The Gambler

sell buy hold stocks

While I’m not a big country music fan, one of the few country songs I can sing along to is “The Gambler” by Kenny Rogers. While Kenny certainly knew how to make money, he also had a pretty good idea of how to keep it: “You gotta know when to hold ‘em, know when to fold ‘em, know when to walk away, and know when to run.” There’s a valuable lesson for investors in those lyrics. 

Most investors (and professionals, too) spend a lot of time deciding which investments to buy and little time understanding when to sell. It’s crucial to have a security selection process in place, and to understand what you own and why you own it, even if it is just an index mimicking strategy.

Part of your process, even before buying a security, should be to outline reasons you would hold the investment even through downturn periods. This can help you resist the temptation to sell in the wrong moments, for the wrong reasons. It is also important to establish factors that could cause you to sell.

At The Center, some of our reasons to potentially change strategies within a portfolio are: 

Security specific

  • Key personnel departure

  • Attainment of your price target

  • Increased correlation to other investments

  • Deviation from intended outcomes

  • Expenses

Goal specific

  • Change in circumstances (ie. entering retirement)

  • Change in risk tolerance

  • Change in the outcome needed to achieve long-term financial planning goals

Having these points in mind will make thinking about selling a position or changing your overall investment strategy (strategic allocation) easier and much less emotional. 

While it is usually best to buy and hold over longer periods of time, knowing when to hold ‘em and fold ‘em doesn’t come easily. But with some thought, you can make prudent decisions when you buy and when you sell, because you never want to have to walk away … or worse yet … have to run!

Angela Palacios, CFP®, AIF®, is a partner and Director of Investments at Center for Financial Planning, Inc.® She chairs The Center Investment Committee and pens a quarterly Investment Commentary.


Any opinions are those of Angela Palacios and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Can you roll your 401k to an IRA without leaving your job?

Nick Defenthaler Contributed by: Nick Defenthaler, CFP®

Can you roll your 401k to an IRA without leaving your job?

Typically, when you hear “rollover,” you think retirement or changing jobs. For the vast majority of clients, these two situations will be the only time they complete a 401k rollover. However, another option for moving funds from your company retirement plan to your IRA — the “in-service” rollover — is an often overlooked planning opportunity. 

Rollover Refresher

A rollover is simply the process of moving your employer retirement account (401k, 403b, 457, etc.) to an IRA over which you have complete control, separate from your ex-employer. If completed properly, rolling over funds from your company retirement plan to your IRA is a tax- and penalty-free transaction, because the tax characteristics of a 401k and an IRA generally are the same.  

What is an “in-service” rollover?

Unlike the “traditional” rollover, an “in-service” rollover is probably something unfamiliar to you, and for good reason. First, not all company retirement plans allow for it, and second, even when it’s available, the details may confuse employees. The bottom line: An in-service rollover allows an employee (often at a specified age, such as 59 ½) to roll a 401k to an IRA while employed with the company. The employee may still contribute to the plan, even after the completed rollover. Most plans allow this type of rollover once per year, but depending on the plan, you potentially could complete the rollover more often for different contribution types at an earlier age (sometimes as early as 55).

Why complete an “in-service” rollover?

While unusual, this rollover option offers some benefits:

More investment options: Any company retirement plan limits your investment options. You can invest IRA funds in almost any mutual fund, ETF, stock, bond, etc. Having options and investing in a way that aligns with your objectives and risk tolerance may improve investment performance, reduce volatility, and make your overall portfolio allocation more efficient.

Coordination with your other assets: Your financial planner can coordinate an IRA with your overall plan with much greater efficiency. How many times has your planner recommended changes in your 401k that simply don’t get completed? When your planner makes those adjustments, they won’t fall off your personal “to do” list.

Additional flexibility: IRAs allow penalty-free withdrawals for certain medical expenses, higher education expenses, first time homebuyer allowance, etc. that aren’t available with a 401k or other company retirement plan. Although this should be a last resort, it’s nice to have the flexibility.

Exploring “in-service” rollovers

So what now? First, always keep your financial planner in the loop when you retire or switch jobs to see whether a rollover makes sense for your situation. Second, let’s work together to see whether your current company retirement plan allows for an in-service rollover. That typically involves a 5-10 minute phone call with us and your company’s Human Resources department.

With your busy life, an in-service rollover may fall close to the bottom of your priority list. That’s why you have us on your financial team. We bring these opportunities to your attention and work with you to see whether they’ll improve your financial position! 

Nick Defenthaler, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He contributed to a PBS documentary on the importance of saving for retirement and has been a trusted source for national media outlets, including CNBC, MSN Money, Financial Planning Magazine, and OnWallStreet.com.


Rolling over your retirement assets to an IRA can be an excellent solution. It is a non-taxable event when done properly - and gives you access to a wide range of investments and the convenience of having consolidated your savings in a single location. In addition, flexible beneficiary designations may allow for the continued tax-deferred investing of inherited IRA assets. In addition to rolling over your 401(k) to an IRA, there are other options. Here is a brief look at all your options. For additional information and what is suitable for your particular situation, please consult us. 1. Leave money in your former employer's plan, if permitted Pro: May like the investments offered in the plan and may not have a fee for leaving it in the plan. Not a taxable event. 2. Roll over the assets to your new employer's plan, if one is available and it is permitted. Pro: Keeping it all together and larger sum of money working for you, not a taxable event Con: Not all employer plans accept rollovers. 3. Rollover to an IRA Pro: Likely more investment options, not a taxable event, consolidating accounts and locations Con: usually fee involved, potential termination fees 4. Cash out the account Con: A taxable event, loss of investing potential. Costly for young individuals under 59 ½; there is a penalty of 10% in addition to income taxes. Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. 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 re tax or legal matters with the appropriate professional. 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. Roth 401(k) plans are long-term retirement savings vehicles. Contributions to a Roth 401(k) are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unlike Roth IRAs, Roth 401(k) participants are subject to required minimum distributions at age 70.5.

How to Deal with Financial Decisions When a Major Life Event Has You Feeling Stuck

Sandy Adams Contributed by: Sandra Adams, CFP®

How to Deal with Financial Decisions When a Major Life Event Has You Feeling Stuck

We’ve all had at least one. A major life event — some might even describe it as a trauma — that leaves us feeling like we’ve been run over by a freight train. For some of us, it may have been a divorce; for others, the loss of a spouse or other close loved one. It could be the sudden loss of a job, a terminal illness diagnosis or accident. Even unexpected “good news” events, like an inheritance or job promotion that comes with a move, can feel stressful when other aspects of your life are unsettled.

Times like these might leave a person unable to envision future goals or make ANY short or long term decisions. It’s common to feel stressed, numb, uncomfortable, anxious, confused — any of these, all of these — or just plain STUCK!

If “stuck” sounds like a place where you (or someone you know) might be, what can you do?

  • First, work with your financial decision partner (your financial advisor) to make sure that you are immediately okay and that any immediate cash flow needs are being met. Those are the only decisions that REALLY need to be made now.

  • Next, take an intentional “time out” (we call this the “DECISION FREE ZONE”) from making any major financial decisions or plans. This gives you time to deal with the life event that has happened or is happening to you.  Take time to take care of you — physically, psychologically, and emotionally — and get back to the business of future planning and decision making when your head is in a more clear place.

  • When you are ready to start thinking about planning again, take a step away from your current situation. “Getting on the balcony” can give you a more clear perspective. With the help of your financial decision partner, you can see your situation from a new point of view and begin the process of setting new goals for your new normal.

Getting “un-stuck” is not easy. And it cannot be done without patience, time, and the help of a good decision partner. 

What has you stuck?  What life event or life events have you feeling numb, stressed, and unable to make decisions?  Understand that this is likely to happen to all of us at some point in our lives, so do not feel alone.  And do not feel pressured to make decisions and or to move forward until you have taken care of yourself and feel comfortable moving ahead. 

We at The Center are trained to help clients with these types of difficult transitions. Please reach out if we can assist you or anyone you know and love.  Sandy.Adams@CenterFinPlan.com.

Sandra Adams, CFP®, CeFT™, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® 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.


Any opinions are those of Sandra D. Adams, CFP® and not necessarily those of RJFS or Raymond James. 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. There is no assurance any of the trends mentioned will continue or forecasts will occur. 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. 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. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

Webinar in Review: Bridging the Gender Gap

Jacki Roessler Contributed by: Jacki Roessler, CDFA®

Women are gaining numbers in the workforce and are the primary breadwinner in over 40% of American households yet they still lag behind their male counterparts in financial preparedness for retirement.* Learn about the unique obstacles women face and discover tools to overcome them in this eye-opening webinar designed to help bridge the financial gender gap.

If you missed the webinar, here’s a recording:

Check out the time stamps below to listen to the topics you’re most interested in:

  • Women’s Strengths and Obstacles: 2:00

  • Setting the Foundation: 5:30

    • Build a Budget: 6:15

    • Emergency Reserves: 9:50

    • Pay Down Debt: 12:50

    • Monitor Credit: 16:00

  • Planning for your Future: 18:30

    • Retirement Savings: 20:30

    • Investment Strategy: 25:30

    • Estate Planning: 34:15

    • Anticipate the Unexpected: 36:30

  • Protect yourself: 39:00

Jacki Roessler, CDFA®, is a Divorce Planner at Center for Financial Planning, Inc.® and Branch Associate, Raymond James Financial Services. With more than 25 years of experience in the field, she is a recognized leader in the area of Divorce Financial Planning.

*Cited from 2012 US Consensus

5 Financial Tips for Recent College Graduates

Robert Ingram Contributed by: Robert Ingram

financial tips for recent college graduates

Congratulations Class of 2019! This is an exciting time for recent college graduates as they begin the next phase in their lives. Some may take their first job or start along their career path, while others may continue their education. Taking this leap into the “real world” also means handling personal finances, a skill not taught often enough in school. Fortunately, by developing good financial habits early and avoiding costly mistakes, new graduates can make time an ally as they set up a solid financial future.

Here are five financial strategies to help get your post-college life on the right path:

1. Have a Spending Plan

The idea of budgeting may not sound like a lot of fun, but it doesn’t have to be a chore that keeps you from enjoying your hard-earned paycheck. Planning a monthly budget helps you control the money coming in and going out. It allows you to prioritize how you spend and save for goals like buying a home, setting up a future college fund for children, and funding your retirement.

Everyone’s budget may be a little different, but two spending categories often consume a large portion of income (especially for younger people early in their careers): housing costs and car expenses. For someone who owns a home, housing costs would include not only a mortgage payment, but also expenses like property taxes and insurance. Someone renting would have the rental cost and any rental insurance.

Consider these general guidelines:

  • A common rule of thumb is that your housing costs should not exceed about 30% of your gross income. In reality, this percentage could be a bit high if you have student loans, or if you want more discretionary income to save and for other spending. Housing costs closer to 20% is ideal.

  • A car payment and other consumer debt, like a credit card payment, can quickly eat into a monthly budget. While you may have unique spending and saving goals, a good guideline is to keep your total housing costs and consumer debt payments all within about 35% of your gross income.

2. Stash Some Cash for Emergencies

We all know that unexpected events may add unplanned expenses or changes to your budget. For example, an expensive car or home repair, a medical bill, or even a temporary loss of income can cause major financial setbacks.

Start setting aside a regular cash reserve or “rainy day” fund for emergencies or even future opportunities. Consider building up to six months’ worth of your most essential expenses. This may seem daunting at first, but make a plan to save this over time (even a few years). Set goals and milestones along the way, such as saving the first $1,000, then one months’ expenses, three months’ expenses, and so on, until you reach your ultimate goal.

3. Build Your Credit and Control Debt

Establishing a good credit history helps you qualify for mortgages and car loans at the favorable interest rates and gets you lower rates on insurance premiums, utilities, or small business loans. Paying your bills on time and limiting the amount of your outstanding debt will go a long way toward building your credit rating. What goes into your credit score? Click here.

  • If you have student loans, plan to pay them down right away. Automated reminders and systematic payments can help keep you organized. To learn how student loans affect your credit score, click here.

  • Use your credit card like a debit card, spending only what you could pay for in cash. Then each month, pay off the accumulated balance.

  • Some credit cards do have great rewards programs, but don’t be tempted to open too many accounts and start filling up those balances. You can easily get overextended and damage your credit.

4. Save Early for the Long Term

Saving for goals like retirement might not seem like a top priority, especially when that could be 30 or 40 years away. Maybe you think you’ll invest for retirement once you pay off your loans, save some cash, or deal with other, more immediate needs. Well, reconsider waiting to start.

In fact, time is your BIG advantage. As an example, let’s say you could put $200 per month in a retirement account, like an employer 401(k), starting at age 25. Assuming a 7% annual return, by age 60 (35 years of saving), you would have just over $360,000. Now, say you waited until age 35 to begin saving. To reach that same $360,000 with 25 years of saving, you would need to more than double your monthly contribution to $445. Starting with even a small amount of savings while tackling other goals can really pay off.

Does your employer offer a company match on your retirement plan? Even better! A typical matching program may offer something like 50 cents for each $1 that you contribute, up to a maximum percentage of your salary (e.g. 6%). So if you contribute up to that 6%, your employer would add an extra 3% of your salary to the plan. This is like getting an immediate 50% return on your contribution. The earlier you can contribute, the more time these matching funds have to compound. 

5. Get a Little More Educated (about money and finances)

Ok, don’t worry. Forming good financial habits doesn’t require an advanced degree or expertise in all money matters. To build your overall knowledge and confidence, spend a little time each week, even just an hour, on an area of your finances and learn about a different topic.

Start with a book or two on general personal finance topics. You can find reference books on specific topics, from mortgages and debt to investments and estate planning. Information offered through news media or internet searches also can provide resources. And you can even find a blog not too far away (Money Centered Blog).

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.

Investment risk is real. Here’s how we manage it.

The Center Contributed by: Center Investment Department

Investment risk is real. Here's how we manage it.

Investment risk is real. Every day. Every year. In up and down markets. Even in good times – when, for example, U.S. Equities are performing well – we all can use this friendly reminder:

The management of investment risk is constant in successful investing.

Benjamin Graham, known as the “father of value investing,” dedicated much of his book, The Intelligent Investor, to risk. In one of his many timeless quotes, he states, “The essence of investment management is the management of risks, not the management of returns.” To many investors, this statement may seem counterintuitive. Rather than an alarm, though, risk may serve as a healthy dose of reality in all investment environments.

Our Take on Risk

How do we at The Center attempt to manage risk as we steward approximately $1.1 billion in assets? We:

We have been managing client assets for more than 34 years. We fully understand and appreciate the importance of investment returns. We also know that risk is an important element when constructing portfolios intended to fund some of life’s most important goals, such as sending a child or grandchild to college, funding a long and successful retirement, having sufficient funds for long-term health needs, and passing a legacy to loved ones.

While no one can guarantee future investment returns, our experience suggests that those who follow our risk management tactics may better stay on track with their financial plans. 

If you are a client, we welcome the opportunity to talk more about how your portfolio is constructed. Not a client? We’d enjoy the opportunity to share our experience and review your goals and risk.


Any opinions are those of Center for Financial Planning, Inc.® and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Efficient Tax Planning is Year-Round Work

Josh Bitel Contributed by: Josh Bitel

efficient tax planning

While many of us focus this time of year on getting our tax returns done, year-round tax planning excites us number geeks! We really can’t control taxes, right? Well, not exactly. 

Of course, we can’t change the tax rates set by our government, but we can work collaboratively on financial decisions throughout the year that help ensure the greatest possible level of tax efficiency. Let’s look at a few examples:

EXAMPLE #1: FORD STOCK

Say you have a stock position in Ford purchased at $3 a share when “the sky was falling”. Because its worth has greatly increased, your unrealized gain amounts to $20,000. The stock has done so well, you might not want to part with it. You also don’t want to pay tax on that nice $20,000 gain. 

So consider this: If your taxable income falls within the 12% marginal tax bracket, chances are you would pay very little or possibly ZERO tax on the $20,000 gain. You could lock in that nice profit and potentially improve the overall allocation of your portfolio. 

This is a hypothetical example for illustration purpose only and does not represent an actual investment.

EXAMPLE #2: ROTH CONVERSION

Let’s take a look at another real-life example we often see. What if your income this year takes a significant drop, through a job loss, retirement, job change, or other move? Be sure to keep us in the loop, so that we can help you make pro-active tax planning decisions.

In this situation, a Roth IRA conversion could make a lot of sense if your income will fall into a lower tax bracket that you most likely will not see again. You would pay tax at a much lower rate, and moving Traditional IRA dollars into a Roth IRA for potential future, tax-free growth could create a monumental planning opportunity.   

SHARING YOUR TAX RETURNS

These are just two examples of the many factors we examine in your financial plan to make sure your dollars are efficiently taxed. You can help us do this work. Sharing your tax return early gives us a much better chance throughout the year to uncover strategies that may make sense for you and your family. 

Many of our clients have now signed a disclosure form allowing us to directly contact their CPA or tax professional to obtain copies of returns and to discuss tax-planning ideas. This saves you, as the client, the hassle of making copies or e-mailing your return – and we are all about making your life easier! 

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.® He conducts financial planning analysis for clients and has a special interest in retirement income analysis.


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. Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

What’s Taking So Long? Dealing with the Frustration of Post-Divorce Financial Delays

Jacki Roessler Contributed by: Jacki Roessler, CDFA®

Post Divorce Finances

I always enjoy talking with former clients after their divorces, but as soon as I heard Margo’s voice on the phone, I knew she was upset. She and her ex-husband, Jim, had divorced nine months ago. Margo shared the frustration that her finances remained tied to Jim’s. The biggest hold-up: receiving her share of retirement assets.

Why was it taking so long? Would the delay have any negative consequences for her?  What, if anything, could she do to expedite the process?

For Margo – and anyone in the same position – preparing and implementing the Qualified Domestic Relations Orders (QDROs for short) may delay the process. These legal documents transfer qualified retirement account assets (i.e. 401ks, pensions, etc) after a divorce.

Because the QDRO is complicated, divorce attorneys often refer drafting to outside experts. A preparer typically takes between three and four weeks to draft the QDRO. The draft must be reviewed and approved by both attorneys, signed by all the parties and then submitted to the Judge. It can then take a week to three months to contact the parties with an approval notice or a list of required changes. After notice is received, the plan administrator generally enforces a 30-day hold for either party to object. 

Even if every step goes smoothly, three or four months is a reasonable timeframe. So I first advised Margo to adjust her expectations.

Should she worry about how this delay will affect her finances? If it happens over a market downturn, is Margo entitled to her 50% share of the 401k on the date of divorce or the amount her share is currently worth, which is $25,000 less? Margo didn’t have any input on investment choices while the QDRO was pending, so she believes she shouldn’t have to share in the short-term investment loss.

Even more worrisome, if Jim were to die, remarry, or retire before the QDRO is approved, she could end up with nothing but the option to take him back to court – or even worse, file a claim against his estate.

Margo can take some proactive steps to speed up this process. First and foremost, she has to be her own advocate and contact her attorney and the preparer about the reason for the delay. Whatever the problem, Margo needs to take an active role in solving it. She can also discuss liquidating her share of the retirement assets (inside the account) while the QDRO is pending, to avoid any market loss. While that’s the safest route, she also risks losing a short-term market gain.

As always, whenever you have financial questions, post-divorce, contact your attorney and/or financial expert to see whether you need assistance.

Jacki Roessler, CDFA®, is a Divorce Planner at Center for Financial Planning, Inc.® and Branch Associate, Raymond James Financial Services. With more than 25 years of experience in the field, she is a recognized leader in the area of Divorce Financial Planning.


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

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.

This is a hypothetical example for illustration purpose only and does not represent an actual investment.

A QDRO - Qualified Domestic Relations Order - is a judgment, decree or order for a retirement plan to pay child support, alimony or marital property rights to a spouse, former spouse, child or other dependent of a participant.

Could We See Changes Coming to Fix Social Security?

Robert Ingram Contributed by: Robert Ingram

Changes Coming to Fix Social Security

For the past several years, you may have seen story after story questioning the health of the Social Security system and whether the federal program can be sustained into the future. If you, like many clients, are thinking about your retirement plan, you’ve probably wondered, “Will my Social Security benefits be there when I retire?”.

Certainly, different actuarial or economic assumptions can influence Social Security’s perceived financial strength and solvency, but it’s clear some steps must be taken. With a system the size and scope of Social Security, one that affects so many people, it's hard to overstate the challenge of finding solutions on which lawmakers and experts can agree.

Funding Social Security - Money In, Money Out

Payroll (FICA) taxes collected by the federal government fund Social Security. How much do we pay? The first $132,900 of an individual’s 2019 annual wages is subject to a 12.4% payroll tax, with employers paying 6.2% and employees paying 6.2% (self-employed individuals pay the full 12.4%).

The government deposits these collected taxes into the Social Security Trust Funds, which are used to pay benefits. Social Security benefits are also at least partially taxable for individuals with income above certain thresholds. For more on Social Security taxation, click here.

U.S. demographic changes pose challenges for Social Security’s financial framework.  Americans are living longer, but birth rates have declined. One implication is that while a growing population draws Social Security benefits, a smaller potential workforce pays into the system.

In its 2018 annual report, the Social Security Board of Trustees projected that the total benefit costs (outflows) would exceed the total income into the trust funds, and the trust fund reserves will be depleted by 2034. Now, the report does not suggest that Social Security would be unable to pay benefits at that point. It estimates that with the trust funds depleted, the incoming revenues would be able to cover about 77% of the scheduled retirement and survivor benefits.

This is still concerning for the millions of retirees collecting their benefits and for future retirees counting on their benefits over the next 15 to 20 years.

So the question is, how can we correct this funding shortfall?

Possible fixes for Social Security?

Ultimately, as with any budget, fixing the imbalances between the Social Security system’s inflows and outflows would involve increasing system revenues, reducing or slowing the benefit payouts, or some combination of both.

There have been a number of proposals discussed in recent years, including:

  • Increasing the Full Retirement Age from age 67

  • Changing the formula for calculating benefits based on earnings history

  • Increasing (or even eliminating) the cap on income subject to the payroll tax

  • Reducing benefits for individuals at certain income levels (“means testing”)

  • Changing how the cost of living adjustment (COLA) for benefits is determined

This past January, the Social Security 2100 Act was re-introduced in the House of Representatives. This series of suggested reforms, originally introduced in 2014 and 2017, has several key items: 

  • Increase the Primary Insurance Amount (PIA) formula for calculating benefits at one’s Full Retirement Age

  • Change the Cost of Living Adjustment (COLA) calculation, tying it to the Consumer Price Index for the Elderly (CPI-E) rather than the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)

  • Increase the special minimum Primary Insurance Amount for workers who become newly eligible for benefits in 2020 or later

  • Replace the current thresholds for taxing Social Security benefits, from a threshold for taxing 50% of Social Security benefits and a threshold for taxing 85% of benefits, to a single set of thresholds set at $50,000 (single filers) and $100,000 (married filing jointly) for taxation of 85%  of Social Security benefits, by 2020

  • Apply the payroll tax rate for Social Security (12.4% in 2019) to earnings above $400,000

  • Continue applying the the payroll tax to the first $132,900 of wages and exempting income from $132,901 up to $400,000, then apply the tax again to amounts above the $400,000 threshold

  • Increase the Social Security payroll tax rate incrementally from the current 12.4%  to 14.8% by 2043

  • The rate would increase by 0.1%age point per year, from 2020 until 2043

  • Combine the reserves of the Social Security retirement and survivor benefits trust fund and the reserves of Social Security’s disability benefits trust fund into a single trust fund

(Note source data: Estimates of the Financial Effects on Social Security of the “Social Security 2100 Act” ssa.gov/OACT/solvency/LarsnBlumenthalVanHollen_20190130.pdf) 

Interestingly, the first four provisions in the proposed bill are actually intended to increase the benefits for recipients. The first provision would slightly increase the benefit amounts paid to recipients through the new formula. The change to CPI-W gives more weight to spending items particularly relevant for seniors, such as health care, resulting in a potentially higher COLA than under the current structure. The third provision increases the current minimum benefit earned, and the fourth item allows for a higher level of income before Social Security benefits become taxable.

To address Social Security’s long-term solvency, this bill focuses on boosting Social Security revenues by increasing the payroll tax rate over time and making more earned income subject to those payroll taxes. That approach is in contrast with other proposals that would focus on managing the outflow of benefits, such as raising the full retirement age from 67 to 70.

This illustrates the philosophical differences in how to address the problems facing Social Security, and what makes reaching consensus on a long-term solution so difficult. 

Should I plan for changes to the Social Security system?

With so many factors at play and strong voices on different sides of the issue, the specific reforms Congress will adopt and exactly when they will occur remain unclear. For most clients, Social Security is part of their overall retirement income picture, but a meaningful source of income.

It is important to have at least a basic understanding of your benefits and what affects them under the current system (benefits collected at full retirement age, changes to benefit amounts based on when they are collected, and the potential impacts of taxation on your benefits, just to name a few factors).

Understanding how your Social Security benefits fit within your own retirement income plan can help you stay proactive as you make decisions in the face of uncertainty, whether controlling your savings rate, choosing investment strategies, or evaluating your retirement goals. If you have questions about your retirement income, we’re always here to help!

Robert Ingram, CFP®, is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® With more than 15 years of industry experience, he is a trusted source for local media outlets and frequent contributor to The Center’s “Money Centered” blog.


*Repurposed from 2016 blog: Will Social Security Be Around When I Retire?

This 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 the author and are not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor the third party website listed 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.

Timothy Wyman, CFP®, JD Named to Financial Times 400 for 2nd Consecutive Year

Timothy Wyman, CFP®, JD Named to Financial Times 400 for 2nd Consecutive Year

Center for Financial Planning, Inc.® is pleased to announce that Timothy Wyman, CFP®, JD has been named to the 2019 edition of the 2019 Financial Times Top 400 Financial Advisors. The list recognizes top financial advisers at national, independent, regional and bank broker-dealers from across the U.S.

In addition to working directly with clients and helping them achieve their financial goals, Tim also acts as Branch Manager, RJFS, Partner and member of the firm’s Business Operations Committee. Tim has recently been appointed to the Albion College Endowment Investment Committee and is an active member of the Small Giants community whose mission is putting people before profits. Having gone through Leadership Oakland's program, Tim now serves his community as a member of their Board of Directors.


The FT 400 was developed in collaboration with Ignites Research, a subsidiary of the FT that provides specialized content on asset management. To qualify for the list, advisers had to have 10 years of experience and at least $300 million in assets under management (AUM) and no more than 60% of the AUM with institutional clients. The FT reaches out to some of the largest brokerages in the U.S. and asks them to provide a list of advisors who meet the minimum criteria outlined above. These advisors are then invited to apply for the ranking. Only advisors who submit an online application can be considered for the ranking. In 2019, roughly 1000 applications were received and 400 were selected to the final list (approximately 40%). The 400 qualified advisers were then scored on six attributes: AUM, AUM growth rate, compliance record, years of experience, industry certifications, and online accessibility. AUM is the top factor, accounting for roughly 60-70 percent of the applicant's score. Additionally, to provide a diversity of advisors, the FT placed a cap on the number of advisors from any one state that's roughly correlated to the distribution of millionaires across the U.S. The ranking may not be representative of any one client's experience, is not an endorsement, and is not indicative of advisor's future performance. Neither Raymond James nor any of its Financial Advisors pay a fee in exchange for this award/rating. The FT is not affiliated with Raymond James.

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.

Any opinions are those of Center for Financial Planning, Inc.® and not necessarily those of Raymond James.