Review of Market in 2014
It has been another decent year for the market. The overall US stock market appreciated 10.51%, international stocks lost 7.71% and bonds eked out a 2.90% gain. Since the bottom of the market in March 2009, the total US stock market has gone up 214.5%1. All returns include dividends and appreciation.

As usual, the predictions were all wrong for 2014. The stock market was supposed to go down, as well as bonds and oil was supposed to end the year around $95/barrel compared to the recent price of $53/barrel.

Active fund managers are still on a long underperformance streak. In the 5 years ending in June 2014, 74% of active domestic stock fund managers underperformed the indices. It still shocks and amazes me to see the fund and asset management fees that individuals are paying in their actively managed portfolios. These fees certainly add up and people continue to pay up for this very expensive underperformance.

New Retirement Plan Limits & Social Security COLA for 2015
In 2015, the employee contribution limits for 401K’s, 403b’s, 457b’s and the Federal Thrift Savings plan goes up to $18,000. Employees 50 and over will be able to contribute $24,000. Limits for IRA’s remain unchanged at $5,500 ($6,500 for those 50 and over).

The adjusted gross income (AGI) phase-out for taxpayers making contributions to a Roth IRA starts at $183,000 for married couples filing jointly and $116,000 for singles and heads of household.

Social Security recipients will receive a cost of living allowance (COLA) of 1.7% in 2015.

The Senior Citizens League conducted a national survey of Social Security recipients. Respondents said that in 2014 their benefits had risen by less than $19/month, while their monthly expenses were up more than $119 (expenses increased 5.26 times the Social Security COLA). Scary statistics when we hear that debates are going on to reduce benefits even more, due to insolvency issues. Another study by the Senior Citizens League estimates Social Security beneficiaries have lost nearly 33% of buying power since 2000.

Longer Life Expectancies
Recently the Society of Actuaries came out with new longevity data showing gains in lifespan for Americans are not evenly distributed. The results show that, along with gender, higher income white-collar workers outlive blue-collar workers. The following table illustrates the life expectancies for 65 year old healthy individuals. Remember, that this information reflects averages, so 50% of individuals in a category are expected to outlive the ages shown, and 50% die before attaining the illustrated age.


Life Expectancy Gains
These results could have consequences with companies that offer pensions, which may start making more offers of lump sum payouts or having to increase funding to keep their pensions solvent.

Routine NM Securities Division Audit
In November, it was time again after 4 years for SMFP’s audit by the regulator, the NM Securities Division. The audit went well and we are good to go till the next one, which may be in 2 years’ time. I was asked to add some additional disclosure language to my website, which gave me an excuse to have the site rewritten. The update is in progress, and hopefully it will be up and running early this year.

Personal Notes
The Tour de Acoma 50 mile bike ride discussed in the last newsletter piqued our interest in the area, so in October we returned to the Zuni Mountains and stayed at the quiet and beautiful Cimarron Rose B&B. The breakfasts were to die for, and we spent the days working them off exploring the amazing El Malpais National Monument larva flows and the El Moro National Monument. It was surprising to learn the youngest lava flows only ended about 3,000 years ago and the oldest started 188,000 years ago. We rode the 54 mile Day of the Tread event again, buzzing along in bee costumes.

Contact me for a review meeting if needed. Please plan early for setting up an appointment. Feel free to pass this newsletter on to whoever may be interested.

1 Vanguard Total Stock Market ETF (VTI), Vanguard Total International Stock ETF (VEXUS) & Vanguard Total Bond Market ETF (BND) from