The Cox Connection

Volume 2 Issue 2 || JULY 2019

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6 Retirement Income Streams Which Will You Have?

  1. Individual Retirement Accounts (IRAs) These include rollovers from a previous employer or contributions you have added to your own IRA over the years. You can begin taking distributions without a penalty at age 59 1/2, normal retirement distributions are taxed as ordinary income, required minimum distributions start at age 70 1/2, and ROTH IRAs offer you tax free income after age 59 1/2. Contributing to an IRA is subject to limits each year.
  2. Employer Plans include 401(k) or 403(b) plans as examples. At retirement, you should consider if you want to adjust your risk level and if it benefits you to roll your assets into an IRA. Health Savings Accounts (HSA) are also offered by some employers as a way to help pay for future medical expenses during retirement. Medical needs can have a huge impact on your retirement scenario.
  3. Employer Pensions are often qualified and payments to you would be taxed as ordinary income. Analyze whether a lump sum or annuity payments are best for you.
  4. Non-Retirement Accounts are taxable individual or joint accounts that you may have been contributing to over time. These accounts are useful because they are only taxed on their gains when you take a distribution. A mix of taxable and tax deferred investments can be beneficial to you when you use them as a source of income later.
  5. Continued Employment can help you delay taking Social Security until you reach full benefit age, however be aware that making over a specified income can reduce your benefit if you continue to work after you have claimed Social Security.
  6. Social Security has been in the news lately but it is here to stay. As the U.S. population expands and contracts you can expect some changes that will help continue Social Security benefits for future retirees. Consider waiting to claim your benefits until full retirement age. Some of your benefits may be taxable depending on your "total" income during the year.

Rollover and Traditional IRAs are subject to different taxes than Roth IRAs. Withdrawals taken from any IRA before age 59 ½ may be subject to a 10% federal income tax penalty. Please visit a tax professional for more information on tax deferred savings and retirement account distributions. Some pension plans may be considered non-qualified retirement accounts and would be subject to different tax rules. Cox Global Associates is neither a tax or legal advisor.

Visit our website and request to download the Retirement Planning Guide. It contains information on income streams and Medicare planning.

Market Update

Despite some continued volatility, the stock and bond markets continue providing positive total returns for 2019. Here are some results year-to-date and quarter-to-date as of June 30, 2019 for the capital markets:

  • S&P 500: YTD 18.54% and QTD 4.30%
  • Dow Jones Industrial Average:  YTD 15.40% and QTD 3.21%
  • MSCI EAFE (International Stocks): YTD 14.03% and QTD 3.68%
  • Bloomberg Barclays US Aggregate Bond: YTD 6.11% and QTD 3.08%
  • Bloomberg Barclays Global Aggregate ex US Bond: YTD 4.99% and QTD 3.42%

While we saw momentum slow down a bit in the second quarter, we are happy with the results. There were moments of uncertainty because of trade negotiations, nuclear programs, and Fed policy adjustments. Those news worth items caused some market volatility. Despite concerns, the markets have erased the negative results felt during the fourth quarter of 2018 for most of the major sectors. Energy was the exception. It has posted positive total returns this year but has not yet erased its result of 2018. Information Technology and Consumer Discretionary stocks have led with results exceeding 20% during the first half of 2019.

Aggregate bond total returns, growth plus income, have been positive for 2019, but the yield on treasury bonds has decreased. Talks of a halt on interest rate hikes, and potentially a decrease in rates, are driving down Treasury yields. We expect the corporate bonds within the US Aggregate Bond Index to continue to be the greatest contributor to return in the near term. Investment grade corporate bonds, represented by Bloomberg Barclays US Corporate Bond Index, has had a YTD return of 9.85% and QTD return of 4.48% while Treasury bonds, represented by Bloomberg Barclays US Treasury 3-10 yr Index, has had a YTD return of 5.11% and QTD return of 3.02%.

If your situation has changed or you would just like to see how your accounts are doing, call us to schedule an appointment to review your portfolio, 281-395-8300.

Total returns of the indices mentioned are provided by Morningstar. Neither Morningstar nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web site, including, but not limited to Information originated by Morningstar, licensed by Morningstar from Information Providers, or gathered by Morningstar from publicly available sources. There may be delays, omissions, or inaccuracies in the Information. Past returns are no indication of future results.

Saving for College

529 Savings Plans

One of the primary ways we suggest saving for college is through a 529 Plan. Oh, and they aren't just for kids! That's right, you too can have a 529 Plan if you are planning to go back to school in the future to further your career or even change your career. Let's cover the basics of 529 Plans:

1. Also known as a qualified tuition plan, where after taxed money can be deposited and grown free of taxes when used for qualified education expenses.

2. Qualified education expenses include: tuition, fees, room and board, books, and computer technology and equipment.

3. Expenses may be related to primary or secondary school (max $10,000 per year), accredited two and four year colleges or universities, vocational school, and eligible foreign schools.

4. What if your kids don't use the money? You'll pay income tax and a 10% penalty on the gains within the account. The penalty is waived if a scholarship is awarded. To avoid paying taxes and penalties you can change the designated beneficiary of the account to someone who will be able to use the funds for qualified expenses.

5. Anyone can contribute to a person's 529 Plan account but you should be aware of gift tax limits.

6. There was over $288 billion in 529 Savings Plans at the end of 2018.

The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. There may be maximum contribution limits for a state sponsored 529 Plan. Please see specific rules for the state plan you are interested in. Deductions for education expenses are subject to IRS rules and change from time to time.


Our Take Aways this Quarter

We believe the trade negotiations are a big deal to the market and our future economy... BUT WHATABURGER SOLD, THE PEACH TRUCK WAS IN TOWN, AND IT WAS CODY'S BIRTHDAY!!! We know, we know, we heard that Whataburger promised things wouldn't change but we sure hope they keep their word. ;)

Did you get some of those sweet Georgia peaches from The Peach Truck? They made a quick stop in Katy and we grabbed a few cases. They were out of of this world! Perfect for the beginning of summer!

We want to give Small Cakes Cupcakery and Creamery a special thank you for their amazing cupcakes to celebrate Cody's birthday! They were amazing!

Other important news we heard about included that our Katy ISD teachers are getting a raise! Yahoo! And Christ Clinic is expanding their Kingsland location. Consider donating to Christ Clinic because they serve so many who need quality healthcare.


Happy 4th of July!!

In July we are highlighting women and investing. Watch our video for some things women need to think about. Call us to talk more about your retirement strategy.

August 14, 2019 School Starts for Katy ISD

September 2, 2019 Labor Day

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Cox Global Associates, Inc. || 1260 Pin Oak Road, Suite 204 || Katy, TX 77494 || 281.395.8300 https://www.coxglobalassociates.com/ || info@coxglobalassociates.com

Securities and Advisory Services are offered through Geneos Wealth Management, Inc. FINRA, SIPC. Investment advisory services also offered through Cox Global Associates, Inc., A Registered Investment Advisor.

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