ILMA Compoundings June 2017 - 31

The Potential of a Political Economy
Even though we are six months past the U.S. presidential election,
politics are still at the forefront of most people's minds. Perhaps that
is understandable given how drawn out, contentious and unusual
our last election cycle was. However, when it comes to investing,
getting worked up over politics is counterproductive. Remember
that you cannot buy shares of GOP or DNC. Instead, you invest in
a diversified portfolio that is designed to weather multiple market
environments. Listen to data rather than politically motivated hyperbole; indicators currently point in a positive direction.
This cycle's political rancor has spread to affect Americans' everyday lives. A January poll from the American Psychological Association
found that American stress levels were the highest in the 10-year history of the poll - the leading cause being the political climate. That's
right - Americans are even more stressed over the election and its
aftermath than they were at the depth of the Great Recession.   
Politics lends itself to irrationality and emotion, while good
investing requires discipline and prudence. In a 2003 study, Yale
Professor Geoffrey Cohen showed that Democratic voters supported Republican proposals when they were attributed to fellow
Democrats more than they supported Democratic proposals
might be well positioned to use your
other assets to fund those extra wants.
On the other hand, if your predictable
sources are not sufficient to cover your
fixed needs, you'll need to think carefully about how to tap your retirement
savings plan assets, as they will be a
necessary component of your income.
UNDERSTAND YOUR SAVINGS
PLAN OPTIONS
A key in determining how to tap your
retirement plan assets is to understand
the options available to you. According to the Government Accountability
Office (GAO), only about one-third of
401(k) plans offer withdrawal options,
such as installment payments, systematic withdrawals and managed payout
funds.² And only about a quarter offer
annuities, which are insurance contracts that provide guaranteed income
for a stated amount of time (typically
over a set number of years or for the
life expectancy of the participant or
the participant and spouse).³

attributed to Republicans, and vice versa. Clearly, this is not a
rational way to evaluate policies. Imagine evaluating investment
options the same way; it would be a disaster.
Similarly, the University of Michigan's consumer sentiment
survey recently showed that Republicans are expecting the best
economy in the 65-year history of the survey, while Democrats are
expecting an economy as bad as the worst of the 2008 financial
crisis. These outlooks are driven by emotional responses to politics rather than dispassionate analysis. In reality, the truth is likely
somewhere in the middle. The most likely scenario, in my view, is
that the economy continues on its course of modest growth that
has been underway for much of the last eight years. Many surveys
show renewed optimism among consumers and small business,
but that has not yet been reflected in the hard data.
It is also useful to look at the technical picture of the market,
i.e., the chart. The chart reflects what is, not what we fear might
be. The chart of the S&P 500 remains in a positive trend, with
well-defined support levels only a few percent below current
prices. Additionally, analysts expect first quarter earnings growth
to be up 8.9 percent compared to last year.

Plans may allow you to leave the
money alone or require you to take a
lump-sum distribution. You may also
choose to roll over the assets to an IRA,
which might offer a variety of income
and investment opportunities, including
the purchase of annuity contracts. If
you choose to work part-time in retirement, you may be allowed to roll your
assets into the new employer's plan.
Determining the right way to tap
your assets can be challenging and
should take into account a number of
factors. These include your tax situation, whether you have other assets
you'll use for income and your desire
to leave assets to heirs. A financial
professional can help you understand
your options.
1. Current law requires married couples to
choose a joint-and-survivor annuity unless the
spouse waives those rights.
2. "401(k) Plans: DOL Could Take Steps to
Improve Retirement Income Options for Plan
Participants," GAO Report to Congressional
Requesters, August 2016

3. Generally, annuity contracts have fees and
expenses, limitations, exclusions, holding
periods, termination provisions and terms for
keeping the annuity in force. Most annuities
have surrender charges that are assessed if
the contract owner surrenders the annuity.
Qualified annuities are typically purchased with
pre-tax money, so withdrawals are fully taxable
as ordinary income, and withdrawals before
age 59½ may be subject to a 10 percent penalty
tax. Any guarantees are contingent on the
claims-paying ability and financial strength of
the issuing insurance company. It is important
to understand that purchasing an annuity in
an IRA or an employer-sponsored retirement
plan provides no additional tax benefits other
than those available through the tax-deferred
retirement plan.

Carter is executive vice
president-wealth management
for CSG Capital Partners of
Janney Montgomery Scott LLC
and is investment adviser to ILMA. He may be
reached at 202-955-4307 or
mcarter@janney.com. Janney Montgomery
Scott LLC is ILMA's investment firm.

31



ILMA Compoundings June 2017

Table of Contents for the Digital Edition of ILMA Compoundings June 2017

Letter From the President
Letter From the CEO
Inside ILMA
What's Coming Up
Industry Rundown
In the Know
International Insight
Market Report
Lubricant Manufacturers Heed New Safety Regulations
Finding a Balance
Making the Most of Your Data Management
Business Hub
Counsel Compound
Washington Landscape
In Network
Member Connections
Cross Connections
Portrait
ILMA Compoundings June 2017 - Cover1
ILMA Compoundings June 2017 - Cover2
ILMA Compoundings June 2017 - 1
ILMA Compoundings June 2017 - 2
ILMA Compoundings June 2017 - Letter From the President
ILMA Compoundings June 2017 - 4
ILMA Compoundings June 2017 - Letter From the CEO
ILMA Compoundings June 2017 - Inside ILMA
ILMA Compoundings June 2017 - 7
ILMA Compoundings June 2017 - What's Coming Up
ILMA Compoundings June 2017 - 9
ILMA Compoundings June 2017 - Industry Rundown
ILMA Compoundings June 2017 - In the Know
ILMA Compoundings June 2017 - International Insight
ILMA Compoundings June 2017 - 13
ILMA Compoundings June 2017 - Market Report
ILMA Compoundings June 2017 - 15
ILMA Compoundings June 2017 - Lubricant Manufacturers Heed New Safety Regulations
ILMA Compoundings June 2017 - 17
ILMA Compoundings June 2017 - 18
ILMA Compoundings June 2017 - 19
ILMA Compoundings June 2017 - 20
ILMA Compoundings June 2017 - 21
ILMA Compoundings June 2017 - Finding a Balance
ILMA Compoundings June 2017 - 23
ILMA Compoundings June 2017 - 24
ILMA Compoundings June 2017 - 25
ILMA Compoundings June 2017 - Making the Most of Your Data Management
ILMA Compoundings June 2017 - 27
ILMA Compoundings June 2017 - 28
ILMA Compoundings June 2017 - 29
ILMA Compoundings June 2017 - Business Hub
ILMA Compoundings June 2017 - 31
ILMA Compoundings June 2017 - Counsel Compound
ILMA Compoundings June 2017 - 33
ILMA Compoundings June 2017 - Washington Landscape
ILMA Compoundings June 2017 - 35
ILMA Compoundings June 2017 - 36
ILMA Compoundings June 2017 - 37
ILMA Compoundings June 2017 - Member Connections
ILMA Compoundings June 2017 - 39
ILMA Compoundings June 2017 - 40
ILMA Compoundings June 2017 - Cross Connections
ILMA Compoundings June 2017 - 42
ILMA Compoundings June 2017 - 43
ILMA Compoundings June 2017 - Portrait
ILMA Compoundings June 2017 - Cover3
ILMA Compoundings June 2017 - Cover4
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