June marks Elder Abuse Prevention Month. At a time when 70% of the nation’s wealth is controlled by Americans over 50 years old, fraudsters are using new tactics to take advantage of retiring baby boomers and the growing number of older Americans. And while some of these criminals are strangers, most often elder financial abuse is committed by family and friends.  So, what can you do to protect yourself and your loved ones from elder financial abuse?

Protect Yourself – In many cases, exploiters and abusers are often people you interact with regularly. They can be charming, yet forceful in their attempt to gain control of your finances. If you feel intimidated or manipulated, trust your instincts and avoid anyone who makes you feel this way. Some proactive measures you can take now are:

• Add a “Trusted Contact” to your bank and investment accounts. A Trusted Contact is someone your bank or financial advisor can call if they suspect fraud or financial exploitation.
• Build a relationship with your attorney and your CERTIFIED FINANCIAL PLANNER™ Differentiated from other financial advisors, CFP® professionals are known for their commitment to high standards of competency and ethics. These are two professionals you will want available to you and familiar with you in the event you suspect financial abuse.
• Shred receipts, bank statements, and unused credit card offers before throwing them away.
• Never give personal information like Social Security numbers, account numbers, or financial information over the phone, unless you initiated the call and the other party is trusted.
• Never rush financial decisions. Ask for details in writing and get a second opinion.
• Never pay a fee or taxes to collect sweepstakes or lottery “winnings.”
• Check references and credentials before hiring anyone. Don’t allow workers to have access to information about your finances.
• Avoid sharing personal information on social media. Information, like your favorite actor and your mother’s maiden name, can be pieced together with other publically available information to hack your online accounts.
• Be wary of predatory lenders and salespeople pressuring you into an inappropriate reverse mortgage or pushing an expensive annuity that may not mature until you are in your 90’s.
• Remain extra vigilant after the loss of a spouse. Bad actors browse obituaries and prey on widows and widowers, often under the guise of an unpaid creditor.
• Don’t sign documents that you do not fully understand.
• Feel free to say “NO.” It is your money!

Protect Your Loved Ones – Many older adults live alone and depend on others for care. This can put them at a greater risk for financial abuse and exploitation. Be their champion by recognizing red flags, which can be spotted in changes to established financial and behavioral patterns.

• Unusual activity in a bank account and unpaid bills
• Frequent expensive gifts to caregivers
• Adding caregivers to bank accounts
• Frequent checks made out to “cash”
• A series of loans to a friend or family member with no repayment
• Sudden change in beneficiaries
• Doesn’t want to talk openly about your concerns
• Caregiver prevents others from visiting

Like other forms of abuse, the consequences of financial abuse are long-lasting and deprive the victim of resources, peace of mind, and in many cases their independence. While some seniors may need help with their finances unless they willfully hand control over to another person, they have the same right as anyone else to receive, spend, invest, save or give away their money. By law, Texas residents are required to report known or suspicious elder abuse. You can report elder financial abuse by contacting Adult Protective Services at 800-252-5400 or online at TxAbuseHotline.org.

Published in the Victoria Advocate

Hannah Gohmert is a CFP® professional and IACCP (Investment Advisor Certified Compliance Professional) with KMH Wealth Management, LLC. She specializes in investor protection and is the Chief Compliance Officer of the firm.

In today’s technological landscape, there are many platforms that allow easy access for almost any person to make an unlimited array of investment decisions. One thing often overlooked by investors and some investment professionals are the tax consequences of these investments. Taxes can cut an investor’s actual return quite substantially. Whether forgotten or unknown, these tax consequences are unavoidable once the annual requirement of filing a tax return comes around. If the tax consequences are not planned for or understood in their entirety, it can often lead to the unnecessary stress of scratching together cash to foot an unexpected tax bill.

That is why it is important when looking at investments or various investment choices to consider after-tax returns. After-tax returns are the net profits made on an investment with their respective tax consequences in consideration. This provides a more accurate representation of return.

The easiest way to mitigate taxes from investing and potentially make the biggest impact on your bottom line is understanding the differences between short and long-term capital gains. Capital gains are the appreciation of an investment position over the amount of which you acquired the position. Under current tax code, capital gains are taxed only when an investment position is sold and the gains are said to be realized. For example, if you bought one share of Apple for $5, and then sold that share of Apple for $125, you would have realized or gained an amount of $120 ($125-$5). This difference of $120 would be considered a capital gain and would be taxed at capital gains rates. Depending on your overall tax situation, capital gains can be taxed at anywhere from 0% all the way up to 37%! The drastic difference in this range of tax rates on capital gains depends whether they are considered short-term or long-term gains.

Short-term gains are a result of positions that are bought and sold in less than one year. Short-term gains are taxed at the investor’s ordinary income tax rate, which can be up the high side of the scale, up to a staggering 37%! On the other side of this, are the stock positions held for longer than one year. Once a stock is held for longer than one year and then sold it becomes taxed at the more lucrative long-term capital gains rates. The highest long-term capital gains can be taxed at is 20%. This could lead to a big difference in your investment returns after-taxes are considered and a huge difference in your taxes owed at tax time.

Using this information to derive a true, after-tax financial return can make a major difference in any investment decision. This will additionally, allow for adequate planning to reduce the chances of an unexpected tax bill. Consider building your financial team to consist of a CPA and CFP® professional who understand the nature of investing with a mind for mitigating taxes.

Published in the Victoria Advocate

Christopher Laughhunn CPA/CFP® is the Tax & Accounting Principal for Keller & Associates CPAs, PLLC.

So the children have left the nest and you are beginning to think more of retirement.  Your home has been the epicenter for family memories and the gathering spot for years.

How do you look at your home now? Do all those repairs stare you in the face? Is your landscaping in need of a facelift after a freeze or neglect?  Does your family still want to come to the family home or do they prefer other places to gather?

My husband, Lane, and I faced this reality lately.  We have built three homes over our 40 plus years of marriage, thinking each one was the “it” home.  However, job opportunities, children coming in multiples, and more enticing neighborhoods kept us busy building different homes.

In the fall of 2020, un-expectantly our realtor friend called to tell us he might have a buyer for our home.  The house was not listed.  We had toyed with the idea of selling this home as our children live in Houston, Boston, DC, and Denver and it is difficult for the out-of-state children to get to Victoria.  We are also getting older and can work virtually from anywhere.  During COVID-19, we were not meeting face-to-face with our clients anyway, but virtually.

The benefit of dissolving this house was a cost-saving on the maintenance, utilities on space we were not using, taxes and insurance. Quite a cost-benefit that could equate to some travels, which is how I equate everything. We could also purge belongings that we knew would be a delight to our children, as they do not want to suffer through all these things upon our demise.

We accepted this offer and made the difficult decisions to toss, donate, or relocate items. We have had a bay house in Rockport for over 20 years and thought we could commute from there to Victoria until we figured out everything.  We also had purchased a vacation home in Santa Fe years ago that we had pegged for some of those twilight years, years from now.

So, if your goal in this next journey of life is to live more affordably and focus your money on how you want to live, selling the family home could help realize these dreams by socking that money away or retiring the mortgage and perhaps other debt.

There also could be a tax benefit if you have a capital gain from the sale of your main home. You may qualify to exclude up to $250,000 of that gain from your income, or up to $500,000 of that gain if you file a joint return with your spouse.

We made some tough choices that were very freeing financially and emotionally. Traveling more is always my goal, but moving closer to children or moving to a 55 and older community are also on our minds as well as other future retirees.  Speak with a CERTIFIED FINANCIAL PLANNER™ Professional to help guide you with these decisions.

Published in the Victoria Advocate

Phyllis Keller, MBA is the Chief Information Officer for KMH Wealth Management, LLC and Keller & Associates CPAs PLLC. 

What if I told you that I could put your money in an investment that would offer guaranteed losses of only 2 percent every year, and you could have complete comfort and security in the fact that you know how much you are guaranteed to lose.  You would probably laugh at such a ridiculous proposal.  Would you consider an investment that is guaranteeing you a loss every year a safe or good investment?  Probably not.

The reality is, this investment is not only real but it is used every day.  Cash and money market investments are often thought to be among the most secure investments that exist.  While this may be true on short time scales when your timeframe is expanded to years or decades, the sense of what is risky and what is safe changes dramatically.

As an example, one of the largest money market funds, the Vanguard Federal Money Market Fund, is yielding three-hundredths of a percent at the time I write this.  An investment of one hundred thousand dollars would only offer a $30 return per year.  This may be fine, however, there is a very real loss that you won’t see on your monthly statement – the loss from inflation.

Inflation is what caused the price of gas to rise from $1.50 per gallon in 2000 to $2.60 now, the price of a $1,510 new car in 1950 to cost $37,800 in 2020, and what increased the price of rent from $300 in 1984 to $1,000 per month today.  Inflation erodes how much you can purchase with your dollars.  At a 2% inflation rate, a $100,000 money market fund would lose $2,000 in purchasing power after one year, far outstripping the $30 interest earned.

Inflation is an ever-present force that will reduce the value of money over time.  This is difficult to see over short time frames, but over years it becomes significant and undeniable, like a river slowly cutting through a canyon, year after year.  Over the past 100 years, the U.S. Bureau of Labor Statistics shows that inflation has eroded 92% of the value of a dollar since 1920.

As contrast, some think of investing in the stock market as a roller coaster or gambling.  In a short time frame of one or a few years, this may be how it feels.  However, when your time horizon expands, so does the narrative.  The worst 20-year period in U.S. stocks began in 1949, and only delivered a compound annual return of 1.2% per year.  The best 20 years began in 2000, and delivered a compound annual return of 18.4%.  The U.S. stock market has not had a recorded 20-year period with a loss – ever.  As your investment time horizon expands, the risk of loss in the stock market declines.

Cash, money market, and similar investments that return below the inflation rate over time may offer a short-term comfort in knowing that your dollars are safe and secure, but your value may not be.  Over longer time frames, cash and money market funds can risk loss to inflation and investing some funds in the stock market may be necessary to maintain your purchasing power.  Consider your time horizon and risk tolerance when investing in anything, even in cash, and consult a CERTIFIED FINANCIAL PLANNER™ Professional to help you decide on the right investment allocation for you.

Published in the Victoria Advocate

David Faskas is a CFA and CFP^® Professional with KMH Wealth Management, LLC. He has been with the firm for over eight years and specializes in investments and portfolio management.  He is the Chief Investment Officer, Chief Financial Planning Officer, and a managing partner in the firm.

Hindsight is defined by Merriam-Webster as the full knowledge and complete understanding that one has about an event only after it has happened. After experiencing a year filled with adversity and unexpected challenges, we are all hoping to bring that hindsight into focus as we move into 2021.

The global pandemic known as COVID-19 has brought substantial devastation to our way of life globally, nationally, and locally. Many among us continue to feel the full force of the economic and health impacts to our daily lives. However, there are encouraging signs that the end of the global pandemic is nearing. Multiple vaccine candidates have had successful clinical trials and are being reviewed and approved by regulatory authorities as of this writing. Effective therapeutics continue to show promise as alternative treatment options. These combinations give us hope that a semblance of normal is possible in 2021. That same optimism can translate into what changes 2021 might bring and how they will impact your finances.

First, there will be a new President inaugurated in January. While most people feel strongly about one party or another, history shows the stock market tends to be indifferent to which party occupies the White House and Congress. According to research from RBC Capital Markets that has tracked the returns of the S&P 500 dating back to 1933, the best outcome for markets have been a Democratic President and split Congress, with an average annual return of 14%. The second-best outcome was a tie between a full Republican sweep and a Democratic President with a Republican Congress. Both of these scenarios returned 13% annually.

Second, 2021 tax laws also continues to offer ample opportunities for investors. Individuals with 401(k) plans can contribute up to $19,500 to their plan from their salary, and for those age 50 or older, an additional $6,500 catch-up contribution is available. Eligible individuals can save up to $6,000 in a Traditional or Roth IRA with a $1,000 additional catch-up contribution for those age 50 or older. Expanded income tax brackets coupled with low tax rates provide opportunity to convert pre-tax retirement accounts to tax-free Roth IRA accounts and manage future taxes and retirement costs such as Medicare premiums.

The year 2020 will undoubtedly go down in the history books as unprecedented.  Let’s look to 2021 and do some financial planning so we will be ready to travel, attend concerts and do all the things to build our economy. From all of us at Keller and KMH, we wish you a Happy New Year! 

Published in the Victoria Advocate

Kyle W. Noack CPA/CFP® is Chief Financial Officer for Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.