Vol. 30, Issue 4 April 2019 Retirement WatchBOB CARLSON’S · even a will. Of those with wills, 23% knew their wills were outdated. I’d wager that the percentage with out-of-date

Retirement WatchBOB CARLSON’S Strategies for a Secure Future

Vol. 30, Issue 4 April 2019

Dear Reader:“Retirement and retirement planning

are changing…In the future, there will be more changes to retirement, and the changes will occur more rapidly,” I began the first edition of my book, “The New Rules of Retirement,” which launched 15 years ago this month.

The opening statement was more ac-curate than I expected. In the following 15 years, I never had trouble filling the monthly issues of Retirement Watch with the latest updates, research and recommendations. The second edition of the book came out in 2016. Initially, I thought it would amount to revising a few chapters, but it became a complete rewrite because so much had changed. I’m sure it won’t be long before I begin

work on the third edition.One thing that hasn’t changed since

the first edition 15 years ago is retirees and pre-retirees have the same prime concerns and worries.

Foremost among the concerns is the possibility of running out of money. Retirees don’t want to become burdens on family members and want to leave legacies to loved ones and charities.

People are worried their cash could be dissipated by medical ex-penses, long-term care, unexpected expenses, taxes and inflation. Market fluctuations, as always, are a wide-spread concern.

The only change regarding these worries is that even more people share them than in the past.

In Retirement Watch, we help our readers achieve and maintain financial security by going beyond the basic issues into the details of topics most financial advisers aren’t prepared to discuss. We present the ins and outs of Medicare and Social Security. You learn different ways to plan to pay for long-term care expenses. Our readers know many ways to maximize the after-tax values of their IRAs, ensure they’re cared for throughout life, pro-tect their estates and more.

The actions you should take to reach and keep your financial independence vary from person to person and can change over time. But I’m always here to keep you informed and ready to take action.

Don’t Leave a Mess for Your Children to Fix

The best description for the legacy plans of most Ameri-cans ages 55 and over is NOGO.

The acronym stands for “not in good order” or simply “not good.” It is a phrase often used by estate and financial planners to summarize the state of the

financial and estate plans of new clients. Most people know the legacy they

want to leave. They know how they want to live and be cared for in their later years, if care is needed. They also know what they need to do to ensure these wishes are fulfilled. But they aren’t taking those important steps, according to a recent study conducted for Bank of America Merrill Lynch.

Their estate and legacy plans are NOGO, though they know how to put them in good order.

The good news is that most people understand that leaving a legacy is not all about money and wealth. At least equally important to many people is passing on values, life lessons and family history.

(Continued on page 2)

Don’t Leave a Mess for Your Children to Fix . . . . . . . . . .1

Plan This Year’s Qualified Charitable Distributions . . .3

How To Avoid the Penalty for RMD Mistakes . . . . . . . . .5

How To Qualify for The 0% Tax Bracket . . . . . . . . . . . . . .6

What To Know About Taking Social Security . . . . . . . . .9

Our Three Likely Scenarios Updated . . . . . . . . . . . . . . . .10

Retire ‘Retirement’? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

In This Issue

Actions to Create the Retirement You DesireApril 2019 2

Protecting loved ones financially also is a priority for most of those age 55 and over, and about three quarters of respondents in the survey said that passing away without having one’s affairs in order is either irresponsible or inconsiderate.

But they aren’t following through with the steps needed to provide that protection.

About 45% of the group didn’t have even a will. Of those with wills, 23% knew their wills were outdated. I’d wager that the percentage with out-of-date wills is higher, but most don’t know their wills need revisions.

Only 18% have the minimum pack-age of estate planning documents: a will, advance medical directive and power of attorney. Of course, most people should have more, such as a living trust (and perhaps one or more other trusts) and updated, accurate beneficiary designation forms.

Having your estate plan in good order is as much for you and your security as for your heirs.

An estate plan gives you more control over the difficult late-in-life ac-tions and decisions. This is particularly important if you are concerned about memory problems or chronic pain.

In the advance medical directive, you decide who will make medical and health decisions when you aren’t able to do so. You can name an individual or several people to make the deci-sions. You also have the opportunity to

discuss with them ahead of time your wishes and expectations regarding care. Plus, you can leave some written guidance either in the document or separately.

Having the advance medical direc-tive also reduces family turmoil and conflict, because you decided who will make decisions and gave them guide-lines to use. Otherwise, there are likely to be extended, emotional arguments about what dad or mom really wanted.

A power of attorney names the per-son or people who will manage your non-medical affairs when you aren’t able to do so.

Without the power of attorney, sim-ple tasks such as paying the bills can be a difficult process for your family. It will be very difficult for your loved ones to take more substantive actions, such as selling some investments to pay medical or long-term care expens-es or simply because it’s a good idea to sell them.

The combination of an advance medical directive and power of attor-ney has another benefit. They ensure you have an advocate or advocates to

look out for you as you age. About 43% of the survey respon-

dents said they are concerned they lack someone to be their advocate as they age. Having the documents in place and talking to the agents you appoint-ed in the documents goes a long way to solving that problem. You’ll have someone who agreed to be your advo-cate and take important actions when needed.

The will, living trust and other docu-ments each have several benefits.

Of course, the documents deter-mine how your major assets are to be distributed among loved ones. Proper documents also accelerate the process of settling the estate.

But they do more. Having the essential estate plan

documents in good order can reduce conflicts and anxiety over funeral arrangements and other end-of-life matters. They also can establish a pro-cess for how personal items and family

heirlooms are to be distributed. These details often lead to conflicts and other emotional unpleasantness among family members when guidance isn’t provided.

Having your estate plan in good order is especially important when you might have a surviving spouse. A ma-jor goal of most estate plans is to en-sure the surviving spouse is taken care of sufficiently. The Census Bureau says about 78% of the adults who live their last years alone are women, and other data show financial security for many

Bob Carlson’s Retirement Watch™ (ISSN 1077-3924) is edited by Robert C. Carlson and published monthly by Eagle Products, L.L.C., 300 New Jersey Ave, NW, Suite 500, Washington, D.C. 20001, Customer service: 800-552-1152. E-mail: [email protected]. Website: www.RetirementWatch.com. Subscription cost is $99 annually. Copyright 2019 by Eagle Products, L.L.C. POSTMASTER: Please send address changes to Bob Carlson’s Retirement Watch, Subscriber Services Department, P..O. Box 1901, Williamsport, PA 17701. Postage paid at periodical rates at Centreville, VA and additional mailing offices. The information in this newsletter is from sources believed reliable, but no guarantee or warranty is made as to its accuracy. The editor, owners, and publisher, as well as their clients, employees, associates and/or family may have positions in securities and instruments recommended or reviewed in this newsletter. The editor and publisher assume no liability for the reader’s use of the information contained herein. Letters and e-mail from readers are encouraged. Editor: Robert C. Carlson; Editorial Director: Paul Dykewicz; Group Publisher: Roger Michalski.

Having your estate plan in good order is as much for you and your

security as for your heirs.

www.RetirementWatch.com April 2019 3

of them declines as they age alone.The survey also revealed that 65% of

respondents want to give away some of their wealth while they are alive instead of waiting to distribute all of it through their estates. That’s a step I’ve recommended for both financial and nonfinancial reasons. See our January 2019 issue for details. (Remarkably, about 8% said they want to give away all their wealth while they’re still alive. I’m not sure they thought through the consequences of that.)

But to do this, you need an estate plan and a retirement plan. You need to know how much you safely can give away without putting your standard of living at risk. You also need a plan to deal with any long-term care you might need, because the cost of long-term care can diminish your estate quickly.

Not having your estate plan in order is likely to diminish your legacy. There will be a lot of confusion about what you own and what should be done with it. The whole process will take longer than it should have and prob-ably will cost more. Family conflicts and arguments are more likely. Some

families never recover from estate settlement disputes.

Many people put a legacy plan in place as they approach retirement, because it is a natural time to consider these issues. Yet, they often don’t revisit

the documents and have them updated. The unfortunate truth is that most

of the people who do have all their documents in order and up to date are those who’ve had someone close to them die or become seriously ill. They have firsthand experience with the negative consequences of having a NOGO plan. The survey indicates the most likely group of people to have their plans in order are those who’ve been widowed.

In the survey, those with at least the three essential documents in order reported several ancillary benefits.

They also are likely to have in good order additional documents that make a complete legacy plan, such as funeral arrangements and documents that make processing the estate easier, such as ownership papers. They also are confident they are more in control of future medical care, costs and other matters. Perhaps most important-ly, those who have complete plans believe there is an advocate for them, and they are more likely to initiate discussions about their preferences for the future.

The bottom line is they are secure that all of their affairs are in order and they will be taken care of well.

Don’t put this article aside without making an action plan. The survey shows that most Americans know what they need to do to establish the legacy they want, but they aren’t taking the needed actions. Plan to meet with an estate planner, put the documents in order and discuss the important matters with family mem-bers and friends.

You Should Be Planning This Year’s Qualified Charitable Distributions

Many people aren’t receiving all the benefits they could from the qualified charitable

distribution (QCD), the powerful tax-saving tool for charitably inclined IRA owners older than age 70½.

The QCD drifted in and out of the

tax law for about a decade, but it finally was made a permanent part of the tax code a few years ago. Now, you can count on it being part of your regular tax planning. You should plan not only to use the QCD but also to maximize the benefits.

In a QCD, you make a charitable contribution by directing your IRA custodian to transfer funds to a charity

or charities you designate. Or the IRA custodian can issue you a check made payable to the charity. Then, you deliv-er the check to the charity.

The QCD is not included in your gross income, yet it counts toward your required minimum distribution (RMD) for the year. That’s a hard-to-beat deal. You receive credit for making the RMD but don’t include the

The combination of an advance medical

directive and power of attorney has another benefit. They ensure

you have an advocate or advocates to look out for

you as you age.


amount in gross income. You receive no charitable contribu-

tion deduction for the QCD, even if you itemize deductions.

If you use an IRA to make a charita-ble contribution but it doesn’t qualify as a QCD, the results are very differ-ent. You would include the distribu-tion in gross income, and it would count as part of your RMD. You can deduct the contribution if you item-ize deductions. But you might not be able to take the deduction because the standard deduction was doubled in the 2017 tax law. You take charitable con-tributions as itemized expense deduc-tions only when your total itemized ex-penses exceed the standard deduction, which is $24,400 in 2019 for married couples filing jointly. Far fewer people qualify to deduct itemized expenses now than before the 2017 tax law.

You’re sure to receive the maximum benefit of a QCD when you plan and take your QCDs early in the year. That’s because the QCD counts toward your RMD.

Suppose you take a distribution from your traditional IRA early in the year. It will be treated as part of your RMD. Later, you decide you want to use a QCD to make a charitable contribu-tion. That distribution you already took doesn’t qualify for the QCD. The distribution was made to you in your name, instead of the custodian making a distribution directly to a charity.

There’s no way you can reverse it to make it qualify for the QCD. Even if you donate the same amount to charity, the distribution is included in your gross income. You can direct

the IRA custodian to distribute other money from the IRA to the charity and have that qualify as a QCD, but it doesn’t reverse the distribution you already took.

Remember, the two major benefits of the QCD are it qualifies toward your RMD for the year, but it isn’t included in your gross income. You’re getting credit for an RMD without adding to gross income. Yet, when you take a distribution from the IRA before making your QCDs for the year, that amount is included in gross income. You pay income taxes you don’t need to.

Because the QCD is not included in gross income, it also reduces adjust-ed gross income. Using the QCD to make charitable contributions and meet your RMD also could reduce taxes on your Social Security benefits and avoid the Medicare premium surtax as well as other Stealth Taxes that are triggered by higher adjusted gross income.

When you’re over age 70½ and charitably inclined, plan and execute your QCDs early in the year. Then, if you need to take other distributions to meet your RMD amount or to pay for expenses, you can plan those

distributions. Be sure you know all the rules about

QCDs so you don’t miss any benefits.You must be at least age 70½ at

the time of the QCD. This is a tricky rule. An RMD may be taken any time during the year you turn age 70½. Distributions taken that calendar year but before you turned age 70½ count toward the RMD. But a transfer or distribution to a charity doesn’t count

as a QCD unless you were age 70½ or older at the time of the transaction.

You can make up to $100,000 in QCDs each year. The limit is per taxpayer, not per IRA. In married couples, each spouse has a separate $100,000 limit, but they can’t share the limits. A spouse’s limit counts only toward distributions made from that spouse’s IRAs.

The annual limit is use-it-or-lose-it. Any unused part of the limit from one year can’t be carried forward to future years.

Only transfers to public charities, known as 501 (c)(3) charities, qualify for the QCD. Distributions to private

Using the QCD to make charitable contributions

and meet your RMD also could reduce taxes on your Social Security benefits and avoid the

Medicare premium surtax as well as other Stealth Taxes that are triggered by higher

adjusted gross income.

The QCD is not included in your gross income,

yet it counts toward your required minimum distribution (RMD) for the year. That’s a hard-

to-beat deal.


foundations, donor-advised trusts and other non-public charities don’t qualify.

QCDs can be made only from IRAs. Transfers from 401(k) plans and other types of employer retirement plans don’t qualify.

You also need to know how to report a QCD on your income tax return.

The 1099-R received from your IRA sponsor won’t indicate any amount was

distributed to a charity or was eligible for a QCD. It will include the QCD in your total distributions with no special designation. You include that amount on line 4a of your Form 1040. For line 4b, you subtract the QCD and report as gross income only the distributions that doesn’t qualify as QCDs. If the entire distribution was a QCD, put $0 on line 4b. If possible, write “QCD” next to line 4b. This will explain to the

IRS why the distributions you report as gross income are less than your gross distributions.

I’m a big believer in planning and taking your RMDs early in the year. But the QCD is the best way for most people age 70½ and older to make charitable gifts. So, if you’re charitably inclined, plan and execute your QCDs first. Then, plan and take any addition-al distributions.

How To Have The Penalty For RMD Mistakes Waived

One of the stiffest penalties in the tax code is the one for not taking the correct re-

quired minimum distribution (RMD) from an IRA or other qualified retirement plan.

You pay a whopping 50% of the amount that was supposed to be dis-tributed but wasn’t. This penalty is in addition to paying income taxes on the distribution. The penalty is called the “excess accumulations tax.”

You probably know the basics of the RMD rules. A review of the rules and key strategies for RMDs was in our February 2017 issue.

The IRS is on the hunt for RMD mistakes. It realized a few years ago that many people take the wrong RMD or none at all. The IRS adjusted its computer systems and the information retirement plan custodians have to re-port to make it easier to identify RMD mistakes.

Yet, the IRS can waive the penalty and readily does so. The process for having

the penalty waived is relatively easy.The important step is to review your

RMDs to determine if you made a mistake. Don’t wait for the IRS to find the mistake and contact you. It will be difficult to have the penalty waived at that point unless you qualify for a few narrow exceptions. If you’re uncertain about the RMD rules, have a tax advi-sor review your RMDs.

Once you discover you didn’t take

an RMD or didn’t distribute the cor-rect amount, the first step is to have the correct amount distributed. The IRS will waive the penalty when the distribution shortfall was “due to rea-sonable error” and “reasonable steps are being taken to remedy the short-fall.” So, the first step is to remedy

the shortfall by having the correct amount distributed. You’ll include it in gross income in the year in which it was actually distributed, not the year it was supposed to be distributed.

It is best to receive the distribution in the form of a check so you can make a copy of the check and submit that with your penalty waiver request. If the distribution is made in another form, be sure to have documentation proving the distribution was made.

Don’t combine this distribution with any other distribution or shortfall. You want to clearly show the IRS the amount was distributed. When the shortfalls were made over more than one year, make separate distributions for each year so that you’ll have clean, clear documentation.

You ask for the penalty to be waived by filing Form 5329, using Part VIII. If you haven’t already filed your income tax return for the year the mistake was made, you can include Form 5329 as part of your return for that year. Oth-erwise, you separately file 5329. File a separate 5329 for each year there was a mistake.

The important step is to review your RMDs to determine if you made a mistake. Don’t wait for the IRS to find the

mistake and contact you.


Enter on line 52 the amount of the RMD that was supposed to be taken. On line 53, enter the RMD actually taken. On line 54, enter zero, not the difference between lines 52 and 53. You enter the zero because you’re re-questing a waiver of the penalty. Also, if you can, write “RC” in the margin next to line 54. These are the line numbers for the current version of the form. The numbers are different for previous years.

Finally, attach to Form 5329 a state-ment describing your reasonable cause and proof that the shortfall has been distributed.

The difficulty is that the IRS hasn’t issued regulations or other guidance stating what it considers to be reason-able cause for not initially distributing the correct amount the first time.

Tax professionals who’ve handled

a number of RMD penalty waiver requests say a request is most likely to be granted when the mistake was due to an error by a financial institu-tion or the serious illness or mental incapacity of the taxpayer. It also is likely that a penalty will be waived if a third party, such as a court or finan-cial institution, has tied up the IRA. Another good reason is your IRA owns hard-to-value assets and you didn’t receive a valuation in time or the valuation later was revised.

In cases for other types of penalties, waivers sometimes are granted when someone for whom the taxpayer was a caretaker had a serious illness. That reason might work for the RMD penalty.

Other than that, we have no guid-ance. If you believe there’s a reasonable cause, you might as well file a penalty

waiver request. The worst that can hap-pen is the IRS denies the waiver and you have to pay the penalty.

The IRS won’t acknowledge initial receipt of your request and will take at least a few months to respond. You’ll receive either a notice that the return was accepted as filed or a bill for the penalty. If Form 5329 is included with your regular tax re-turn, you won’t receive an acceptance notice. You’ll receive either a bill for the penalty or nothing.

Don’t include a check for the penalty with your return. Older versions of the instructions to Form 5329 say to do that, but recent versions don’t.

Details about the penalty are in IRS Publication 590-B and the in-structions to Form 5329. Or you can read the IRS regulations for tax code §4974(d).

How To Stay In The 0% Tax Bracket For Capital Gains And Dividends

You can have a significant amount of income and yet pay no income taxes on your

long-term capital gains and quali-fied dividends. Most retirees and many other individuals shouldn’t have to pay income taxes on those types of income.

The key is to know about the tax brackets and when tax rates change for long-term capital gains and qualified dividends, which I’ll call tax-favored investment income (TFII). Other types of income are known as ordi-nary income.

There’s a 0% tax rate on TFII as long as you’re in the 10% or 12% income tax bracket. In 2019, the 12% bracket tops out at $78,950 of taxable income for married couples filing jointly and $39,475 for single taxpayers.

There’s only a 15% tax rate on TFII when you’re in the 22% tax bracket and most of the 35% tax bracket. You don’t pay the maximum 20% rate on TFII until your taxable income equals or exceeds $488,850 for married couples filing jointly or $434,550 for single taxpayers.

Here’s how the different tax brackets can play out.

Suppose Max and Rosie Profits are a married couple who file joint

returns. They have $50,000 of taxable income before considering TFII. They’re in the 12% income tax brack-et until their taxable income exceeds $78,950. That means the Profits could have up to $28,950 of TFII for the year and it would be taxed at the 0% rate.

The break points for the different tax rates are based on taxable income. Taxable income is what’s left after taking all your tax deductions and other breaks. Your gross income can be higher than these amounts, perhaps substantially higher, and with good tax planning someone with a high gross income still can benefit from the lower rates on TFII.


The standard deduction or your itemized expense deductions can be key to reducing your taxable income.

Remember the 2017 tax law just about doubled the standard deduc-tions. You take either the standard deduction or your itemized expense deductions, whichever is higher. Be-cause of the increased standard deduc-tion and reduction in allowed itemized expense deductions, many more tax-payers will take the standard deduction instead of itemizing expenses.

Going back to Max and Rosie Profits, to determine their tax bracket they first take their gross income and subtract any deductions to arrive at adjusted gross income. Most retirees don’t have any deductions to arrive at adjusted gross income. These are listed on the new Schedule 1 that goes with the new Form 1040.

Then they either take the standard deduction or itemize expenses. In 2019 they have a standard deduction of $24,400.

So, even if they have no deduc-tions for adjusted gross income, their $50,000 of taxable income means they could have gross income, other than TFII, of $74,400 and still be in the 12% regular income tax bracket and 0% bracket for TFII. They can have an additional $28,950 of TFII subject to the 0% bracket when their gross income other than TFII is up to $103,350. Taxpayers age 65 and older receive an additional standard deduction of $1,300 for each spouse, which would allow the Profits taxable income of up to $105,950 before high-er tax rates are triggered.

The personal exemption amount was eliminated in the 2017 tax law.

You can see how what I call tax bracket management can save a lot of money over time. It can help you stay in the 12% bracket on ordinary income and 0% bracket on long-term capital gains and qualified dividends. Or if your income is higher, you can keep your TFII in the 15% bracket and avoid the 20% maximum tax rate on it.

First, you need to estimate your itemized expense deductions for the year, so you’ll know if you’re likely to use the standard deduction or itemize expenses. When you’ll be itemizing expenses, you might be able to plan to maximize them for the year. Oth-erwise, you know you’ll be taking the standard deduction.

Second, you should estimate the income for the year you’ll receive that is out of your control. The income you don’t control can include Social Security benefits, pensions, annuities, required minimum distributions, and

interest and dividends earned in tax-able accounts.

Social Security benefits might or might not be included in gross income. A portion of the benefits, up to 85%, is included in gross income as your adjusted income increases. See our February 2019 issue for details. So, reducing adjusted gross income not only keeps your TAII in a lower tax bracket but also reduces income taxes on the Social Security benefits.

But there’s a key point that can result in some circular planning. Taking additional TAII increases your adjusted gross income (AGI). So, your initial planning might

indicate that you can take a certain amount of long-term capital gains before rising to the next higher tax bracket. But those long-term gains increase your AGI, and that could increase the amount of Social Securi-ty benefits included in gross income. That, in turn, would reduce the amount of long-term gains you can take without being pushed into the next tax bracket. So, you have to redo the calculations before making a final determination of the amount of TAII you can take.

Distributions from mutual funds and exchange-traded funds are an-other type of income that’s out of your control, and you might not know the amount until near the end of the year.

When the fund earns a long-term capital gain and distributes it to share-holders, those investors report it as long-term capital gains. When a fund earns a short-term capital gain and passes it through to shareholders, the

You can have a significant amount of income and yet pay no income taxes on your

long-term capital gains and qualified dividends.

Most retirees and many other individuals

shouldn’t have to pay income taxes on those

types of income.


shareholders are taxed on it as ordi-nary income.

Third, consider restructuring some of your portfolio to reduce gross income that’s out of your control. For example, you might shift investments that earn taxable interest into invest-ments that earn tax-exempt interest. Also, stocks or mutual funds that earn nonqualified dividends could be sold and replaced with investments that pay qualified dividends or they could be moved into IRAs.

Fourth, estimate the amount of long-term capital gains you can take without pushing your taxable income to the next higher bracket. Because of uncertainties about the taxation of So-cial Security income and distributions from funds, you probably want to have a cushion in this number.

Finally, manage your investments to maximize the tax benefits.

Avoid taking short-term capital gains. A gain is short-term when you held the investment for one year or less. Short-term gains are taxed as or-dinary income. Take short-term cap-ital gains only when the investment fundamentals dictate the action.

If you have investments with paper losses in taxable accounts, consider selling these to shelter capital gains and other types of income.

You might want to sell some invest-ments that have long-term capital gains assets even when you don’t need the cash. Suppose you own a stock that’s appreciated. You like it and want to continue holding it, but you haven’t taken enough gains yet to take you near the top of the tax bracket.

You could sell the stock and rec-ognize the gain. Then, buy the stock back. The purchase re-establishes the basis in the stock as its current fair market value. So, you’ve taken the previous gain at a low tax rate (perhaps 0%), and you now have a higher basis. This ensures the gains you already earned won’t be taxed at a higher rate in a future year.

When you need cash to pay ex-penses, try to avoid taking additional distributions from traditional IRAs and 401(k)s. The distributions would be taxed as ordinary income and will increase taxable income. That could trigger higher tax rates across the board. Instead, try to take long-term capital gains when additional cash is needed, especially if the gains won’t push you into a higher bracket.

Let’s return to Max and Rosie Prof-its to show how to manage your tax bracket.

Max and Rosie both are older than 65 and retired. They’ll file a joint return and take the standard de-duction plus the additional amount for older taxpayers, giving them

a standard deduction of $27,000 ($24,400 plus $2,600).

They estimate taxable Social Security benefits will be $35,000 and they’ll receive about $15,000 in qualified dividends. That’s $50,000 of income other than long-term capital gains.

They can earn up to $105,950 of total income without rising into the next tax bracket (the $78,950 taxable income limit on the bracket plus their $24,400 standard deduc-tion, plus the $2,600 additional standard deductions for both being

over age 65).So, they can recognize up to $55,950

of long-term capital gains and have them taxed at the 0% tax rate.

As I said earlier, if the Profits have some investments with a lot of appre-ciation, they might want to sell them now to ensure the gains are taxed at the 0% rate and buy the investments back. That ensures if they need to sell the investments to raise cash in the future, the gains to date were taxed at the 0% rate. Selling the investments in the future to raise cash might push them into a higher tax bracket.

One way to enhance tax bracket management is to convert some of your traditional IRAs to Roth IRAs. This reduces required minimum distribu-tions in future years. That reduces the amount of ordinary income over which you have no control and makes it easier for you to stay in the lower tax bracket. When you need additional cash, you can take a distribution from the Roth IRA. It will be tax free and won’t push you into a higher tax bracket.

You can see how what I call tax bracket

management can save a lot of money over time.

It can help you stay in the 12% bracket on ordinary income and 0% bracket on long-

term capital gains and qualified dividends.


What You Need To Know About Taking Social Security Benefits

Confusion and misunder-standings abound in discussions about Social

Security. A result is people leave tens of thousands of dollars of guaranteed lifetime income on the table.

Perhaps the most misunderstood issue, based on emails I receive, is how working past age 62 affects benefit lev-els, especially working while receiving retirement benefits.

There are several different factors at work, so you have to understand their interaction to estimate how your bene-fits will be affected over time.

You are eligible to collect retirement benefits beginning at age 62, but you’ll receive a reduced benefit. You receive your “normal” or full benefit if you retire at your full retirement age. This age depends on your year of birth. It’s being gradually increased to 67 for people born after 1959. If you were born January 2, 1957, through January 1, 1958, then your full retirement age for retirement benefits is 66 years and 6 months.

When you delay receiving bene-fits, the benefits are increased 8% for each year of delay through age 70. The increase is known as delayed retirement credits. There’s no increase in benefits due to delayed retirement credits after age 70. You receive the maximum amount of benefits by beginning them at 70, and you’ll receive the same amount if you delay their beginning past 70.

But there might be another good benefit to delaying benefits if you con-tinue working and earning income.

Your Social Security benefits are calculated using only your 35 high-est-earning years. If you keep work-ing, the additional years of income could increase the income in the 35 top years. You might knock off some low-income years when you were young and starting your career or years when you were laid off or earned a lower income for other reasons.

Each year, Social Security reviews the records for all Social Security recipients who work. If your latest year of earnings turns out to be one of your 35 high-est years, Social Security will refigure your benefit and pay you any increase due. This is an automatic process, and benefits are paid in December of the following year. For example, if you worked and received Social Security retirement benefits in 2018, in Decem-ber 2019, you should get an increase for your 2018 earnings if those earnings raised your benefit. The increase would be retroactive to January 2019.

You don’t have to stop working to begin taking Social Security retirement bene-fits. You can begin the benefits anytime at age 62 or later. But if you aren’t yet full retirement age and continue to work for income, your benefits might be reduced.

If you’re younger than full retirement age, there is a limit to how much you can earn and still receive the full Social Security benefit due for your age. If you’re younger than full retirement age during all of 2019, Social Security will

deduct $1 from your benefits for each $2 you earn above $17,640. If you reach full retirement age during 2019, $1 will be deducted from your benefits for each $3 you earn above $46,920 until the month you reach full retirement age.

That’s not necessarily a bad thing, because the amount that your benefits are reduced isn’t truly lost. Your bene-fit will increase at your full retirement age to account for benefits withheld due to earlier earnings.

Here’s an example provided by Social Security. Let’s say you claim retirement benefits upon turning 62 in 2019, and your payment is $942 per month. But you continue to work and because of your income level, 12 months of bene-fits are withheld.

Social Security would recalculate your benefit at your full retirement age of 66 and 6 months and pay you $1,007 per month (in today’s dollars).

Suppose you continue working be-tween the ages of 62 and 66 and 6 months and earn so much that all benefits in those years are withheld. In that case, Social Security would pay you $1,300 a month starting at age 66 and 6 months.

You can see that there’s a lot of inter-play between the different rules, and it can be difficult to estimate the net effect. The best approach is to use one of the Social Security benefit calcu-lators available on the web, including the one on the Social Security website that’s available after you establish a “my Social Security” account. Run different scenarios through the calculators to get an idea of the likely results.

Investment Recommendations and PorfoliosApril 2019 10

Our Three Likely Scenarios Updated

Is 2019 going to be like 2015? Or will it bring a serious bear market and perhaps a

recession?In 2015, the U.S. labor market was

strong, and the economy was growing. So, the Fed ended quantitative easing.

As the year went on, the debt crisis in Greece roiled markets. China’s stock market took a steep dive, and Puerto Rico was having financial problems.

Markets started to react. The 10-year treasury yield rose from 1.68% on Jan. 30 to 2.49% on June 26. The S&P 500 tumbled about 15% from its May high to its August low and stayed near the low until early October.

Economic data sagged as the year went on. The 12-month rate of change in the Industrial Production Index turned negative, and that’s of-ten a sign of an imminent recession.

Yet, a recession didn’t occur, and U.S. stocks didn’t enter a bear mar-ket. Stocks and the U.S. economy began soaring after another tumble in early 2016.

Today is developing a lot like 2015. The Fed began tightening significantly

in 2018. Stock markets tumbled, and the global economy is slowing. There’s been bad economic news out of China and Europe. Italy has replaced Greece as a major risk in Europe, and Italy is a much bigger economy. In addition, today we have global trade conflicts we didn’t have in 2015.

In the December 2018 issue I laid out three likely scenarios for the economy over the next year.

Since the Fed paused in its tightening policy, the worst case scenario of the Fed tightening too much isn’t likely to occur, unless the Fed already went too far.

The second and most optimistic scenario is the central banks step in by increasing the monetary base as they did in 2016. The European Central Bank (ECB) announced just that in March, pre-viewing a new stimulus program. But the Fed is unlikely to follow unless the economy slows consider-ably. The Fed doesn’t have a lot of tools left and wants to save what it has for when it’s really needed. Also, new

monetary stimulus isn’t likely to be as effective now as it was a few years ago.

That leaves the third scenario. The Fed stands pat for a while to see what happens, which is what the Fed announced in late January.

Because it takes time for monetary tightening to spread through the econ-omy, I think U.S. and global growth will continue to slow. Most new

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economic reports are worse than their predecessors and than expectations.

I expect that growth will reach a plateau at a 2% or lower growth rate. It could remain there for some time.

But even that result isn’t a given. Growth is low and falling in Europe and Japan, and Europe is struggling with the Italy problem. Either econo-my could drag down global growth.

China is using both monetary and fiscal stimulus to maintain its growth around 6%. But a stumble there also would harm growth everywhere else.

Since late December, however,

U.S. stocks acted as though it’s early 2016 again, and we’re about to em-bark on another spree of monetary and fiscal stimulus.

That’s easy to understand. Each time the markets and economy stum-bled following the financial crisis, the Fed or Washington stepped in with fresh stimulus.

Yet, divided government in Wash-ington makes fiscal stimulus unlikely, and the Fed is hesitant to provide ad-ditional monetary stimulus beyond its announcement that it will stop raising interest rates for a while. And

the Fed will continue to reduce its balance sheet for at least a few more months. That’s a form of tightening.

U.S. stocks are priced for a continu-ation of economic growth exceeding 3% and strong earnings growth. That looks too optimistic to me given the headwinds facing both the economy and earnings.

This is a good time for inves-tors to be cautiously optimistic. We do that by holding diversified, balanced portfolios and ensuring there’s a margin of safety in each of our positions.

Diversification, Balance Are Key When Markets Near a Turning Point

Most markets had a good run from late December through early March. Our

portfolios benefitted from the surge while staying true to our policy of diversification and balance.

Real estate investment trusts (RE-ITs) are outpacing the stock indexes.

We reintroduced REITs to the port-folios in early 2017 through Cohen & Steers Realty Shares (CSRSX).

In the last four weeks CSRSX is unchanged, and it’s returned 12.77% for the year to date. Over 12 months the total return of CSRSX is 17.45%.

The fund focuses on select sectors of the REIT market. First, the fund managers develop outlooks for the national economy and regional econ-omies. Then, they determine which REIT sectors are likely to benefit from those outlooks. Finally, they use their

PORTFOLIO

Sector Portfolio Fund Allocation Ticker 4-Wk

ReturnAdd New

Cash?Vanguard Treasury Money Market 15.5% VUSXX 0.18% Yes

Cohen & Steers Realty Shares 13.0% CSRSX 0.00% Yes

Leuthold Core Investment 14.5% LCORX -0.55% Yes

WCM Focused International Growth 16.0% WCMRX 2.16% Yes

iShares Gold Trust 5.0% IAU -1.11% Yes

Hussman Strategic Growth 19.0% HSGFX -1.23% Yes

Cohen & Steers Infrastructure 7.0% UTF 2.64% Yes

Wasatch-Hoisington U.S. Treasury 10.0% WHOSX -0.87% Yes

*Returns are as of March 8, 2019

I recommend reducing the money market fund allocation a bit and putting the proceeds into Wasatch-Hoisington U.S. Treasury. This should benefit as long-term interest rates decline. Hold all other positions.

Balanced PortfolioFund Allocation Ticker 4-Wk

ReturnAdd New

Cash?Vanguard Treasury Money Market 22.0% VUSXX 0.18% Yes









We're adding Wasatch-Hoisington U.S. Treasury to the portfolio and reducing the money market fund allocation. There are no other changes to make this month.


in-depth knowledge of the universe of REITs to select those with quality properties and management who are likely to benefit from the environment.

Recently, the fund held 45 stocks and had 46% of the fund in the 10 largest positions.

The top sectors in the fund recent-ly were apartments (15%), health care (12%), data centers (11%), of-fices (10%) and industrial buildings (8%). Top holdings were Welltower, UDR, Essex Property Trust, Equinix and Prologis.

The stock rally has been global, and we’ve benefited by owning WCM Focused International Growth (WCMRX).

The managers want to own only a few stocks of what they consider to be great companies with high and sustainable growth.

They start by looking for compa-nies with little or no debt and high returns on capital. Then, they analyze the companies looking for benefits from key global trends, management that fosters a culture of growth and barriers to competition.

The fund is up 2.16% in the last four weeks and 8.52% for the year to date.

It recently owned 32 stocks and had almost 39% of the fund in the 10 largest positions.

Global infrastructure stocks also have done well. We own the stocks through Cohen & Steers Infrastruc-ture (UTF), a closed-end fund that uses about 30% leverage.

The fund is up 2.64% in the last four weeks and 20.37% for the year to date. The stock price has been rising

faster than the net asset value, so the discount to net asset value of the fund now is 5.67%, compared to a six-month average discount of 7.01%.

The distribution yield of UTF is 7.87%. A small amount of this year’s distributions so far are return of cap-ital, but there were no return of capi-tal distributions in 2017 and 2018.

UTF doesn’t try to follow an index. Its managers examine the globe’s different infrastructure companies, including pipelines, airports, railroads, utilities, cell towers and others. They look for well-managed, reasonably val-ued companies that are likely to do well in the current economic environment.

Top holdings recently were Nex-tEra Energy, Crown Castle, Amer-ican Tower, Enbridge and FirstEn-ergy. The top sectors were electric utilities (28%), midstream pipeline companies (12%), cell towers (10%), railroads (8%) and airports (6%). About 16% of the fund is invested in bonds and preferred stocks.

Reflecting my caution about U.S. stocks, we’re also invested in two funds that own stocks but can hedge their positions against market declines.

Leuthold Core Investment (LCORX) can invest in a range of global stocks and bonds, commodi-ties, bonds and cash. It also can hedge its stock positions by selling short individual stocks or exchange-traded funds (ETFS). Its default position is to be invested about 60% in U.S. stocks and 40% in U.S. bonds.

Management of the fund has been cautious about U.S. stocks for a while, based on a range of valuation and technical market indicators they use, including some proprietary measures. They believe the rally of the last few months is likely to be a bear market rally. Even so, valuations declined so much by late 2018 that the fund increased its stock exposure a bit.

Recently, the fund was invested 51% in U.S. stocks and 2% in interna-tional stocks. It also was 9% hedged against the stocks for a net 42% stock exposure. LCORX had about 14% in cash. About 3% of the fund was in gold ETFs. The remainder of the fund was primarily in government bonds.

LCORX declined 0.55% in the last four weeks and is up 2.69% for the year to date.

Income Growth Portfolio Fund Allocation Ticker 4-Wk

Return Add New Cash?

Vanguard Treasury Money Market 25.0% VUSXX 0.18% Yes









Reduce the money market fund position and add the proceeds to Wasatch-Hoisington U.S. Treasury. Hold all other positions.


We also take a cautious approach to the stock markets with Hussman Strategic Growth (HSGFX). We added the fund last November as the stock decline accelerated.

HSGFX usually owns 130 to 140 stocks chosen by a combination of valuations and market action.

Manager John Hussman also uses futures and options to either lever-age the stocks when market condi-tions are positive or to hedge them against negative market conditions. The fund’s had its ups and downs over the years. Hussman adjusted the metrics he uses to determine

the futures and options positions in late 2017, and the new system has worked better.

HSGFX was fully hedged against a market decline for most of 2018 and registered positive returns as the stock indexes tumbled in the last quarter.

More recently, Hussman relaxed the hedges to put the fund in a more neutral position. The measures of market action Hussman uses indi-cate the 2019 rally could continue in the short term. He believes the gains following late December are only a bear market rally, but the fund will

remain in a neutral position until the indicators of market internals he follows deteriorate.

The fund is down 1.23% for the last four weeks and 4.90% for the year to date.

We also own a position in gold as a hedge against either inflation or a global crisis or panic.

I recommend iShares Gold Trust (IAU). It usually has the lowest fees.

IAU is down 1.11% over the last four weeks and is up 1.30% for the year to date.

As part of our cautious, balanced strategy, the portfolios have included a money market fund. I use Van-guard Treasury Money Market (VUSXX) because of its low fees. Its recent yield was 2.35%.

Now, it is time to put some of that cash to work.

The economy is weakening, and cen-tral banks are reversing their tightening policies. Also, inflation is declining across the globe. I think that’s a good time to buy some long-term bonds.

True Diversification PortfolioFund Ticker Alloc. 3 mos. 1-Yr. 3-Yr. 5-Yr. 10-Yr.Total Portfolio 100% 3.00 1.53 7.62 3.45 7.38

Plus or minus S&P 500 1.58 -3.01 -7.89 -7.31 -9.42

Price Capital Appreciation PRWCX 11% 4.70 9.55 12.26 9.74 14.85

Price HY PRHYX 11% 3.90 2.97 8.41 3.87 10.27

FPA Crescent FPACX 18% 3.66 0.48 9.47 5.12 10.57

Berwyn Income BERIX 13% 2.77 2.50 5.07 2.73 8.19

Cohen & Steers Realty Sh CSRSX 5% 4.03 19.51 8.95 8.83 18.32

Oakmark** OAKMX 5% 1.68 -3.26 15.66 8.62 17.80

William Blair Macro Alloc*** WMCNX 12% 1.72 -0.41 3.10 0.85 n/a

Leuthold Core Investment**** LCORX 12% 0.11 -4.09 6.12 4.27 8.49

iShares Select Commodity COMT 8% 2.97 0.44 12.36 n/a n/a

WCM Focused International Growth WCMRX 5% 4.22 0.38 12.10 6.65 n/a

Returns longer than one year are annualized. *Added to the portfolio in February 2012 issue. **Added in the December 2014 issue. ***Added in the September 2015 issue. ****Replaced MainStay Marketfield in the June 2016 issue. In the June 2018 issue we eliminated PAUDX and PRRDX. The PRRDX proceeds were put in COMT as were some of the proceeds from PAUDX. The remaining proceeds from PAUDX were put in LCORX, and WCMRX. Portfolio returns are as of February 28, 2019. Fund returns are as of February 28, 2019. N/A=Not Applicable.

Retirement Paycheck Portfolio

Fund Ticker Allocation12-mo. Yield

Add New Cash?

Vanguard Treasury Money Market VUSXX 50.0% 2.35% Yes

Verizon VZ 5.0% 4.23% Yes

Reaves Utility Income UTG 10.0% 6.36% Yes

DoubleLine Emerging Markets FI DBLEX 15.0% 5.19% Yes

C&S Infrastructure UTF 7.0% 7.87% Yes

Cohen & Steers REIT & Preferred Inc RNP 13.0% 7.45% Yes


There are no changes to make in the portfolio this month. We've been enjoying some capital gains along with solid yields.


When the economy slows and inflation falls, long-term interest rates usually decline. Falling interest rates increase the prices of bonds. Though interest rates are low by his-toric measures, they still can decline from current levels and meaningfully increase bond prices.

I recommend putting a portion of the portfolios in Wasatch-Hoising-ton U.S. Treasury (WHOSX). The fund currently owns primarily long-term U.S. Treasury bonds. The managers can change the fund’s investments, but they’ve strongly fa-vored long-term treasuries for years. They believe the economy is weaker than many investors realize and due to weaken further.

The fund will lose value if interest rates increase, but I believe there’s a low risk of a lasting rise in long-term interest rates.

The fund declined 0.43% in the last four weeks and 0.49% for the year to date.

RETIREMENT PAYCHECKMany income investments haven’t

had a margin of safety lately, so we be-came more conservative in the Retire-ment Paycheck portfolio late in 2018.

That’s going to change gradually as the major central banks end their

One-Stop Recommended PortfoliosAlternative Funds

RW Recommended Fund NTF Funds* ETFs Fidelity Price VanguardVanguard Federal Money Market

Any MMF Any MMF Any MMF Any MMF Any MMF

Cohen & Steers Realty Shares

Cohen & Steers Realty Shares

iShares C&S REIT Real Estate Inv Real Estate REIT Index

Leuthold Core InvestmentLeuthold Core Investment

N/A N/A N/A N/A

WCM Focused Int'l GrowthWCM Focused International Growth

iShares MSCI ACWI Global Equity Europe Europe

Hussman Strategic Growth N/A N/A N/A N/A N/A

iShares Gold Trust N/A iShares Gold Trust N/A N/A N/A

VerizonRydex Telecomm Investors

iShares Telecomm (IYZ)Select Telecomm

Media & Telecomm

N/A

Cohen & Steers Infrastructure

N/A N/A N/A N/A N/A

Wasatch-Hoisington U.S. Treasury

Wasatch-Hoisington U.S. Treasury

iShares 20+ TreasuryL-T Treasury Index

U.S. Treasury L-T

Long-Term Treasury

C&S REIT & Preferred Income

N/A N/A N/A N/A N/A

Reaves Utility Income N/A N/A N/A N/A N/A

DoubleLine Emerging Mkts FIDoubleLine Emerging Mkts FI

iShares EM Corp BondNew Markets Inc

E Mkts Corp Bond

Em Markets Bond

*Not all NTF funds listed are available from all the NTF programs. Some are more restrictive than others, and some funds do not want to be available on all the NTF programs.

Simplify your investment life and probably improve returns for concentrating your investments at one or two mutual fund firms or brokers. It will be easier to track and manage your portfolio. The One-Stop Portfolios let you follow our margin-of-safety investment approach at the major fund companies and No Transaction Fee (NTF) broker programs. There is not always a good alternative to one of my recommended funds. Those cases are indicated by "N/A" in the table. In those cases, consider paying a fee to invest in my recommended fund or opening an account directly in that fund.

Portfolio PerformanceSector Balanced Income

GrowthRetirement Paycheck IWW ETFs

One Month 0.75% 0.67% 0.72% 1.07% 0.18%Year to Date 4.54% 4.24% 4.25% 4.84% 0.38%Last 12 Months -3.13% -2.11% -0.09% 2.70% -5.36%3 Years* 7.86% 7.71% 4.97% 6.04% -0.83%5 Years* 3.97% 3.42% 2.62% 5.53% -5.74%10 Years* 5.35% 4.88% 4.89% N/A 1.50%Compound Return 378.63% 340.90% 64.70% 73.54% 64.46%

*Annualized. Returns are as of February 28, 2019. The Income Growth Portfolio began in July 2001. The Retirement Paycheck Portfolio began December 2010. The IWW-ETF Portfolio began December 2005. Other portfolios began January 1995.

The portfolios are off to a good start in 2019. We'll continue to earn solid returns if the economy continues its growth, but our balance and diversification will enable us to do well even if markets turn down.


restrictive policies. While the central banks are making their transitions, we’ll hold the current portfolio for at least another month. The portfolio is earning a solid yield and lately has generated some capital gains.

We already discussed Vanguard Treasury Money Market and Cohen & Steers Infrastructure.

We also already discussed REITs, which this portfolio owns through Cohen & Steers REIT & Preferred Income (RNP). This is a closed-end fund that is about equally split between REITs and preferred securities.

The fund returned 2.94% in the last four weeks and 14.22% for the year to date. The shares have been appre-ciating faster than the net asset value, so the discount to net asset value has decreased to 9.72% from a six-month average of 11.61%. The distribution yield is 7.45%. The fund hasn’t made any return of capital distributions this year but has in each of the last three years. RNP uses about 25% leverage.

The portfolio also has benefitted from owning utility stocks through Reaves Utility Income (UTG).

This is another closed-end fund. It uses about 17% leverage. It re-turned 3.83% in the last four weeks and 10.39% for the year to date. The discount is 2.85%, compared to a six-month average discount of 3.56%. The yield is about 6.36%. The fund hasn’t made any return of capital distributions.

Verizon (VZ) has had a bumpy rise in the last six months. It’s handily outperformed the S&P 500, but with

a lot of ups and downs. The stock is up 4.78% in the last

four weeks and 1.62% for the year to date. Over one year it has returned 20.21%. The yield is 4.23%.

Emerging markets began to look attractive late in 2018, so we added emerging market bonds to the port-folio through DoubleLine Emerging Markets Income (DBLEX).

Following the bear market in emerg-ing market investments, the fund’s been doing well. It returned 0.57% in the last four weeks and 3.45% for the year to date. The yield is 5.19%.

The fund is invested in dollar-de-nominated bonds, so there’s no currency risk to U.S. investors.

TRUE DIVERSIFICATIONIt is time for the detailed review of

the True Diversification portfolio that we take about every three months.

As you can see from the table of returns, the portfolio continues to perform as expected. Our portfo-lio beats the market indexes when they are down or weak, and we have solid but lower returns when the major U.S. stock indexes are in strong bull markets.

Over a full market cycle, we should do as well or better than the S&P 500 with much less risk and volatility. Most traditional portfolios aren’t really diversified. Their returns and volatility are about 90% correlated with the stock indexes.

Our portfolio’s standard deviation over the last three years is 6.04, com-pared to 11.18 for the S&P 500. Over five years and 10 years, the numbers

are comparable. The mean is another measure of volatility, and our mean is about half that of the S&P 500’s.

Our beta shows that the portfolio isn’t highly correlated with the S&P 500. A beta of 1.0 means a portfolio rises and falls with the S&P 500. A beta of 0.0 means there is no correlation at all. Our beta to the S&P 500 for three years is 0.51, and it is comparable over five years and 10 years.

Our long-term alpha has been negative since about mid-2013, when the S&P 500 surged higher. Alpha compares our returns to the S&P 500 and adjusted for the amount of risk taken. We like to have a positive al-pha over five years and longer. Since the Fed instituted quantitative easing and supported stock prices, our alpha’s been lagging. Our alpha over 10 years is negative 0.64. But we’re gradually closing the gap. I expect we’ll have positive alpha again after the next bear market.

INVEST WITH THE WINNERSThis portfolio’s going to stay in cash

for at least one more month.In this strategy, I use several

models to determine which ex-change-traded fund (ETF) has strong recent performance that is likely to continue.

Three months ago, the models told us to move the portfolio into cash. They’ve come close to trigger-ing new recommendations a couple of times, but the rallies didn’t last long enough. So, we’ll keep the strategy in cash.


Robert C. Carlson wrote the book on retirement and retirement planning—twice: The New Rules of Retirement (Wiley, 2nd ed. 2016) and Personal Finance after 50 for Dummies (with Eric Tyson; 2nd ed. 2015). He also serves as Chairman of the Board of Trustees of the Fairfax County (Va.) Employees’ Retirement System (a more than $3.0 billion portfolio) and served on the Board of Trustees of the Virginia Retirement System (a $42 billion portfolio in 2005) from 2000-2005. He was educated at the University of Virginia School of Law and McIntire School of Commerce (M.S.) and Clemson University.

Challenges Investors Face: The TJT Solution to Portfolio Management Many investors need help with their portfolios. We saw that with the strong registration and turnout for the webinar featuring Bob Carlson and TJT Capital, “Challenges Investors Face: How TJT Capital Manages Portfolios to Participate in Bull Markets and Protect Capital in Bear Markets.” The webinar is available for replay at www.tjtcapital.com. If you like Bob Carlson’s margin of safety approach and methods of selecting mutual funds, log in or contact TJT Capital at 877-282-4609 or [email protected].

Retire ‘Retirement’?

More and more often I see someone argue that we should stop using the word

“retirement” and abandon the whole concept of retirement. Retire retire-ment, they say.

They argue that people are living longer, healthier, more active lives. “Retired” people no longer have sed-entary lifestyles that occasionally are interrupted by shuffleboard and card games. Surveys show a high percent-age of Baby Boomers want to work past age 65, and a substantial and growing minority say they don’t want to retire ever.

Those are good points. All they mean, though, is that retirement has changed from the stereotype made popular in the 1960s. But most peo-ple still retire from specific careers and from work altogether at some point. Many who continue working either volunteer or have substantial-ly lower incomes than during their main careers.

Also, though many people say they plan to work past 65 and perhaps never retire, reality often is different from their wishes. A majority of retir-ees say they retired earlier than they initially planned, and their retire-ment dates were out of their control. Health issues, layoffs and needs of family members often determine retirement dates.

For most of us, there are indeed one or more phases of life after our prima-ry careers when we’re still productive and active. But almost everyone wants to retire at some point.

More importantly, no matter what we are doing and what we label it, at some point all of us have to deal with many of the issues associated with retirement: Medicare, Social Security benefits, managing IRAs, estate plan-ning and more.

What we really mean by retirement these days is at some point we want to have established enough resources that we no longer need to work for compensation if we don’t want to.

We need to recognize that retirement is a process and now there often are

one or more periods between full-time middle-age careers and full-time retire-ment. So, while retirement has changed and will keep changing, it’s still here. There’s no reason to retire “retirement.”

P.S.: I always have more information to provide about your retirement finances. One way I deliver it is through the Retirement Watch Spot-light Series. This is a series of online seminars that you can view whenever you want from wherever you can access the internet.

A recent edition explained how to establish a retirement paycheck with lifetime, guaranteed income, regardless of what’s happening in the markets. Soon, I’ll provide an-other of my semiannual investment and economic reviews in which I lay out where the economy and markets are heading.

To learn more about the Spotlight Series, go to the top of the Retire-mentWatch.com home page, and select the Spotlight link.

“America’s #1Retirement Expert”

–StockInvestor.com, DividendInvestor.com

Bob Carlson is trained as a CPAand attorney. He currentlyoversees a $3.8 billion retirementfund as Chairman of Virginia’sFairfax County Employees’Retirement System.

His weekly column in Forbescovers estate planning, Medicare,long-term care, income taxes, IRAstrategies, annuities, investments,and more… and has been selectedas a Forbes Editor’s Pick.

Bob’s written America’s leadingretirement publication since 1991:RetirementWatch.com. It’s thefirst and only source to cover allthe financial aspects ofretirement, including exposingscams, schemes, and fraudstargeting retirees.

Additionally, Bob has authoredthree international bestsellers:

How to Create a “SecondSocial Security Check”…And potentially generate as much income as you need…

for as long as you need it.

Dear Friend,

If you are retired, or approachingretirement age, and want a guaranteedincome for life…

This will be one of the most importantthings you will read this year.

I’m going to show you a little understood,yet lucrative, retirement strategy.

It’s quietly (and 100% legally) beingexploited by thousands of savvy retireeseach year.

And most importantly, it pays you anincome for life.

I call this a “Second Social Security,”because it can pay you a check each andevery month for the rest of your OR yourspouse’s life.

And you get this Second Social Securitycheck in addition to your regular SocialSecurity check.

Supplement to the Retirement Watch newsletter

The New Rules of Retirement…Invest Like a Fox, Not aHedgehog… and Personal FinanceAfter 50 – for Dummies.

In other words, getting this second checkdoesn’t take away one cent from yourregular one.

Plus, depending on your situation, it can pay you between a few hundreddollars… up to tthhoouussaannddss ooff ddoollllaarrss ppeerr mmoonntthh.. (Contact your accountantfor exact figures.)

More importantly, your new Second Social Security check is as bulletproofas your regular one. You collect even if…

The stock market crashes

The economy nosedives

Interest rates go to zero… or through the roof

In other words, the cash flows in like clockwork. Every month, you’ll openthe mail and smile when you see your extra Social Security check.

Of course, the sooner you act, the sooner you’ll get the cash flowing. In fact,you can collect your first check in as little as four weeks.

And what’s more, this “Second Social Security check” is an excellentalternative to IRAs and 401(k)s. Why?

Because with an IRA or 401(k), when the markets drop… you losethousands… maybe tens of thousands from your precious retirement funds.

And (worse!) the experts tell you to “spend down” 4% of your IRA or 401(k)each year. Sure, you need this for income… yet each withdrawal is one stepcloser to outliving your money.

But if you instead switch to a Second Social Security check, you get a steady,dependable, and predictable monthly income ffoorr lliiffee… regardless of whatWall Street or Washington throws at you…

Which means you can end any worries about outliving your money.

So, let me show you…

Three Reasons You Need ThisSecond Social Security Check

We all want enough money to carry us safely through retirement. A lifetimeincome can provide you with that security.

And this is the most powerful source for lifetime income I’ve ever seen.

Here are three reasons why you need to consider this Second SocialSecurity check:

Starting in 2022, the U.S. Social Security will beunderwater, paying out more than it brings in

Twelve years later, it will run out of moneycompletely

But this Second Social Security fund is awash withcash – almost always bringing in more money thatit pays out – because it’s managed by some ofAmerica’s most brilliant financial minds

So, as you think about how important a “Second Social Security check” is foryour future, let me anticipate a question:

Why Haven’t I Heard About thisLucrative Strategy Before?

Frankly, most who have heard of it don’t understand it. So, they don’t give ita second thought.

But it’s not going to stop me from exposing the tremendous benefits of thislittle-understood strategy for you today.

After all, those in the know already use it to secure a rock-solid financialfuture in the face of an uncertain one.

In fact, many prominent people benefit – and have benefited – from thisSecond Social Security check…

Even if they don’t talk about it publicly:

Babe Ruth, who had to retire because of healthreasons… the same year Social Security wasenacted. His manager made sure he had a “SecondSocial Security check.” It helped him when hishealth failed.

Ben Bernanke, former Fed chair, gets two of theseSecond Social Security checks.

Elaine Larsen, the famed 285-mph drag-racingchamp, has a Second Social Security check. Shesaid it has “…allowed me to look at the next stage ofmy life with a new attitude. It’s allowed me to relax.I’m not looking at the downside of things. I’mlooking at what I can do next.”

But it’s not just for the rich and famous. All kinds of people have created aSecond Social Security check for themselves: Businessmen, housewives,teachers, doctors, factory workers…

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Stock market volatility – threatening the value ofyour retirement account with each violent swing ofthe Dow

Longer life spans – and 401(k) or IRA moneyrunning out, before you run out of life

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In fact, experts say this strategy makes your entire portfolio last longer,making it easier for you to achieve your retirement goals.

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He also said, ““[[YYoouurr]] ssuuggggeessttiioonn ssttrruucckk aa cchhoorrdd…… aanndd tthhaatt rreepprreesseennttss aappootteennttiiaall $$110000,,000000 iinn aavvooiiddeedd eessttaattee ttaaxxeess..””

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BBuutt,, ffoorr tthhee nneexxtt 2244 hhoouurrss,, yyoouu ggeett aa ffuullll yyeeaarr ooff hhiigghh--vvaalluueepprreesseennttaattiioonnss ffoorr jjuusstt $$113399 —— wwhhiicchh iiss aa $$442255 ssaavviinnggss……

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That’s a trivial 39 cents a day. (They want to charge me that for a paper bagat the discount grocery store.)

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You risk nothing. In fact, I urge you to watch every presentation on my dimefor the next 30 days. THEN decide if you want to keep your subscription forthe full year. But for now, let’s start you on your 30-day mmoonneeyy--bbaacckkpprreevviieeww:

Now, upon signing up, I suggest you watch my January 2019 presentation,HHooww ttoo GGeenneerraattee GGuuaarraanntteeeedd LLiiffeettiimmee IInnccoommee. Please write that down.That is the presentation that shows you all you need to set up your SecondSocial Security check.

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Now, I’m sure we can both agree… just one tip can pay for the small annual

https://www.retirementwatch.com/offer/spot-second-check?source=RW0419&channel=INSERT&step=2

subscription fee many times over.

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That’s $199 for 24 continuous months of presentations you can access anytime. And don’t forget, that also gives you access to all my previouspresentations… all my archives.

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the first place.

It’s saved more retirements than I can remember. Check out what some ofmy Retirement Watch members have written to me:

““BBoobb CCaarrllssoonn ggeettss iitt.. HHee iiss aann eexxppeerrtt bbeeccaauussee hhee ttaakkeess tthhee ttiimmee ttoo lleeaarrnnhhiiss ccrraafftt.. HHee iiss aa ttrruuee fifinnaanncciiaall gguurruu bbeeccaauussee hhee hhaass tthhee uunniiqquuee aabbiilliittyy ttooeeffffeeccttiivveellyy ccoommmmuunniiccaattee hhiiss kknnoowwlleeddggee wwiitthh hhiiss rreeaaddeerrss tthhrroouugghh oonnee oofftthhee aabbssoolluuttee bbeesstt nneewwsslleetttteerrss iinn tthhee ccoouunnttrryy.. II ccoonnttiinnuuoouussllyy rreeccoommmmeennddBBoobb CCaarrllssoonn’’ss RReettiirreemmeenntt WWaattcchh ttoo mmyy cclliieennttss..”” ~ David T. P.

““BBoobb CCaarrllssoonn ttaauugghhtt mmee tthhee bbrreeaaddtthh aanndd ddeepptthh ooff wwhhaatt II ddoonn’’tt kknnooww..TThhaatt’’ss wwhhyy II rreecceennttllyy rreenneewweedd mmyy ssuubbssccrriippttiioonn..”” ~ Malcolm W. B.

““II lloosstt aa lloott ooff mmoonneeyy bbyy nnoott ppaayyiinngg aatttteennttiioonn ttoo BBoobb.. MMyy fifinnaanncciiaallaaddvviissoorr hhaadd mmee ddeeeepp iinn tthhee NNAASSDDAAQQ,, ssoo II fifinnaallllyy fifirreedd hhiimm.. II’’mm nnoowwppaayyiinngg mmuucchh mmoorree aatttteennttiioonn..”” ~ Johnny G.

““IItt’’ss vveerryy hhaarrdd ttoo mmaakkee mmoonneeyy iinn tthhiiss mmaarrkkeett.. RReettiirreemmeenntt WWaattcchh hheellppeeddmmee mmaakkee ssoommee mmoonneeyy aanndd pprrootteecctt mmyy pprriinncciippaall.. TThhaannkk yyoouu!!”” ~ Marvin O.

““II wwiisshh II hhaadd ffoolllloowweedd yyoouurr aaddvviiccee mmoorree cclloosseellyy.. II wwoouulldd nnoott hhaavvee lloosstt ssoommuucchh dduurriinngg tthhee llaasstt 22 11//22 yyeeaarrss..”” ~ William M. G.

But to be blunt… You can’t put a price on security, happiness, andprosperity.

BBoottttoomm lliinnee:: The faster you join RReettiirreemmeenntt WWaattcchh SSppoottlliigghhtt, the fasteryou can reap the money-saving (and money-making) benefits…

…Starting immediately with your “Second Social Security paycheck.”

To get going — with immediate access to my SSppoottlliigghhtt presentations —simply click the orange button below right now.

I look forward to helping you minimize your retirement risks… whilemaximizing your money.

Yours for a better retirement,

Bob CarlsonEditor, RReettiirreemmeenntt WWaattcchh SSppoottlliigghhtt SSeerriieess


Documents

Vol. 30, Issue 4 April 2019 Retirement WatchBOB CARLSON’S · even a will. Of those with wills, 23% knew their wills were outdated. I’d wager that the percentage with out-of-date