Putting Meaning into Action – Crafting a Personal Values Statement

Have you ever wondered what giving back to the community could look like for you and your family? Or how you could participate in philanthropic endeavors in a meaningful and impactful way? Melissa Joy, CFP®, hosted a webinar with guest speaker Shelley Strickland, PhD, the Vice President for Development and Donor Services at the Ann Arbor Area Community Foundation, in order to answer those questions.

Strickland began the webinar by unpacking the history and significance behind the term philanthropy in the United States. “Philanthropy,” she explained, “has a Greek root meaning love of human kind. It is voluntary actions for the public good.” This term is inherently loaded with the sorted history of the founders of American philanthropy, Rockefeller and Carnegie, as well as with European roots that tie philanthropy to charity. Rockefeller and Carnegie started a trend that was unique to American giving, which positioned philanthropy as a partner to charity. For example, in addition to providing food in a soup kitchen, Rockefeller and Carnegie felt it was important to figure out why the soup kitchen is needed in the first place and then give to causes that help fix the initial problem. 

Shelley explained that it's OK if people are confused by what philanthropy means in general or more specifically, what it means to you and your family. She explained multiple reasons why people give, including:  

  • Giving back to the community of which you are a part of

  • Giving to show devotion

  • Giving as an investment and or tax break

  • Giving for the social aspects that surround giving

  • And paying it forward as a debt for having good fortune

"Less than 10% of giving is done out of altruism and that's not a bad thing." She assured webinar listeners that whatever your reasons for giving, it's best to take the time to sort through those motivations to give your giving a better strategic plan.

Philanthropy is inherently tied to our values and our values give us motive to start that giving process, so it is imperative for those who want to give, to create a Values Statement that guides your giving with intention to create the most meaningful impact. Too often philanthropic giving is reactive—someone asked you to donate to this charity, so you do—versus strategic. That's why having a plan can give your giving meaning and help you know when to say "no."

So how do you start sorting out your own values and making a strategic giving plan? Easy! Here’s a link to the handout that will take you step-by-step through what you should be thinking about when crafting you and your family's philanthropic values statement. While completing the handout, make sure to ask yourself, "What is the meaning behind that thought? Why is that important to me?" As you go through the questions, you'll start to identify themes in your values and causes that will help narrow the focus of your giving. If you’re unsure of how to properly answer the handout’s questions, take a look at this example of how someone who is passionate about arts education might fill out their own values statement.

Regardless of the size of your gift, it is helpful to identify what values lead your actions, what causes you're passionate about, and what stories define you. Write this for yourself and share with your family. Not only will crafting a values statement guide your philanthropic giving with intention, but it will clarify your actions and give meaning to them so your impact can be even greater.

Center for Financial Planning would like to thank Shelley Strickland, PhD, for taking the time to speak at the webinar for our attendees. This was the first of three webinars we’re offering regarding philanthropy. In this session, Shelly talked about the "why" of giving. Still ahead, she’ll discuss the "how" and the "to whom," so stay tuned!

Raymond James is not affiliated with Shelley Strickland, PhD or the Ann Arbor Area Community Foundation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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The Center Gives Back to our Community

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Contributed by: Clare Lilek Clare Lilek

The end of the year is a busy time as we prepare for holidays, family time, and New Year resolutions. Here at The Center, we decided not to get caught up in the rush of the end of the year and instead carve out time to give back to the community around us and those less fortunate. One of the ways we’re doing this is through our charitable giving. Each month during the fourth quarter our team members have chosen a different cause to support monetarily. In October we donated to the Susan G. Komen Foundation, for November we supported Prostate Cancer Research, and for the month of December, we are donating money to Toys for Tots.

Not only do our team members give their money, but they give their time as well. On November 23rd we volunteered at Focus: Hope, packaging food in their warehouse that was delivered to homebound seniors. And on December 2nd we are volunteering at an organization in Detroit called Arts & Scraps. (UPDATE: The Center Team volunteered December 2nd as planned. Arts & Scraps measures success through smiles. We helped foster 3,000-4,000 future smiles! THAT’S A LOT OF CHILD HAPPINESS!)  The organization’s goal is to take recycled industrial materials and create art packages to give to students and communities to encourage learning through art. 

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Though our individual team members have a range of diverse interests, we unite in our desire to give back to the community around us. During these group volunteer days, we have the chance to learn about different organizations around the Detroit area while participating in a Center value of philanthropy.

At The Center, we also like to donate specific items to charities. Most recently staff members donated hundreds of books to RX For Reading Detroit to help combat the "book desert" in the city. John Mio brought the book drive and organization to our attention and in conjunction with our donations collected over 700 books for the organization!

This power of collective has been seen daily in the office since we partnered with Toys for Tots. Our clients, team members, friends, and family have donated toys to our ever-growing collection. We have already filled one box to the brim and are looking to fill another with new, unused, and unwrapped toys. If you would like to donate toys, feel free to either stop by or send them directly to our office in Southfield by December 16th!

This time of year is filled with love and joy spread by family time in conjunction with so many beloved holidays. The Center is thankful for our good fortune and for the hard work of our dedicated team. We are even more grateful that these kindhearted people contribute to the community in positive and meaningful ways, both individually and collectively. The Center is happy to be part of this communal giving and we’re dedicated to continuing this good will and spirit into the New Year.

Clare Lilek is a Challenge Detroit Fellow / Client Service Associate at Center for Financial Planning, Inc.

Raymond James is not affiliated with any of the charities mentioned. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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How Much is my Medicare Part B Premium Going Up in 2016?

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

Several months ago we heard the news that Medicare part B premiums were increasing by a whopping 52% for many Americans currently enrolled and those who were set to begin benefits in 2016 (Click here to read Matt Trujillo’s blog describing the proposed increase in greater detail).  Obviously this created quite an uproar, which has since caused a significant scaling back of the increase. 

On November 2nd, when President Obama signed the “Bipartisan Budget Act of 2015” into law, most of the “press” was focused on the new Social Security changes that will occur in 2016 (Click here to see how the changes could impact your filing strategy).  However, the deal also included a revision to the increase in Medicare part B premiums many would face. The change effectively trimmed the hike to approximately 14% (from 52%) and included a $3 per month surcharge to premiums.  The majority of those impacted by the increase are those who are single with income over $85,000 and those who are married with income over $170,000 (approximately 30% of part B participants). 

Although no one is happy when a monthly expense goes up by 14%, I must say that it’s extremely refreshing to see both political parties come together and compromise on an issue that was set to have a dramatic impact on millions of Americans. 

If you or anyone you know has questions or concerns on how these changes could impact your personal situation, please don’t hesitate to reach out to us for guidance. We’d be happy to help!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

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 Nick Defenthaler and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

The Center Recognized for Technology Best Practices

Contributed by: Center for Financial Planning, Inc. The Center

Investment News recognized Center for Financial Planning, Inc. as one of 12 firms to receive a Technology Best Practice award. Melissa Joy attended a Best Practices Workshop and Award Presentation in New York City in October in conjunction with the recognition.

The criteria for the award was based on qualitative results from the Investment News 2015 Adviser Technology Study. In the words of Mark Bruno, Associate Publisher of Investment News, in an article about the awards, “the winners think about their practices and businesses as CEOs rather than just advisers. All of these firms are run by people with a long term vision.”

“Technology has always been an important component of our capabilities and ability to deliver exceptional service to our clients,” Melissa Joy commented. “While we are pleased to receive this award, we will not rest on our laurels. We expect that technology will play an increasingly important role in our service going forward.”
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The Ladder to Adulthood—What Millennials Need to Know

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Contributed by: Clare Lilek Clare Lilek

I graduated from college in 2014, and this year started the first salaried job of my professional career. These are big steps in what I call my “ladder to adulthood.” What is this ladder, you may ask? Well twenty-somethings (and thirty-somethings too) each have their own ladder to adulthood: the stepping blocks we accomplish little by little to become full adults. These steps can include becoming participating civil citizens, being financially independent, and having a sense of life and economic stability. Yeah, it’s a pretty important ladder.

When you turn eighteen, your ladder begins as you choose your next steps after graduating high school. Depending on how knowledgeable you are about the adult decisions that lie ahead and how ready you are to make said decisions, you could have a step ladder, or something reminiscent of a skyscraper.

Personally, I didn’t realize exactly how long my own ladder to adulthood was until I arrived at The Center. This is my first time working in the financial industry and my previous exposure to these topics were hushed whispers of the mysterious 401ks and the disappearance of pensions—what did that even mean?! After working here for a couple of months, not only did I figure out what a 401k is, but in general, my knowledge about financial topics has grown exponentially. But that got me thinking, if I didn’t work at The Center, when would I have learned all this? Would it have been too late? Well, not to worry, I have compiled a very basic list of what millennials entering the workforce fulltime should be (but aren’t necessarily) doing:

  1. Think about your future. 401ks and IRAs are fancy terms for savings – savings that are dedicated to your retirement. The earlier you open one of these accounts, the more money you can accumulate and the more stable you’ll be when your retirement comes.

  2. Understand the importance of the market. Investments are the way of the world and just saving money in a bank account is not going to accrue as much interest as investing does. 401ks and IRAs take your savings and invests it in the market which, in theory, will allow you to have more money than just by keeping your money in the bank.

  3. Know the lingo. Stocks vs bonds, and the pros and cons of each. Understand diversified portfolios and what that means for stability.

  4. Save, save, and save some more! Have a budget that includes savings, and stick to it. Don’t live beyond your means, an important life lesson! And when budgeting, save a portion of each monthly salary.

  5. Have a plan. If investments and 401ks are mysteries to you, there is no shame in having a Certified Financial Planner™ help create a plan with you—actually, it’s a very “adult” thing to do. They can set up accounts, plan for your future, and make sure you’re in the know.

Hey Millennial, if you were to win the lottery today, would your first thought be, “I should probably invest that money and save for my future?” What about your second or third thought? I’m going to take a guess that, no, that’s probably not in your initial thought process. But shouldn’t it be? That’s my point. We’re not talking about these topics and no one is talking to us about them, yet they are crucial in securing our future.

We learn as preschoolers that the early bird gets the worm, and in this case, the early bird gets a more comfortable retirement and financial life. Just by learning about financial planning, investments and the like, you are stepping up that ladder to adulthood and ensuring that when you step off that ladder, you’re stepping onto a stable platform.

Clare Lilek is a Challenge Detroit Fellow / Client Service Associate at Center for Financial Planning, Inc.

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. Any opinions are those of Clare Lilek and not necessarily those of Raymond James. 401(k) 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. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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Qualifying for an Affordable Care Act Insurance Subsidy

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Contributed by: Matt Trujillo, CFP® Matt Trujillo

If you retired prior to age 65 (Medicare eligibility age), and didn’t get ongoing insurance from your former employer, then odds are you purchased health insurance through a health care exchange.  Depending on your modified adjusted gross income (MAGI) you may have been entitled to a subsidy on your monthly insurance premiums. 

The subsidy depends on your household size (how many people you claim on your tax return), as well as your modified adjusted gross income.  If you are unfamiliar with the concept of MAGI, it is your AGI (the number at the very bottom of your 1040) plus some stuff you have to add back such as non-taxable social security benefits, tax exempt interest, and excluded foreign income. These items are important to note because just simply looking at your AGI might lead you to believe you qualify for a subsidy – when in fact you don’t.

How To Qualify for a Subsidy

The subsidy amount is determined by several factors, chief amongst them is your MAGI relative to the declared federal poverty level for a given year. For 2015 the federal poverty level for a household of 2 is $15,390 and for a family of 4 it is $24,250.  Determining where you are on the scale (you can be anywhere from 100%- 400%) will determine your eligible subsidy.

Common Health Care Subsidy Questions

Q: What if you estimate that your income will be 400% of the federal poverty level, making you eligible for a subsidy, and in reality it ends up being more than that?

A: You will have to pay back the entire subsidy you received throughout the year. My advice in this case is if you think it’s going to be really close, it might be better to wait until the year is over and file form 8962 with your taxes to see if you were eligible for any subsidy that you didn’t receive. If, in fact, you were eligible, you will get any owed money back in your tax refund come tax time.

Q: What if I overestimate my income and I received a smaller subsidy on insurance premiums than I should have received throughout the year?

A: Again, this is where form 8962 comes in handy. Fill this out with your taxes and any money you should have received will be given back to you in your tax refund can be applied against tax owed or refunded to you if there is no tax liability to offset).

As always, if you have questions about your personal situation, we’re here to help!

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

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 Matt Trujillo and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. 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.

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Year-End Financial Checklist: 7 Tips to End on High Note

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Contributed by: Jaclyn Jackson Jaclyn Jackson

And just like that, we are already in the fourth quarter; the year has gone by quickly! Before it completely slips away...

Try these top tips to strengthen your finances and get things in order for the year ahead:  

  1. Harvest your losses – Tax-loss harvesting generates losses that can be used to reduce current taxes while maintaining your asset allocation. Take advantage of this method by selling the investments that are trading at a significant loss and replacing them with a similar investment. 

  2. Max out contributions – While you can wait until you file your tax return, it may be easier to take some of your end-of-year bonus to max out your annual retirement contribution.  Traditional and Roth IRAs allow you to contribute $5,500 each year (with an additional $1,000 if you’re over age 50).  You can contribute up to $18,000 for 401(k)s, 403(b)s, and 457 plans.

  3. Take RMDs – Don’t forget to take the required minimum distribution (RMD) from your IRA.  The penalty for not taking your RMD on time is a 50% tax on what should have been distributed.  RMDs should be taken annually starting by April 1st of the year following the calendar year you reach 70 ½ years of age.

  4. Rebalance your portfolio – It is important to rebalance your portfolio periodically to make sure you are not overweight in an asset class that has outperformed over the course of the year.  This helps maintain the investment allocation best suited for you.

  5. Use up FSA money – If you haven’t depleted the money in your flexible spending account (FSA) for healthcare expenses, now is the time to squeeze in those annual check-ups.  Some plan sponsors allow employees to roll over up to $500 of unused amounts, but that is not always the case (check with your employer to see if that option is available to you). 

  6. Donate to a charity – Instead of cash, consider donating highly appreciated securities to avoid paying capital gains tax.  Typically, there is no tax to you once the security is transferred and there is no tax to the charity once they sell the security.  If you’re not sure where you want to donate, a Donor Advised Fund is a great option.  By gifting to a Donor Advised Fund, you could get a tax deduction this year and distribute the funds to a charity later. 

  7. Review your credit score – With all of the money transactions done during the holiday season, it makes sense to review your credit score at the end of the year.  You can go to annualcreditreport.com to request a free credit report from the three nationwide credit reporting agencies: Equifax, Experian, and TransUnion.  Requesting one of the reports every four months will help you keep a pulse on your credit status throughout the year.

Bonus: 

If there have been changes to your family (new baby, marriage, divorce, or death), consider these bonus tips:

  • Adjust your tax withholdings

  • Review insurance coverage

  • Update financial goals, emergency funds, and budget

  • Review beneficiaries on estate planning documents, retirement accounts, and insurance policies

  • Start a 529 plan

Jaclyn Jackson is a Research Associate at Center for Financial Planning, Inc.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jaclyn Jackson and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. RMD's are generally subject to federal income tax and may be subject to state taxes. Consult your tax advisor to assess your situation. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

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Veterans Day Tribute to Those Who Served

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Contributed by: Center for Financial Planning, Inc. The Center

The Veterans Day holiday offers us all an opportunity to say “thank you” to those who served our country. This year, we wanted to include a personal tribute to some special veterans who are close to our hearts. From WWII through Korea and Vietnam, relatives of our Center team have bravely answered the call of duty. For this, we are grateful, today and always.

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What the End of “File and Suspend” and “Restricted Application” Means for You

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

On November 2nd, President Obama signed the Bipartisan Budget Act of 2015 into law. It contained the first major change in Social Security since 2000, eliminating popular Social Security strategies “file and suspend” and “restricted application”.  The result of this legislation is less lifetime Social Security benefits for many who planned on delaying retirement benefits until age 70.

Let's take a look at an example of how the strategies were most widely utilized:

Mark and Carrie are 65 years old and recently both retired from Microsoft.  They were both highly compensated and paid the maximum into Social Security for several decades, thus creating a $30,000/yr benefit for Mark and a $32,000/yr benefit for Carrie upon reaching full retirement age (FRA) – in their case, age 66.  Because they are both in great health, have longevity in their family and have accumulated a $1.5M portfolio to supplement retirement income, they planned to delay filing until age 70 to both get the highest possible annual benefit for life (benefits increase 8% each year you delay until age 70).    

Mark and Carrie’s financial planner suggested one change to this plan.  If Carrie were to file and immediately suspend her benefit at her Full Retirement Age  of 66, this would allow Mark to file a “restricted application”.  Filing the “restricted application” would entitle Mark to 50% of Carrie’s FRA benefit, or $16,000/yr (50% of $32,000) from age 66 until age 70.  During this same time frame, Carrie would not be receiving any benefit because she “filed and suspended” in order to receive an 8% annual benefit increase until age 70. 

When Mark turns 70, he would switch from the “restricted application” benefit of $16,000/yr to his own maximized benefit of approximately $41,000/yr (compared to $30,000/yr at age 66). At 70, Carrie would finally start to collect on her own benefit that has now grown to approximately $43,000/yr (compared to $32,000/yr at age 66) after receiving no benefits from age 66 – 70. 

It made perfect sense for Mark and Carrie to both delay benefits until age 70 because of the reasons mentioned earlier, however, by taking advantage of the “file and suspend” and “restricted application” strategies, they were able to bring home another $64,000 in total lifetime benefits ($16,000 x 4 years)! 

So why are these strategies going away? 

Lawmakers saw “file and suspend” and “restricted application” as unintended loopholes that emerged from legislation in 2000.  An additional $64,000 in total lifetime benefits really adds up, especially as more and more retirees are maximizing their benefits using this strategy.  The reforms in this year’s budget bill are projected to save Social Security an estimated $168 billion over 75 years – WOW!

Some important things to consider:

What if I’m currently receiving benefits from the “file and suspend” or “restricted application” strategies?

Don’t panic!  You are “grandfathered” in and your benefits will not change or be interrupted whatsoever.

When will the “file and suspend” strategy be eliminated and is there an age requirement?

If you attain age 66 (full retirement age for those born between 1943 and 1954) by April 29, 2016 you are eligible to still take advantage of the strategy but you must also apply for this benefit strategy by the same date.  If you wait beyond April 29, 2016 or attain age 66 after this date, you will not be able to “file and suspend”.  

When will the “restricted application” strategy be eliminated and is there an age requirement?

If you attain age 62 by the end of 2015, you are “grandfathered” in and are able to take advantage of this filing strategy if it makes sense for your situation.  Those who will not be 62 by year-end will unfortunately not be able to employ this filing strategy.

Obviously with this being a very new piece of legislation, there are still questions that need to be answered and details that need to be shaken out.  Keep your eyes open for additional communication regarding this important change in Social Security and as always, don’t hesitate to reach out to us directly if you have questions about your own personal situation!

If you are interested in more on this topic, register for our April 7th webinar here.   

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James

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