Donna Cournoyer, Author at Moore Advisors

Medicare Update: Enrollment Is Open

Medicare open enrollment period starts October 15 and continues through December 7 each year. During this period, Medicare enrollees can make certain changes in their coverage. Here is what we know about Medicare costs for 2024.

Everyone who has Medicare coverage (Traditional Medicare or Medicare Advantage) gets Medicare Part A free, but pays for Medicare Part B.

The Centers for Medicare & Medicaid Services (CMS) hasn’t said yet how much the base cost of Part B will cost in 2024, but the annual Medicare Trustees report in March forecast the monthly price to rise from $164.90 to $174.80, a 6% increase, in 2024.

Here are a few things to keep in mind:

If you are on Traditional Medicare and plan to stay on Traditional Medicare:

You may be able to lower your annual drug costs by switching to a different Plan D. For example. there are 24 Part D drug plans in Massachusetts, and each has a different premium, deductible, co-pay, and formulary (list of covered drugs).’

To compare plans, go to the Medicare.gov site and set up your account. In the “What do you want to do?” section, select “Open all options”, then “Find health & drug plans.”

If you want to switch from Medicare Advantage to Traditional Medicare:

Some people switch from Medicare Advantage to Traditional Medicare because they don’t like the restricted network of an Advantage plan, or because frequent copays for services have become expensive.

You can switch from a Medicare Advantage plan to traditional Medicare during the Medicare Open Enrollment period, or during the Medicare Advantage Open Enrollment Period (January 1 to March 31).

If you make this change and you want drug coverage, be sure to sign up for a Medicare stand-alone prescription drug plan (Plan D), unless you have creditable drug coverage from another source. If you do not, and you decide to sign up for Part D coverage later, you may face a penalty for late enrollment.

And if you want a Medicare Supplement Plan (or Medigap Plan, which covers most out of pocket costs) you’ll need to sign up for that then, too.

In most states, Medigap insurers are not required to sell you a policy if you don’t meet the medical underwriting requirements. If you are able to enroll outside of your open enrollment period, you might have to pay higher premiums.

MA residents note, though: You can join Medicare Supplement plans without the need for medical underwriting at any time of the year in Massachusetts, and you cannot be denied coverage nor be charged more due to your age or health status.

Will I have to pay more for Medicare because of my income?

Some people pay more for Medicare Part B and Part D based on income. This additional payment is called IRMAA (Income-Related Monthly Adjustment Amount).

Your tax return for 2022 will be used to determine whether you will be subject to an IRMAA charge for 2024. If you retired in or after 2022, or had another life-changing event (e.g., marriage, divorce, death of spouse, etc.) you can file form SSA-44 to request that your IRMAA amount be reduced or eliminated.

IRMAA charges have not been released yet for 2024, but are expected to be about 6% higher than in 2023.

If you have questions or would like help evaluating your Medicare options, please let us know.

-SM

Donna Cournoyer In College Planning

College Application Marathon: Fall’s Final Sprint

As October arrives, your high school senior is likely deep into the college application process, and now the college application marathon turns into a final finishing sprint.

This time in your student’s life can seem pressure-packed and overwhelming.

Together you’re trying to find the perfect college fit that will allow them to pursue their educational and extracurricular goals in a way that can be supported by your family’s finances.

Keeping on top of the application process, including deadlines, may relieve some of that pressure. Below are some suggestions that you might find helpful.

Refine the List

Now is the time to refine your student’s school list. Take a realistic look at the options. In addition to that school at the top of your student’s wish list, do you have some options that are likely to be more affordable, and at least one or two where your student is “likely” to be accepted?

Know the Options

The college admissions “game” has gotten more complex and is defined by detailed applications, multiple essays, different application types and different deadlines for each school! Early Accept, Early Accept II, Early Decision, Early Action, and additional points such as “restricted” are possible options for applicants

Be sure to know the options and deadlines for each school on your student’s list and make an informed and timely decision on how your student will apply.

It is a good idea to consider the Early Action applications which are not binding, (when you do not have to commit to attending if you are accepted). Applying early will usually result in an earlier notification to the student. If you know the student will apply to the school, why not get the application in as soon as possible, and get notified early of the decision?

Be sure to work with your student on getting the applications done not only by the deadline, but a little ahead, so you all can be a little less stressed when completing them.

Words of Caution on Early Decision Applications

You should be well-informed about electing Early Decision because:

It is a binding agreement with the college or university. Most often, you have no idea if the student will receive any financial aid or a merit scholarship before you commit to attending the school if the student is admitted. It usually limits the student to other early applications as well.
Not every school keeps their Net Price Calculator (NPC) up to date and some do not include merit scholarships in the estimate, even if they do offer them. At the very least, you should complete the NPC on the school’s website to get an idea of eligibility.
You will need to be prepared to pay whatever the cost is to you. It’s possible that you won’t be offered aid and will have to pay full price.

Although many schools state a student’s eligibility does not depend on when they apply, most schools do not have unlimited funds. Getting applications done early for admissions and financial aid will give your student the best opportunity for maximizing their eligibility for scholarships and aid.

The College Essay

Hopefully your student has worked over the summer on their college essay.

Understand what your student’s best positioning is and be sure to have your student weave a good narrative into their essays that accompany the application.

Many schools have a holistic approach to the application review, and this is an area where your student can really shine. Admissions representatives love to hear stories that bring a student’s application to life.

Test Scores

Decide on whether to submit the SAT / ACT test scores. Many schools are still test optional. If you and your student do not feel the scores are indicative of their ability, consider not submitting if scores are not required and if your student is very strong in other areas such as GPA, involvement in groups and activity, and other accomplishments.

If you have questions specific to a school, do not be shy about calling the school and reaching out. They have an enrollment goal to achieve, and admissions folks are generally helpful in guiding you along the way to submitting your application.

Final Notes

Take it easy on yourself and your student during this time. Try to find ways to keep calm, take breaks, and remember: the ultimate goal is to get them off to college next year, and they will make it!

In my experience when working with families, most often the student ends up where they were meant to be in the end.

If you need some hourly college planning advice, you may contact Donna on our website.

While the FAFSA release date is still expected to be December, it has not yet been announced. You can register for an FSA ID and complete the FAFSA here when the application opens.

We will post updates on the FAFSA release date when they are available.

-DC

Donna Cournoyer In Personal Data Security

How to Respond to a Personal Data Breach

October is National Cybersecurity Awareness Month. In the spirit of promoting greater awareness of how to protect your data (see Personal Data Defense article from September), below are some tips on what to do if you are hacked.

Confirm the Breach: verify whether your personally identifiable information (PII) has indeed been compromised; check for unusual account activity, notifications from financial institutions, or alerts from the compromised service or organization.
Change Passwords: if the breach involves an online account, change the password immediately; use a strong, unique password for each account, and enable multi-factor authentication (MFA) where available.
Contact Affected Institutions: if your financial accounts or credit cards are involved, contact your bank or credit card company to report the incident; they can help you monitor your accounts for unauthorized transactions.
Credit Freeze / Alerts: consider placing a credit freeze on your credit reports with the major credit bureaus (Equifax, Experian, and TransUnion); this restricts access to your credit report, making it more challenging for identity thieves to open new accounts in your name. Alternately, you can place a fraud alert on your credit reports, which requires creditors to take extra steps to verify your identity before granting credit.
Monitor Your Accounts: continuously monitor your bank, credit card, and other financial statements for unusual or unauthorized transactions. Review your credit reports regularly to check for fraudulent accounts or activity.
File a Police Report: if you believe your identity has been stolen, file a police report; this documentation may be required by banks, creditors, or other organizations to prove that you’re a victim of identity theft.
Report to Government Agencies: contact the Federal Trade Commission at gov to report the identity theft or data breech; they provide resources and guidance for victims.
Notify Creditors and Utility Companies: inform your creditors and utility companies about the situation; they can help you investigate and resolve fraudulent accounts or charges.
Update Online Accounts: review your online accounts, including email and social media, for any signs of unauthorized access; change passwords and enable MFA where possible.
Document Everything: keep a detailed record of all communications and actions taken regarding the breach; this documentation may be necessary for resolving any issues that arise later.

If you’ve managed to avoid being hacked, that’s certainly a good thing! But knowing what to do if your data security is breached can save you time, aggravation, and money.

-RK

Donna Cournoyer In Economy

Thick, Slick, and Rising: What’s Behind the Recent Climb In Oil Prices?

Unlike other commodities, we are constantly reminded of the direction in which the price of oil is headed when we fill up our gas tanks (for those of us who are still driving combustion-engine automobiles). Higher oil prices have a direct effect on our personal budgets and can be a source of financial anxiety when the oil price climbs quickly.

The chart below illustrates the recent oil price climb – up more than 25% during the last three months, which has pushed the price of gas at the pump to well over $4.25 per gallon, for mid-grade fuel, in Massachusetts.

The recent oil price climb may be acting as an anxiety accelerant for some, so taking a closer look at oil market dynamics might help alleviate these concerns. The information presented below comes by way of Clearnomics, an economic research firm.

Rising energy prices are a direct burden on consumers and businesses who spend more on gasoline and other fuels, putting upward pressure on headline inflation. This also indirectly raises prices on all goods and services as production and transportation costs rise, potentially impacting core inflation.

Thus, higher oil prices effectively function as a tax which can slow economic growth and impact corporate profitability.

Why have oil prices risen in recent months?

First, the U.S. economy has been much steadier than expected. Weakness in oil prices earlier this year partly reflected fears around an imminent recession. The fact that a recession has not materialized has helped to propel oil prices higher.

Second, Saudi Arabia and Russia recently announced that oil production cuts of 1.3 million barrels per day would be extended until December. This amounts to 1.3% of global production – not an insignificant sum – and adds to previous cuts.

The two countries are among the largest in OPEC+ and have led other cuts in order to prop up oil prices, as well as in response to slower GDP growth and weakness in China. Some economists estimate that this could result in a global deficit of more than 1.5 million barrels per day in the fourth quarter of 2023.

It’s important to maintain perspective around these cuts. The relevance of OPEC as a price-setting cartel has declined over the past decade, partly because cuts by each country are voluntary and difficult to enforce, and because the U.S. has become the top producer of oil in the world.

U.S. oil production is nearly back to its pre-pandemic level of 13 million barrels per day. While there are many nuances in terms of the types of oil produced and consumed in the U.S., Europe, and elsewhere, the fact that the U.S. has been a “swing producer” has shifted the dynamics of the energy markets considerably.

Another tailwind for oil prices is declining oil inventories. For instance, the Strategic Petroleum Reserve (SPR), a large emergency supply of oil in the US, is at its lowest level since the mid-1980s.

This is primarily because oil was drawn from the SPR to offset high prices last year when gasoline was averaging more than $5 per gallon nationwide. The federal government would need to purchase 376 million barrels of oil to restore the SPR to its 2010 peak level. While there is no set timeline for doing so, this deficit naturally places upward pressure on oil prices.

So it seems like events are conspiring to keep the price of oil higher for longer. How worried should we be about higher oil prices?

According to David Kelly, Chief Global Strategist at JP Morgan Asset Management, “investors should probably not worry too much about the recent spike in oil.”

Kelly, who presents his research team’s findings frequently to the advisor community, contends that, barring some further shock, there should be limited upside to energy prices from here.

The main reason: signs of slower economic activity around the world, according to JP Morgan. The global composite purchasing managers index (calculated from regular surveys filled out by big businesses) hit its lowest level in seven months in August, with outright declines in manufacturing and a moderation in services growth.

Both China and Europe are seeing very sluggish growth, offsetting strength in India and Japan. And JP Morgan is expecting the pace of economic growth to slow in the US as we move into 2024. All of this should dampen the demand for oil and gas, as should longer-term investment in energy transition.

So for those among us who experience oil-related anxiety, taking a few deep breaths, and anticipating less acute pressure on oil-market dynamics in the months ahead, may help.

-RK

Donna Cournoyer In Market Updates

September 2023 Market Recap: 3 Out of 4 Ain’t Bad

Following a punishing first nine months of 2022, stocks had been on a roll, with prices rising for three quarters in a row: Q4-2022, Q1-2023, and Q2-2023. But a swoon in August and September ended the streak.

The recent stock market decline ranged from 2% to 5% during the third quarter, depending on which index you choose to follow. To paraphrase Michael Lee Aday (aka Meat Loaf), three out of four ain’t bad.

Intermediate and long maturity bond yields climbed significantly during the quarter, with the 10-year Treasury yield reaching its highest level in sixteen years toward the end of September, at 4.6%. Higher yields translate to lower prices for bonds.

In fact, if interest rates continue to rise into the end of 2023, investors may witness something that hasn’t happened before: three consecutive calendar years of negative returns for US Treasury bonds.

The US dollar bucked the recent negative trend and reached new highs for 2023 in September. Compared to other major currencies, the US dollar appreciated by about 3% in the third quarter.

Dollar strength places additional pressure on foreign stocks, because for US-based investors, the total return of a foreign investments also incorporates changes in the value of US dollar. Foreign stocks declined by 4.9% during the third quarter.

Oil has also bucked the recent negative price trend affecting stocks and bonds. For more on developments in the oil market, see the next section.

Below is a summary of quarterly returns for stocks and bonds as of September 30.

What to make of the recent market fluctuations?

The ebb and flow of stock and bond prices (volatility) is a normal part of investing. In most calendar years, we see significant intra-year drops: for stocks, on average, the intra-year drop is about 14%, and for bonds, about 3.5%. Yet most years still end in positive territory for stocks and bonds.

A key principle of successful investing: keep market volatility in perspective. This means not just focusing on recent performance, but on your broader goals and objectives, and on the long-term investment returns of your portfolio.

-RK

Donna Cournoyer In Reading Recommendations

The Education of a Coach

The Pulitzer Prize winning author David Halberstam is well known for his work as a New York Times reporter who challenged the upbeat news coming from the United States mission in South Vietnam, and for his book The Best and Brightewherst, which focuses on the consequences of US foreign policy in Vietnam during the Kennedy administration.

In total, Halberstam wrote twenty books before his accidental death in 2007, seven of which covered personalities and events in sport. The last of his sports books, and only one focused on football, was The Education of a Coach, about Patriots Head Coach Bill Belichick.

In the introduction to the book, David Maraniss discusses some elements of football that disturbed Halberstam, including “the cultural hyperventilation that transformed the sport from recreation to religion” and “the overwhelming pile of money that made it a business more than a game”.

Despite its detractions, football displays feats of human speed, strength, and athletic skill. Maraniss tells us Halberstam was captivated by this. And through the book, Halberstam attempts to understand Belichick’s traits of excellence and originality which he uses to lead others, build cohesive teams, and affect positive outcomes.

For those of you who enjoy the game, and who count yourselves as Patriots fans, here’s hoping those traits will inspire New England’s team as we enter a new football season.

-RK

Donna Cournoyer In College Planning

Ready, Set… Wait for the New FAFSA

Roughly 18 million college students apply for financial aid each year through the Free Application for Federal Student Aid. The U.S. Department of Education develops the FAFSA form and disburses aid to students at 5,600 colleges and career schools each year.

The FAFSA is also used by colleges and universities to determine eligibility for their own free grants and scholarships.

Due to the implementation of extensive changes based on the FAFSA Simplification Act, the Department of Education delayed the usual October 1 launch date to December this year for the 2024-2025 application. The exact date has not yet been released.

Changes to the form began over the last three years and some of the more impactful changes will occur on the 2024-2025 FAFSA form.

What this means for students who are applying now to college for admission for the fall of 2024 or who are current college students, is that their aid eligibility may be affected. Some changes are expected to help students, and some are expected to have a negative impact on eligibility.

It also means that schools which have historically released earlier financial aid offer letters to freshmen applicants, will likely be scrambling to review the FAFSA applications once the form opens and may have to delay their offer notifications to freshman.

Some of the FAFSA changes that may have a negative impact on student eligibility are:

The number of family members in college is no longer a factor in the need analysis. The “sibling discount”, which could make a student eligible for more aid, is going away. However, based on comments from administration officials from a sampling of schools that use the CSS Profile, many colleges likely will continue to give some form of sibling discount.
The net worth of a business is no longer limited to those with more than 100 full-time employees. Applicants must report the net worth of all businesses.

Some of the FAFSA changes that may have a positive impact on student eligibility or be a benefit to students are:

The FAFSA will have significantly fewer questions.
The FAFSA EFC (Expected Family Contribution) name has changed to FAFSA SAI (Student Aid Index) which helps avoid confusion as this number is for determining eligibility and is not associated with what a family or student “is expected” to pay.
Some untaxed income items have been eliminated such as: payments made to tax-deferred pension and retirement plans that are paid directly or withheld from earnings; money received by or paid for on behalf of the student; and veterans’ noneducational benefits.
For dependent students, education savings accounts will only be counted as a parent asset if the account is designated for the student. Previously, if a parent had education savings accounts for other children, the value of those were also required to be counted.
Students may now list up to twenty colleges on the form, rather than the previous ten.

One important outcome of the FAFSA change is unclear: how schools will adjust aid (or not) for current students. Students and families will have to wait and see how the new FAFSA, and their school’s policy changes, will affect their financial aid for their remaining college years.

One Final Note about the FAFSA Form: every student should complete the FAFSA form. Free money can be left behind if a student does not submit the form, especially in year one.

Some colleges require the form to be submitted to qualify for a merit scholarship, even though it is not need-based. Also, some colleges award additional grants in the form of free money, just for completing and submitting the FAFSA, regardless of eligibility.

You can register here for an FSA ID and use the same link to complete the FAFSA when the application opens.

Parents of students applying for admission for Fall of 2024 can use the Net Price Calculators on their schools’ websites to get an idea of eligibility before the FAFSA becomes available.

You can also receive a College Money Report (for three schools on your list) by visiting the Resources page on the Moore Financial Advisors website.

We will post updates on the FAFSA release date when they are available.

Donna Cournoyer In Personal Data Security

How to Play Digital Defense and Protect Your Personal Information

US Consumers lost $8.8 billion to financial fraud last year, up 44% from 2021, according to a recent Bloomberg News article. And cybercrime costs worldwide are set to grow to $19.5 trillion by 2025.

The Federal Trade Commission notes hundreds of thousands of cases where individuals have reported losing at least $1,000, as the chart below shows.

Many of us have been affected by cyber crime, either directly or indirectly by way of a relative or friend. Knowing what steps to take to create a more secure digital environment can give you greater peace of mind and hopefully allow you to avoid being scammed.

Here’s our Top Ten List for Playing Digital Defense and Protecting Your Personal Data:

Use Strong, Unique Passwords: use a different password for each online account and consider using a reputable password manager to generate and store your passwords securely.
Enable Multi-Factor Authentication (MFA): this adds an extra layer of security by requiring you to provide a second form of verification (e.g. a text message code) in addition to your password.
Regularly Update Software and Apps: this helps to keep your computer and phone operating systems, software applications, and antivirus programs up to date.
Use Secure Connections: ensure websites you visit have a secure connection (look for “https:// and a padlock icon in the address bar).
Be Cautious with Emails and Links: verify the sender’s authenticity before clicking on links or downloading attachments, and don’t provide sensitive information through email unless your email is encrypted.
Limit Your Data Sharing: be mindful of information you share on social media platforms and adjust your privacy settings to limit who can see your personal information.
Monitor Your Financial Statements: regularly review your bank and credit card statements for unauthorized transactions and report suspicious activity immediately.
Regularly Check Your Credit Reports: request free annual credit reports from each of the three major credit bureaus (Equifax, Experian, and Transunion).
Freeze Your Credit: consider freezing your credit with the credit bureaus; this makes it more difficult for identity thieves to open new accounts in your name.
Consider Using a Virtual Private Network (VPN): this provides an extra layer of protection when you access information through publicly available sources; using a VPN (provided by a vendor) makes it harder for observers to identify you and track your online movements.

Conducting an annual personal cyber safety audit is a worthwhile endeavor. It will help you determine if you’re at risk of having your identity stolen or becoming a victim of fraud. Here’s a checklist that will help you conduct your personal audit and improve the way you play digital defense.

Donna Cournoyer In Investment Strategy

Interest Rate Football

The Olympics captures our imagination. It is built on dreams, wrapped in narrative, fueled by drama, and played on the world’s athletic stage. If we were to draw an analogy to the financial world, the Olympics lines up well with the stock market. It holds the promise of the thrill of victory, and at times delivers the agony of defeat.

Football, on the other hand, demands our attention. It is persistent, visceral, and woven into the fabric of American society. Extending the financial analogy, football is akin to interest rates and the bond market. You might fully engage, casually observe, be perplexed or uninterested, but it’s difficult to completely ignore.

The owners of the thirty two NFL teams set the rules of the game. Similar to the football team owners, the twelve members of the Federal Reserve’s Federal Open Market Committee (FOMC) set interest rate policies that affect the level of interest rates and influence bond returns.

The FOMC is now suggesting that policy may soon shift from ‘hike’ to ‘hold’. If this is the case, short-term interest rates, which are currently at 5.5% and which have been on an upward path since 2021, could stabilize in the near future.

The managers of large bond mutual funds and ETFs function like NFL coaches. They call the shots for their respective funds (teams) and decide which bonds (players) to hold and which to trade.

Several large fund managers have been encouraging financial advisors to add longer-term bonds and bond funds to their clients’ portfolios.

Vanguard, the well-known firm in Pennsylvania, claims “opportunities in bonds abound”, and “now is the time to add high-quality bond exposure.” PIMCO, the California-based bond specialist, proclaims “Bonds are back” and recommends investors “make the most of this compelling opportunity”.

And the world’s largest asset manager, New York based BlackRock says “the Fed should be done” and it’s Chief Investment Officer for Fixed Income says “You can put your shoulder behind a bit more of interest rate (bond) exposure.”

The bond fund managers are making strong statements, with conviction, and backed by experience. But like NFL coaches who are advocates for their teams, these bond fund managers are prone to offer positive prognostications for their funds.

My bias is to proceed with skepticism and caution regarding the “opportunities” offered by intermediate- and long-term bond funds. Why?

Interest rate cycles tend to unfold over years, rather than weeks or months
Bond rates are still adjusting from all-time Pandemic-era lows
Bonds with the shortest maturities, and lowest risk, today offer the highest yields

The picture below, courtesy of JP Morgan Asset Management, is one that I’ve shared with you previously. When thinking about interest rate risk in client portfolios, I keep this image at the forefront of my mind.

The blue line in the chart displays the nominal yield of the 10-year Treasury bond over time. Today’s 10-Year Treasury bond pays just over 4% annually. Although the yield is significantly higher than what was on offer during the early days of the pandemic, it sits well below the long-term average yield of 5.76%.

And with inflation still above 4%, currently there is no inflation-adjusted compensation being offered by longer-term Treasury bonds. The grey line, depicting inflation-adjusted ‘real yields’, shows this.

The risk for bond investors who take on more intermediate- and long-term bond exposure is that interest rates continue on an upward path.

For example, if 10-year interest rates were to move higher by another 1 percentage point, to 5%, this would translate to a price decline of about 8% for 10-year Treasury bonds. The bond holder (or bond fund holder) would still receive interest over time, but the bond price would need to fall to make up for the jump in interest rates.

The bottom line: play bond defense. The interest rate environment remains unsettled. Shorter-term bonds and shorter-term bond funds are a safer option when inflation is elevated and interest rates are trending higher. Today, investors get more yield by taking less interest rate risk.

The adage “the best defense is a good offense” is attributed to George Washington and often repeated by football commentators. Sometimes, though, the best defense is simply achieved by playing defense.

Donna Cournoyer In Market Updates

August 2023 Market Recap: Summer Slump

The financial markets entered a summer slump in August.

The US government debt rating downgrade by Fitch Ratings was the initial catalyst for higher Treasury yields (and lower prices) early in the month. Minutes from the Federal Reserve’s July meeting, where interest rate policy is set, were released in mid-August and supported the narrative that central bank officials won’t be in a rush to bring rates down any time soon.

Market participants’ interpretation of the Fed’s interest rate policy kept the pressure on bond yields and hurt returns.

For August, the Bloomberg US Aggregate Bond Index fell by 0.63%. Through the end of August, the US bond market return year-to-date was still positive at 1.6%.

Higher bond yields took some of the summer heat out of stocks. For the month of August, the S&P 500 index of large company US stocks fell by 1.63%. Foreign stocks sold off by 3.9%.

Year-to-date, though, stocks are still significantly in the black. US stocks gained 18.7% and foreign stocks were up by 10.9% as of August 31.

Below is a summary of August returns.

Donna Cournoyer