In The News

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.



The Social Security Waiting Game

At 62 years of age, Americans can begin claiming early Social Security benefits for themselves, provided they have been working and paying taxes. Claiming at age 62 may sound appealing, but there can be a substantial downside to the amount of money you can collect. In fact, you will receive 75% of the benefit amount that you would have received by waiting until your full retirement age, which is currently around age 66 depending on the month you were born.

But keep in mind that you are not required to file at your full retirement age. In fact, from your full retirement age up until age 70, you will receive an 8% increase in your monthly benefit amount by waiting to file. At age 70, that increase stops.

Investing Benefits

What if you don’t need the money, but decide to file at 62 in order to invest the benefit? Before you decide to take Social Security early and invest the payments, you need to be aware of the risks involved. Investing in the markets means you are assuming returns based on historical performance and subjecting your retirement outcome to market risk, including sequence of returns risk, where you may not have enough of a retirement time horizon to wait out any market downturns.

And if you’re still working while collecting, your earnings may end up in the government’s pockets if you make too much. In other words, taxes need to be considered as well, because if your primary income source is too high, your Social Security benefits may become taxable, lowering the amount you have available to invest.

According to the Social Security Administration website:  

“In 2017, the annual earnings limit is $16,920 if you’re under full retirement age.”

That being said, some investments may not be counted as income by Social Security, and it’s important to work with a financial advisor when making these major decisions.

Continued from the SSA website:

“When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you’re self-employed. We include bonuses, commissions and vacation pay. We don’t count pensions, annuities, investment income, interest, veterans or other government or military retirement benefits.”

Break-Even Analysis

When it comes to age and benefit amounts, the Government Accountability Office (GAO) maintains that “the Social Security benefit formula adjusts monthly payments so that someone living to average life expectancy should receive about the same amount of benefits over their lifetime regardless of which age they claim.”

There are those that argue, however, that this model is outdated. Even though many experts say waiting as long as possible is the best strategy, it all depends on your individual situation. For example, if family history says your life expectancy is age 74, then filing early for Social Security benefits can make sense.

Another thing to consider is the complexity in determining how to factor in spousal benefits. If you’re married and die first, waiting to file may give your spouse larger survivor benefits.

How and when you claim Social Security can have a dramatic effect on your whole retirement outcome. The most important thing to do is get professional help in this process. That is what we do.

Contact Estate Planning Solutions in Glendale, Arizona  if you need help with Social Security or have any other retirement questions by calling (623) 537-3657.

Retirement Planning In a Continued Bull Market

The bull market for equities continues to defy predictions of an impending correction. Most economists maintain that it’s not if a pullback will happen. It’s when. That being said, vigilance in this environment is critical, particularly in retirement.

Is It Time to Rebalance?

Since stocks bottomed out in 2009 after the financial crisis, we’ve seen them come roaring back at about five times the rate of the bond market. If you haven’t been rebalancing your asset allocation during this period you may have too much risk in your portfolio—and it not might be from stocks. For example, former CNNMoney “Ask the Expert” columnist and “Real Deal Retirement” editor Walter Updegrave recently wrote “someone who started with a 60% stocks to 40% bonds portfolio in March 2009 would have upwards of 80% of assets in stocks and just 20% in bonds today, assuming no rebalancing and reinvestment of all gains.”1

Growth and Protection

With interest rates destined to move up, the future of bond market returns doesn’t look rosy. U.S. Government bonds are often called “risk-free.” Technically, that refers to default risk. These investments are still subject to interest rate and inflation risk.

One solution being recommended more and more these days is using fixed indexed annuities (FIAs) to manage risk in a portfolio. Recent innovations in these products have made them a very attractive bond or CD alternative for many reasons. For instance, they offer principal protection guaranteed by the financial strength of the issuing insurance carrier, and some FIAs offer more attractive returns.

This is a great time to reevaluate your risk allocation. Please contact us if you need help. Estate Planning Solutions in Glendale, Arizona can be reached at (623) 537-3657.

1 Money | Retirement, “3 Ways to Protect Your Retirement Money from a Market Downturn,” by Walter Updegrave, May 25, 2017, (Accessed July 28, 2017).