considering need vs want

Clients should consider need vs. want when it comes to future income distributions.

During the 2008 financial crisis as well as the collapse of oil prices in 2015-16 we found that those clients that could reduce or suspend their monthly income distributions faired far better during each recovery.

Currently we have both the oil and the financial markets experiencing crises simultaneously. This is forcing a number of yielding securities to husband cash by suspending or reducing dividends. This will reduce the available distributable income at least for the interim. The reduction of dividends can have many clients on fixed monthly distributions unknowingly using more principal as part of their monthling income. Adjusting distributions to income from dividends and interest only will help to preserve portfolio principal and future income.

Those clients that are taking maximum distributions (distributing all net portfolio income) should review with their advisor as to what would be a new appropriate rate of withdrawal if their circumstances will allow.

RMD Reprieve

As we stated in our CARE Act Summary on 3/28/20, investors have a reprieve from having to take their Required Minimum Distributions (RMDs) in 2020. If you have been taking your RMD but have not needed these distributions we would suggest terminating them for 2020. If you have already taken your 2020 RMD you have 60 days from the time you took the distribution to return it to the appropriate account without penalty.

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