Arrowhead Wealth Partners Newsletter - August 2023

Arrowhead Wealth Partners Newsletter - August 2023

August 14, 2023

Over Halfway Home!

It is hard to believe we are already over the halfway mark for 2023. We hope you are having a great year and finding ways to stay cool during this hot summer!

In this newsletter, we will discuss some of the important differences between a Roth and Traditional IRA, and how they can help with our retirement planning conversations based on your personal situation.

The Arrowhead Team

Roth vs. Traditional IRA

Both Roth and Traditional retirement accounts offer significant benefits, but the choice between them depends on your individual financial situation, goals, and tax considerations. Here are some reasons why you might consider contributing to a Roth retirement account instead of a traditional retirement account:

  1. Tax-Free Withdrawals: The primary advantage of a Roth account is that qualified withdrawals are tax-free. This means that when you retire and start withdrawing funds, you won't owe any federal income taxes on the earnings and contributions you've made over the years. This can be a huge benefit, especially if you anticipate being in a higher tax bracket during retirement.
  2. Tax Diversification: By having both Roth and traditional retirement accounts, you create tax diversification in your retirement savings. This can be advantageous during retirement because you have the flexibility to manage your tax liability. You can choose whether to withdraw from taxable, tax-deferred (traditional), or tax-free (Roth) accounts depending on your financial needs and the tax laws in effect at that time.
  3. No Required Minimum Distributions (RMDs): Traditional retirement accounts require you to start taking required minimum distributions (RMDs) once you reach age 73. Roth accounts do not have this requirement. This can be beneficial if you don't need the money from your Roth account during retirement and want it to continue growing tax-free for as long as possible.
  4. Flexibility and Access to Contributions: Unlike traditional retirement accounts, Roth contributions (not earnings) can be withdrawn at any time without penalty or tax, even before retirement age. While it's best to leave the money in your Roth account for retirement, this feature can serve as an emergency fund or provide added financial flexibility.
  5. Estate Planning Benefits: Roth accounts can be a valuable estate planning tool. Since Roth IRAs do not have RMDs during your lifetime, you can leave the account untouched for a longer time, potentially passing on a more substantial tax-free inheritance to your beneficiaries.

Of course, there are reasons why someone might choose a traditional retirement account, such as the potential for immediate tax deductions for contributions, particularly if you expect to be in a higher tax bracket during your working years than during retirement.

It's important to consider your current and projected future income, tax situation, and long-term financial goals when making this decision. We certainly wouldn’t want you to make this decision on your own. If you have questions or would like to discuss how contributing to a Roth IRA might make sense for your financial plan, please do not hesitate to reach out and we are happy to discuss!

LPL Midyear Outlook

In case you missed it in our previous email, the LPL Research Team Midyear Outlook can be accessed using the link below.

LPL Financial 2023 Mid-Year Outlook-The Path Toward Stability. 

Below are a few sections we would highlight.

Page Three Figure 1.

This section discusses the outlook for growth of five key economies across the world. You will notice that economic growth is expected across the board for 2023. This is being supported by a healthy first half of the year.

Page Six Figure 5.

This section discusses support for equities for the remaining of this year and 2024. You will notice there is potential, but it does not appear to be an easy road. Volatility in equity markets is to be expected, especially during a Mid-Term Election year.

Page Ten Figure 9.

We continue to decipher what the Federal Reserve is planning with Monetary policy for the months ahead. We do anticipate that we are closer to an end of rate hikes than when we started. This figure illustrates the potential opportunity for bonds created by a Federal Reserve rate pause.

Page Fourteen Figure 12.

We have recently been receiving more and more questions about alternative currencies that could potentially complete for the U.S. Dollar’s global dominance. Although the U.S. Dollar has declined from recent all time highs late last year it is still expected to reign supreme.

We Want Your Input!

In the coming weeks, we plan to send a survey to get some feedback from you. We would like to get a better understanding of how you feel about our communications moving forward! Please look for an email from us on a Monday in the coming weeks and help us out by responding to the survey. Thanks in advance!




Arrowhead Wealth Partners – Q3 2023 Portfolio Update

In the video below, Cody goes through some of the investment changes we have recently made and key areas of focus we have currently for the 3rd Quarter of 2023.

Arrowhead Wealth Partners - 3Q Portfolio Update´╗┐

´╗┐Arrowhead Wealth Partners was founded to serve the needs of ordinary people who want well-regarded professionals to manage their investments and guide them towards successfully meeting their financial goals.