The Surprising Tax Trap for Surviving Spouses - Understanding the Widow’s Penalty

Contributed by: Nick Defenthaler, CFP®, RICP®

Several years ago, after starting a new relationship with a newly widowed client, I received a confused phone call from her. She had received a communication from Medicare stating that her Part B & D premiums would increase significantly from the prior year. To make matters worse, she also noticed, while filing her most recent tax return, that she was now in a much higher tax bracket. What happened? Now that her husband was deceased, she was receiving less in Social Security and pension income. Her total income had decreased, so why would she have to pay more tax and Medicare premiums? Unfortunately, she was a victim of what’s known as the “widow’s penalty.”

Less Income and More Taxes – What Gives?

Simply put, the widow’s penalty is when a surviving spouse ends up paying more taxes on less income after the death of their spouse. This happens when a widow or widower starts filing as a single filer the year after their spouse’s death.

When the first spouse dies, the surviving spouse typically sees a reduction in income. While the surviving spouse will continue to receive the greater of the two Social Security benefits, they will no longer receive the lower benefit. In addition, it’s also very likely the surviving spouse will either completely or partially lose income tied only to the deceased spouse (ex. employment income, annuity payments, or pensions with reduced or no survivor benefits).  Depending on how much income was tied to the deceased spouse, the surviving spouse’s fixed income could see a sizeable decrease. However, the surviving spouse starts receiving less income and is subject to higher taxes.

With some unique exceptions, the surviving spouse is required to start filing taxes as single instead of as married filing jointly in the year following their spouse’s death. In 2026, that means they will hit the 22% bracket at only $50,401 of taxable income. Married filers do not reach the 22% bracket until they have more than $105,700 of taxable income. To make matters worse, the standard deduction the widow will receive will be almost cut in half. In 2026, for a married couple (both over 65), their standard deduction will be $35,500. A single filer (over the age of 65), however, will only have a $18,150 deduction! Unfortunately, even with less income hitting the tax return, widowed tax filers commonly end up paying higher taxes due to the compression of tax brackets and the dramatic standard deduction decrease for single filers.

Another recent layer of complexity that can perpetuate the issue of the ‘widow’s penalty’ is the new ‘additional senior deduction’ that went into effect in 2025 and expires at the end of the tax year 2028. If a married couple is over the age of 65 and has an Adjusted Gross Income (AGI) of $150,000 or less, they will receive an additional $12,000 deduction that can offset income. For single filers, the deduction amount is only $6,000 and starts to phase out once AGI exceeds $75k. If one spouse passes away, not only will this deduction be reduced, but it’s possible the surviving spouse sees a dramatic decrease or complete elimination of the $6k deduction they’d receive because of the dramatically different income thresholds that apply to this new deduction.

Tax brackets are not the only area in which surviving spouses are penalized. Like the client in my story above, many surviving spouses see their Medicare premiums increase even though their income has decreased because of how the income-related monthly adjusted amount (IRMAA – ONCE BLOG IS UPDATED ON WEBSITE CREATE HYPERLINK) is calculated (click HERE to visit our dedicated Medicare resource page). Specifically, single filers with a modified adjusted gross income (MAGI) of more than $109,000 are required to pay a surcharge on their Medicare premiums, whereas there is no surcharge until a couple that is married filing jointly reaches $218,000 of income. This means that a couple could have an income of $130,000 and not be subject to the Medicare IRMAA surcharge, but if the surviving spouse now has income over $109,000, their premium will increase by almost $1,200 per year. In this same example, the widow could now be in the 24% bracket (as compared to the 12% bracket with $130k of income filing jointly) and be paying almost $12,000 MORE between increased Medicare premiums (IRMAA charges), federal and state of Michigan tax!

Proactive Planning

Short of remarrying, there is no way to avoid the widow’s penalty. However, if your spouse has recently passed away, there may be some steps you can take to help minimize your total tax liability.

For most widows, the year their spouse dies will be the last year they will be allowed to use the higher married filing jointly tax brackets and standard deduction. In some cases, it can make sense to strategically realize income during the year of death to minimize the surviving spouse’s lifetime tax bill. A surviving spouse might do this by converting savings from a Traditional IRA to a Roth IRA while they are still subject to the married filing jointly rates.

For example, let’s say I was working with a couple (we’ll call them John and Mary), and after several years in a long-term care assisted living facility, John sadly passed away at age 85. Because John and Mary did not have long-term care insurance, they incurred substantial out-of-pocket medical expenses, resulting in a significant medical deduction in the year of John’s passing. Several months after her husband’s passing, Mary suggests we convert over $100,000 from her IRA to a Roth IRA. Because this was the last year she could file jointly on her taxes along with the significant medical deduction that was only present the year John passed, Mary paid an average tax rate of 10% on the $100,000 converted. Mary is now filing single and finds herself in the 24% tax bracket, so converting the funds at a much lower rate may be beneficial depending on each individual’s situation.

I believe the widow’s penalty should be on every married couple’s radar. While it’s possible that while both spouses are living, their tax rate will always remain the same, as we’ve highlighted above, unless both spouses pass away within a very short period of time from one another, higher taxes and Medicare premiums are likely inevitable. However, proper planning could help to dramatically reduce the impact this penalty could have on your plan.

Nick Defenthaler, CFP®, RICP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Nick specializes in tax-efficient retirement income and distribution planning for clients and serves as a trusted source for local and national media publications, including WXYZ, PBS, CNBC, MSN Money, Financial Planning Magazine and OnWallStreet.com.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Center for Financial Planning, Inc is not a registered broker/dealer and is independent of Raymond James Financial Services Investment advisory services are offered through Center for Financial Planning, Inc. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Nick Defenthaler, CFP®, RICP® and not necessarily those of Raymond James.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

These examples are hypothetical illustrations and are not intended to reflect any actual outcome. they are for illustrative purposes only. Individual cases will vary. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Prior to making any investment decision, you should consult with your financial advisor about your individual situation.

Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.

7 Ways the Planning Doesn't Stop When You Retire

Contributed by: Sandra Adams, CFP®

Most materials related to retirement planning are focused on “preparing for retirement” to help clients set goals and retire successfully. Does that mean when goals are met, the planning is done? In my work, there is often a feeling that once clients cross the retirement “finish line” it should be smooth sailing from a planning standpoint. Unfortunately, nothing could be further from the truth. For many clients, post-retirement is likely when they’ll need the assistance of a planner the most!

Here are 7 planning post-retirement issues that might require the ongoing assistance of a financial advisor:

1. Retirement Income Planning - An advisor can help you put together a year-by-year plan including income, resources, pensions, deferred compensation, Social Security and investments. The goal is to structure a tax-efficient strategy that is most beneficial to you.

2. Investments - Once you are retired, a couple of things happen to make it even more important to keep an active eye on your investments: (1) You will probably begin withdrawing from investments and will likely need to manage the ongoing liquidity of at least a portion of your investment accounts and (2) You have an ongoing shorter time horizon and less tolerance for risk.

3. Social Security - It is likely that in pre-retirement planning you may have talked in general about what you might do with your Social Security and which strategy you might implement when you reach full retirement age (which is 67). However, once you reach retirement, the rubber hits the road, and you need to navigate all of the available options and determine the best strategy for your situation – not necessarily something you want to do on your own without guidance.

4. Health Insurance and Medicare - It’s a challenge for clients retiring before age 65 who have employers that don’t offer retiree healthcare. There’s often a significant expense surrounding retirement healthcare pre-Medicare.

For those under their employer healthcare, switching to Medicare is no small task – there are complications involved in “getting it right” by ensuring that clients are fully covered from an insurance standpoint once they get to retirement.

5. Life Insurance and Long-Term Care Insurance - Life and long-term care insurances are items we hope to have in place pre-retirement. Especially since the cost and the ability to become insured becomes incredibly difficult, the older one gets. However, maintaining these policies, understanding them, and having assistance once it comes to time to draw on the benefits is quite another story.

6. Estate and Multigenerational Planning - It makes sense for clients to manage their estate planning even after retirement and until the end of their lives. It’s the best way to ensure that their wealth is passed on to the next generation in the most efficient way possible. This is partly why we manage retirement income so close (account titling, beneficiaries, and estate documents). We also encourage families to document assets and have family conversations about their values and intentions for how they wish their wealth to be passed on. Many planners can help to structure and facilitate these kinds of conversations.

7. Planning for Aging - For many clients just entering retirement, one of their greatest challenges is how to help their now elderly parents manage the aging process. Like how to navigate the health care system? How to get the best care? How to determine the best place to live as they age? How best to pay for their care, especially if parents haven’t saved well enough for their retirement? How to avoid digging into your own retirement pockets to pay for your parents’ care? How to find the best resources in the community? And what questions to ask (since this is likely foreign territory for most)?

Since humans are living longer lives, there will likely be an increased need and/or desire to plan. In an emergency, it could be difficult to make a decision uninformed. A planner can help you create a contingency plan for potential future health changes.

While it seems like the majority of materials, time, and energy of the financial planning world focuses on planning to reach retirement, there is so much still to do post-retirement. Perhaps as much OR MORE as there is pre-retirement. Having the help of a planner in post-retirement is likely something you might not realize you needed, but something you’ll certainly be glad you had.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandra D. Adams and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Why Proactive Family Meetings Matter — And Why the Holidays Can Be the Perfect Time

Contributed by: Sandra Adams, CFP®

In our financial planning work with clients, family meetings can be scheduled for many different reasons. Often, these meetings happen because something has changed and the family needs to discuss a transition or a crisis. But as with most planning, family meetings are most effective when they’re done proactively — before a stressful life event forces the conversation.

What Does a Proactive Family Meeting Look Like?

When we talk with clients about bringing their children into a family meeting, we start with two simple questions:
What is the purpose of the meeting?
What should be on the agenda?

Purpose of the Meeting

A proactive family meeting serves several important goals:

• Introducing future decisionmakers to your advisory team.
  Adult children are often the ones who will step in as powers of attorney, trustees, or general decision‑makers if a parent’s health or cognitive abilities change. It’s incredibly helpful if they already know us, feel comfortable reaching out, and understand the role we play.

• Communicating long‑term plans and wishes.
  Depending on your comfort level, this may include reviewing your estate plan, discussing how your assets are structured, or simply sharing your broader goals and intentions for the future.

• Reducing confusion and conflict later.
  When everyone understands the plan in advance, families are better equipped to support one another during transitions.

Agenda Options

Every family meeting looks different. Some clients prefer to walk through their full financial plan, similar to an annual review. Others choose a higher‑level conversation focused on values, wishes, and the “why” behind their decisions rather than specific numbers.

There is no one right way to structure the agenda — the goal is clarity, communication, and connection.

Why the Holidays Can Be an Ideal Time

While family meetings can happen at any point in the year, the holiday season often provides a unique opportunity. Families are already gathered, routines slow down, and adult children may have the chance to observe how their parents are doing day‑to‑day. Subtle changes in health, mobility, memory, or energy levels can be easier to notice in person than over the phone.

For families who want to be proactive, using this natural gathering time to hold a thoughtful, structured conversation can be incredibly valuable. It doesn’t need to be formal or heavy — just intentional.

So, When Is the Right Time?

The right time for a family meeting is when it’s needed — whether that’s in response to a looming transition or, ideally, well before one. If your family values proactive communication and wants to avoid crisis‑driven decision‑making, scheduling a meeting as part of your retirement or longevity planning is a wise step.

And if your family is already together for the holidays, it may be the perfect moment to start the conversation.

We’re Here to Help

If you or someone you know is interested in scheduling a family meeting or has questions about the process, please reach out. We’re always happy to help facilitate these important conversations.

You can contact me at Sandy.Adams@CenterFinPlan.com.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandra D. Adams and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Pay Yourself First—At Every Stage of Life

Contributed by: Sandra Adams, CFP®

As a financial planner, one of the most powerful principles I share with my clients is simple: Pay yourself first. Regardless of your age or income, prioritizing your future self is the cornerstone of financial well-being.

In Your 20s and 30s:

Start small, but start now. Automate contributions to a retirement account like a 401(k) or IRA—even if it is just 5%. Build an emergency fund (at a minimum, 3 to 6 months’ worth of your spending needs). These early habits create momentum, allowing compound interest to work its magic over time.

In Your 40s and 50s:

This is often your peak earning period. Increase your savings rate, especially if you are catching up. Maximize retirement contributions and consider additional investment accounts. Paying yourself first now means more flexibility later—whether that is retiring early or helping your kids with college.

In Your 60s and Beyond:

Continue to prioritize your financial future. Shift focus from accumulation to preservation and income planning. Paying yourself first may now mean budgeting wisely from your retirement income and ensuring that your healthcare, long-term care, and legacy plans are in place.

No matter your stage, the message is the same: You are your most important bill. Treat your future like a non-negotiable expense. Your future self will thank you.

If you or someone you know needs help with how to get started setting your pay yourself first goals, please reach out. We are always happy to help! Sandy.Adams@CenterFInPlan.com.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Taking Charge of Your Financial Future: A Busy Professional's Guide

Contributed by: Kelsey Arvai, CFP®, MBA

Let’s face it: life moves fast. Back-to-back meetings, inbox and voicemail full, and trying to squeeze in a workout or some semblance of a social life. It’s no wonder financial planning often gets pushed to the bottom of the to-do list, especially for busy professionals.

Busy professionals understand that their financial future isn’t some far-off idea. They see in real-time how their future is being shaped right now with every decision they make, every dollar they spend, their job, their family, and several elements outside their control and purview.

Luckily, all you need is a plan and to stick to said plan.

This guide was created for the ambitious, over-extended, high-achieving professionals who want their money working as hard as they do.

1. Know Thy Numbers. Understand what matters and what doesn’t. What matters: your net worth, your savings rate, your monthly cash flow, and your progress toward your big-picture goals. With Financial Freedom as the goal, the way you get there is slowly over time. It’s decisions that compound (either upwards or downwards) that will set you in the direction you’re going.

2. Automate Often. Learn Your Plan. Automation is a busy professional’s bestie. Consider setting up auto-transfers for bills, savings, and everything in between. You might start with high-yield savings, even if it’s $50 bucks a paycheck—choose an amount that you will never have to stop saving until you have at least 3 to 6 months of spending in cash. It’s prudent to consider deferring at least up to the employer match (typically 4%) to your employer retirement plans (401k, 403b, etc.). Work your way up to saving 15-20% of your total household income, even if it’s by increasing your deferral by 1% each year until you max out your retirement plan. Utilize target date funds based on your age 65, set it, and then forget it. Understand your benefits you want to understand how your money is being allocated.

3. Taxes Are Cool! Tax planning is a year-round adventure. Every financial decision we make has some tax implication (for better or worse). Tax strategies can impact the longevity of your plan and help to ensure that your money lasts as long as you do or increase your probability of accomplishing your legacy goals.

4. Protect Yourself. The root of your plan should be defined by what you feel is success—whatever that looks like to you. Ensure you have appropriate insurance coverage to protect against unexpected losses. Regularly review and update policies as your circumstances change.

5. DIY Only Sometimes. There is power in delegation. Hiring a financial planner to create a personalized strategy for you and keep you accountable. More importantly, we are here through every change, expected or unexpected.

Financial Planning is not about perfection; it’s about intention. So, take pause often and ensure you are heading in the direction that YOU want to go. And if not, take the steps to course-correct with courage, clarity and probably a spreadsheet or two.

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

If you're in the Metro Detroit area, join our book tour and receive a FREE copy!

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Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kelsey Arvai, MBA, CFP®, and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through the Center for Financial Planning, Inc. The Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

401(k) and 403(b) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

Matching contributions from your employer may be subject to a vesting schedule. Please consult with your financial advisor for more information.

What Financial Planning Really Means for You and Your Family

Contributed by: Kelsey Arvai, CFP®, MBA

Let me start by telling you what financial planning is not. Financial Planning is not one-size-fits-all. It’s not only for the wealthy. It’s not a one-and-done exercise. And it’s certainly not just about creating a budget or calculating your net worth. Comprehensive financial planning is deeply holistic. It often starts with the numbers (budgets, investments, retirement projects, etc.), but it is ultimately driven by every area of life: social, emotional, physical, and even spiritual well-being.

Building wealth over the long term incorporates aspects of not only financial strategy but also your relationships, mental health, lifestyle, and values. At its core, financial planning is about designing a life that speaks to you and what really matters to you and your family—spending time with loved ones, creating meaningful memories, and making your money work in ways aligned with your values. Time and energy are some of our most finite resources. The art of planning lies in striking the right balance between the two, along with our financial resources while navigating the ever-shifting demands of life. To quote our recent publication, Finding Your Center, which I will do throughout this blog: “The Center was built on a belief that people deserve more than financial advice—they deserve partners who listen.”

Even when you’re not quite sure what outcome you’re aiming for—or how you might get there, you and your family are the starting point. Your unique talents, desires, fears, values, and current life circumstances shape your financial strategy. Think of it like a fitness plan or a nutritional diet: the best one is the one that is tailored for you and your family. Financial Planning is a tool to help optimize your life, not just your portfolio. “True wealth is found in the freedom to live life on your terms, with clarity and confidence.” Whether that looks like living on $2,000/month or $200,000/year, the goal isn’t a specific dollar amount or net worth value. It’s that deeply satisfying sense of clarity, confidence, and calm that comes from designing a plan, following it, and living it. There is no crystal ball that can protect us from pain, fear, or grief. That’s not the goal of planning. “Financial planning isn’t about predicting the future. It’s about preparing you to meet it—wholeheartedly.”

Financial planning can have ripple effects in every direction: from saving for your children or grandchildren’s education to supporting your aging parents or grandparents to navigating windfalls or inheritances to hardships and difficult times. One of the greatest gifts you can give your family is not money; it’s clarity and confidence. “Our work isn’t just for today—it’s for the generations that come after, and the values they’ll carry forward.”

The clients we serve are diverse—young professionals, retirees, blended families, small business owners, your next-door neighbors, your kid’s teachers, and college graduates who are just starting out. “You don’t need to have it all figured out to begin. In fact, that’s why we’re here.”

At the end of the day, financial planning is about more than money, dollars, and cents. It’s about living with alignment and purpose. It’s about being proactive, not reactive, and finding freedom in structure. So, let me leave you with this question: What would it mean to you and your family to feel financially at peace? “Our greatest joy is helping people write their own definition of success—and walking with them as they live it.”

Are you curious about what a personalized financial plan might look like for you or your family? Let’s talk: Discovery Call with Kelsey Arvai, MBA, CFP®.

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

If you're in the Metro Detroit area, join our book tour and receive a FREE copy!

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Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kelsey Arvai, MBA, CFP®, and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through the Center for Financial Planning, Inc. The Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Are You a Fiduciary? What Are Your Fees? How Does It Work?

Contributed by: Kelsey Arvai, CFP®, MBA

Contributed by: Nick Errer and Ryan O'Neal

Fiduciary vs. Financial Advisor

There is often confusion surrounding the differences between financial advisors and fiduciaries. While anyone who gives financial advice may call themselves a financial advisor, what separates fiduciaries is their legal and ethical responsibility to act in the best interest of their clients. In other words, a fiduciary is a person or organization with a legal and/or ethical obligation to act on behalf of someone else (or a group of people) and to put the interests of that individual or group ahead of their own. A fiduciary typically has more knowledge or expertise in a particular area than the person or group the fiduciary is helping.

A fiduciary relationship is intended to eliminate the conflicts of interest and abuses that could occur in such an uneven situation by requiring the fiduciary to always act for the exclusive benefit and interest of those they are serving (common examples are doctors, lawyers and fiduciary financial advisors and investors).  A financial advisor who is not held to the fiduciary standards may provide recommendations that could result in higher commissions or other personal incentives, whereas a financial fiduciary must give advice that best suits a client’s needs, regardless of the consequences to themselves.

Who Regulates Fiduciaries?

Financial Advisors who have a fiduciary commitment to their clients will be registered with either the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) as Registered Investment Advisors (RIAs). All RIAs are required to always act as fiduciaries, which means they put their client’s interests above their own. Additionally, financial advisors may hold professional designations such as Certified Financial Planner™ (CFP®) and Accredited Investment Fiduciary® (AIF®), which have their own ethical standards that must be adhered to.

What Are the Fees?

Fiduciaries are compensated in various ways, and the specific payment structure will vary from one client to another. In some cases, fees are based on a flat rate or hourly charge for a particular plan, while most times, they are calculated as a percentage of Assets Under Management (AUM). Non-fiduciary advisors often receive commissions as part of their payment structure. These advisors are held to a “suitability standard,” meaning they must have a reasonable belief that an investment or transaction is suitable for their customer.

When seeking new financial advice, it is essential to conduct comprehensive research to confirm that the advisor prioritizes your best interests over their own financial gain.

Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Kelsey Arvai, Nick Errer, and Ryan O’Neal and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc® Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

If You’re a Single Woman, These Are the Top 5 Things to Plan for Prior to Retirement!

Contributed by: Kali Hassinger, CFP®, CSRIC™

Retirement planning comes with its own unique set of opportunities and challenges. When you're a single woman, deciding to retire and the many subsequent decisions surrounding that life change can feel like it presents even more anxiety. Focusing on a few key areas to optimize your financial future can help ease these doubts and ensure you make the right financial choices. Here are the top five items to plan for as you consider retirement:

1. Build and maintain a Diversified Investment Portfolio

Throughout your career, you've successfully built your retirement savings pool. When you're working and living off of your income, it can be easier to weather the market's ups and downs. When your portfolio is needed to provide income for your lifestyle and well-being, the stakes are a bit higher. Building a balanced portfolio that aligns with your risk tolerance, time horizon, and retirement goals is extremely important. With those guidelines in mind, your investment portfolio should be well-diversified across various asset classes, sectors, and geographical regions.

2. Understand your Budget, Expenses, and Lifestyle Needs

At all stages of our lives, having a budget and understanding of spending is important. When making the decision to retire, you'll want to plan for both current and future expenses. Women often have longer life expectancies than men, meaning their savings need to last longer in retirement. A detailed budget and retirement spending projection can help you determine if you've saved enough to have a financially confident retirement.

3. Create a Comprehensive Withdrawal Strategy

A well-thought-out withdrawal strategy can help preserve your portfolio and ensure it lasts throughout your lifetime. One common approach is the "bucket strategy," where you segment your savings and portfolio into different buckets or investments based on when you will need to use the money. When working with clients, we recommend keeping approximately 12 months of your portfolio income need in cash or low-risk, cash-like positions that are not subject to market volatility. Beyond that 12-month need, your ability to handle risk can vary.

Your withdrawal strategy should also incorporate and consider the tax implications of your withdrawals to avoid unforeseen tax burdens.  Strategic tax planning can also help to extend the life of your portfolio.

4. Develop an Estate Plan

Estate planning is often overlooked, but it's one of the most critical steps in helping to ensure that your assets are distributed according to your wishes. Whether you choose family or charitable causes, deciding how your savings and possessions are handled can avoid unnecessary stress for your loved ones.

Without a spouse who would be the default decision-maker in a situation where you cannot make them yourself, it's extremely important to ensure that you've appointed a power of attorney for financial or healthcare decisions.

5. Understand your Social Security Benefits

For many, Social Security is the only fixed source of income in retirement, and the decisions are often irrevocable. As a single person, you'll want to optimize the Social Security benefits available to you. Although you can collect as early as age 62, your benefit will be higher if you collect at your full retirement age or even as late as age 70. A financial planner can help you determine the best strategy for you based on your assets, life expectancy, and retirement goals.

As retirement approaches, it's natural to feel overwhelmed by the decisions that need to be made. Working with a financial planner can provide you with the expertise and personalized advice to feel confident in your financial future. It can also provide a partner you can trust with any of life's financial decisions.

Kali Hassinger, CFP®, CSRIC® is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Kali Hassinger, CFP®, CSRIC™ and not necessarily those of Raymond James.

Prior to making an investment decision, please consult with your financial adviser about your individual situation. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc®. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Managing Financial Decisions after a Traumatic Event

Contributed by: Sandra Adams, CFP®

Life happens…someone we love passes away, we are diagnosed with a life-threatening illness, we are involved in a horrible automobile accident that totals our vehicle and makes us scared for our lives. And then, to add to the stress, we need to make a significant financial decision. How can we do that when we are completely traumatized and overwhelmed?

1. Take an intentional time out—called the Decision Free Zone—to ensure you get your mind clear, your emotions settled, and your financial goals clear before making any big financial decisions.

2. Acknowledge the impact of your trauma — understand how your trauma experience may be influencing your financial decisions, and be intentional about putting off big decisions until you feel ready to do so with your future purpose in mind.

3. Prioritize self-care – whether it is taking time to grieve, making sure you get the proper medical or psychological treatment, or just taking time to rest, relax, and recover from the traumatic event, take care of yourself first before pressing yourself to make significant financial decisions.

4. Communicate – Talk to a trusted friend, partner, family member, or professional about your financial concerns or challenges — do not try to manage the stress alone. It is also important to let others know that it may be a while before you are ready to make big decisions so they are not pressuring you based on their timelines.

5. Set boundaries – like the above, set boundaries based on the timelines you feel comfortable with, not with the timelines others are pressuring you to stick to. Only make decisions when you are ready to make them.

6. Seek professional help – Find a professional partner, like a financial advisor trained in transition planning, who understands your need to take your time and can help you through your trauma and transition.

When you have experienced a traumatic event, it is important to be patient with yourself and to make sure to take the proper steps to heal and prepare yourself before making big financial decisions. By taking the appropriate steps and aligning yourself with the right financial partners, you can overcome the trauma and come out the other side making solid financial decisions. If you or someone you know has been through a traumatic event and is struggling with financial decisions and could benefit from some assistance, please send them our way. We are always happy to help.

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandra D. Adams and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Three Financial Planning To-Dos for New Parents

Contributed by: Lauren Adams, CFA®, CFP®

If you’ve recently become a new parent, maybe your first thoughts when meeting your new child were like mine: feelings of overwhelming joy and gratitude, but also immense responsibility for this new life. Not only do you need to feed, clothe, and shelter this child, but you are also responsible for providing for their health, mental, and financial well-being for the next 18+ years. Talk about a commitment!

Hopefully, you have some trusted people in your life to help you with the health and mental well-being part, but we want you to know we’re here to help you with the financial part of the equation. In addition to stocking up on diapers and assembling the crib, we want you to add three very important to-dos to your New Parent Checklist:

1. Review Your Life Insurance Coverage

First, ensure you have enough life insurance to care for your loved ones if something happens to you. Many of us are fortunate to receive some life insurance benefits from our employer through what is called “group term life insurance.” Often, this is equal to a certain dollar amount (for instance, one times your annual salary) and is available at little to no cost to you. The plus side of group term life insurance is that it is cost-effective and usually doesn’t require medical underwriting. The downside of group term life insurance is that it typically does not provide enough coverage that your family would need if you were gone, and it usually does not stay with you if you were to leave your employer.

That is why we frequently recommend that our clients consider getting their own term life insurance through an independent insurance agent. In most cases, term life insurance (as opposed to other kinds of permanent insurance) that provides financial coverage for a certain period of time is the best way to get the most death benefit for the least amount of premium dollars. The length of that term and the dollar amount of coverage can be dictated by financial needs as well as what is important to each client. For instance, some clients want to be able to pay off a mortgage, fund college costs, allow their spouse to hire childcare, and so on. Depending on the dollar amount, you may be required to go through medical underwriting to be approved for the death benefit you want. Your financial advisor can help you determine what time and dollar amount is right for you.

2. Meet with an Estate Planning Attorney

Everyone should have an estate plan in place, which is especially important for parents. An estate plan – that usually includes a Last Will & Testament, Durable Power of Attorney for Finances, Durable Power of Attorney for Healthcare/Advanced Medical Directive, and sometimes a Revocable Living Trust – can make sure all your wishes are correctly carried out in the event of your incapacity or death. This could include everything from who you want to make healthcare decisions on your behalf to at what ages your children should receive any inheritances you leave them. One of the most important things you specify in an estate plan is the guardian for minor children if something happens to you.

When choosing a guardian, parents should discuss who is the best person to care for their children’s needs. The guardian is often a relative or close friend near the same age. The guardian does not have to be the person who manages investments on the children’s behalf (in that case, parents may want to name a separate conservator—someone who handles money on behalf of their minor children). Many times, the guardian and conservator are the same people, but there are situations when the duties are best split (usually depending on the skills and strengths of the friends or family that they choose). In that case, the guardian and conservator work together to determine an appropriate monthly stipend for the guardian to care for their children.

3. Review Your Beneficiaries

Meeting with an estate planning attorney and drafting documents is only one piece of the puzzle. You’d be surprised to learn how often we meet with married couples, help them review their financial statements, and discover that their parents are still named as the primary beneficiaries on their accounts. It is surprising but understandable; between checking and savings accounts, workplace retirement accounts like 401(k)s, Individual Retirement Accounts, and a myriad of other investment account options, there is a lot to keep track of!

When this happens, beneficiaries could be required to go through probate court to obtain inheritances, resulting in additional expenses to settle the estate. Once a client is deceased, their account could be frozen, which delays accessing funds for family members who might rely on the assets (namely, spouses and minor children). Because of this, we regularly help clients keep track of their beneficiaries and account titling.

Now, I know life insurance, estate planning, and beneficiary designations are not the most exciting things to think about after you bring your new bundle of joy home. But knowing that you have a plan in place to care for your child regardless of what happens to you can be one of the greatest gifts you give them. Reach out to discuss your personal situation and let us help you through this process!

Lauren Adams, CFA®, CFP®, is a Partner, CERTIFIED FINANCIAL PLANNER™ professional, and Director of Operations at Center for Financial Planning, Inc.® She works with clients and their families to achieve their financial planning goals.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Lauren Adams, CFA®, CFP® and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.