One Charles Private Wealth99 Derby Street Suite 101Hingham, MA 02043617-337-4206TF: 844-819-6279info@onecharlespw.comwww.onecharlespw.com

OCPW Monthly Newsletter - October 2016

Earnings Call: A Closer Look at Financial Reports

Ten Year-End Tax Tips for 2016

Top Financial Concerns of Baby Boomers,Generation Xers, and Millennials

What are my health-care options if I retire early?

Earnings Call: A Closer Look at Financial Reports

See disclaimer on final page

The second quarter of2016 marked the fifthquarter in a row ofdeclining U.S. corporateearnings. Low oil pricesand a strong dollar werelargely to blame forlackluster financialresults.1

Publicly traded companies are required toreport quarterly financial results to regulatorsand shareholders. Earnings season is theoften-turbulent period when most companiesmust disclose their successes and failures.

An earnings surprise--whether profits come inabove or below the stock market'sexpectations--can have an immediate effect ona company's stock price, so it's easy tounderstand why executives may go to greatlengths to impress their investors. Earnings dorepresent a corporation's bottom line and aregenerally a key driver of the stock price overtime. Still, an earnings surprise may not be areliable indicator of a company's longer-termoutlook, partly because earnings figuresgenerally reflect past performance.

Earnings are just one factor to consider whenevaluating a company's outlook. Salesperformance, research and development, newproducts, consumer trends, and globaleconomic conditions can all affect futureresults.

Performance watchwordsA quarterly report typically includes unauditedfinancial statements, a discussion of thebusiness conditions that affected financialresults, and some guidance about how thecompany expects to perform in the followingquarters. Financial statements reveal thequarter's profit or net income, which must becalculated according to generally acceptedaccounting principles (GAAP). This typicallyinvolves subtracting operating expenses(including depreciation, taxes, and otherexpenses) from net income.

Earnings per share (EPS) represents theportion of total profit that applies to eachoutstanding share of company stock. EPS is

the figure that often makes headlines, becausethe financial media tend to focus on whethercompanies meet, beat, or fall short of theconsensus estimate of Wall Street analysts. Acompany can beat the market by losing lessmoney than expected, or can log billions inprofits and still disappoint investors who werecounting on more.

To help avoid surprises, many companies takesteps to manage the market's expectations. Forexample, they may issue profit warnings orrevise previous forecasts, prompting analysts toadjust their estimates accordingly. Companiesmay also be able to time certain businessmoves to help meet earnings targets.

Shaping perceptionIn addition to filing regulatory paperwork, manycompanies announce their results throughpress releases, conference calls, and/orwebinars so they can try to influence how theinformation is judged by investors, analysts,financial media, and the general public.

Pro-forma (or adjusted) earnings may presentan alternative view of financial performance byexcluding nonrecurring expenses such asrestructuring costs, interest payments, taxes,and other unique events. Although theSecurities and Exchange Commission has rulesgoverning pro-forma financial statements,companies still have a great deal of leeway tohighlight the positive and minimize the negativein these reports. There may be a vastdifference between pro-forma earnings andthose calculated according to GAAP.

The media hype surrounding earnings thatcome in stronger or weaker than expectedcould distract from other important details thatmay be included in a company's quarterlyreport. Understanding the reporting processmay help you ignore short-term market swingsand remain focused on your long-term investingstrategy.

Note: The return and principal value of stocksfluctuate with changes in market conditions.Shares, when sold, may be worth more or lessthan their original cost.1 FactSet, 2016

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Ten Year-End Tax Tips for 2016Here are 10 things to consider as you weighpotential tax moves between now and the endof the year.

1. Set aside time to planEffective planning requires that you have agood understanding of your current taxsituation, as well as a reasonable estimate ofhow your circumstances might change nextyear. There's a real opportunity for tax savingsif you'll be paying taxes at a lower rate in oneyear than in the other. However, the window formost tax-saving moves closes on December31, so don't procrastinate.

2. Defer income to next yearConsider opportunities to defer income to 2017,particularly if you think you may be in a lowertax bracket then. For example, you may be ableto defer a year-end bonus or delay thecollection of business debts, rents, andpayments for services. Doing so may enableyou to postpone payment of tax on the incomeuntil next year.

3. Accelerate deductionsYou might also look for opportunities toaccelerate deductions into the current tax year.If you itemize deductions, making payments fordeductible expenses such as medicalexpenses, qualifying interest, and state taxesbefore the end of the year, instead of payingthem in early 2017, could make a difference onyour 2016 return.

4. Factor in the AMTIf you're subject to the alternative minimum tax(AMT), traditional year-end maneuvers such asdeferring income and accelerating deductionscan have a negative effect. Essentially aseparate federal income tax system with itsown rates and rules, the AMT effectivelydisallows a number of itemized deductions. Forexample, if you're subject to the AMT in 2016,prepaying 2017 state and local taxes probablywon't help your 2016 tax situation, but couldhurt your 2017 bottom line. Taking the time todetermine whether you may be subject to theAMT before you make any year-end movescould help save you from making a costlymistake.

5. Bump up withholding to cover a taxshortfallIf it looks as though you're going to owe federalincome tax for the year, especially if you thinkyou may be subject to an estimated tax penalty,consider asking your employer (via Form W-4)to increase your withholding for the remainderof the year to cover the shortfall. The biggest

advantage in doing so is that withholding isconsidered as having been paid evenly throughthe year instead of when the dollars are actuallytaken from your paycheck. This strategy canalso be used to make up for low or missingquarterly estimated tax payments.

6. Maximize retirement savingsDeductible contributions to a traditional IRA andpretax contributions to an employer-sponsoredretirement plan such as a 401(k) can reduceyour 2016 taxable income. If you haven'talready contributed up to the maximum amountallowed, consider doing so by year-end.

7. Take any required distributionsOnce you reach age 70½, you generally muststart taking required minimum distributions(RMDs) from traditional IRAs andemployer-sponsored retirement plans (anexception may apply if you're still working andparticipating in an employer-sponsored plan).Take any distributions by the date required--theend of the year for most individuals. Thepenalty for failing to do so is substantial: 50% ofany amount that you failed to distribute asrequired.

8. Weigh year-end investment movesYou shouldn't let tax considerations drive yourinvestment decisions. However, it's worthconsidering the tax implications of any year-endinvestment moves that you make. For example,if you have realized net capital gains fromselling securities at a profit, you might avoidbeing taxed on some or all of those gains byselling losing positions. Any losses over andabove the amount of your gains can be used tooffset up to $3,000 of ordinary income ($1,500if your filing status is married filing separately)or carried forward to reduce your taxes in futureyears.

9. Beware the net investment incometaxDon't forget to account for the 3.8% netinvestment income tax. This additional tax mayapply to some or all of your net investmentincome if your modified AGI exceeds $200,000($250,000 if married filing jointly, $125,000 ifmarried filing separately, $200,000 if head ofhousehold).

10. Get help if you need itThere's a lot to think about when it comes to taxplanning. That's why it often makes sense totalk to a tax professional who is able toevaluate your situation and help you determineif any year-end moves make sense for you.

Deductions may be limitedfor those with high incomes

If your adjusted gross income(AGI) is more than $259,400($311,300 if married filingjointly, $155,650 if marriedfiling separately, $285,350 iffiling as head of household),your personal and dependentexemptions may be phasedout, and your itemizeddeductions may be limited. Ifyour 2016 AGI puts you in thisrange, consider any potentiallimitation on itemizeddeductions as you weigh anymoves relating to timingdeductions.

IRA and retirement plancontributions

For 2016, you can contributeup to $18,000 to a 401(k) plan($24,000 if you're age 50 orolder) and up to $5,500 to atraditional or Roth IRA ($6,500if you're age 50 or older). Thewindow to make 2016contributions to an employerplan generally closes at theend of the year, while youtypically have until the due dateof your federal income taxreturn to make 2016 IRAcontributions.

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Top Financial Concerns of Baby Boomers, Generation Xers, andMillennialsMany differences exist among baby boomers,Generation Xers, and millennials. But one thingthat brings all three generations together is aconcern about their financial situations.

According to an April 2016 employee financialwellness survey, 38% of boomers, 46% of GenXers, and 51% of millennials said that financialmatters are the top cause of stress in theirlives. In fact, baby boomers (50%), Gen Xers(56%), and millennials (60%) share the sametop financial concern about not having enoughemergency savings for unexpected expenses.Following are additional financial concerns foreach group and some tips on how to addressthem.

Baby boomersBaby boomers cite retirement as a top concern,with 45% of the group saying they worry aboutnot being able to retire when they want to.Although 79% of the baby boomers said theyare currently saving for retirement, 52% of thesame group believe they will have to delayretirement. Health issues (30%) andhealth-care costs (38%) are some of thebiggest retirement concerns cited by babyboomers. As a result, many baby boomers(23%) are delaying retirement in order to retaintheir current health-care benefits.

Other reasons reported by baby boomers fordelaying retirement include not having enoughmoney saved to retire (48%), not wanting toretire (27%), and having too much debt (23%).

Generation XWhile baby boomers are concerned aboutretiring when they want to, Gen Xers are morespecifically worried about running out of moneyin retirement, with 50% of the surveyed groupciting this as a top concern. More Gen Xers(26%) than baby boomers (25%) or millennials(21%) have already withdrawn money held intheir retirement plans to pay for expenses otherthan retirement.

Besides worrying about retirement, 25% of GenXers are concerned about meeting monthlyexpenses. Forty-four percent find it difficult tomeet household expenses on time each month,and 53% consistently carry balances on theircredit cards.

Being laid off from work is another financialworry among Gen Xers, cited by 22% of thosesurveyed--more than cited by baby boomers ormillennials.

Gen Xers (26%) report that better job securitywould help them achieve future financial goals,which may help explain their worry about bothfuture (retirement) and current (living)expenses.

MillennialsUnlike baby boomers and Gen Xers who worryabout future financial needs, millennials seemto be more concerned about meeting currentexpenses. This concern has grownsubstantially for millennials, from 23% in thesame survey conducted in 2015 to 35% in2016. Millennials are also finding it increasinglydifficult to pay their household expenses ontime each month, with the number jumping from35% in 2015 to 46% in 2016.

Considering the amount of debt that millennialsowe, it's probably not surprising that they worryabout making ends meet. Specifically, 42% ofthe millennials surveyed have a student loan(s),with 79% saying their student loans have amoderate or significant impact on their ability tomeet other financial goals.

In an attempt to make ends meet, 30% ofmillennials say they use credit cards to pay formonthly necessities because they can't affordthem otherwise. But 40% of those whoconsistently carry balances find it difficult tomake their minimum credit-card payments ontime each month.

How each generation can address theirconcernsFocusing on some basics may help babyboomers, Gen Xers, and millennials addresstheir financial concerns. Creating and stickingto a budget can make it easier to understandexactly how much money is needed forfixed/discretionary expenses as well as helpkeep track of debt. A budget may also be auseful tool for learning how to prioritize andsave for financial goals, including adding to anemergency savings account and retirement.

At any age, trying to meet the competingdemands of both short- and long-term financialgoals can be frustrating. Fortunately, there isstill time for all three generations to develophealthy money management habits andimprove their finances.

In its survey,PricewaterhouseCoopersdefined the generations ashaving these birth years:baby boomers: 1943-1960;Generation X: 1961-1981;millennials: 1982-1997. TheU.S. Census Bureau andother groups often definethese generational rangesdifferently.

Source:

"Employee FinancialWellness Survey,"PricewaterhouseCoopersLLP, April 2016

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One Charles Private Wealth99 Derby Street Suite 101Hingham, MA 02043617-337-4206TF: 844-819-6279info@onecharlespw.comwww.onecharlespw.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016

IMPORTANT CONSUMER DISCLOSURES

This newsletter is provided by One CharlesPrivate Wealth for informational purposes andmay contain content that is not suitable for allinvestors. No portion of this commentaryshould be constructed as a solicitation to buyor an offer to sell a security, or the provisionof personalized investment, tax or legaladvice. Investing involves risk, including thepotential loss of principal, and there can beno assurance that any particular investmentor strategy will prove profitable. One CharlesPrivate Wealth is an investment advisorregistered with the U.S. Securities andExchange Commission ("SEC") thatmaintains a principal office in the State ofMassachusetts and additional informationabout the Firm is available on the SEC'sInvestment Adviser Public Disclosure websiteat www.adviserinfo.sec.gov.

Securities offered through Purshe KaplanSterling Investments, Member FINRA/SIPC.Headquartered at 18 Corporate Woods Blvd.,Albany, NY 12211. Investments through PKSor RIA are: NOT FDIC INSURED, NOT BANKGUARANTEED, MAY LOSE VALUE,INCLUDING LOSS OF PRINCIPAL, and NOTINSURED BY ANY STATE OR FEDERALAGENCY.

Purshe Kaplan Sterling Investments and OneCharles Private Wealth are not affiliatedcompanies.

Should I accept my employer's early-retirement offer?The right answer for you willdepend on your situation. Firstof all, don't underestimate thepsychological impact of earlyretirement. The adjustment

from full-time work to a more leisurely pacemay be difficult. So consider whether you'reready to retire yet. Next, look at what you'rebeing offered. Most early-retirement offersshare certain basic features that need to beevaluated. To determine whether youremployer's offer is worth taking, you'll want tobreak it down.

Does the offer include a severance package? Ifso, how does the package compare with yourprojected job earnings (including future salaryincreases and bonuses) if you remainemployed? Can you live on that amount (andfor how long) without tapping into yourretirement savings? If not, is your retirementfund large enough that you can start drawing itdown early? Will you be penalized forwithdrawing from your retirement savings?

Does the offer include post-retirement medicalinsurance? If so, make sure it's affordable andprovides adequate coverage. Also, sinceMedicare doesn't start until you're 65, make

sure your employer's coverage lasts until youreach that age. If your employer's offer doesn'tinclude medical insurance , you may have tolook into COBRA or a private individual policy.

How will accepting the offer affect yourretirement plan benefits? If your employer has atraditional pension plan, leaving the companybefore normal retirement age (usually 65) maygreatly reduce the final payout you receive fromthe plan. If you participate in a 401(k) plan,what price will you pay for retiring early? Youcould end up forfeiting employer contributions ifyou're not fully vested. You'll also be missingout on the opportunity to make additionalcontributions to the plan.

Finally, will you need to start Social Securitybenefits early if you accept the offer? Forexample, at age 62 each monthly benefit checkwill be 25% to 30% less than it would be at fullretirement age (66 to 67 , depending on youryear of birth). Conversely, you receive a higherpayout by delaying the start of benefits pastyour full retirement age--your benefit wouldincrease by about 8% for each year you delaybenefits, up to age 70.

What are my health-care options if I retire early?If you're eligible for anearly-retirement package fromyour employer, determinewhether post-retirementmedical coverage is included.

These packages sometimes provide medicalcoverage until you reach age 65 and becomeeligible for Medicare. Given the high cost ofmedical care, you might find it hard to turndown an early-retirement package that includessuch coverage.

If your package doesn't include post-retirementmedical coverage, or you're not eligible for anearly-retirement package at all, you'll need tolook into alternative sources of healthinsurance, such as COBRA continuationcoverage or an individual health insurancepolicy, to carry you through to Medicareeligibility.

Under the Consolidated Omnibus BudgetReconciliation Act (COBRA), mostemployer-provided health plans (typicallyemployers with 20 or more employees) mustoffer temporary continuation coverage foremployees (and their dependents) upontermination of employment. Coverage can lastfor up to 18 months, or 36 months in some

cases. You'll generally have to pay the full costof coverage--employers aren't required tocontinue their contribution toward coverage,and most do not. Employers can also charge anadditional 2% administrative fee.

Individual health insurance is available directlyfrom various insurance carriers or, as a result ofthe Affordable Care Act, through state-based orfederal health insurance marketplaces. Oneadvantage of purchasing coverage through amarketplace plan is that you may be entitled toa premium tax credit if your post-retirementincome falls between 100% and 400% of thefederal poverty level (additional income-basedsubsidies may also be available).

Some factors to consider when comparingvarious health options are (1) the total cost ofcoverage, taking into account premiums,deductibles, copayments, out-of-pocketmaximums, and (for marketplace plans) taxcredits and subsidies; (2) the ability to continueusing your existing health-care providers (andwhether those providers will be in-network orout-of-network); and (3) the benefits providedunder each option and whether you're likely toneed and use those benefits.

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