Why Investment Management at Lawson Kroeker is Different by Design
When it’s time to select an investment management firm, you’ll notice a difference at Lawson Kroeker. Why? One of the core reasons is that the Lawson Kroeker team maintains a deliberately smaller client base, across a focused, in-house team. We believe this result is greater client levels of confidence – and continued success over time.
Here’s what some of the leaders at Lawson Kroeker have to say about this philosophy:
Bruce Van Kooten, Portfolio Manager:
“Confidence means trusting your manager to take the steps to preserve and increase wealth over a time period. It’s asking yourself if your firm is doing the best they can for you, and if you’re comfortable with what they’re doing – and how they’re doing it.
Clients should consider asking themselves, ‘Do I believe that Lawson Kroeker as a firm is doing the best they can for me? Am I confident with what they’re doing and how they’re going about doing it?’
We definitely have the talent here within this firm. Any of us could probably be successful on Wall Street or on either coast but we choose to live and practice our profession here.”
Tom Sudyka, Portfolio Manager:
“One of the things that drew us back to Omaha from Wall Street careers was the opportunity to own our own firm. Being the owner, you get to drive the direction to take care of the clients. It’s an entirely different set-up than most of the firms we compete with. Here, in our mutual fund, we know who our investors are, and for our separately managed accounts we know our clients personally. We are the ones making the decisions, and not farming it out to somebody else to make the decisions.”
If you are looking into investment management options, we hope you’ll include Lawson Kroeker in your consideration. Take a look at this video that tells a little bit more about what makes Lawson Kroeker different than the typical investment management firm.
Three Retirement Planning Tips for Your Last Five Years of Working
You’re five years from your anticipated retirement date, and things are looking pretty good. You can look back over a satisfying career, and you have plenty of retirement plans to look forward to. From travel to more time for hobbies, you’re expecting to have a lot of fun enjoying the fruits of your labor. Even if things are looking great, are there retirement planning strategies you should be utilizing, particularly in your last five years of working?
While you’ve saved and you’re thinking that you’re nearing your magic number for a comfortable retirement, it’s not the time to coast into the finish line. Here are three key strategies you should consider for the end of your career:
Reevaluate your equities portfolio. You’ve worked hard to put money away over several decades, but you can experience a major mistake even in just the handful of years you have until retirement and those few years after you retire. You may have heard that you should keep the bulk of your investments in equities, in order to get the best return. As you near retirement, you may want to go over your investments with your advisor to decide if you need to reduce your equities.
Determine whether you can withdraw less than 4%. Retirees are often advised to withdraw 4% of savings their first year and make an adjustment for inflation. Because of low yields, that amount may be too aggressive. Talk to your advisor about your options. (You may want to consider approaching it another way by spending less when there’s a more challenging market year). The takeaway here is that talking to your advisor may be a better step than doing “what everyone does” or what you’ve heard they’re doing.
Think about where your assets will thrive. If you’ve maximized contributions to IRAs and your 401(k), choose taxable accounts that are the most tax-efficient. It may surprise you what options are available – especially since the tax world is constantly changing. (Let it be your advisor’s job to keep up … and your job to enjoy the confidence that comes from that).
But you’re thinking now isn’t a great time to invest. Tom Sudyka, Portfolio Manager, has something to say about that. “Ken Kroeker, a Lawson Kroeker co-founder, is always fond of saying, ‘Now is always the hardest time to invest.’ It doesn’t matter what’s going on in the economy, or what’s going on in the stock market. It’s always hard. The trick is to stay in the market as often as you can with companies you know and understand,” says Tom.
Take a moment to learn more about our philosophy. Or, just send us a note. Now is always a great time to talk about what’s on your mind for your future.
Financial Planning for Aging Parents: 3 Helpful Steps You Can Take
It’s fun to talk with family about holiday traditions or summer plans. It’s fun to talk about how fast the kids are growing. However, discussions around financial planning may not fall into the same category. These conversations are often pushed off until a medical crisis or other event makes avoidance no longer possible.
If your parents are aging rapidly, you may feel compelled to sit down with them and talk about some plans. Here are three suggestions that may ease the stress a bit:
1 Plan ahead and start small. This isn’t a conversation to bring up while you’re carving the turkey at Thanksgiving. Instead, let your parents know that you’d like to talk with them about their preferences as they age, and set a time that’s compatible with their schedule. If you have siblings, let them know that you plan to have this conversation and invite them to participate.
It’s a good idea to keep this first conversation broad and consider it an introduction to what will likely be many conversations around financial planning. They may have more steps in place than you anticipated, or they may be relieved to have help in making plans. There’s also a good chance that they will have complicated emotions about this discussion, and may feel guarded about disclosing information.
2 Discuss their vision. First, it’s a good idea to express your desire for their comfort and fulfillment of their wishes. Then ask them what they have in mind for a living situation as they age. Do they envision a place in assisted living, or would they prefer having assistance in their own home? If they’ve always assumed they’d come live with you, it’s a good idea to have that conversation early.
You should also discuss finances and how they’ll pay for the living situation they anticipate having. Maybe this is a good time to review finances and discuss whether there’s a will in place. They may have an executor in mind or a power of attorney they would like to name. This can be an emotional conversation, as you and your siblings may have different ideas for what you’d like to see next. Prepare to honor your parents’ wishes as much as possible.
3 Handle disagreements wisely. Even if you and your siblings share a close relationship with one another and with your parents, opinions can vary strongly when considering how to care for aging parents. If you and your siblings are at an impasse, consider hiring a professional mediator, who can help sort out challenges and come to resolutions with more confidence.
A well-grounded investment plan can help with these changes and the challenges they may bring. Our team at Lawson Kroeker can help you stay the course when it’s time for a life transition. Let’s talk about your particular situation and the steps that make sense for you as you move forward.
Financial Planning for the Nearly-Empty Nesters
Three Financial Planning Tips for the Empty Nest Years
A change in the “nest” situation at home naturally brings thoughts and questions about changes in your financial situation. As you reach this milestone of empty nesting (or near it), take a moment to consider what you may need to prioritize in your financial planning:
Maximize opportunities to save for retirement: If you’ve been steadily setting aside 10-15% for your retirement, you’re probably going to be excited to bump that number closer to 25% for the next few years. If you’re in your 50s, you can make catch-up contributions to your 401(k) for up to $23,000 annually. You can also open an individual retirement account (IRA) and contribute up to $5,500, or $6,500 if you’re in your 50s.
It’s also a good idea at this point to take a step back and examine your investment risk. Risk should be evaluated throughout your life and as you near retirement age. Is it time to determine a different level than you chose when you first entered the workforce?
Assess your insurance needs: Health insurance costs. Life insurance ins and outs. Long-term care insurance. While no one particularly enjoys these logistics, how you plan for changing insurance needs is an important part of your retirement planning. Take a moment to see what your advisor has to say about these concerns. (Remember, if you work with a professional, you don’t have to weigh all these options on your own.)
Plan for surprises: Sometimes … they come back. Your financial planning for the empty nest years should include a plan for how you’ll handle things if you need to support an aging parent or if a child returns to live at home. When it comes to a returning child, there’s a difference between a short-term stay for a young adult that needs a little help getting started and plans to stay long term. If they stay longer, how will you determine how much they should contribute to the household finances or upkeep of your home? Having this conversation means you can acknowledge their “adulthood” without compromising the plans you have for your investment portfolio. The same concept applies when an aging parent needs to join your household.
Life changes, and it brings … life changes. At each step, your ideas, concerns and plans can change, too. Our team at Lawson Kroeker Investment Management is diligent and focused, and we enjoy working with clients one-on-one. A well-grounded investment plan can help with these changes and the challenges they may bring.
Take a moment to learn more about our philosophy today. We look forward to helping you address life changes with confidence.
Planning for Retirement in Your 50s: What’s Your Vision, and Are You On Track?
If you’ve recently celebrated a milestone birthday of turning 50, then you may notice a few things. You may be more interested in activities that have meaning – or those activities that you just enjoy for the sake of enjoying them. You may be making regular visits to a child who is away at college. (You may even find yourself starting a lot of sentences with, “Kids these days…”)
What else comes to mind in your 50s? It’s normal to question whether your planning for retirement is on track, or if you need to prioritize making some changes as you head toward 65.
Planning for retirement isn’t just about the numbers; it’s also about visualizing the kind of life you want and making plans to support that vision. Maybe you can’t wait to travel to other countries, or maybe you’re excited to garden and read in your most comfortable chair. Both are great plans, and they require different strategies.
Accelerate your savings: When you hit 50, the IRS gives you a little more of a break on your savings plan. Instead of the typical $18,500 contribution limit for 401(k) plans, you’re allowed to contribute an extra $6,000 with the catch-up rule. This applies to traditional plans and to Roth 401(k)s.
While the rules for IRAs are a bit less generous, you can still put an extra $1,000 each year after you turn 50 into your traditional or Roth IRA.
Finding extra cash may not seem high on your “that’s fun to do” list, but it may not be all that challenging, either. It’s a good idea to try using a budgeting tool to see where your money is going. You may find that you could easily find extra savings in your budget with a few minor adjustments.
A few other key steps to consider:
Assessing your investment portfolio: A big change that comes in your 50s is that you need to examine your risk tolerance and make plans for when you expect to begin receiving distributions from investments. You may want to put some money in a fixed income investment so that you aren’t as vulnerable to the market swings that may affect your retirement date.
Getting rid of “bad” debt: Credit card debt interest is likely in the vicinity of 16%, often three times higher than a fixed mortgage or car loan. In addition, that debt doesn’t come with any benefits, such as mortgage interest deductions. There’s nothing wrong with enjoying the speedy convenience or the reward points a credit card can offer – but you might be surprised how quickly you could put extra money away for retirement if you’re not carrying a balance.
Planning for health concerns: The reality is that most people need increasingly more health care as they age. You also may want to consider long-term care insurance, particularly if you’d like to avoid asking family members to shoulder your care.
Investing in a Health Savings Account (HSA) is a good step because the money can be set aside, tax-free, for health-related costs. Any money not spent can be invested and grown until you use it.
Enjoying your 50s can mean a unique set of life changes, new decisions and new opportunities. You can really enjoy each of these changes with confidence if you feel like your retirement strategy is on track. Contact us at Lawson Kroeker to talk. We’ve been diligent, consistent and client-focused since our founding more than 30 years ago.
Investing and Inheritance: Take Your Time … Emotions Will Be Involved
Plus Three Other Key Considerations
If you’ve received a windfall in the form of an inheritance, you might be surprised at the emotional aspect of the news. Being involved in an inheritance means many decisions, and investing an inheritance can be a complicated process.
Take some time. While you may feel an urgency to look at investment decisions quickly and plan to wait for later to work through your emotions, the opposite may be healthier. Most experts agree that taking some time before any action can be beneficial in the process.
Choose advisors wisely. You may have people all around you, and once they hear that you’ve received an inheritance, they’ll have a lot of opinions about the “right way” to handle the money. Be sure to work with a professional that you trust, and it might be a good idea to come up with a standard response for well-meaning friends and family that want to share their ideas (i.e., “I’ll bring that up to my advisor, thanks.”).
Keep the process positive. Hiring an investment professional to handle the estate can avoid surprise disagreements and keep the process positive for everyone. Long before the time comes for an inheritance to be passed along, it often helps to have an intergenerational meeting in which the plans for the inheritance are disclosed. A neutral advisor can help open the door to good communication and efficiency.
Think through financial categories. You may be tempted to start by scheduling a trip or buying that piece of property you’ve been thinking about for years, but it’s better to do some cool-headed planning in the early months following a windfall. Take a look at these four categories as a suggestion, and determine where you may need to contribute part of the money:
Safety: includes medical, transportation, home repair and insurance
Fun: vacations, entertainment
Future: money that won’t be touched in the near future
Cushion: for true emergencies
You could also include charity as an optional category. Each category does not need to be equal, nor does it need to be decided quickly. Fill out some ideas and then revisit the list in a few days or weeks and make adjustments.
If you have questions and concerns related to a financial windfall, such as an inheritance of the sale of a business, contact us at Lawson Kroeker. Our professional team is trained for investing an inheritance and in the art of building trust through diligence and a focused strategy. At Lawson Kroeker, we not only understand the need to take your time; we encourage it.
Have You Made These Common (But Lesser-Known) Missteps When Planning for Retirement?
Surprise. There is a fair amount of complexity associated with retiring. Sometimes there are feelings of genuine confusion over “what’s next?” For many retirees, it can take several months or a year (or more) to find a new and meaningful routine. For others, a big move to a new city can lead to excitement … mixed with a sense of disconnection.
The good news is that each of these challenges can be systematically and effectively resolved. However, when planning for retirement, you could have made a few missteps along your investment journey that could affect your plans in a different way.
Here are some common errors to avoid:
You think you’ll need less money in retirement. Think about what expenses you’ll have as a retired person: housing, utilities, clothing, health, groceries. None of these are items that are dependent on you having a job. Your expenses may even increase in retirement, depending on the plans you have for travel or entertainment. Most Americans will live 10 to 15 years longer than they anticipate.
You are not taking advantage of catch-up contributions. If you got a bit behind in your retirement savings while you were pursuing education or raising children during your 20s and 30s, don’t worry. Your 50s can be a time to shore up retirement funds, with the government allowing you to make catch-up contributions. This increases the maximum amount you can contribute; an extra $6,000 to a 401(k) or an extra $1,000 to an IRA.
You may feel that you can’t possibly put more away for retirement, but this is a prime opportunity to get your savings in line. Consider cutting expenses like eating out or take a more budget-friendly vacation, or you can take on a side job to maximize your contributions.
You could be under-thinking when it comes to taxes. Don’t forget to factor in taxes when planning for retirement. You may have saved well, and combined with your Social Security, you may be in good shape for a healthy income in retirement. But you can plan on the IRS claiming its share, as well. Unless you have a 401(k) or a Roth IRA, your income will be taxed as ordinary income.
Planning for retirement requires a long view of your financial situation. Contact us at Lawson Kroeker to get started on a vision for your retirement and what steps are necessary to make it a reality. We’re diligent, focused and consistent – and we can help you to be, also.
Why Are we Thankful to be in the Midwest?
Many of our team at Lawson Kroeker have experience at big investment firms, located in bigger cities.
Why have many returned to the Midwest? While each Chartered Financial Analyst at Lawson Kroeker may offer a slightly different answer to that question, many of the themes are the same. From the opportunity to personally serve clients to the benefits of raising kids in a great city like Omaha, they all enjoy advising clients and working hard in the Midwest.
While Omaha is a competitive market with an entrepreneurial spirit, it’s still small enough to allow for a more personal approach to advising clients. At Lawson Kroeker, decisions are never farmed out to another company, and there’s time to think carefully through the advice given to clients.
What makes us different also makes us thankful.
How Charitable Donations Through an IRA Can Impact Taxes and Investing … Are You Familiar with These Tax Changes Toward Charitable Donations?
Changes in determining who will include itemized deductions on their tax returns will affect millions this tax year. The Tax Cut and Jobs Act of 2017 is expected to drastically reduce the number of people enjoying tax savings related to their charitable donations, with only 16 million in 2018 versus 37 million in 2017. The updates impact taxes and investing for many Americans.
The itemized tax deduction will be limited to $10,000 for state and local taxes and the standard deduction will go up, with single returns at $12,000 and those married filing joint returns receiving a $24,000 standard deduction. Head of household returns will have a standardized deduction of $18,000. The thresholds are higher for those over the age of 65.
The percentage of households that report itemized deductions on their tax returns is expected to drop 39% with only 15% itemizing.
The good news for seniors: While this news may make it seem that the benefits of contributing to charity will be drastically changed, and both taxes and investing will require some changes in order to absorb the impact, there is good news for seniors. The new law does not change the ability to make a charitable contribution from an individual retirement account (IRA) without recognizing taxable income.
In the past, the ability to include charitable donations on itemized deductions meant that many people over the age of 70 ½ never took advantage of this ability. With the new changes in place, everyone who meets the minimum age requirement might consider changing the way they make their charitable contributions. (Essentially, individuals over the age of 70 ½ with IRAs could leverage some tax savings while giving to a philanthropy).
How it works: The law is generally referred to as a “charitable IRA rollover,” and it allows seniors to make donations to eligible charities directly from their IRA, excluding the donations from their gross income.
For younger taxpayers: If an investor is under the age of 70 ½, they may still be able to capture some of the benefits of their charitable donations by “bunching” their contributions. Instead of making a donation of $5,000 each year for three years, they could give $15,000 once every three years, allowing them to itemize on that tax return. This method can be a bit challenging for the charity in question because of budgeting and planning, but there are options like a private foundation or donor-advised fund that can manage the donation flow to the charity.
To learn more about how recent laws have impacted investment strategies, contact us at Lawson Kroeker Investment Management. We can help guide you.
Why Lawson Kroeker Favors Long-Term Investment Advice Over Speculation: And, Does Speculating Over Investment Advice Even Work?
As winter approaches the Midwest, some experts say the bear market is stirring from hibernation, ready to come out of its den. As the bull market continues an extensive run since March 2009, many investors wonder what investment advice should guide their decisions.
In truth, if you’ve ever worked with our team at Lawson Kroeker, you know that the headlines don’t have much impact on the steady focus of our Chartered Financial Analysts®. Read on as we share further insights on the topic.
“Is it different this time?” is a common question when talking of the current market conditions and working with those seeking investment advice. There are always variations in how the stock market plays out, and this time is no different. As discussed in one of our “As We See It” quarterly reflection pieces, the factor that differentiates this long bull market run is the speculative (or fast) money flowing in and out of the market.
Is the bull market aging? Peaks in speculation and momentum are telltale signals of an aging bull market. Investors, in a rush of fear of missing out (FOMO), often make purchases at a time when the prices should influence the opposite behavior. This often occurs with initial public offerings (IPOs), which entice investors with the hopes of investing in the next great thing. Unfortunately, many of these IPOs fail their investors, who watch their speculative money slip away quickly after it peaks.
What are areas of new speculation? One of the newest speculative types of investments has been in cryptocurrencies. Many investors jumped to acquire the Bitcoin, but there’s been no emergence of a single platform to support it or provide widespread acceptance of this currency. Those who purchased Bitcoins watched as their value increased from around $900 in early 2017 to around $19,000 in December of that year.
Given the anticipation that the value would significantly increase from there, investors continued to hold tight to Bitcoins as the value then dropped to around $4,400 in the fall of 2018.
Speculative investing and trends come and go, but the investment philosophy at Lawson Kroeker remains consistent, focused and diligent. As we’ve done since our founding year, our team embraces a long-term view of investing that helps build success over time. Contact us today to learn more.