Florida Office (239) 262-6577

New York Office (585) 383-0180


Financial Education

Our advisors share their insights and experience on a wide range of financial topics.

The Business of Family – Your Guide to Legacy Planning

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us

By Kim Ciccarelli Kantor, CFP®, CAP®

When we hear the term estate planning, most people consider the “nuts and bolts” of your plan:

Estate documents (wills, powers of attorney, health care proxies);

Financial vehicles that can support your family and your community for years to come (various types of trusts, donor-advised funds, etc.).

While the tangible aspects of your estate plan are absolutely necessary to your family’s long-term financial success, your legacy plan encompasses more than just your investments and assets. When properly prepared and executed, the plan should serve as a blueprint to prepare your children and grandchildren to become good stewards of your wealth.

Unfortunately, many personal fortunes have been squandered more quickly than they were amassed as a result of poor family communication and inadequate planning.

All too often, the intangible component of legacy planning is overlooked and future generations are left without a guiding framework for how to best sustain and enhance family wealth.

Key Considerations for Family Founders

As the family matriarch or patriarch, a well-thought-out legacy plan affords you with a unique opportunity to guide your children and grandchildren in achieving long-term personal and financial success.

At the very core of the legacy planning process should be your family’s mission and deeply held values. A mission or values statement serves as a succinct, powerful means for articulating financial priorities and creating mutual understanding about how to align your money with your principles and purpose.

In order for your legacy plan to achieve its full potential, you must consistently communicate your family mission and story – including the core values and key lessons that were instrumental during your lifelong journey of building and sustaining your wealth.

Perhaps the most important consideration as the family patriarch/matriarch is how to prepare your children and grandchildren to inherit wealth and embrace a healthy perspective about money.

In our experience, families realize the greatest benefit when they move beyond a simple explanation what is given to heirs. Rather, the heart of your family discussions should focus on (1) why the assets are being passed forward and (2) your intentions for how the wealth should be utilized.

If you have neglected to lay out clear expectations during your lifetime, your children and grandchildren could misinterpret your wishes and use their inheritance in a manner that is not consistent with your family mission and values statement.

While some of your descendants may indeed view their inheritance as a legacy to be preserved and passed on to future generations, others may see the windfall as a means for immediate gratification and short-term indulgence.

With these considerations in mind, the question remains: As the family founder, what is the most effective way to convey my wishes for how my legacy plan ought to be carried out?

Based on our extensive work with client families, we have identified five vital components of most successful plans – known as the “capital” in the business of family. By fostering strong development in each of these crucial areas, your family members will gain clarity and insight into your distinctive vision for the future.

Figure 1. The five types of capital serve as the building blocks of the business of family, with each component playing a critical role in constructing a legacy for future generations.

Financial capital consists of the tangible assets you have accumulated during your lifetime – investments, business interests and possessions – as well as the future growth potential of these assets.

Sustaining family capital is best accomplished when you have clear, realistic expectations and a strategic approach to long-term growth. Through the family financial and legacy plan, your children and grandchildren should gain a mechanism for investing appropriately, conserving values and appreciating the end use for the wealth.

Human capital is expressed through the personal character development of individual family members. In order to serve as good stewards of your wealth, your descendants must value responsibility and productivity, as well as a desire to continuously learn and expand their skill set.

To successfully cultivate these traits, you must talk about the meaning of money as a family unit – sharing your values about spending, saving, sharing and investing. Assisting your children and grandchildren in developing these traits will empower them to pursue worthwhile ambitions during their life – in essence, utilizing their human capital in an impactful way.

Family capital involves the process of creating and reinforcing mutual understanding so that you can strengthen your existing familial ties into positive, productive relationships. Families learn to respect and trust each other through the open exchange of ideas, by mitigating past misunderstandings, and by listening to and learning from each other.

Mastering the ability to compromise is necessary, as well as striving to achieve a win/win outcome for all parties involved.

Societal capital manifests through community action and your family’s involvement in service and philanthropy. To be effective, societal capital must be expressed both in individual and collective family choices.

Depending on your circumstances, family foundations, donor-advised funds and charitable trusts are useful vehicles for carrying out your philanthropic goals (as may be reflected in your family mission statement).

Structural capital serves as the foundation required to hold the legacy plan together, to bridge the gap between generations in a concrete way.

The framework of your legacy plan – the business of family – is demonstrated through the development of the family mission and value statement, regular communication between family members, and decision-making procedures that promote accountability and boundaries for managing your money.

Successful family governance is best achieved through clearly written, living agreements among family members, with an eye towards perpetuating the family’s mission and values for posterity.

Figure 2. By gathering multiple generations for a family meeting, you can promote open communication between all parties and reinforce the desired mission and goals of your legacy plan.

By facilitating intergenerational communication about your family mission, values and purpose of the plan, our CAS team aims to help you build mutual understanding and cohesiveness among family members and prepare your heirs to leverage all five types of capital to their fullest potential – today, tomorrow, and for generations to come.

Discover how our team of experienced advisors go above and beyond the traditional, tangible financial planning role to simplify the transfer of your intangible wealth and values to your children and grandchildren.

Social Security Loopholes for Married Couples

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


By Josh Espinosa, CFP®, CIMA®


Most of us are familiar with the analogy of the “three-legged stool” of retirement income: (1) Social Security; (2) savings and investments; and (3) pension plans.

As the saying goes, your level of stability during retirement depends upon the combined strength of each of these three legs; and a lack of planning in one of these areas could knock out a key structural component of your financial security.


As private pensions have steadily been phased out by most employers, the remaining two legs – investments and Social Security – have become even more critical for sustaining your desired lifestyle throughout retirement.


While the reality of today’s retirement income “stool” may be more wobbly than in years past, a strategic approach to maximizing your Social Security income can compensate for the lack of a private pension plan.



Changes to the Rules


As a result of the Bipartisan Budget Act of 2015, two Social Security loopholes for married couples were closed or restricted. The legislation could impact couples who are approaching retirement age with respect to their flexibility in claiming individual and spousal benefits.



Loophole #1 – File & Restrict

Under the previous law, if you are eligible for benefits both as a retired worker and as a spouse (or divorced spouse) and are not yet full retirement age (66 years), you must apply for both individual and spousal benefits. You will receive the higher of the two benefits.


The loophole allowed some married individuals to start receiving spousal benefits at full retirement age while letting their own retirement benefit grow by delaying it.


The new law is known as “deemed filing.” By applying for one benefit, you are “deemed” to have also applied for the other. Deemed filing has now been extended to apply to those at full retirement age and beyond.


Who’s Affected: If you were born after January 1, 1954, and will be eligible for Social Security benefits both as a retired worker and as a spouse (or divorced spouse), then the new law applies to you.


Note: File and restrict is still available if you were born before 1/1/1954 and your spouse is receiving benefits.



Loophole #2 – File & Suspend

The earlier law allowed a worker at full retirement age or older to apply for retirement benefits and then voluntarily suspend payment of those retirement benefits; which allowed a spousal benefit to be paid to his or her spouse while the worker was not collecting retirement benefits.


The worker would then restart his or her retirement benefits later (for example, at age 70), with an increase for every month retirement benefits were suspended.


Under the new law, you can still voluntarily suspend benefit payments at your full retirement age in order to earn higher benefits for delaying. But during a voluntary suspension, other benefits payable on your record – such as benefits to your spouse – are also suspended.


Also, if you have suspended your benefits, you cannot continue receiving other benefits (such as spousal benefits) on another person’s record.


Who’s Affected: The new law applies to individuals who request a suspension on or after April 30, 2016, which was 180 days after the new law was enacted. In short, the file and suspend loophole is no longer available unless already doing it.



Case Study – Maximizing Social Security Benefits


Despite the recent regulations surrounding Social Security, you and your spouse can still take steps to make the most of your benefits during retirement. Let’s explore a situation where we helped one of our client families maximize the value of their Social Security benefits.


George (age 66) and Doris (age 65) are a married couple who retired and moved to Naples in 2015. George served as the chairman of a large packaging and coatings company, and Doris was a small business owner.


Prior to becoming a CAS planning client, Doris started claiming Social Security benefits at age 63. The couple has sufficient cash flow to meet their retirement lifestyle needs before accounting for their Social Security income.


Based on their situation, we recommended that George delays his Social Security benefits until he reaches age 70. Because they do not need the extra income at this time, waiting until age 70 allows the benefits to grow at a rate of approximately 8% annually (increasing his annual benefits from $2,687/year to $3,538/year.


Since Doris is already taking Social Security benefits, George can also claim half of Doris’ spousal benefit until age 70 (based on her full retirement amount).


When George reaches age 70, Doris will also be able to activate her spousal benefits based on his increased benefit. Because she started claiming benefits before reaching full retirement age, she will get the difference of her income and half of George’s spousal benefit minus the early retirement reduction.


Doris also benefits from an increased benefit should George pass away before her. In this case, she would qualify for widow benefits at George’s full amount.


Overall, this strategy will maximize their total combined benefits based on both their life expectancies.



Note: There is no “one-size-fits-all” approach to managing your Social Security income flow. Your unique circumstances will serve as the foundation for developing an appropriate strategy for you and your family.


In some instance, delaying retirement income is not the most suitable option (especially if you are considering an assisted-living housing situation, in which case current income could be a more important criterion for admission than net worth).


Our CAS team has had the opportunity to help hundreds of client families determine the best approach for claiming their Social Security benefits. Before making any final decisions about your Social Security income, we recommend speaking with your advisor to establish a sustainable cash flow plan that fulfills your needs throughout retirement.



1  Based on an individual with full retirement age of 66, comparing early filing at age 62 and receiving reduced benefits of 75% of primary insurance amount versus delayed filing at age 70 and receiving credits to increase benefits by 32% of primary insurance amount.

Unleash the Power of Education – Your Guide to 529 Plans

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


By Steven T. Merkel, CFP®, ChFC®


In an increasingly competitive and high-skilled job market, a college education is almost a necessity for young people who are jumpstarting their careers. Many employers are demanding a college-educated workforce, and the rise of technology and automation is steadily replacing millions of blue-collar jobs.


Higher education serves as the key that unlocks the door to success and upward mobility, but the opportunities afforded by a college degree come at a cost. College tuition and fees have skyrocketed over the past 40 years, increasing at nearly twice the rate as medical care (see figure 1).


Although public and private university expenses have risen at a comparable rate, the raw increase in costs for private institutions has been far more drastic (tuition and fees at private universities have gone up by more than $19,000 annually – see figure 2).


By steadily saving throughout your lifetime for this investment in your child and grandchildren, you can position them for future success in their career and help to alleviate the burden of student loan debt that could otherwise loom in their future.


Although there are many ways to save, 529 college savings plans are the most popular and effective vehicle for unleashing the power of education in your child or grandchild’s life.


Let’s take a closer look at how 529 plans work, the benefits and limitations of these accounts, and how the new tax law has impacted 529 plans.



Figure 1. The cost of college tuition and fees has increased by more than 1,000% during the 35-year period of 1968-2013 – far outpacing the rate of increase in healthcare, housing and other commodities.



Figure 2. For private universities in the U.S., the average cost of tuition and fees for the 2017-2018 academic year is $34,740. For public colleges and university, tuition and fees in 2017 dollars have more than tripled since 1987.


A 529 college savings plan is a tax-advantaged account that is specifically designed for future education expenses. When you establish a 529 plan, you designate a single beneficiary (typically a child or grandchild) who is the intended recipient of the savings.


The funds in this account may be utilized on behalf of the student at any college, university, trade school, or post-secondary institution that is recognized by the Department of Education (when in doubt, check with the school or institution regarding their eligibility).


As the custodian, you have control over the account. The beneficiary of the plan can be updated at any time, and the funds from one 529 plan may be rolled over to another 529 plan without penalty.


In terms of asset allocation, you have the ability to choose from a range of mutual fund and exchange-traded fund (ETF) portfolios based on your risk tolerance and savings target. Consult with your advisor for more details on which 529 investment strategy is best suited for your needs.


Every state in the U.S. sponsors some form of a 529 savings plan. More than 30 states provide you with tax benefits when you contribute funds to the account (typically in the form of claiming a deduction on your state income taxes).


Most states also exempt you from paying state taxes on the earnings of the 529 plan when you make withdrawals for qualified education expenses. The specifics of these plans can vary significantly state-by-state (see figure 3).


For all 529 plans, you do not pay any federal income taxes on earnings within your account as long as the withdrawals go towards qualified education expenses (see figure 4).


TIP: When making withdrawals from the 529 plan, you should maintain records of all qualified education expenses you have incurred. In the unlikely event that you are audited, the IRS may request documentation.


Figure 3. 529 plans are sponsored at the state level and are subject to different tax benefits. Some states offer a generous deduction on state income taxes, while others offer tax benefits upon withdrawal of funds for qualified education expenses.



Figure 4. If withdrawals from your 529 plan are spent on qualified higher education expenses, the earnings in the account are not subject to federal income tax (and are typically exempt from state income tax as well).


TIP: Under the new tax law, states have been granted the ability to classify tuition and fees for private K-12 schools – up to $10,000 – as qualified education expenses (check your home state’s 529 rules).



529 Plan Rules

As with most tax-advantaged investment accounts, 529 college savings plans are subject to legal restrictions:


Annual gift tax exclusion – Another advantage of 529 plans is the potential to apply contributions towards your gift tax exemption for the year. While leveraging this tax benefit is a great perk, there may be significant gift tax consequences if you contribute more than $15,000 per year individual limit ($30,000 for married couples) to a particular beneficiary.


We encourage you to be mindful of any other expenses you have applied to the gift tax exemption and to adjust your 529 contributions each year so that you fall below the $15,000 GST threshold ($30,000 for married couples).


Exception: Most 529 plans allow you to make a one-time, lump-sum contribution of up to $75,000 ($150,000 for married couples) to the account – as long as you do not gift any additional money to the account beneficiary over the course of the next five years. In essence, you can deposit five years’ worth of contributions at one time instead of contributing $15,000 annually.


Note: Additional contribution limits may apply to your account based on the regulations in place for your state’s plan.


Non-qualified withdrawals – Although you are technically allowed to take withdrawals from the 529 plan for expenses other than the qualified items listed in Figure 4, the earnings portion of these distributions are subject to 10% withdrawal penalty. In short, taking non-qualified withdrawals negate the tax benefits of the account.


Some examples of expenses that are classified as non-qualified include transportation costs, health insurance (even university-sponsored coverage) and student loan repayments.



Changes under the New Tax Law

The Tax Cuts and Jobs Act of 2017 had a direct impact on two key areas of consideration for 529 plans.


First, states have been granted the ability to classify tuition and fees for private and religious K-12 schools – up to $10,000 – as qualified education expenses. Most states have not yet codified this new rule into their respective 529 plans, but the notion of tax-efficient savings for primary education is certainly encouraging for those who have children and grandchildren enrolled in private schools.


Secondly, you now have the ability to roll over funds from a traditional 529 account to a 529 ABLE account. ABLE accounts are specifically designed to enhance quality of life for Americans with disabilities. This new law does not impact your ability to roll over funds from one 529 plan to another 529 plan.


In contrast, the following areas have not been impacted by the tax reform legislation:

  • Coverdell Education Savings Accounts
  • American Opportunity Tax Credit (AOTC)
  • Student Loan Deductions
  • Exemption of Tuition Fee Waivers from Taxable Income



Investing in the Next Generation

A 529 plan is an outstanding vehicle for preparing your children and grandchildren to pursue successful careers, as well as mitigating the massive debt burden they could accrue during their collegiate experience.


To further sweeten the pot, 529 plans also carry significant tax advantages for you – serving as an excellent tool for gifting funds to future generations.


Figure 5. The upsides to leveraging 529 plans as an education savings tool are wide-reaching.


Time and time again, our CAS team has witnessed the success of 529 plans in unleashing the power of education for future generations. Contact your advisor to discover more about how we can work together to provide a bright future for posterity while capitalizing on opportunities for tax efficiencies within your investment portfolio.




Figure 1 – Bureau of Labor Statistics, 2013 Consumer Price Index (CPI)
Figure 2 – College Board, 2017 Annual Survey of Colleges
Figure 3 – Saving for College, 2017: How much is your state’s 529 plan tax deduction really worth?

Opportunities Abroad

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


By Jasen Gilbert, CFP®


The strong performance of the S&P 500 and the Dow Jones Industrial Average in 2017 was an encouraging sign for investors. While the above-average returns of U.S.-based investments receive a lot of attention in financial news outlets, international equity markets often fly under the radar.


As our team evaluated performance benchmarks both at home and abroad, we observed that the surge in U.S. equity markets mirrored a bullish trend that is happening across the globe. The scorecard is in: International markets – and especially emerging markets – actually outpaced the S&P 500 in 2017 (see figure 1).


The big question: Is the recent boom in international equity markets a fluke, or is it a sign of a greater long-term trend?


Figure 1. A comparison of 2017 market performance for three indices indicates that international markets outperformed U.S. benchmarks. Emerging markets led the way with a 33% return.



The Global Economic Reset

As with U.S. markets, international equity markets are cyclical by nature. After several years of lackluster performance, earnings in foreign markets are beginning to show the promise of recovery and growth (see figure 2a – the red line provides context for average annual returns).


We also observed that – despite modest growth in the U.S. – much of the global economy had been experiencing a recession since 2015, with a marked decline in global GDP growth and annual returns that were far below average (see figure 2b).


Figure 2a. Similar to U.S. markets, international equity valuation is subject to cyclical fluctuations over time.


Figure 2b. The drop in global GDP in 2015-2016 was almost as severe as the Great Recession of 2008-2009.


In addition to the cyclical ebb and flow of equity value, various additional economic and geopolitical factors suggest that a sustained upward trend in international markets could be on the horizon. The underlying fundamentals that drive market growth are strong, which could give way to a phenomenon known as the Global Economic Reset. We see the potential opportunity for pent-up consumer demand – coupled with significant improvements to the balance sheets of global corporations – to be translated into growth.


First, we have monitored the earnings per share growth of the All Countries World Index (excluding U.S. markets) over the past five years. Earnings have finally begun to recover after several years of negative growth, and the projections for 2018 are quite optimistic by comparison (see Figure 3). When coupled with the corresponding trends in GDP growth shown in Figure 2b, the outlook for international investing appears to be promising.


Figure 3.


By expanding our vantage point to examine the past 35 years, we observe that annual GDP growth from 1981-2008 (the “pre-crisis” time period) averaged 7%. In comparison, annual GDP growth from 2008-2016 has been about 5% on average. We anticipate that this metric may move closer to the 7% equilibrium over the long term – indicating that several years of above-average returns may arise within the near future.


Figure 4. The post-recession GDP growth of nations outside the U.S. has lagged behind the average annual growth rate of 7% from 1981-2008.


In addition to the economic indicators shown thus far, geopolitical factors have also created a scenario that could be ripe for strong international investment performance. When citizens are dissatisfied with the state of their nation’s economy – particularly in the case of a prolonged recession – democratic elections tend to favor candidates that propose pro-growth policies.


Alternatively, the current government leadership that is seeking re-election will make an effort to respond to the pleas of their business owners and workers so they can retain power. The results of upcoming elections and other political developments across the EU and Asia could have a profound impact on the growth outlook of the global economy.


Last by not least: Global corporations have made significant strides in improving their balance sheets. Whereas the ACWI debt-to-equity ratio for corporations ballooned to more than 32% in the early 2000s, a massive amount of debt has been paid off in the lead-up to the Global Economic Reset. The current debt-to-equity ratio is now about 23% – meaning that global corporations have much more capital to invest in the production of goods, delivery of services and labor (see figure 5).


Figure 5. Global corporations have made significant progress in reducing the amount of debt on their balance sheets, opening the door to more capital investment.


The synergy of these economic and political factors have created a “perfect storm” with the potential for strong international investment performance over the next few years. As a result of this trend, you could be well-served to include non-U.S. investments as a component of your diversified portfolio.



Balance in All Things

In addition to building a diversified investment portfolio for you, our CAS team works with our custodian partners to ensure that your international holdings are being rebalanced based on market trends and outlook in the global sector. Rebalancing involves a regular evaluation of how to best represent different equity classes in your portfolio.


In our evaluation, we consider a wide range of factors – two of which are national/regional performance trends and performance by industry. To illustrate this, let’s take a closer look at emerging markets in particular.


In figure 6, we observe that the international investing landscape has changed drastically since the late 1980s. As an example, Malaysia represented a large cross-section of the emerging markets universe in 1988; today, Malaysia is no longer a major player. China, Korea and Taiwan have emerged as the leading emerging markets, whereas many of the Latin American economies have fallen from prevalence.


Clearly, international markets are subject to the same steady, constant changes as U.S. markets, and the long-term effect of these fluctuations can lead to dramatic changes over the course of 30 years.


Figure 6. The emerging markets landscape has shifted dramatically over the past three decades, with Southeast Asia gaining prominence and Latin America/Malaysia receding.


The microcosm of emerging markets provides us with insights that can be applied broadly to the big picture of your financial plan. The need for diversification and regular rebalancing cannot be understated. By recognizing change and emerging opportunities over time and incorporating an appropriate balance of international markets within your portfolio, our team will work with you to capitalize on promising investing opportunities at home and abroad.

Contact your advisor to learn more about how CAS leverages international investments as part of your comprehensive financial plan.


Planning For Market Uncertainty in Retirement

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


For investors, 2017 proved to be a rewarding year. The S&P 500 index rose by more than 20 percent, and the Dow Jones Industrial Average surged past both the 20,000 and 25,000 thresholds in a single year.


The trend of strong market returns has continued throughout January. The bull market that began in March 2009 continues to push forward, despite ongoing speculation from financial professionals that equity markets could be overvalued.


The real question is: How long will the market continue to rise and when will equity markets reach their peak? No one can provide a definitive answer, as market forces and fluctuations in value are largely beyond our control.



Cycling through History

Although historical performance is limited in its predictive ability, past performance does provide us with significant context for understanding big-picture trends. Recent history illustrates that a strong, sustained bull market often precedes a correction bear market, as inflated equity markets return to a more stable valuation and investor confidence begins to wane.


The decade-long bull market of the 1990s began to reverse course in 2000 in the wake of the “dot-com” bubble burst and the emergence of several major accounting scandals (in particular, Enron and Arthur Andersen). The once-burgeoning technology industry was especially hard-hit, with the NASDAQ losing 39% of value in 2000 (followed by losses of 21% and 31% in 2001 and 2002, respectively). The Dow also decreased by more than 27 percent during this three-year window.


Equity markets began to bounce back in late 2002, ushering in a new bull market that was sustained through late 2007. At this point, the sub-prime mortgage crisis (among other factors) led to the most drastic correction market since the Great Depression. All three major indices lost more than 50% of their value in 17 months (between October 2007 and March 2009).


Although we have knowledge of market cycles, we cannot say with certainty what the future holds. For this reason, it is critical for you to be prepared for the possibility of a bear market – especially if you are approaching retirement or are currently living on retirement investment assets today.


Figure 1. Performance of the S&P 500 index, Jan 1998 through Jan 2018.



Navigate Uncertainty with Preparation and Prudence

Above all, the most effective way to prepare for uncertainty in equity markets is to plan well in advance for your needs and priorities during retirement. To develop the “stepping stones” for future retirement success, we recommend that clients and their family members begin to work through the planning process with an advisor at least 8-10 years prior to their desired retirement date.


In our experience, the most effective retirement plans share two main characteristics: (1) a conservative draw rate and (2) a realistic, long-term approach to budgeting. With these provisions in place, you can build a strong, sustainable foundation for your financial success throughout retirement.


1. Be conservative when selecting your withdrawal rate. After working hard and accumulating assets throughout your lifetime, you will finally enter the asset distribution phase of life during retirement. As you begin to take distributions from your IRAs, 401(k)s and other investment accounts, you should exercise prudence when selecting your rate of withdrawal.


Your ideal withdrawal rate will vary based on your desired lifestyle (expenses) and your available asset base (income). That being said, we have generally seen great long-term success with a conservative draw rate of 4-5 percent.


When you begin to exceed 5 percent – especially once you enter the 7-9 percent range – it is likely that your withdrawal rate is not sustainable for the duration of your retirement. A high withdrawal rate – especially early in retirement – could cause your asset base to deteriorate at an alarming pace. As a result, you may find it difficult to meet expenses in your later years (especially with rising health care costs and uncertain market conditions).



Figure 2. Conservative draw rates can extend the lifespan of your retirement savings, regardless of fluctuations in the market.


2. Be realistic when developing your retirement budget. A detailed and well-thought-out budget for your retirement lifestyle is the key to determining your ideal withdrawal rate. Once you appreciate the full extent of your short-term spending priorities and long-term expenses throughout retirement, you can compare that figure to your asset base to determine the best withdrawal rate for your situation.


Apart from selecting a withdrawal rate that is too high, the biggest mistake you can make in retirement is to underestimate your expenses up front. When a retiree fails to plan for the inevitable costs that loom in their future, he or she will often take additional withdrawals beyond their predetermined distribution – which, in turn, threatens the long-term viability of their retirement savings.


Because budgeting is so crucial for promoting a sustainable retirement lifestyle, it is in your best interest to regularly consult with a financial expert to prevent overlooking key considerations and making costly mistakes.



As the current bull market enters its ninth year, we must not be lulled into a sense of false optimism or complacency. Our knowledge of market trends suggests that a bear market looms on the horizon; it is a matter of when, not if. Although the constant flux of market forces is beyond our control, you do have control over your expense budgeting and retirement income distributions.


While the specifics of your plan are dependent on your personal circumstances, the correct course of action when planning for your retirement lifestyle is preparation and prudence. With adequate foresight and consistent guidance from your advisory team, you can feel confident that your draw rates and spending habits will be sustainable throughout your golden years – regardless of the uncertainty that exists in the market.

Don’t Take the Bait!

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


Online commerce and communications have become ubiquitous in the lives of millions of Americans. Whether it’s online banking, shopping or social media, the Internet plays an integral role of our society.


Unfortunately, opportunistic hackers and scam artists are often quite tech-savvy, and they are actively attempting to swindle people and sow chaos on your computer or mobile device. Every year, especially during the peak of the holiday shopping season, we observe an uptick in a particular type of online fraud: phishing.


Most phishing emails or text messages share one primary goal: getting you to click on a link or open an attachment. If you receive a suspicious email, the most important thing to remember is DO NOT CLICK on anything in the email! By clicking on the content, you are potentially unleashing a barrage of malware and viruses that could harm your computer or mobile device.


Releasing the malware may be the end goal of some phishing scams, but others go a step further to hijack your personal information for financial exploitation. For example, you may be directed to a fake website prompting you to enter your log-in credentials for a financial institution or to input other confidential information.


Although it is almost inevitable that you will receive a fraudulent email or text message, many of these scams possess several recognizable characteristics. By understanding the signs of a phishing message and remaining vigilant when opening your emails, you can significantly decrease the likelihood of “taking the bait” from a phishing scam.



Telltale Signs of Phishing

♦  The email starts with “Dear Customer” or another generic greeting.

♦  The email is written in broken English or contains an excessive amount of grammatical errors.

♦  Hover your curser over the sender’s name to reveal the sender’s real email address. If the real email address does not match the email address displayed, it is likely a scam.

♦  Do a Google search for the sender’s email address/phone number or the email subject line, followed by the phrase “phishing” or “scam”. Take a look at the first few results to see if the email has been previously identified as malicious.


If the email possesses any of these characteristics, delete it immediately.



Confirm Your Order?

The fake “order confirmation” email is especially prevalent during the holidays. You may receive an email that appears to be from an online retailer, asking you to confirm your purchase. The hacker’s goal when sending an order confirmation phishing email is for you to “review your order” by either clicking on a link or opening the email’s attachment.


Of all the various scams, these emails are perhaps the most enticing. If you did not order anything from the retailer in question, you may be tempted to click or open to see what was ordered. On the other hand, if you had recently purchased from the online retailer, you may assume it was for your legitimate purchase and click on the link or attachment.


If you have an account with the supposed sender, log in to your account and check your order history. If no purchases are listed, the email is a scam. If you do not have an account with the supposed sender, it is almost certainly a scam.


While it is likely that an unexpected order confirmation email is the work of a phishing scam artist, it is also possible that someone has hacked into one of your online retail accounts and made fraudulent purchases. Just in case, monitor your credit card and bank transactions for fraudulent transactions. If detected, report it to the financial institution as soon as possible.



This holiday season, be vigilant when handling suspicious emails or text messages. By following the guidelines in this article and remaining aware of the signs of phishing emails, you can protect yourself and your devices from falling prey to the malicious attempts of online scam artists.

Tax Breaks for Continuing-Care Retirement Communities

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


Paul F. Ciccarelli, CFP®, ChFC®, CLU®


For affluent seniors, a continuing-care retirement community (CCRC) can be an attractive alternative. These centers offer a full range of services, from independent living to skilled nursing. If you strolled through some of these CCRC campuses, you might think you were at a country club.


For those who could conceivably afford to live in a continuing-care retirement community, here’s a bit of good news: A little-known tax break could significantly lower your costs. Proper investment and tax planning can provide tremendous opportunities to enhance your future cash flow and financial positioning for the remainder of your lifetime.



The tax-saving idea here is that you may be able to deduct part of the CCRC’s one-time entrance fee and ongoing monthly fees as medical expenses. This is the case even if you currently live independently at the CCRC and require little to no care. In other words, you are allowed to claim a deduction for prepaid medical expenses, regardless of your current health status. Since the CCRC fees can be quite steep, significant write-offs may be allowed despite the 7.5% of adjusted gross income floor for deductible medical expenses.


The concept of prepaid medical deductions might sound too good to be true, but it is legitimate. For skeptical readers, consider the 2004 Tax Court decision, D.L. Baker v. Comm’r [122 TC 143, Dec. 55, 548 (2004)]. The Bakers decided to take their case to the Tax Court, which turned out to be a wise move – because they won big.


The Tax Court’s 2004 decision is good news for seniors because it confirms that you can treat a significant percentage of the one-time entry fees and recurring monthly charges as prepaid medical expenses. Even better, the amount that can be treated as medical expenses doesn’t in any way depend on the level of healthcare services you actually received during the year in question. They depend only on the CCRC’s aggregate medical expenditures in relation to overall expenses or revenue from fees paid by the residents. Any CCRC worth considering should have estimates of these percentages available for you to evaluate.


Because of the significant planning opportunities available to individuals moving into a CCRC, I strongly recommend that you seek advice from a qualified financial planner, a CPA or an attorney before making your final decision. Keep in mind that the deduction for the initial entrance fee and the ongoing monthly fees is a “use it or lose it” deduction. In other words, you will need to plan out your taxable income to ensure maximum benefit from these significant tax deductions.

How Secure Is Social Security?

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


If you’re retired or close to retiring, then you’ve probably got nothing to worry about – your Social Security benefits will likely be paid to you in the amount you’ve planned on (at least that’s what most of the politicians say). But what about the rest of us?



Media Onslaught

Watching the news, listening to the radio, or reading the newspaper, you’ve probably come across story after story on the health of Social Security. And, depending on the actuarial assumptions used and the political slant, Social Security has been described as everything from a program in need of some adjustments to one in crisis requiring immediate, drastic reform.


Obviously, the underlying assumptions used can affect one’s perception of the solvency of Social Security, but it’s clear some action needs to be taken. However, even experts disagree on the best remedy. So let’s take a look at what we do know.



Just the Facts

According to the Social Security Administration (SSA), over 60 million Americans currently collect some sort of Social Security retirement, disability or death benefit. Social Security is a pay-as-you-go system, with today’s workers paying the benefits for today’s retirees. (Source: Fast Facts & Figures about Social Security, 2016)


How much do today’s workers pay? Well, the first $127,200 (in 2017) of an individual’s annual wages is subject to a Social Security payroll tax, with half being paid by the employee and half by the employer (self-employed individuals pay all of it). Payroll taxes collected are put into the Social Security trust funds and invested in securities guaranteed by the federal government. The funds are then used to pay out current benefits.


The amount of your retirement benefit is based on your average earnings over your working career. Higher lifetime earnings result in higher benefits, so if you have some years of no earnings or low earnings, your benefit amount may be lower than if you had worked steadily.


Your age at the time you start receiving benefits also affects your benefit amount. Currently, the full retirement age is in the process of rising to 67 in two-month increments, as shown in the chart:


You can begin receiving Social Security benefits before your full retirement age, as early as age 62. However, if you retire early, your Social Security benefit will be less than if you had waited until your full retirement age to begin receiving benefits.


Specifically, your retirement benefit will be reduced by 5/9ths of 1 percent for every month between your retirement date and your full retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter.


Example: If your full retirement age is 67, you’ll receive about 30 percent less if you retire at age 62 than if you wait until age 67 to retire. This reduction is permanent – you won’t be eligible for a benefit increase once you reach full retirement age.



Demographic Trends

Even those on opposite sides of the political spectrum can agree that demographic factors are exacerbating Social Security’s problems–namely, life expectancy is increasing and the birth rate is decreasing. This means that over time, fewer workers will have to support more retirees.


According to the SSA, Social Security is already paying out more money than it takes in.  However, by drawing on the Social Security trust fund (OASI), the SSA estimates that Social Security should be able to pay 100% of scheduled benefits until fund reserves are depleted in 2035. Once the trust fund reserves are depleted, payroll tax revenue alone should still be sufficient to pay about 75% of scheduled benefits.


This means that in 2035, if no changes are made, beneficiaries may receive a benefit that is about 25% less than expected. (Source: 2017 OASDI Trustees Report)



Possible Fixes

While no one can say for sure what will happen (and the political process is sure to be contentious), here are some solutions that have been proposed to help keep Social Security solvent for many years to come:

♦ Allow individuals to invest their current Social Security taxes in “personal retirement accounts”

♦ Raise the current payroll tax

♦ Raise the current ceiling on wages currently subject to the payroll tax

♦ Raise the retirement age beyond age 67

♦ Reduce future benefits

♦ Change the benefit formula that is used to calculate benefits

♦ Change how the annual cost-of-living adjustment for benefits is calculated



Uncertain Outcome

Members of Congress and the President still support efforts to reform Social Security, but progress on the issue has been slow. However, the SSA continues to urge all parties to address the issue sooner rather than later, to allow for a gradual phasing in of any necessary changes.


Although debate will continue on this polarizing topic, there are no easy answers, and the final outcome for this decades-old program is still uncertain.



What Can You Do?

The financial outlook for Social Security depends on a number of demographic and economic assumptions that can change over time, so any action that might be taken and who might be affected are still unclear.


But no matter what the future holds for Social Security, your financial future is still in your hands. Focus on saving as much for retirement as possible, and consider various income scenarios when planning for retirement.


It’s also important to understand your benefits, and what you can expect to receive from Social Security based on current law. You can find this information on your Social Security Statement, which you can access online at the Social Security website, www.socialsecurity.gov by signing up for a my Social Security account. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every year, starting at age 60.




Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Hale & Hearty: The Aging Dilemma

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


Should a 70-year-old American be considered “old”? Statistically, your average 70-year-old has just a 2% chance of passing away within a year. The estimated upper limit of today’s average life expectancy is 97 years old, and a rapidly growing number of 70-year-olds will live past age 100.


Perhaps more importantly, many 70-year-olds today are in much better shape than their grandparents were at the same age. So how do you define the term “old” in today’s environment of increasing longevity? In most developed countries, healthy life expectancy after age 50 is growing faster than life expectancy itself, suggesting that the “old age” period of diminished vigor and ill health is often deferred until a person has reached their early to mid-80s.



A recent series of articles in The Economist suggests that we need to devise a new term for people between the ages 65 to 80, who are generally “hale and hearty”; a group of individuals who are capable of performing knowledge-based work on an equal footing with 25-year-olds, but are increasingly being shunted out of the workforce by their younger counterparts. The article suggests that if this 65-to-80 cohort does not start participating in the workplace at a higher rate, the impact on our economy and society could be catastrophic.


Globally, a combination of falling birth rates and increasing lifespans threatens to increase the old-age dependency ratio – the ratio of retired people to active workers – from 13% in 2015 to 38% by 2100. This lopsided ratio could lead to major fiscal strains on our pension and Social Security systems, because fewer workers will be paying into the retirement benefits for an ever-increasing pool of retirees.


How can this dilemma be addressed? The articles note that whenever a new stage of life is defined and popularized, a wave of profound societal and economic changes have followed.


For instance, the conception of childhood in the mid-19th century paved the way for child labor and protection laws, compulsory schooling and the emergence of new businesses that focus on children (from toy making to children’s books). Another example: when teenagers were first identified as a distinct demographic in the 1940s, the value of the U.S. economy increased substantially as a result of their willingness to work part-time and to freely spend their income on new goods and services.


Instead of classifying people between the ages of 65-80 as “old” or “retired”, we should consider defining a new stage of life that recognizes the contributions of senior citizens and encourages capable people to continue participating in the workforce.


Fortunately, an increasingly large constituency of people ages 65-80 has transitioned into the “gig economy”, taking on part-time roles that emphasize knowledge and relationships. They are often content to work part-time, are not actively looking for career progression, and are better able to deal with the precariousness of such jobs. Businesses that seek on-demand lawyers, accountants, teachers, personal assistants and drivers are finding plenty of recruits among older people.


Still others are preparing for life beyond retirement by becoming entrepreneurs. In America, people between ages 55 and 65 are 65% more likely to start a new business than people who are 20-34 years old.  In Britain, 40% of new business founders are over age 50, and 60% of employed people over age 70 are self-employed.



One of the largest economic contributions made by older people is often overlooked: volunteerism and child care support. More than 40% of Americans ages 65+ regularly volunteer their time and talent to serve their communities.  In Italy and Portugal, about 20% of grandmothers provide daily care for a grandchild. That frees the parents to work longer hours and save a huge bundle on child care services.


All of these changes are indicative of a reality that is not well-publicized: that the traditional retirement age increasingly makes no sense in terms of our senior citizens’ health, longevity and ability to contribute to our society. The sooner we find an appropriate classification for healthy people between the ages of 65-80, the faster we can begin to fully appreciate their potential to contribute.




Special thanks to Bob Veres for his commentary

The Secret to Productivity – Give Me a Break!

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest
Contact us


For generations, the tried-and-true eight-hour workday was widely considered to be the gold standard of workplace productivity.


However, the eight-hour workday is gradually becoming a relic of the past. Before the advent of modern technology, workers were dependent on sunlight in order to complete tasks, whether it was harvesting citrus, hand-weaving cloth on a loom, or welding doors to a Model T. That being said, the concept of working 9-to-5 does not jive with how the human brain functions.


A 2014 study conducted by the Draugiem Group – a productivity consulting firm based in Latvia that works with Proctor & Gamble, Nokia, Samsung, Nestle, L’Oréal and Siemens – measured how much time workers spent on various tasks and compared this to their productivity levels. A computer application tracked both their work habits and outcomes.


The researchers discovered that the length of the workday was fairly inconsequential; rather, the main driver of productivity was how people structured their day.


People who worked longer hours were typically less productive than those who made a habit of taking short, regular breaks.


The most productive workers would spend an average of 52 minutes of concentrated work, followed by 17 minutes of rest. That formula allowed them to be 100% dedicated to the task they needed to accomplish without being distracted. When productive workers felt fatigued, they completely separated themselves from their work for a brief period of time. Then, they would dive back into their work – refreshed and ready for another hour of focused productivity.


The findings of the study indicate that the brain naturally functions in spurts of high energy followed by low-energy phases. In order to maximize your productivity, take a quick lap around the office, grab a snack or give yourself a brief reprieve from the daily grind!



 Special thanks to Bob Veres for his commentary.


Receive weekly updates from your CAS family!