CFS, Inc.Michael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

June 2018

Investing to Save Time Boosts Happiness Returns

Marriage and Money: Taking a Team Approach toRetirement

What is the employment situation report, and why isit important to investors?

What is gross domestic product, and why is itimportant to investors?

CFS Advisory NewsletterPlanning Your Financial FutureMid-Year Planning: Tax Changes to Factor In

See disclaimer on final page

The Tax Cuts and Jobs Act,passed in December of lastyear, fundamentallychanges the federal taxlandscape for bothindividuals and businesses.Many of the provisions in thelegislation are permanent,others (including most of the

tax cuts that apply to individuals) expire at theend of 2025. Here are some of the significantchanges you should factor in to any mid-yeartax planning. You should also considerreviewing your situation with a tax professional.

New lower marginal income tax ratesIn 2018, there remain seven marginal incometax brackets, but most of the rates havedropped from last year. The new rates are 10%,12%, 22%, 24%, 32%, 35%, and 37%. Most,but not all, will benefit to some degree from thelower rates. For example, all other things beingequal, those filing as single with taxableincomes between approximately $157,000 and$400,000 may actually end up paying tax at ahigher top marginal rate than they would havelast year. Consider how the new rates will affectyou based on your filing status and estimatedtaxable income.

Higher standard deduction amountsStandard deduction amounts are nearly doublewhat they were last year, but personalexemptions (the amount, $4,050 in 2017, thatyou could deduct for yourself, and potentiallyyour spouse and your dependents) are nolonger available. Additional standard deductionamounts allowed for the elderly and the blindremain available for those who qualify. If you'resingle or married without children, the increasein the standard deduction more than makes upfor the loss of personal exemption deductions.If you're a family of four or more, though, themath doesn't work out in your favor.

Itemized deductions — good and badThe overall limit on itemized deductions thatapplied to higher-income taxpayers is repealed,the income threshold for deducting medicalexpenses is reduced for 2018, and the income

limitations on charitable deductions are eased.That's the good news. The bad news is that thededuction for personal casualty and theft lossesis eliminated, except for casualty lossessuffered in a federal disaster area, andmiscellaneous itemized deductions that wouldbe subject to the 2% AGI threshold, includingtax-preparation expenses and unreimbursedemployee business expenses, are no longerdeductible. Other deductions affected include:

• State and local taxes — Individuals are onlyable to claim an itemized deduction of up to$10,000 ($5,000 if married filing a separatereturn) for state and local property taxes andstate and local income taxes (or sales taxesin lieu of income).

• Home mortgage interest deduction —Individuals can deduct mortgage interest onno more than $750,000 ($375,000 for marriedindividuals filing separately) of qualifyingmortgage debt. For mortgage debt incurredprior to December 16, 2017, the prior $1million limit will continue to apply. Nodeduction is allowed for interest on homeequity loans or lines of credit unless the debtis used to buy, build or substantially improvea principal residence or a second home.

Other important changes• Child tax credit — The credit has been

doubled to $2,000 per qualifying child,refundability has been expanded, and thecredit will now be available to many whodidn't qualify in the past based on income;there's also a new nonrefundable $500 creditfor dependents who aren't qualified childrenfor purposes of the credit.

• Alternative minimum tax (AMT) — The TaxCuts and Jobs Act significantly narrowed thereach of the AMT by increasing AMTexemption amounts and dramaticallyincreasing the income threshold at which theexemptions begin to phase out.

• Roth conversion recharacterizations — In apermanent change that starts this year, Rothconversions can't be "undone" byrecharacterizing the conversion as atraditional IRA contribution by the return duedate.

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Investing to Save Time Boosts Happiness ReturnsThe more money you make, the more valuableyou perceive your time to be — and the moretime-strapped you may feel, according toUniversity of British Columbia psychologyprofessor Elizabeth Dunn.1 So wouldn't it standto reason that if you use some of yourhard-earned money to buy yourself more time —for example, by paying someone to clean yourhouse or mow your lawn — you might achieve agreater level of happiness? Indeed, that wasthe primary finding in a series of studies byProfessor Dunn and other researcherspublished in the Proceedings of the NationalAcademy of Sciences (PNAS).2

The discoveryThe study's authors surveyed 6,000 individualsat diverse income levels in multiple countries,including the United States, Canada, theNetherlands, and Denmark. The surveysqueried participants about whether they spentmoney on a monthly basis to hire others to takecare of unpleasant or time-consuming dailytasks or chores — such as cleaning, yard work,cooking, and errand-running — and if so, howmuch they spent. Respondents were alsoasked to rate their "satisfaction with life" andreport demographic information, such as theirincome level and whether they were marriedand had children.

Researchers found that across all nationalsamples, 28.2% of respondents spent anaverage of about $148 per month to outsourcedisliked tasks, while in the United States, 50%of respondents spent an average of $80 to $99on services that save time. Across all studies,those who spent money to outsource dislikedtasks and/or save time had a stronger lifesatisfaction rating. Findings were consistentacross income spectrums; in fact, in the UnitedStates, researchers found a stronger correlationamong the less-affluent respondents. Theauthors noted, however, that their studies didnot include enough people at the lowest end ofthe income spectrum to attribute similar findingsto this group.

Of course, correlation does not necessarilyindicate causality, so the researchers designeda follow-up experiment to further test theirhypothesis.

In this experiment, researchers gave a group of40 adults $80 each to spend over the course oftwo weekends. During the first weekend, theywere to spend $40 on something that wouldsave them time, such as ordering groceriesonline and having them delivered. On thesecond weekend, they were directed to spend$40 on a nice material purchase, such asclothes, board games, or a bottle of wine. On

average, those who spent money to save timereported better moods at the end of the daythan those who purchased material goods. Andaccording to the researchers, over time, theeffect of regular mood boosts can add up togreater overall satisfaction with life.

In a third study, researchers asked respondentshow they would spend an extra $40. Just 2%indicated they would use the unexpected bonusto invest in time-saving services.

Perhaps most surprising of all the findings?Researchers polled 800 millionaires from theNetherlands about whether they spent moneyto save time. Despite the fact that theseindividuals could readily afford to hire others totake care of time-consuming tasks, only abouthalf of them reported doing so on a monthlybasis. Researchers surmise that the reasonmight be because such individuals feel guilty ordon't want to be perceived as lazy foroutsourcing chores they can easily dothemselves.

The lesson"If you have a lot of money and a lot of nicestuff, but you're spending your time doing thingsthat you dislike, then your minute-to-minutehappiness and overall happiness is likely to bepretty low," said Dunn in an interview about theresearch.3 In the PNAS report, the study'sauthors contend that this may be especially truefor women:

"Within many cultures, women may feelobligated to complete household tasksthemselves, working a 'second-shift' at home,even when they can afford to pay someone tohelp. In recent decades, women have madegains, such as improved access to education,but their life satisfaction has declined;increasing uptake of time-saving services mayprovide a pathway toward reducing the harmfuleffects of women's second shift."

The bottom line? If you can afford it, don't shyaway from spending money to save time. Doingso is an investment that provides immeasurablereturns in the form of overall well-being.1 "What Is Your Time Really Worth?" Elizabeth Dunn,TEDx Colorado Springs, December 1, 2014

2 "Buying Time Promotes Happiness," PNAS, July24, 2017

3 "A Psychology Expert Says Spending Your Moneyon This Can Boost Your Happiness," CNBC,November 10, 2017

"Time famine" is the feelingof being overwhelmed bythe demands of work andlife. Also known as timescarcity and time stress,this pressure is a "criticalfactor" in the rising rates ofobesity.

Source: "Buying TimePromotes Happiness,"PNAS, July 24, 2017

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Marriage and Money: Taking a Team Approach to RetirementNow that it's fairly common for families to havetwo wage earners, many husbands and wivesare accumulating assets in separateemployer-sponsored retirement accounts. In2018, the maximum employee contribution to a401(k) or 403(b) plan is $18,500 ($24,500 forthose age 50 and older), and employers oftenmatch contributions up to a set percentage ofsalary.

But even when most of a married couple'sretirement assets reside in different accounts,it's still possible to craft a unified retirementstrategy. To make it work, open communicationand teamwork are especially important when itcomes to saving and investing for retirement.

Retirement for twoTax-deferred retirement accounts such as401(k)s, 403(b)s, and IRAs can only be held inone person's name, although a spouse istypically listed as the beneficiary who wouldautomatically inherit the account upon theoriginal owner's death. Taxable investmentaccounts, on the other hand, may be heldjointly.

Owning and managing separate portfoliosallows each spouse to choose investmentsbased on his or her individual risk tolerance.Some couples may prefer to maintain a highlevel of independence for this reason,especially if one spouse is more comfortablewith market volatility than the other.

However, sharing plan information andcoordinating investments might help somefamilies build more wealth over time. Forexample, one spouse's workplace plan mayoffer a broader selection of investment options,or the offerings in one plan might be somewhatlimited. With a joint strategy, both spousesagree on an appropriate asset allocation fortheir combined savings, and their contributionsare invested in a way that takes advantage ofeach plan's strengths while avoiding anyweaknesses.

Asset allocation is a method to help manageinvestment risk; it does not guarantee a profit orprotect against loss.

Spousal IRA opportunityIt can be difficult for a stay-at-home parent whois taking time out of the workforce, or anyone

who isn't an active participant in anemployer-sponsored plan, to keep his or herretirement savings on track. Fortunately, aworking spouse can contribute up to $5,500 tohis or her own IRA and up to $5,500 more to aspouse's IRA (in 2018), as long as the couple'scombined income exceeds both contributionsand they file a joint tax return. An additional$1,000 catch-up contribution can be made foreach spouse who is age 50 or older. All otherIRA eligibility rules must be met.

Contributing to the IRA of a nonworking spouseoffers married couples a chance to double upon retirement savings and might also provide alarger tax deduction than contributing to asingle IRA. For married couples filing jointly, theability to deduct contributions to the IRA of anactive participant in an employer-sponsoredplan is phased out if their modified adjustedgross income (MAGI) is between $101,000 and$121,000 (in 2018). There are higher phaseoutlimits when the contribution is being made tothe IRA of a nonparticipating spouse: MAGIbetween $189,000 and $199,000 (in 2018).

Thus, some participants in workplace planswho earn too much to deduct an IRAcontribution for themselves may be able tomake a deductible IRA contribution to theaccount of a nonparticipating spouse. You canmake IRA contributions for the 2018 tax year upuntil April 15, 2019.

Withdrawals from tax-deferred retirement plansare taxed as ordinary income and may besubject to a 10% federal income tax penalty ifwithdrawn prior to age 59½, with certainexceptions as outlined by the IRS.

Open communication andteamwork are especiallyimportant when it comes tosaving and investing forretirement.

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CFS, Inc.Michael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019

IMPORTANT DISCLOSURES

Cooper Financial Services, Inc. doesnot provide investment, tax, or legaladvice. The information presentedhere is not specific to any individual'spersonal circumstances. Securitiesoffered through our affiliateBroker/Dealer, CFS Securities, Inc.,Member FINRA & SIPC.

To the extent that this materialconcerns tax matters, it is notintended or written to be used, andcannot be used, by a taxpayer for thepurpose of avoiding penalties thatmay be imposed by law. Eachtaxpayer should seek independentadvice from a tax professional basedon his or her individualcircumstances.

These materials are provided forgeneral information and educationalpurposes based upon publiclyavailable information from sourcesbelieved to be reliable—we cannotassure the accuracy or completenessof these materials. The information inthese materials may change at anytime and without notice.

What is gross domestic product, and why is it importantto investors?GDP, or gross domesticproduct, measures the valueof goods and servicesproduced by a nation's

economy less the value of goods and servicesused in production. In essence, GDP is a broadmeasure of the nation's overall economicactivity and serves as a gauge of the country'seconomic health. Countries with the largestGDP are the United States, China, Japan,Germany, and the United Kingdom.

GDP generally provides economic informationon a quarterly basis and is calculated for mostof the world's countries, allowing forcomparisons among various economies.Important information that can be gleaned fromGDP includes:

• A measure of the prices paid for goods andservices purchased by, or on behalf of,consumers (personal consumptionexpenditures), including durable goods (suchas cars and appliances), nondurable goods(food and clothing), and services(transportation, education, and banking)

• Personal (pre-tax) and disposable (after-tax)income and personal savings

• Residential (purchases of private housing)and nonresidential investment (purchases ofboth nonresidential structures and businessequipment and software, as well as changesin inventories)

• Net exports (the sum of exports less imports)• Government spending on goods and services

GDP can offer valuable information toinvestors, including whether the economy isexpanding or contracting, trends in consumerspending, the status of residential and businessinvesting, and whether prices for goods andservices are rising or falling. A strong economyis usually good for corporations and theirprofits, which may boost stock prices.Increasing prices for goods and services mayindicate advancing inflation, which can impactbond prices and yields. In short, GDP providesa snapshot of the strength of the economy overa specific period and can play a role whenmaking financial decisions. All investinginvolves risk, including the possible loss ofprincipal, and there is no guarantee that anyinvestment strategy will be successful.

What is the employment situation report, and why is itimportant to investors?Each month, the Bureau ofLabor Statistics publishes theEmployment SituationSummary report based on

information from the prior month. The data forthe report is derived primarily from two sources:a survey of approximately 60,000 households,or about 110,000 individuals (householdsurvey), and an establishment survey of over651,000 worksites.

Results from each survey provide informationabout the labor sector, including the:

• Total number of employed and unemployedpeople

• Unemployment rate (the percentage of thelabor force that is unemployed)

• Number of people working full- or part-time inU.S. businesses or for the government

• Average number of hours worked per weekby nonfarm workers

• Average hourly and weekly earnings for allnonfarm employees

According to the Bureau of Labor Statistics,when workers are unemployed, they, their

families, and the country as a whole can benegatively impacted. Workers and their familieslose wages, and the country loses the goods orservices that could have been produced. Inaddition, the purchasing power of theseworkers is lost, which can lead tounemployment for yet other workers.

Investors pay particular attention to theinformation provided in this report. For instance,a decreasing unemployment rate may indicatean expanding economy and potentially risinginterest rates. In this scenario, stock valuesmay rise with expanding corporate profits, whilebond prices may fall for fear of rising interestrates. Advancing wages may also be a sign ofhigher inflation and interest rates, as well asgreater economic productivity.

Generally, the Employment Situation Summaryreport provides statistics and data on thedirection of wage and employment trends —information that can be invaluable to investors.

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