Financial Insights- February 26, 2021

Written by Jon Brethauer, CFP®, AIF®, CPFA, MBA

On February 26, 2021

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The standard deduction for a married couple filing jointly is $25,100 plus $1,350 for each spouse that is age 65 or older.  A single taxpayer has a standard deduction of $12,550, but if 65 or older it increases to $14,250. For those that use the standard deduction, they can add another $300 for charitable cash contributions. Like last year, the 60% of Adjusted Gross Income (AGI) limitation is waived for cash contributions. The top tax bracket of 37% starts at $628,300 of taxable income for joint filers and $523,600 for a single taxpayer. The top tax rate on capital gains and qualified dividends remains at 20% with a 3.8% surtax on net investment income for Obama Care for those with AGI of $200,000 for singles and $250,000 for joint filers. The annual gift tax exclusion stays the same at $15,000, while the estate tax exemption increases to $11.7 million, or $23.4 million for a couple. While all of this is subject to change by Congress, we expect any changes will apply beginning in 2022, although there is nothing guaranteed when it comes to Congress.


One of the proposals espoused in the 2020 Democratic platform is an increase in the capital gains tax from 20% to 39.6% for those making more than $1 million.  First, nothing is final, and there many discussions to be had by Congress and others before something is changed.  We see several issues with the proposal.  Consider that you own a small business or farm that you spent a lifetime, or at least a long time, building into something of value that you hope to sell at retirement.  Most closely held businesses will have little if any cost basis.  Thus, when one sells the business for a million dollars, instead of paying $200,000 in capital gains taxes, one would pay $396,000, or almost double!  Somehow that doesn’t seem fair.  Next, according to Janet Yellen’s written response to questions, she believes one alternative is to tax capital gains on a year over year basis – in essence, this means a mark to market approach.  Not only do we believe that totally destroys the concept of long-term investing, but it would also likely add volatility to the market which ultimately hurts smaller investors.  How?  For someone subject to the higher tax, there would be no reason to hold an investment for the long term if it is going to be taxed each year and the added trading could easily increase volatility.  Finally, at least until we study it more, it could hurt charitable giving.  If taxes are paid every year, there would be less ability for donors to give assets with built-in capital gains to charitable organizations.


Whether it be carbon emissions (“E”), labor standards (“S”), or business ethics (“G”), many profess to be supportive of various ESG-related issues in the world. But as investors, when the proverbial rubber meets the road, investment performance weighs heaviest on the conscience. The importance of the societal idea of “doing good” often depends on the extent of “doing good” financially, and some investors alternatively choose to make an ESG impact by supporting various causes using the proceeds from their investments upon liquidation. The question that is most likely to determine an investor’s appetite for ESG investing is, does it outperform the traditional counterpart? The answer (surely not a preferable one) is – “it depends”. As we mentioned in the previous ProVise Prospective$ (link), there are several categories of ESG investing and choosing the right benchmark to compare performance against can be complicated and in some cases, misleading.

For example, an ESG fund that uses exclusionary screening to exclude certain industries from the investable universe cannot be compared to a traditional benchmark that includes those respective sectors. Even fund investing that just simply “considers” ESG criteria alongside standard valuation metrics can have considerable differences in the weightings of sectors and market cap compositions relative to traditional benchmarks. Many exchange-traded funds (ETFs) track indexes that screen various investment universes (e.g., US large-cap US equity or international corporate fixed income) for companies with the highest ratings across key ESG issues. Given the dearth and varying levels of company-specific information available to individual investors, we recommend ETFs that track indexes created by reputable, industry-leading data providers as a way to diversify risk and gain access to this investment theme in an efficient, low-cost vehicle.


The popularity of investing that focuses on the environmental, social and governance (ESG) impact.

On Thursday, March 11th at 4:30 pm EST, ProVise will host a Zoom meeting to discuss ESG and how it impacts investors and businesses. The meeting will be moderated by Ray Ferrara, CFP® and will feature Daniel Mannix, CFA® on what is (and what isn’t) ESG investing and why now is the time to seriously consider it as a viable investment approach.  To register, click here.  Space is limited, but we will record it for those who cannot attend. If you have any questions in advance, please send an email to



It is likely that somewhere along the line someone has told you a lie, even if it was just a little white lie. But what about money? Ever heard a good lie? There are lots of folks in jail for fraud (lying). surveyed 2,600 adults on the subject of lying about money – maybe to a spouse, family member, fellow employee at work, friend, etc.

Here are the top ten with the percent of people that admitted to this lie at least once:

10) concealing a windfall from a spouse/partner – 11%; 

9) lying on a tax return – 13.4%;

8) lying to a spouse/partner about how much debt they have – 15%;

7) lying in a job interview about your salary at a previous job – 21.5%;

6) exaggerating about how much something costs to family, friends, etc. – 22.1%;

5) misrepresenting or concealing income on a financial aid application – 23.4%;

4) hiding a bank account or credit card from a spouse/partner – 24.2%;

3) misrepresenting or concealing income on a health insurance application – 27.4%;

2)  hiding a purchase from a spouse/partner or family member – 40.1%;

1) downplaying how much something costs – 46.6%.


Not since World War II has life expectancy in the United States declined.  But with Covid-19 adding to increasing suicides and drug overdoses, it did during the first half of 2020, and it was a big decline.  It dropped a full year from 78.8 to 77.8 years, according to the National Center for Health Statistics.  Among black males, however, the decline was a full three years.  For all males, the drop was from 76.3 to 75.1 years and for women, it dropped from 81.4 to 80.5 years.  The gap between men and women widened to 5.4 years which is the highest in 20 years.


The Conference Board recently surveyed CEOs of American industry about their confidence in their company’s opportunities over the next twelve months.  Anything over 50 is considered bullish and the current report comes in at a whopping 73.  Obviously, this is coming off a year in which the country has battled a pandemic and the shutdown for much of our economy.  With an increasing number of vaccines being approved around the world, there is hope that we can return to some degree of normalcy late this year and certainly next.  Add to this the stimulus bill being debated in Congress along with a possible $1-2 trillion infrastructure bill being passed later this year.  A third of the CEOs said they thought incomes would increase by at least 3% and over half thought they would add jobs, with only 12% saying they planned on reducing their labor force.  With all that good news and so many optimistic outlooks, how could things go wrong?  It is what we don’t know or realize that often upsets the apple cart. 


As one enters into retirement and begins withdrawing from a portfolio, the results can be quite different depending on whether the first few years (especially) are up or down for the market.  A retiree who invested 100% of their $1 million retirement fund in the S&P 500 on 1/1/73 would have faced a 14.3% decline that year, followed by a 25.9% decline in 1974.  It roared back in 1975 by 37% and 23.8% the next year.  Suppose he took out an inflation-adjusted $100,000 per year; he would have run out of money in 9 years.  Keep in mind that most planners recommend taking out no more than 4% rather than the 10% shown here.  However, a retiree who started retirement on 1/1/82 with $1 million and an inflation-adjusted withdrawal of $100,000 would have found a very different result.  The S&P 500 was up 14.8% in 1982 and 17.3% in 1983.  Thus, on 12/31/20 (39 years later) she would still have $6.32 million in the investment account.  (source: BTN Research)



 Research shows that millennial women (ages 23 -39) continue to struggle and lag behind their male counterparts in investment knowledge and confidence.  What are some steps young women can take to plan for a healthy financial future

  1. Learn about your employer’s benefits and leverage them.  Can you name the benefits offered by your employer?  Are you taking advantage of health and dental insurance, 401(k) plans, and Health Savings Accounts.
  2. Build an emergency and opportunity fund for those unplanned events like a job loss or unexpected health or car bill.
  3. Tackle student loan debt.
  4. Ask yourself “What is the purpose of my money?” in the short and long term.

Start today by answering a single question and work through the list.  We work with many successful professionals and savvy women who are trying to make the right financial decisions for themselves and their families.  Let us know if we can help you answer the questions, so you are more informed, confident, and empowered in your financial future.