will be in April.

Covid-19 Distributions from IRAs and Loans from 401ks. Distributions up to $100,000 from IRAs and $100,000 loans from 401ks can be made without tax penalty for those impacted by the virus. The income tax of the distribution can be split evenly over 2020-2022. Distributions are not subject to withholding and can be repaid (rolled back in) in 3 years, in a lump sum or installments which will produce a refund of the tax paid.   Loans from Company Retirement Plans can be made up to 100% of the vested balance up to $100,000. Repayments on the loan may be delayed for up to one year.

Required Minimum Distributions (“RMDs”) are waived and can be returned. RMDs for 2020 are specifically eliminated for owners and beneficiaries. Owners, not beneficiaries, that have already taken a 2020 RMD and would like to return it, need to act quickly. If the distribution took place in the last 60 days, you can roll the money back in (note, if withholdings were made, you’ll need to “gross up” the net distribution) and save paying the tax. If the 60 day window has passed, you can still complete a valid rollover for up to 3 years if you can show you were impacted by the coronavirus crisis.

Charitable Contributions. To encourage contributions to charity, Congress has provided that individuals can make and deduct contributions up to and in excess of 100% of their AGI. Hence, they could wipe out their taxes and even get a carryforward for 5 years. In addition, individuals who use the standard deduction (90% of taxpayers) can get up to a $300 charitable contribution deduction “above the line” in the addition to their standard deduction.

Relief for Student Loan Borrowers. Required payments on Federal student loans are deferred until September 30, 2020, during which time no interest will accrue. Furthermore, this period of time will continue to count towards any loan forgiveness. Hence, any student borrower who intends to qualify for a program that will ultimately forgive the entirety of their Federal student debt should immediately pause payments. Any payments made in this period will simply reduce principal and therefore are reducing a debt that will be forgiven. In addition, through the end of the year, employers who provide employees with up to $5,250 of student debt payments may exclude those payments from the employee’s W-2.

Additional Unemployment Compensation Benefits. Unemployment benefits have been increased from 26 to 39 weeks. Futher, Self-employed individuals will now be eligible. Plus there will not be the typical one week of “waiting time” for unemployed employees of self-employed individuals without work. Additionally, the weekly benefit is increased by $600 per recipient for up to 4 months. Since the average weekly unemployment benefit is about $400, this will increase the average benefit to $1,000 for those 4 months. Therefore, employees and self-employed individuals who have lost their job or don’t have work, could qualify for up to 9 months of unemployment benefits, with an extra 17 weeks of $600 payments – meaning, an average worker could get as much as $26,000 in the first 9 months.

Paycheck Protection and Forgivable Loans.  Businesses, including sole proprietorships, with less than 500 employees can apply for an SBA loan to help with economic suffering on their business caused by coronavirus. The loan is the lesser of $10 million or 2.5 times the monthly payroll costs over the past year and must be applied for by June 30, 2020. Loans will be made on a first come-first serve basis until the total maximum of $10 Billion has been loaned. So, a company with a 2019 monthly qualified payroll of $40,000 could borrow $100,000. And, as long as the business maintains the same number of employees, the loan will be forgiven for all payroll, rent, utilities and healthcare costs incurred in the first 8 weeks after receiving the loan. For example, if payroll remained $40,000 per month, rent was $6,000 per month, utilities $2,000 per month and health care costs $2,000 per month, virtually the entire loan would be forgiven. And, any debt forgiven is not included in taxable income for the year. For the portion of the loan that is not forgiven, interest on the loan will be at 4% or less over a term of 10 years and payments will be deferred for at least 6 months and no longer than one year.

Employee Retention Credit. Businesses who doesn’t qualify for the SBA loan above but suffered a reduction in quarterly revenues in 2020 to 50% or more for the same quarter in 2019, may qualify for a $5000 employee retention credit.

Deferral of payroll taxes. Most employers, other than those who receive the special SBA loans above, qualify to defer the employer portion of payroll taxes for over one year. Their 2020 employer payroll taxes can be paid half by December 31, 2021 and half by December 31, 2022.

Net operating loss rules are loosened. The CARES act allows losses in 2018, 2019 or 2020 to be carried back five years producing tax refunds that can be used now.

Conclusion. The CARES act provides significant funds, programs and tax benefits for individuals, families and businesses. Some of the provisions have time limits as outlined above. DWM will be individually contacting our clients who we think might be able to take advantage of these programs and get their rightful share of the “Pennies from Heaven.” We will also alert them to other financial and/or tax strategies, including Roth conversions and tax loss harvesting, given the CARES provisions and the state of the current markets. If you have any questions, please contact us.

We hope that you, your family and your community stay healthy and we all can get back to normal as soon as possible.

https://dwmgmt.com/

At 80, “Successful Ager” Jack Nicklaus Remains As Relevant As Ever

Golfing great Jack Nicklaus turned 80 last week. His drives aren’t as long anymore- Gary Player can now outdrive him.  Jack stepped away in 2018 from day-to-day operations of his companies which build golf courses all over the world.  You might think Mr. Nicklaus is slowing down.  But to hear Jack tell it, he got rid of the things he was tired of doing and is focusing on all the activities he likes; including public speaking engagements, occasional golf exhibitions, course design and fundraising with his wife.

Nicklaus started designing courses in 1969.  He’s completed over 300. He’s become a grandfather to the “kids” on the PGA tour such as Rickie Fowler and Justin Thomas. Rory McIlroy says that Nicklaus “has the best advice on how to play golf- not how to swing but how to play the game.”  Jack’s wife of 60 years, Barbara, is chair of the Nicklaus Children’s Health Care Foundation and together they have raised over $50 million for pediatric care in Ohio and Florida.  They just pledged to raise another $100 million over the next five years.  Yes, Jack Nicklaus remains relevant as ever and, by any definition, is successfully aging.

Much has changed since Social Security was started in 1935.  Back then, the average life expectancy was 61 years old.  In 1947, the poet Dylan Thomas encouraged the elderly: “Do not go gentle into that good night, old age should burn and rage at close of day.” It’s starting to happen. With greater longevity and medical advances, it’s no surprise that the term “successful aging” has grown in popularity over the past few decades.  Back in 1987, John Wallis Rowe and Robert Kahn published a book entitled “Successful Aging.”  They felt there were three key factors: 1) being free of disability or disease, 2) having high cognitive and physical abilities, and 3) interacting with others in meaningful ways.

Now comes a new NYT bestseller; Dr. Daniel Levitin’s “Successful Aging; a neuroscientist explores the power and potential of our lives.”  Today more people who are in the last quarter of their lives are engaged with life as much as they’ve ever been, immersed in social interactions, spiritual pursuits, hiking and nature, charitable work and even starting new professional projects.  Dr. Levitin remarks:  “They may look old, but they feel like the same people they were 50 years ago and this amazes them.”

Successful aging involves focusing on what is important to you, and being able to do what you want to do in old age. While successful aging may be one way to describe how well we age, the concept of meaningful aging might be another important way to consider how to age well.   Certainly, some of our faculties may have slowed, yet “seniors” are finding strength in compensatory mechanisms that have kicked in – positive changes in mood and outlook, punctuated by the exceptional benefits of experience.  Baby boomers and their elders may process information more slowly than younger generations but they can intuitively synthesize a lifetime of information and make smarter decisions based on decades of learning, often from their mistakes.

Combining recent developments in neuroscience and psychology, “Successful Aging” presents a novel approach to how we think about our final decades. The book demonstrates that aging is not simply a period of decay but a unique time, like infancy or adolescence, which brings forth its own demands, surprises and happiness.

Until about thirty years ago, older people in the workforce were forced/encouraged to retire; a tremendous economic and creative loss.  However, since the 1990s, the tide has been turning for seniors. Employers and organizations are awakening to the eastern idea that the elderly may not only be of some value but may provide superior enhancements to a group.   New medical advances and positive lifestyle changes can help us to find enhanced fulfillment that previous generations may not have been able to do.

Research now shows, for example, that fending off Alzheimer’s disease involves five key components:  1) a diet rich in vegetables, 2) moderate physical exercise, 3) brain training exercise, 4) good sleep hygiene, and 5) an appropriate regimen of supplements.  In addition, research shows that social stress can lead to a compromised immune system. We don’t need to be victims; we just need to take advantage of modern medicine and make some lifestyle changes.

When older people look back on their lives and are asked to pinpoint the age at which they were the happiest, what do you think they say? The age that comes up most often, according to Dr. Levitin, as the happiest time in one’s life is 82. And, that number is rising.

At DWM, we work with clients from 0 to 96.  As total wealth managers, we understand life cycle planning, financial and investment strategies and proactively provide value-added services.  Of course, we focus on making sure our clients have enough money for their entire lives.  In addition, and as important, we pay particular attention to helping them experience the best life possible with the money they have.  Their fulfillment is our fulfillment. Their happiness is our happiness.

Jack Nicklaus’s longtime PR man Scott Tolley says Jack still only operates at two speeds, “go and giddy-up.”  Gary Player calls retirement a death warrant.  It doesn’t need to be.  Successful aging is getting easier and more fun and fulfilling.  C’mon baby boomers- let’s giddy-up.

https://dwmgmt.com/