A lot of 401(k) investors end up making the same mistakes when choosing their investments. The results are low returns and unbalanced portfolios. Avoiding these four mistakes is a good start for getting more out of your 401(k). There is no easy answer to how you should allocate your 401(k). You have to make these decisions on your own based on your personal risk tolerance, investment choices and the allocation of your other investments. Mistake #1: Going Overboard on Risk Avoidance Many 401(k) plan participants are either overwhelmed by the list of investment choices or are simply afraid to take any risk in their investments, and so put all of their savings into a money market or stable value fund. Sometimes the money market fund is the default option for their employer’s plan — meaning their money ends up there, earning very low interest. Nobody bothers to change it. Money market and stable value funds are basically fancy words for cash, a low risk, low return investment, and the return from cash usually lags behind inflation. This means that a 401(k) in these safe investments will probably decline in value over time. For many folks, the investment horizon is long, so you can tolerate some volatility to get the higher returns later. Mistake #2: The Equal Allocation Trap Another common mistake made by investors in their 401(k)s is to invest an equal portion into each available investment option. This is called the 1/N Rule. There are many problems with taking this approach. First, you do not need to invest in every option available in your plan. Especially now that target date retirement funds (mutual funds that change allocation based on

In an increasingly paper-free society, organizing your financial documents can still be a challenge. No matter how simple or complex your financial picture might be, it takes some thought-out organization to keep your tax documents, service records, and paid bills in a format that will allow you to easily access information when you need it. What steps can you take now to organize your financial documents for 2021 and beyond? Clean and Evaluate If your financial files look more like a pile of loose papers, it’s time to clean up this pile and evaluate what you have. Broad category labels like “House,” “Bills,” “Healthcare,” or “Taxes” can be enough to help you begin sorting documents into piles. Once you have your documents organized into tidy piles (or online file folders), the next step is to determine what you need to keep. Saving documents you’ll never need again can lead to clutter and leave you unable to find information quickly. On the other hand, throwing something away too early (like W-2s or 1099s) can create a headache if you’re audited or need to go back to find something specific. Create a Filing System After you have a better idea of what financial documents you’re dealing with, you can create a filing system. There’s no one-size-fits-all answer here, and the best filing system for you, is the one that is easiest for you to use. This can mean creating folders by month, keeping items segregated by category, or something else—whatever makes sense for you based on what you’re trying to keep organized. Decide on a Storage Option If you’re not a fan of paper clutter, your financial organization strategy may be to use a desktop scanner to scan and store

New Year’s is traditionally the time to review your life and make resolutions for change. In addition to thinking about working out, eating healthy, and meeting personal and professional goals, you should also think about your finances. To make the most of the New Year, keep the following tips in mind. Outline New Goals To ensure you’re moving in the right direction, take some time to outline your goals. Think about long-term goals such as buying a home, sending the kids to college, or retiring by a certain age, and consider reaching out to a financial professional to get help creating a path toward those goals. Also, think about your short term goals. What do you want to accomplish this year? Do you want to save a certain amount of money? Expand your business? Reduce your spending so you can afford a vacation? Regardless of what you want, make a plan to get there. Review Your Expenses When you’re thinking about finances, you always need to consider two sides of the equation — spending and earning. Set aside some time to review your expenses and identify areas you can make cuts. Depending on your situation, you may want to skip buying lunches, or cancel some of your streaming services. You should also take some time to review your cell phone bill, insurance premiums, and similar expenses. Once you’ve made an assessment, considering shopping around to see if you can get a better deal. Update Your Tax Deductions Do you anticipate owing tax this year or getting a refund? If so, you should update your tax deductions. To do so, just ask your employer for a new Form W-4 and make

From pandemic-related stimulus payments to job losses and furloughs, for many taxpayers, next spring’s tax season may be more complex than usual. With the end of 2020 rapidly approaching, you should take some time to review your tax situation and make any necessary changes that can help you avoid surprises on April 15, 2021. Below are some steps you can take now to get a jump on next year’s tax season. Check and Adjust Your Withholdings January can seem like a lifetime ago, and taxpayers who haven’t checked their withholdings since then could find themselves facing a potentially larger tax bill (or a smaller refund than expected) if their personal circumstances have changed in the interim. By comparing the amount you’ve had withheld so far this year with your expected tax liability, you can get a good idea of whether you need to increase or decrease your withholdings through the end of 2020. For those whose income and deductions haven’t much changed since 2019, a quick glance at your 1040 can give you a good idea of what you’ll owe for 2020. For others, online tax-forecasting tools can provide an educated guess at your approximate federal income tax liability. If you’re likely to owe money in 2021, making an estimated payment now can help you avoid underpayment penalties. Get Organized Even though you won’t receive your 2020 W-2s, 1099s, or other tax statements until early 2021, organizing the documents you do have can give you a head start for next year. Moreover, much of the information you’ll need to input in your tax forms can already be found in your final paystub of 2020 (like federal, state, and FICA withholdings),

After modest growth to begin 2020, the economy screeched to a halt as the onset of the pandemic ended the longest economic expansion ever. A record decline in gross domestic product (GDP) in the second quarter was followed by record GDP growth in the third quarter as the economy emerged from lockdowns. After such a tumultuous year in 2020, we take a look at what’s in store for the economy in 2021. 2021 Economic Outlook As we turn the page to 2021, we expect real GDP growth in the United States of 4–4.5%, modestly outpacing our forecast of 3.75%–4.25% for our developed international counterparts. Emerging market economies, particularly in Asia, have fared better in controlling the outbreak of COVID-19, and we believe their economies may be in a better position heading into 2021. We forecast 5–5.5% real GDP growth for emerging markets. After GDP contracted an annualized 5% during the first quarter of 2020 and then a record 31% in the second quarter, the economy revved back up with a 33% jump in the third quarter, bouncing off depressed levels. Record fiscal and monetary stimulus helped provide additional fuel for the economy as it emerged from lockdowns. We expected the 2020 recession would be one of the shortest recessions ever, and although the National Bureau of Economic Research (NBER) has yet to declare it officially, the recession probably lasted less than six months. When the economy began to shift into gear in the second half of 2020, we believe a new economic expansion likely began. Dating back to WWII, economic expansions have lasted more than five years on average, with the past four expansions averaging more than eight years [FIGURE 1].

Retirement is the time in your life when you want to sit back, relax, and enjoy the fruits of years of hard work. But unfortunately, when the market is volatile, it may bring additional anxiety and stress. The good news is, a volatile market does not necessarily spell disaster, and by following a few simple tips, you may be able to reduce anxiety as you navigate through these times. Determine How Much Income You Have to Count On It is unlikely that all of your retirement savings is linked directly to the markets. Often times, retirement income will consist of investments, along with Social Security, or a pension income, with the latter two being sources of guaranteed income. Your guaranteed income should be enough to cover all essential spending, such as food, housing, transportation, and insurance. That way, when your other investment income may be down, you will have enough for your needed spending and will be able to push off non-essential needs to a later date. Look at Your Stock-to-Bond Ratio It is often common to reduce the risk of your financial portfolio in the early stages of your retirement. This is done to help you settle into your new retirement life and create a more stable foundation for your future retirement. Reducing the risk in your portfolio will often result in selling more stocks and buying more bonds, which could provide you with a lower risk investment if the market sees some fluctuation. Talk with a financial professional about your stock-to-bond ratio to determine if your long-term returns could help you with your retirement goals, while still providing some stability against volatility. Keep an Eye on Your Taxes

More than most years, it’s hard to look ahead to the next year, to 2021, without looking back at 2020. A global pandemic, a massive economic collapse, a bear market, a surprisingly sharp reversal, a hotly contested election where passions ran high, the impact of lockdowns—it was an unusual year of extraordinary challenges. In 2021 it’s time to restart the engines, but things are going to look different, feel different. 2020 has changed us, the way we do business, the way we connect. It’s also shown us our constants, what works for us, and what we hold on to. In 2021 we restart the engine, but we’re not driving toward the same world we left behind in 2019. It’s not even our destination. There has been damage to areas of the economy that may never fully recover, but there are other areas that will adapt, reinvent themselves, and help reinvigorate growth. In Outlook 2021: Powering Forward, we talk about stocks and bonds, the economy, and the post-election policy environment, but in the background will be new challenges, new opportunities, and new ways of doing things. Thankfully, one constant has been the value of personal and professional relationships, even if we’ve had to learn how to connect in new ways. Sound financial advice offered a long-term map for many investors that helped them from getting off course in a turbulent 2020. There are still risks to navigate in 2021, but it’s time to get back on the road. COVID-19 Over the course of the year, we have seen an increased understanding of how to contain the COVID-19 virus, important progress on how to treat those hospitalized, and promising developments on treatments

To say that 2020 was a wild year would be an understatement. As we prepare to welcome in the New Year, we take a look at what we can expect in the stock and bond markets, the economy, and a new post-election policy environment in 2021. Some Policies May Change We understand the temptation for many to over-emphasize the importance of elections in making investment decisions. However, the post-election clarity may be more important than the outcome itself, and the strong November performance was a good example. Also, new policymakers in Washington, DC, bring some important new policy considerations for 2021: There are still some looming uncertainties regarding the makeup of the Senate, but it appears the most likely outcome will be a split Congress, which historically has produced the strongest stock returns. A split Congress will likely force both parties to negotiate on policy decisions, limiting the opportunity for dramatic changes. A fifth COVID-19 relief bill may be forthcoming, but recent headlines suggest the bill will be smaller in scale relative to previous relief bills. The Federal Reserve (Fed) took extraordinary measures to provide support to the economy and markets in 2020 and is unlikely to reverse course in 2021. Inflation risks may be skewed to the upside, an important consideration for the Fed moving forward. The Economy is Off To a New Start The US economy was performing well early in 2020; however, growth came to a screeching halt following the outbreak of COVID-19 and the imposition of “stay at home” orders. The ensuing data was astounding: Quarter-over-quarter gross domestic product (GDP) declined 31.4% in the second quarter, and unemployment skyrocketed to as high as 14.7%, both setting

2020 has been one of the most unprecedented years in recent history, but some things—like tax contributions and retirement deadlines—don’t change much, if at all. And with the uncertainty surrounding just about everything, meeting these deadlines and getting tax efficiencies in place now may help the rest of the year run more smoothly. Read on for several things you’ll want to accomplish before 2020 draws to a close. Establish or Contribute to a Keogh Plan or Solo 401(k) A Keogh plan, or a tax-deferred pension plan that’s available to unincorporated businesses or the self-employed, allows contributions of up to $57,000 per year—far more than the $19,500 that can be contributed to a traditional 401(k).1 But to take advantage of these tax savings in 2021, the taxpayer must establish (and contribute to) a Keogh plan by December 31, 2020. Take Required Minimum Distributions (RMDs) Anyone with an IRA, 401(k), 403(b), 457, Simple IRA, or SEP IRA must begin withdrawing from these accounts at some point. These withdrawals, which are computed using the applicant’s age, life expectancy, and the total balance of the account, are known as RMDs, and are subject to income tax. The SECURE Act boosted the RMD age from 70.5 to 72. But because the penalty for failing to take an RMD (or for taking a distribution that’s too small) can be a 50 percent excise tax, missing this deadline can be an expensive mistake.2 As for the 2020 year, the CARES Act waived RMDs for IRAs and retirement plans, including beneficiaries with inherited accounts5. The waiver was also extended to individuals who turned age 70 ½ in 2019 and took their first RMD in 2020. Pay Expenses for

When you donate to a charity, you want to know that your donation is going to its highest and best purpose—which means minimizing the tax exposure of the donated assets. One way to accomplish this, whether you’re hoping to donate during your lifetime, after your death, or both, is through a charitable remainder trust. Read on to learn more about the benefits of charitable planning through a charitable remainder trust. What is a Charitable Remainder Trust (CRT)? A CRT is a type of irrevocable trust that generates an income stream for the trust settlor or other beneficiaries, with the rest of the trust assets going to a named charity or charities. This essentially provides the trust settlor with a “life estate” in the donated assets while ensuring they can seamlessly pass through to the charity after the settlor’s death. Key Benefits of a CRT A CRT can be ideal for anyone who would like to make a difference through charitable giving—without necessarily losing the use of the assets in the interim. CRTs can be especially beneficial when funded with long-term, highly-appreciated assets that would otherwise be subject to some hefty capital gains taxes when sold or passed along via an inheritance. CRTs can be funded by cash, publicly-traded securities, real estate, and a few other types of complex assets. And if you’re not sure you’d like to commit to a single charity (or set of charities) for the lifetime of the trust, you can combine a CRT with a donor-advised fund (DAF), a mechanism by which charities can be added, omitted, or substituted at any time without any additional cost. CRTs also offer several tax benefits, explained in further detail