In The News

April is Financial Literacy Month. Here Are the Top 10 Things You Should Know.

  1. Tax reform changes a lot of things starting in the 2018 tax year. (And a lot of the new law sunsets in 2026, returning to 2017 levels.)

Under the new tax law passed last December—the “Tax Cuts & Jobs Act”—some of the changes include new tax brackets, new limits to mortgage interest deductions, lower deductions for local property/sales taxes, higher standard deductions, higher estate tax exemptions, and more. We suggest that you meet with both your financial advisor as well as your tax professional to see how you will be affected, and how you might best prepare for 2018 and future taxes.

  1. RMDs (Required Minimum Distributions) kick in at age 70-1/2, which can change your tax bracket.

Even people who’ve saved up a large amount of money for retirement are often surprised to find that when they are required to start withdrawing a percentage of their money stashed in tax-deferred accounts like 401(k)s and IRAs every year starting at age 70-1/2, they’re suddenly thrown into a higher income tax bracket, and a big chunk of their savings ends up going to Uncle Sam. Make sure your retirement plan includes tax planning to help mitigate the effect of RMDs.

  1. Sequence of returns risk can wipe out retirement money invested in the stock market; that’s what happened to a lot of people in 2008.

No one can predict the timing of a bear market, but if you retire during or right before a market downturn, sequence of returns risk can lead to retirement failure. As a retiree, you don’t have the time horizon to wait for the market to come back up before you withdraw funds needed for income—you need the money to live on. But by withdrawing funds during a market downturn, you amplify your losses, kind of like compound interest in reverse. There are options, just ask us.

  1. Insurance can shift financial risk from your family over to an insurance company.

You may be able to take advantage of permanent insurance or annuity policies to help protect your family from a variety of risks depending on your situation; there are all sorts of new policy designs to cover long-term care, lifetime retirement income, spousal survivorship and tax-advantaged wealth transfer.

  1. Health care expenses in retirement must be planned for.

Surprise, Medicare isn’t free and doesn’t cover everything. Total projected lifetime health care premiums (Medicare Parts B and D, supplemental insurance, and dental insurance) for a healthy 65-year-old couple retiring this year are expected to be $321,994 in today’s dollars ($485,246 in future dollars). Adding deductibles, copays, hearing, vision, and dental cost sharing, that number grows to $404,253 in today’s dollars ($607,662 in future dollars).

  1. Long-term care is not covered by Medicare.

Surprising to many, long-term care (LTC) like going into a nursing facility is not covered by Medicare at all. It can be covered by Medicaid, which requires a complete spend-down of assets (which can bankrupt your spouse and leave nothing for heirs.) A semi-private room costs more than an average of $7,000 per month in 2017. Here are the costs for LTC, broken down by state.

  1. You can get a free copy of your credit report once a year by visiting

We highly recommend that you check your credit reports at least yearly for fraudulent activity using your (potentially-stolen) identity, especially since the Equifax data breach which was all over the news last year.

  1. Updating beneficiaries is incredibly important.

The beneficiaries you have listed on your insurance policies, investments, and retirement accounts like IRAs and 401(k)s take precedence over your will and/or trust. There have been court battles over this, and ex-spouses have received money no longer intended for them. Make sure your beneficiaries on all accounts and policies are up to date so that your wishes are carried out. (And update your estate plan regularly, too.) Let’s meet.

  1. Know the difference between taxable, tax-deferred and tax-free accounts.

Taxable: Gains or interest received on non-retirement or investment accounts are taxed as income (at your tax bracket for the year) or as short- or long-term capital gains, depending.

Tax-deferred: Income taxes are due on gains when you take money out of tax-deferred retirement accounts like 401(k)s or traditional IRAs. And you have to start taking money out starting at age 70-1/2.

Tax-free: Roth IRA distributions (after age 59-1/2 or if other requirements are met) as well as life insurance benefits may be tax-free in most cases.

  1. Only one thing is for certain: change.

Legislation, market conditions, economic events, financial instruments and your family dynamics change over time, so it is important to update your financial/retirement plan at least yearly to help ensure that your plan is on track, your retirement income stream is as safe as possible, and that your strategies are still recommended given your current life situation and analysis of current conditions/opportunities.

If you have questions about your finances or would like to meet, please don’t hesitate to call Estate Planning Solutions at (623) 537-3657.


7 Hidden Retirement Risks

  1. Longevity

The average life expectancy has increased. Chances are that if you’ve reached 65 years old you will live into your mid-80s according to life expectancy calculations. Many are living even longer—one in four people will live into their 90s, while one in ten will live past 95. Make sure that your retirement plan takes longevity into account so that you don’t run out of money—no matter how long you live.

  1. Loss of Income

Make sure both you and your spouse are protected from the unexpected. Consider the financial impact of the loss of one spouse, running the numbers both ways. Remember that your surviving spouse will only get the highest of your two Social Security checks, not both checks.

NOTE: Be sure to talk with us about Social Security. Recently it was discovered that the Social Security Administration failed to tell widows and widowers how they could receive a higher benefit amount.

  1. Incapacity Risk

Longer life expectancy could lead to high costs of a stay in a long-term care facility. The average cost of a semi-private room in a nursing care facility was more than $7,000 per month in 2017, and it’s estimated that approximately 50% of people over 65 will need long-term care. We can help you devise a plan to pay for costs if you do need long-term care, but not overspend on policies that may be subject to drastic premium increases, sudden cancellations or never be needed at all. There are many strategies and new options to consider.

  1. Negative Return Risk

A 50% gain does not allow a portfolio to recover from a 50% loss. In fact, a 100% gain is required to restore a 50% loss! Talk to us about how we can help reduce this risk in retirement. The “buy and hold” strategy that works when you are young—where you wait for the markets to come back up after a downturn—does not apply in retirement as we saw in 2008, when many people’s retirements were wiped out.

  1. Bond Risk

When interest rates* rise, bond prices fall—and vice versa. Duration risk is the name economists give to the risk associated with the sensitivity of a bond’s price to a one percent change in interest rates; the higher a bond’s duration, the greater its sensitivity to interest rate changes.

  1. Inflation Risk

You should plan on prices for food, goods and services getting higher during retirement, reducing your buying power incrementally as you are living on a fixed income. We can help you address inflation* risk in your retirement plan.

*Inflation and interest rates are considered by economists to be inversely related. So when inflation—or the cost of goods and services—rises, interest rates go down. Interest rates in the United States are set by the Federal Reserve based on the rate of inflation, which they like to see at 2%. In 2017, the Fed raised interest rates, and has said they will raise them even more in 2018.

  1. Healthcare Costs

Surprising to some, Medicare is not free—your premiums for coverage are usually deducted from your Social Security check. And standard Medicare doesn’t cover dental, hearing or vision, is subject to deductibles, and doesn’t cover long-term care. Fidelity’s latest estimate is $275,000 per couple for out-of-pocket healthcare costs in retirement.


Let’s Create or Review Your Custom Retirement Plan

When people think about retiring, their number one fear is running out of money. That’s why we focus on creating reliable retirement income when we are developing your custom retirement distribution plan.

Once you have a retirement plan in place, it’s not set in stone. Things change. You may add or lose family members, your retirement goals may change, the economic environment may create new considerations, and financial innovations may present new strategies. Once per year is a minimum in terms of making sure your retirement plan (and beneficiaries) are constantly up-to-date.

And remember, the tax laws just changed. It’s more important than ever to plan ahead.

If you have questions or would like to discuss planning to help address your retirement risks, call Estate Planning Solutions at (623) 537-3657.

Learn more at these links:


Tax Reform Highlights

Here are some brief updates about the tax bill that was recently passed. Keep in mind that the industry is still working through the ramifications of the legislation; there will be much more in-depth information coming throughout the year.

New Income Tax Rates

  • The tax brackets for individuals have been lowered for everyone except the lowest bracket, until 2026, when they revert back to 2017 rates. (Employees will see the lowered withholding on their February 2018 paychecks.)

  • The bracket income levels will rise each year with inflation, because they are now tied to the chained consumer price index. Over time, this will move more people into higher tax brackets.
  • The corporate tax rate was lowered from 35 to 21 percent, the lowest it’s been since 1939. Per the legislation, this lowered rate never expires.

Standard Deduction

  • The standard deduction doubles from $6,350 to $12,000 for single filers and from $12,700 to $24,000 for married/joint filers; it is projected that 94 percent of taxpayers will take the standard deduction, especially since many other deductions have been lowered or removed. The standard deduction will revert back to 2017 levels in 2026.

Personal Exemptions

  • Starting in 2018, taxpayers will no longer be able to subtract $4,150 from income for each person claimed. As a result, some bigger families may pay higher taxes.

Alternative Minimum Tax

  • The alternative minimum tax is retained, and the exemption is increased from $54,300 to $70,300 for singles and from $84,500 to $109,400 for joint filers. (The alternative minimum tax is not available at $500,000 for singles and $1 million for joint filers.) The exemption reverts to 2017 levels in 2026.


  • Mortgage interest remains deductible for the most part, but is limited to the interest on a maximum of $750,000 (down from $1 million) on home loans going forward. Current mortgages are not affected.
  • New restrictions on property tax deductions could make homes out of reach for some. Income tax deductions for state and local taxes are now capped at $10,000 per year, and taxpayers must choose between deducting property taxes or income/sales taxes.
  • Home equity loan interest is no longer tax deductible, starting in 2018.
  • One key homeownership benefit stayed intact: If you lived in and owned a home as your primary residence for at least two of the past five years, you may avoid tax–up to $250,000 for singles and $500,000 for married couples.

Itemized Deductions

  • The deductions that remain in place for taxpayers include charitable contributions, retirement savings contributions and student loan interest. (You have to itemize and cannot take the standard deduction in 2018 in order to deduct these expenses.)
  • The deductions no longer available starting 2018 include moving expenses (except for military), fees for tax and financial advice, home equity loan interest, and alimony payments. (People receiving alimony are now able to deduct it.)


  • Starting in 2019, there is no mandate for having health insurance, therefore no tax penalty as instituted by the Affordable Care Act (“Obamacare”).
  • In the past, medical expenses could be deducted only if they exceeded 10 percent of adjusted gross income. The new law lowers that threshold to 7.5 percent for 2017 and 2018, allowing more health-care costs to be written off. (NOTE: People 65+ have already had the lower threshold.) These lower thresholds expire for everyone in 2019.

Estate Taxes

  • The estate tax exemption doubled to $11.2 million for singles and $22.4 million for couples. The exemption reverts back to 2017 levels in 2026.


Let’s get together and talk about tax planning. Call Estate Planning Solutions at (623) 537-3657.


“Tax reform could alter some financial tips, strategies.”  (accessed January 8, 2018.)
“Trump’s Tax Plan and How It Affects You.” (accessed January 8, 2018).
“GOP tax bill expands medical expense deduction for two years.” (accessed January 8, 2018).

Financial Resolution for 2018: Buy More Time!

When the New Year rolls around, many of us focus on making financial resolutions. These goals often include things like getting out of debt, saving more or negotiating a higher salary. These are all worthy endeavors and they all have something in common: The result of achieving any of these goals is reduced stress and happiness. But the fact is, limiting stress in your life can actually mean spending a little more money, too.

The results of a study published earlier this year in the Proceedings of the National Academy of Sciences of the United States of America, suggests that spending money to save time instead of making material purchases can reduce stress and improve overall happiness. The study maintains that despite rising incomes in developed countries like the United States, Canada, Denmark, and The Netherlands, people feel increasingly impoverished when it comes to time:

Despite rising incomes, people around the world are feeling increasingly pressed for time, undermining well-being. We show that the ‘time famine’ of modern life can be reduced by using money to buy time. Surveys of large, diverse samples from four countries reveal that spending money on time-saving services is linked to greater life satisfaction. To establish causality, we show that working adults report greater happiness after spending money on a time-saving purchase than on a material purchase. This research reveals a previously unexamined route from wealth to well-being: spending money to buy free time.”

The lead author of the study, Ashley Whillans, an assistant professor at the Harvard Business School, said “People who spent money to buy themselves time, such as by outsourcing disliked tasks, reported greater overall life satisfaction.” Regardless of income, people who outsourced things like housecleaning, yardwork or ordering takeout reported more overall happiness. The study also indicates that spending money to delegate duties as a time-saving strategy especially benefits women who work all day and feel like they come home to a “second shift” of housecleaning and other chores.

Despite these revelations, many people who can easily afford outsourcing these duties, often don’t. The common reason given for not having others perform these tasks is to avoid laziness. The research, however, suggests it’s important to think of these solutions as your personal stress-reducer, your “escape hatch from the excessive time pressure of modern life.” You’re not lazy, you are time-deprived! There is a difference.

If you have questions or would like to discuss financial issues or review your financial plan for 2018, call Estate Planning Solutions at (623) 537-3657.

The Health Effect of Retirement

Most people have a hard enough time imagining what their retirement will be like, let alone retiring early. When I say early I mean before the current, average U.S. retirement age of 63. Sure it sounds great to throw out the alarm clock and play golf all day. The reality is leaving the workforce early has some important tradeoffs.

Cognitive Decline

Recent studies seem to indicate a profound link between cognitive decline and retirement. This notion of “mental retirement” seems to have a more dramatic impact on younger retirees. A New York Times article, citing a recent study, reported, “Researchers find a straight-line relationship between the percentage of people in a country who are working at age 60 to 64 and their performance on memory tests. The longer people in a country keep working, the better, as a group, they do on the tests when they are in their early 60s.”

Use It or Lose It

As much as everyone seems to complain about their jobs, there appears to be a real benefit to working when it comes to maintaining cognitive ability. The issue may not just be working as long as we live. The benefit may be as simple as finding consistent mental stimulation as we age. Work can often take us out of our comfort zones and help us keep active socially. One problem is that it isn’t always easy to keep working or find another job in your 60’s. One option, that is often suggested, is to find something to volunteer for.

The Trends

Research shows we are working longer. A research paper from the National Institutes of Health says “There is evidence that older Americans have reversed a century-long trend toward early retirement and, during the past decade, have been increasing their labor force participation rates, especially beyond age 65. This is good news for the standard of living of elderly Americans, as well as for the fiscal balance of the Social Security and Medicare systems.”


If you have questions about retirement, contact Estate Planning Solutions in Glendale, Arizona at (623) 537-3657.


Healthcare Costs for Retirees Are Growing

One of the biggest expenses for retirees is healthcare–and it’s getting more expensive. A recent analysis from Fidelity Investments shows that a healthy, 65-year-old couple retiring this year will need $275,000 to cover their healthcare costs during retirement. That’s up six percent from 2016. 1

Fidelity’s calculations include premiums and out-of-pocket costs associated with Medicare parts A, B and D. The numbers don’t, however, include over-the-counter medications, dental services or long-term care.


Even faced with these staggering amounts, pre-retirees do have choices to help reduce healthcare costs in retirement. One option, a health savings account (HSA), offers some attractive tax savings. Any worker who has a high-deductible healthcare plan can open an HSA. You’re currently allowed to save up to $3,400 annually, or $6,750 for family coverage in the account. 2 You don’t pay tax on your contributions, they’re allowed to grow tax-free, and as long as the funds are used to cover qualified healthcare expenses, you don’t pay any taxes when you withdraw the funds either. You can even use them to pay certain Medicare premiums.

Long-Term Care

It’s important to consider long-term care. Medicare does not cover it, and in order to be covered by Medicaid, a family needs to completely and drastically spend down all assets. A private room in a nursing home now costs consumers more than $8,000 per month, or $97,455 per year, according to the “Genworth 2017 Cost of Care Survey,” released September 26, 2017 by Genworth Financial, which provides national median figures. 3 Long-term care costs can easily sabotage your retirement objectives, as well as your legacy, so it is critical to have a plan in place.


Please call us regarding healthcare costs in retirement. Contact Estate Planning Solutions in Glendale, Arizona  to set up an appointment by calling (623) 537-3657.