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Featured Advisor

Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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Tax Increases Would Have Biggest Impact on 40-Somethings

Investors in their 40s appear most sensitive to the effects of anticipated tax increases. Let’s take a look at how they’d cope.

| BY Adriana Reyneri

Investors in their 40s – already struggling to save for retirement - appear more sensitive to the effects of anticipated tax increases than their younger and older peers, according to Millionaire Corner survey of 1,195 individuals from a range of age and wealth levels conducted in November.

More than 70 percent of investors in their 40s indicate they would cut back on spending if faced with tax increases, according to the latest Millionaire Corner survey, which finds that tax hikes are less likely to affect the budgets of younger and older households. Roughly 54 percent of investors ages 40 and younger would cut spending in response to a tax increase, as would 59 percent of investors ages 51 through 60.

Tax hikes would put a further squeeze on 40-something investors, who report the most difficulty achieving their retirement goals. More than 54 percent of investors in their 40s indicate that they’re not saving enough for retirement, a sentiment shared by 52 percent of investors ages 40 and younger, and 34 percent of investors ages 51 to 60.

What’s keeping these investors from saving for retirement? Declining income is the key obstacle for investors in their 40s. More than half (52 percent) cite lower income as a deterrent to saving for retirement. Less than half of investors ages 40 and younger (32 percent) cite declining income as an obstacle, as do 50 percent of investors ages 51 to 60. Job loss also appears to be hitting hardest at investors in their 40s. More than one-fourth (27 percent) say they are unable to save for retirement because of job loss, compared to 18 percent of younger investors and 21 percent of older investors. College costs also constrain their ability to save for retirement, a factor cited by 28 percent of investors in their 40s.

What other strategies would already-stressed 40-somethings use to cope with rising taxes? About one-fourth would boost their savings in response to tax increases and 21 percent would look for tax-advantaged investment opportunities. Twelve percent would dip into their savings, while 11 percent would donate to charity and 10 percent would reallocate their assets.

Younger investors are more likely to save as a strategy to cope with tax increases. More than one-third (36 percent) indicate they will increase their savings. Investors in their 50s are more likely to look for tax-advantaged investment opportunities, a strategy cited by 32 percent of members of the baby boomer generation.

The vast majority of investors anticipate tax increases, but the share is slightly smaller among investors ages 40 and younger (82 percent) compared to investors in their 40s and 50s (87 percent).