Webinar in Review: Part 3: Divorce & Finance 101 for Michigan Women

Contributed by: Jacki Roessler, CDFA® Jacki Roessler

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I’ve been working with divorcing clients and their attorneys for well over 20 years now. Although every single case I’ve worked on has had its own unique issues and challenges, most initial appointments follow a similar trajectory. First and foremost, I always want to hear what the person in front of me is most concerned about.  In fact, I want to hear ALL of their financial concerns and questions relative to the divorce.

Once their concerns are on the table (and in my notepad), I find that most clients need education on the basics.  In fact, it’s been a rare first meeting that doesn’t end with me stepping up to a white board to present what I call “Divorce Finance 101”. If my client doesn’t understand the key issues that surround child support, alimony and property division, we can’t even begin to address concerns about handling a family-owned business, paying for college costs, substantiating the need for alimony or what may or may not be considered separate property.

The webinar that follows is a compilation of my favorite topics from “Divorce Finance 101”. A few words of warning. This information is fluid. It changes over time as State, Federal and tax law changes occur.  There are always exceptions to all the “basic rules” too, of course. Most importantly, I am not a lawyer and therefore cannot provide legal advice. I can only give information based on my professional experience. My most important piece of advice to any client is how critical it is to hire a qualified, experienced family law attorney that practices often in your county court system.

As always, please feel free to contact me at jacki.roessler@centerfinplan.com for any questions that are specific to your case or if you have any future webinar topics you’d like to suggest.

Jacki Roessler, CDFA® is a Divorce Financial Planner at Center for Financial Planning, Inc.®

Any opinions are those of Jacki Roessler 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.

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Webinar in Review: Grief and Healing

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Contributed by: Sandra Adams, CFP® Sandy Adams

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According to the U.S. Census Bureau, over 24% of the U.S. population over the age of 65 is widowed.  But widowhood impacts people of all ages, and the effects are often more painful and long lasting when the loss happens earlier in life.  At The Center, we have worked with clients of all ages that have, expectedly or unexpectedly, been impacted by the loss of a spouse. Each person goes through a different grief process and has his or her own individual experience with grief and loss.  The transition is one that is difficult and can take years — but there is light at the end of the tunnel.

On December 12th, Dr. Peter Lichtenberg joined us to present a webinar on Grief and Healing.  Dr. Lichtenberg, who was twice widowed by the age of 55, shared his own personal experience with grief and loss — twice.  While each experience was different in its own right, he was able to learn about himself while learning to honor and keep with him the spirit of two women that he has loved so deeply in his life. Dr. Lichtenberg provided information about patterns of grief, feelings to be aware of when experiencing loss, and advice on how to get through the hard times to get to a point of acceptance and rebuilding of a new life. 

Dr. Lichtenberg’s Lessons Learned from his Grief and Loss experiences:

  1. Don’t underestimate the power of loss early on.

  2. Have the right person stay with you after the death.

  3. Plan and be prepared (estate planning documents, etc.)

  4. Arrange the funeral or memorial service the way you want it, and let others help you with the final details.

  5. If you have children, find a way to keep the same routine, and keep them in their routine.

  6. Communicate, communicate, communicate — especially during the first month.

  7. Find a professional skilled in dealing with death and dying who can listen and help you on your journey.

  8. Think about how you want to talk about your loved one.

  9. The journey of grief will bring you in touch with your frailties; try to view this as a journey of growth and exploration.

  10. Revisit notes, letters and pictures from your loved one. These affirmations are a powerful force in healing.

  11. Experience as much gratitude as you can. Gratitude is a powerful healing force that allows you to live in the present.

  12. Know what depression is, and how it differs from grief.

If you were unable to listen to the webinar on December 12th, we encourage to listen to the replay. And if you or someone you know has experienced the loss of a loved one and needs assistance or resources, please feel free to reach out to us at The Center.  We are here to help!

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Dr. Litchenberg is not affiliated with Raymond James.

Holiday Online Shopping Scams

Contributed by: Nicholas Boguth Nicholas Boguth

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Tis’ the holiday season, which means plenty of online shopping for a lot of us. For those of you who have been or will be online shopping for the holidays, we want you to take special care to avoid attempted fraud.

Most of these online shopping scams will come through your email in the form of a fake offer, receipt, or shipping notice.

The most important thing is to avoid clicking on anything that seems out of the ordinary, and if you get an offer that seems too good to be true – it probably is.  You may also see these “too good to be true” offers on social media, and they could even look like a friend shared it with you. In these cases, do some research before clicking, and avoid filling out personal information on non-reputable websites.

Protect yourself by shopping with a credit card; it is easier to deal with fraud if you ever do fall victim.

If you are emailed a receipt or shipping notice for something that you did not purchase, do not click the email. Instead, check your credit card transactions to see if this purchase actually did happen. If it did happen, contact your credit card company immediately to report the fraud.

This is also a good time to remind everyone to periodically change your passwords for online accounts, and be sure to use different passwords for different accounts. If possible, only shop at well-known online stores, or retailers that you have had success with in the past. Be on the lookout for anything out of the ordinary. If you do come across something you believe to be fraudulent, report it to the FBI’s internet crime complaint center (https://www.ic3.gov/default.aspx).

Keep these tips in mind and happy holiday shopping!

Nicholas Boguth is an Investment Research Associate at Center for Financial Planning, Inc.® and an Investment Representative with Raymond James Financial Services.

Third party links are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor the listed website or its respective sponsor. 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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Webinar in Review: Part 2: Cash Flow Planning for Women in Divorce

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Contributed by: Jacki Roessler, CDFATM Jacki Roessler

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Developing a game plan with minor children can be empowering for all

(Adapted from a blog previously published in 2015)

Recently I sat down with my client, “Jane” for a “moment of truth” meeting. The culmination of several client meetings and extensive number crunching, it was apparent Jane’s primary financial goal wasn’t realistic. Above all else, Jane wanted her three children to experience little to no change in their current lifestyle.

Based on my projections, that wasn’t likely to happen without sacrificing the family’s long-term financial well-being.

The kids’ lifestyle included private school tuition, overnight summer camp and a plethora of expensive extra-curricular activities. As a parent of young children, I empathize with the desire to keep things as stable as possible in the midst of a tumultuous time. As a divorce financial planner, however, my job is to inject a dose of reality into the mix for my clients-before they make agreements they may regret in 3 years.

In this case, Jane was stunned to hear that child support wouldn’t cover all her minor children’s expenses. Like most states, Michigan’s child support formula factors the income of both parents, the parenting schedule, family size and the tax status of the parties into the equation. The actual expenses of the children are not automatically considered. Jane assumed that since her husband had agreed in the past to prioritize private school tuition, he would be required to continue. That wasn’t necessarily the case. Savings for future college costs? Not part of the formula. The same goes for horseback riding camps, travel soccer, music lessons, etc…

After several tough meetings and in-depth conversations, Jane made some difficult decisions. The truth was that her kids’ expenses had contributed in some way to the divorce; she and her husband had been living beyond their means.

On the advice of her therapist, Jane sat down with her kids to discuss developing a family financial game plan. That might mean downsizing their house or cutting back on some of the extras. It might even mean a change of schools. However, it was empowering for them all (yes, even the kids) to know that they would be ok if they made smart financial decisions now to protect themselves for the future. For example, they all agreed that it was more important for Jane to be home after school than it was for the kids to continue at any particular school. The kids understood that they couldn’t attend every camp they had in the past, but would be able to choose one special experience. Jane didn’t burden her children with specific numbers or financial worries, rather, she initiated a dialogue about prioritizing to keep the family stress-free.

It may feel uncomfortable to discuss finances with children, especially as it relates to divorce. However, frank money talks and responsible role modeling by parents helps children set and achieve their own financial goals as they venture into adulthood.

If you’re going through a divorce and want more detailed information about cash flow planning, please click below to watch our webinar replay.

Jacki Roessler, CDFATM is a Divorce Financial Planner at Center for Financial Planning, Inc.®

Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on legal issues, these matters should be discussed with the appropriate professional.

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2017 Year-End Financial Planning

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Contributed by: Josh Bitel Josh Bitel

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With the fourth quarter upon us, tedious tasks like assessing your financial situation can often fall by the wayside.  With that in mind, this is a good time for us to share some important items to consider before the end of the calendar year. Here are a few things to consider before you take on 2018.

Establish or tighten up your emergency fund.

As we often recommend, keeping three to six months worth of expenses saved in an easily liquidated and accessible account can protect you against any unforeseen perils that may arise. Getting an emergency fund in place before the year wraps up is a great way to jump-start your budget for 2018.

Check your flexible Spending Account

Make sure you don’t end the year with a balance inside your FSA plan. Most of these plans have a ‘use it or lose it’ feature. So if you’re putting off that pesky doctor’s visit or are overdue for a new pair of prescription glasses, use your pre-tax dollars you’ve elected to cover these expenses!

Review your retirement accounts to make sure you’re on track to maximize your contributions

Whether it is an IRA account, either traditional or Roth, or an employer sponsored plan, the end of the year is a great time to assess your contributions and make sure you’re on track to meet your goals. This is important for your tax situation as well, as you may be able to deduct contributions to certain retirement plans. Although IRA accounts can be funded up until April 15th of the following year (up to $5,500 if you’re under age 50), it’s never too early to make sure you’re on track!

Give a tax-deductible charitable contribution

The end of the year is a time when we’re all thinking about giving. If you are charitably inclined, the end of the year is a great time to donate to any causes you are passionate about so you can receive a write off on your taxes for 2017. Don’t forget, donating appreciated securities from a taxable account is often more advantageous for you and the cause you believe in! Make sure you are making this donation for something you really believe in and not just for the potential tax write-off, the holiday season is a great time to asses this.

As always, in regard to your financial life, we are here to assist in anyway we can. These are just a few of the things you should keep in mind as the year wraps up. If you have any questions regarding your personal situation, contact us here at The Center for Financial Planning.

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®

Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional.

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Travel Planning Tips

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Contributed by: Raya Chope Raya Chope

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Whether you want to take a dream trip around the world or simply want to visit your close relatives for a few days, you can benefit from some pre-trip planning. If you plan far enough in advance, you'll usually get better rates on airline fares, lodging, and packages than if you wait until the last minute, particularly if your travel plans are flexible. If you're traveling to a foreign country, you may need time to obtain a passport or a visa or to research your itinerary. In addition, you'll reduce the inevitable stress that accompanies traveling by preparing yourself as thoroughly as possible.

Financial Considerations for Travelers:
 

Cash vs. Credit Card

The main advantage to paying for your trip with cash is that you'll be less likely to overspend, because you can clearly see how much you're spending. Plus, you won't have to pay your trip off gradually over time, long after your vacation has ended. Even if you pay for most of your travel arrangements with cash, make sure that you do not carry large amounts of cash with you on your trip. It's safer to take traveler's checks or use an ATM card.

Prepare a Daily Budget

Have you ever returned from a trip happy because you spent less than you anticipated? If you're like most travelers, the answer is no. You usually return from trips feeling overextended or even guilty because you spent more money than you wanted to. If you want to avoid this, plan a daily budget before you leave on your trip. This can mean simply deciding how much you want to spend each day, or it can mean breaking down how much you want to spend on certain items on your trip.

Prepare for Cancellation Fees

Before making travel arrangements, find out what will happen if you have to cancel your trip. In most cases, you'll pay some penalty if you cancel. For instance, if you purchase nonrefundable airline tickets (many tickets issued at a “low fare rate” are nonrefundable), you cannot get a refund if you cancel your trip. If you have to cancel a group tour or cruise, expect to pay part or all of the cost of the trip, depending on how early you cancel. Since the cancellation policies vary widely, make sure you understand how and when you will be charged if you cancel.
 

Make copies of your important documents

Before you go on your trip, copy all your important documents, including your driver's license, your medical card, your credit cards, and your passport. Give a copy to a friend/family member at home in case your wallet or identification is stolen. Keep with you a copy of your passport, your airline ticket number, and a log showing what traveler's check numbers you've used in case these get lost or stolen.

We love to see our clients living out their travel dreams, please don’t hesitate to call or email our staff with any questions.

Raya Chope is a Client Service Associate at Center for Financial Planning, Inc.®

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

Webinar in Review: Part 1: The Grey Divorcée

Contributed by: Jacki Roessler, CDFATM Jacki Roessler

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Social Security Tips for Grey Divorcees: 3 Things We Bet You Didn’t Know

(Revised and updated from an original blog posted in July, 2015) by Jacki Roessler, CDFA™ and Melissa Joy, CFP®)

Back in July, 2015, Melissa and I presented a workshop on Social Security benefits and divorce to attorneys with the intent of giving them information to protect their clients. Since that time, we’ve both worked with many grey divorce (i.e. over age 55) clients who benefited greatly from this advice. We believe now is a good time to bring these issues directly to those in the process of divorce.

1. It is most likely NOT better to claim Social Security early, at age 62.

Generally, as long as you can afford to wait to age 66 and you’re in good health with a reasonable life expectancy, it’s far better to wait to full retirement age (FRA) to collect, in order to maximize lifetime Social Security benefits.

This seemed counter-intuitive for many of the workshop attendees, as it was for me when I began researching this topic. However, there is a steep reduction in benefits for those who collect early. That reduction lasts a lifetime. Keeping in mind that Social Security is an income stream that cannot be outlived, and life expectancy for Americans has increased dramatically, any number crunching will back up this tip. Think Social Security might go bankrupt? Despite what you’ve heard, this is an extremely unlikely scenario for the baby boomer generation and beyond.

Of course, if you need the cash flow and don’t have other sources of income, this strategy may not be feasible.

2. 10 years married is the magic number.

Ex-spouses are entitled to receive up to 50% of their former spouse’s Social Security benefit or 100% of the benefit on their own work history, whichever is greater. However, in order to qualify, the marriage had to last 10 consecutive years and the recipient ex-spouse cannot be remarried.

Suppose Sarah, a lower-wage earner, is in a marriage with a high-wage-earning spouse. Sarah’s ex-husband’s FRA Social Security benefit is $2,400. Sarah could receive 50% of her ex’s benefit ($1,200 per month) or the benefit on her own work history, $700 per month. Wouldn’t Sarah prefer bumping up to the divorced spouse retirement benefit in lieu of claiming her own?

Unfortunately, we see cases all the time where the marriage lasted close to 10 years — but not quite! This is often a critical planning error. Some couples might be willing to stay married for an additional year to have access to a larger lifetime income stream for the low-wage-earning spouse.

Keep in mind that when a divorced spouse’s retirement benefit is paid, it doesn’t impact the high-wage earners benefit in any way. They can still receive 100% of their own Social Security benefit. In fact, as long as the high-wage earner was married to each spouse for 10 consecutive years, he or she could have up to 4 ex-spouses collecting a divorced spouse benefit on their earnings.

3. Consider not remarrying before age 60.

Social Security Widow’s benefits can be up to 100% of the deceased spouse’s Full Retirement Age benefit. This rule applies to ex-spouses as well. Sarah in the example above would be entitled to receive as much as $2,400 per month (remember that her own workers’ benefit was $700 per month and monthly spousal benefits were $1,200). However, there is a little-known caveat: the ex-spouse can’t remarry before age 60. In the example above, Sarah would surely consider putting off her pending marriage to her new beau, Mark, until she turns 60. If the remarriage occurs after age 60, Social Security Widow benefits would still be available.

If you’re going through a “grey” divorce and want more detailed information, please click on the link below to watch our webinar replay.

As always, we’re here to help. If you need assistance, contact Jacki at Jacki.Roessler@centerfinplan.com or Melissa at Mellisa.Joy@centerfinplan.com.

Jacki Roessler, CDFATM is a Divorce Financial Planner at Center for Financial Planning, Inc.®

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 Jacki Roessler and not necessarily those of Raymond James. This is a hypothetical example for illustration purposes only. Actual investor results will vary. This is a hypothetical example for illustration purposes only. Actual investor results will vary. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Is Corporate Tax Reform a Good Thing?

Contributed by: Jaclyn Jackson Jaclyn Jackson

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The probability of tax reform is increasing with the White House proposing to reduce the corporate statutory federal tax rate from 35% to 20%.  Even though most companies don’t actually pay at the 35% tax rate (26% median effective tax rate for the S&P 500), the tax cut is projected to lift S&P earnings by 8%.  While S&P projections sound good, economic benefits are not a sure thing as implications could have varying outcomes based on historical data. 

To illustrate the complexity of implications, I’ve outlined core arguments that prove and disprove the benign effects of lowering the corporate tax rate.

For:

  1. Incentivizes US companies to stay in the US, expand business, and increase employment.

    According to a study done by J.P. Morgan, 60% of the cash held by 602 US multi-national companies is in foreign accounts. They concluded that $663 billion would be invested into business expansion and job growth in the United States, if an income tax cut were offered to companies that repatriate.
     

  2. Higher corporate income taxes lower worker wages, diminish consumption, and increase unemployment.

    Using data from 1970-2007, a Tax Foundation study found that for every $1 increase in state and local corporate tax revenues, hourly wages would drop an estimated $2.50. Theoretically, lower wages decrease one’s ability to buy goods, resulting in lower income for businesses thereby creating a net increase in unemployment.
     

  3. Job growth is inhibited by the current corporate income tax rate which is over the rate that maximizes revenue to corporations and the US government.

    Based on studies of the Laffer curve, the corporate income tax rate that maximizes revenue to both corporations and the US government is 30%.

Against:

  1. Repatriation doesn’t ensure more jobs in the US.

    Congress passed a tax holiday in 2004 that allowed companies to bring back earnings made abroad at a 5% income tax instead of at 35%.  Fifteen of the companies that most benefitted cut more than 20,000 net jobs.
     

  2. Historically, unemployment rates were the lowest in US when federal corporate income tax rates were the highest.

    From 1951 (top marginal corporate income tax rate rose from 42% to 50.75%) to 1969 (rates reached 52.8%), the unemployment rate moved from 3.3% to 3.5%. From 1986 to 2011 (top marginal corporate income tax rate declined from 46% to 35%), the unemployment rate moved from 7% to 8.9%.

    Majority of economists don’t link employment to lower tax rates.  When 53 American economists were polled, 65% attributed employers not hiring to lack of product/service demand.
     

  3. High corporate profits don’t guarantee low unemployment rates.

    In 2011, corporate profits made up 10% of US GDP (highest since 1950), but corporate income tax revenue only brought the US federal government the equivalent of 1.2% of GDP (lowest in recorded history). In 2011, the US unemployment rate was 8.9% compared to the OECD (Organization of Economic Cooperation and Development) average of 8.2%.

*Data summarized from https://corporatetax.procon.org/.

While most would agree lowering corporate tax rates deserves serious consideration, it is not a given that lowering corporate tax rates will improve employment nor consumption.  Today, US corporate profits are high (sitting on nearly $2 trillion in cash), yet wages and job creation hasn’t gone up significantly. There are many other factors to consider with comprehensive tax reform, not to mention the tough tradeoffs involved in this process. Frankly, tax reform is a huge, convoluted undertaking; time will tell whether the current administration is up to the task.

Jaclyn Jackson is a Portfolio Administrator and Financial Associate at Center for Financial Planning, Inc.®

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. 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. Past performance is not a guarantee of future results.

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