Financial Planning

What the New Tax Law Means for Your Wallet, Your Financial Future


It’s not a question of whether the most far-reaching federal tax overhaul in decades will impact you, but how much it will impact you, according to personal finance experts. Here are some notes on the new tax law.

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If you earn an income, if you have money invested in the stock market, if you have dependent children, if you’re saving toward retirement or toward a child’s education, if you own a home or a business, chances are your 2018 federal tax returns will look considerably different than the returns you file for the 2017 tax year.


What’s inside the 1,000-plus pages of the Tax Cuts and Jobs Act of 2017 that President Donald Trump signed into law late last year? Which taxpayers are likely to be impacted most by the sweeping new tax policy? And how to take advantage of some of the positives in the policy, while minimizing the impact of the negatives? Read on to find out, then be sure to consult a tax expert to discuss how to handle your specific tax situation in light of the new law, because as CERTIFIED FINANCIAL PLANNER™ professional Evan Beach of Campbell Wealth Management in Alexandria, VA, points out, “With all these new rules, new tax-mitigation strategies will definitely emerge.”


  1. Impact on EARNERS

The income tax rate on people in five of the seven tax brackets drops by anywhere from 1 to 4 percent starting in the 2018 tax year. Say you and your spouse were in the 28 percent tax bracket and filed your taxes jointly. The new rate for people in that bracket is 24 percent and breaks at $315,000 instead of $233,000, so you would pay less tax on more income within that bracket.


As with many provisions of the new law, the individual income tax cuts are due to expire at the end of 2025, unless they’re renewed by lawmakers before then. They also could be repealed and replaced well before 2025, if another President comes into office, for example, or if Democrats gain a majority in the U.S. Congress and decide to overhaul tax policy.

  1. Impact on INVESTORS

The new tax law lowers the tax rate on corporations from 35 to 21 percent, which observers expect will bolster corporate earnings. That in turn could lead stock prices to trend higher, Beach suggests. Thus people who hold investments in the stock market, either in the form of shares of individual company stock, mutual funds, etc., either inside or outside their retirement accounts, are likely to benefit. Corporations that tend to pay the full corporate tax rate — mostly small and mid-sized companies — are likely to benefit most from the lower rate, so investors might be wise to prioritize investing in those types of companies, he says.


One thing that didn’t change in the new tax law is the relatively low rate at which long-term capital gains are taxed. That’s generally a positive for investors.


The new tax law leaves rules governing contributions to, and deductibility of, qualified deferred retirement plans such as 401ks and IRAs largely intact. That, coupled with lower income tax rates, suggests it could be wise in the near term for certain people to prioritize contributing to a Roth IRA, where money is taxed on the way in, unlike with a 401(k) or traditional IRA, where money is taxed on the way out. This strategy may make sense for people who believe the prevailing tax rate that applies to Roth contributions made today will be lower than the rate they’re likely to pay on the distributions they will take later from tax-deferred retirement accounts.


Of course, trying to predict future tax policy is pure speculation. The most effective hedge against uncertainty surrounding future tax policy, says Beach, is to appropriately diversify the tax treatment of investments, spreading them across tax-deferred accounts such as a 401k, after-tax accounts like a Roth, and a taxable investment portfolio.


The new tax law likely changes the entire decision-making dynamic around whether to itemize deductions on your federal tax return. That’s due to several key changes:


  • An increase in the standard deduction. Under the new tax law, the standard deduction increases starting in 2018 to $12,000 for individuals and $24,000 for married couples filing jointly, up from $6,500 and $13,000, respectively.


  • Elimination of the $4,050 personal exemption for each person claimed on a federal tax return, effective beginning with the 2018 tax year.


  • Doubling of the child tax credit, from $1,000 to $2,000 per child, effective in 2018.


  • Key changes in the tax-deductibility of widely used personal deductions, including charitable donations, state and local taxes, mortgage interest, medical expenses and more.


A significantly higher standard deduction beginning in the 2018 tax years means many people who formerly itemized their deductions (using Schedule A on their federal tax form) likely will begin taking the standard deduction. Indeed, Beach cites a projection that the share of taxpayers who itemize deductions will drop from around 30 to less than 10 percent. Overall, people who live in places with high state and local income and property taxes will be hit hardest by this shift, according to Beach.


In response to the new deduction dynamics, Beach says he expects more taxpayers to start “lumping” deductions. That is, that people who formerly itemized will lump items such as charitable contributions and expensive medical procedures into one tax year instead of spreading them across multiple years, in order to accumulate enough deductions above the standard deduction threshold to justify itemizing their deductions. People in that scenario would end up itemizing deductions every few years instead of every year.



Previous tax policy allowed people to deduct the mortgage interest paid on first and second homes for mortgages of up to $1 million. Under the new law, that deduction is still available, but it’s capped for new mortgages up to $750,000. This won’t affect home purchases made before Dec. 16, 2017, so long as the home closed before April 1, 2018.

The new tax law also eliminates the deduction for home equity lines of credit on a primary residence, beginning with the 2018 tax year. Also effective in 2018, there’s now a $10,000 cap on the amount of state and local property taxes that are deductible. There was no cap previously. Another change that could impact homeowners and property owners is the elimination of a deduction for unreimbursed losses from flood, fire, burglary, etc. Now that deduction only applies if the loss occurred in a federal disaster area. This change could make it more important to have certain types of property-casualty insurance, such as flood insurance.



As mentioned above, the new law doubles the child tax credit. It also raises the phase-out level for the tax credit to $400,000 of adjusted gross income for couples filing jointly, from $110,000, meaning significantly more families will qualify for the credit. The new law also established a $500 tax credit for dependents who aren’t your children.



The new tax law expands how funds in tax-favored 529 college savings plans can be used. In addition to covering college expenses, beginning in 2018, money from those plans can be used to pay for up to $10,000 of tuition expenses per year, per student, for enrollment at an elementary or high school. So 529 plans aren’t just for higher education anymore.

  1. Impact on BUSINESS OWNERS

Besides lowering the corporate tax rate from 35 to 21 percent, the new tax policy could bode well for people who own so-called “pass-through businesses” — LLCs, partnerships, S Corps and sole proprietorships. Effective in 2018, owners of these entities gain the ability to deduct 20 percent of their qualified business income, meaning they essentially will be paying taxes on only 80 percent of their revenue. The benefit of the deduction is phased out for specified pass-through service businesses with taxable income exceeding $157,500 ($315,000 for married filing jointly).



The new tax law is a good news/bad news proposition for the charitably inclined. The good news is that the new tax bill expands the deductible amount for charitable contributions from 50 up to 60 percent of adjusted gross income. However, fewer people are likely to take advantage of this provision, since fewer will have enough deductions to justify itemizing, explains Beach. As a result, people could end up stacking their charitable donations, as discussed in #4.


Under the old tax regime, people who itemized their deductions could deduct medical expenses above 10 percent of adjusted gross income. The new law lowers that threshold to 7.5 percent. However, that change applies only in the 2017 and 2018 tax years; the 10 percent threshold returns beginning in the 2019 tax year.


On the health insurance front, meanwhile, the new tax law eliminates the Affordable Care Act penalty on individuals who lack minimum essential coverage. Repeal of the penalty is effective for the 2019 tax year.


  1. Impact on THE VERY WEALTHY

Lawmakers doubled the threshold at which the federal estate tax kicks in, so beginning with the 2018 tax year, it applies only to estates of at least $11.2 million in asset value for an individual, and $22.4 million for a couple. Keep in mind, though, that close to 20 states and the District of Columbia maintain their own estate or inheritance taxes.


This column is provided by the Financial Planning Association® (FPA®) of Northeastern New York, the principal professional organization for Certified Financial PlannerTM (CFP®) professionals. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process. Please credit FPA of Northeastern New York if you use this column in whole or in part.

The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION. The marks may not be used without written permission from the Financial Planning Association.

Kids, Parents and Paying for College: Seven Steps to Striking the Right Balance


If you’re a student who wants to go to college, or you’re the parent of a student with college aspirations, the dollar figures can be daunting. As of 2017, according to the College Board, the average all-in price (including tuition and fees) for four years at an in-state public college approaches $40,000. For four years at an out-of-state public college, the number exceeds $102,000. And for four years at a private nonprofit college, the tab runs about $139,000. Paying for college can be daunting.

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However you slice it, going to college entails a major financial commitment. And it’s not getting any cheaper. In fact, between 2007-2008 and 2017-2018, overall tuition and fees at public four-year institutions have increased annually at an average rate of 3.2% above inflation, according to the latest figures from the College Board. So if college is still years away, simple math suggests that the aforementioned dollar figures will be significantly higher.


As daunting as it can be for parents and students to try to figure out how to fulfill the financial obligations that come with a college education, avoiding that stress and finding creative ways to cover an expense that by all indications will continue to increase “is all about budgeting and planning in advance,” says David J. Haas, a CERTIFIED FINANCIAL PLANNER(CFP®) professional with Cereus Financial Advisors in Franklin Lakes, NJ.


Give yourself plenty of time to work through the process, adds New York City-based CFP® professional, Sallie Mullins Thompson. “Be sure to start the planning at least two years in advance of the [student’s college] entry date.”


Step One in the planning process: Open the lines of communication.

“Communication between student and parent is key,” asserts Haas. With large sums of money in play, college funding discussions can invite divisiveness and unnecessary strife unless the involved parties commit to open communications. In laying the groundwork for those communications, it’s important that everyone agree to be frank, honest and transparent, to minimize unpleasant surprises and give one another the best chance of staying on the same page.


Step Two: Get clear about expectations.

How much are parents willing and able to contribute, if any? How much will the student be expected to kick in, if any? “Students and parents need to talk about the financial aspects of the college decision and be upfront about how much money parents are providing,” says Haas. “When a student sees that dollar figure of how much they’re going to be expected to cover, that student is going to be more diligent in finding ways to meet their obligation.”


As much as parents may want to cover a student’s entire college tab because they have the financial wherewithal to do so, they should still consider asking the child to cover a portion of the cost, because having “skin in the game” can motivate them to focus on making the most of their education, says Leon C. LaBrecque, CFP® who heads LJPR Financial Advisors in Troy, MI. “I made my kids pay 25% of their college cost. If they got a scholarship, that was their 25%. If the scholarship exceeded 25%, I agreed to hold [the equivalent amount of money] for them for later…The concept created an ownership bias in them such that they took ownership in their education.”


Step Three: Get clear about priorities.

Oftentimes families find themselves struggling to balance competing, concurrent financial priorities, such as saving for retirement while also funding a college education. “Remember, you can always borrow for college, but you can’t borrow for retirement,” says Melissa Sotudeh, CFP® at Halpern Financial in Rockville, MD.


“Look at [funding] your retirement as the number one priority, and funding college as the second priority,” Haas adds. “It’s important to look at all the family’s goals to understand where education fits.”


Step Four: Commit NOT to pay list price.

Every college has a list price and a net price for a student. And as Haas notes, “Many people don’t pay list price.”


In fact, tuition discounting by private colleges and universities is at an all-time high, according to the National Association of College and University Business Officers (NACUBO). Through grants, scholarships, and fellowships, the average tuition discount rate for first-time, full-time students at this category of schools was 49.1 percent in 2016-17. Among all undergraduates, the estimated institutional tuition discount rate was a record 44.2 percent. An estimated 87.9 percent of freshmen and 78.5 percent of all undergraduates received grant aid in 2016-17, according to the NACUBO.


There are ways to find out what the net price is for individual institutions, such as via the net price calculators on a school’s website. Net price info for many schools is also available at, and through the high school guidance office.

While net prices for four-year colleges have risen across the board, grant aid has not kept up with those increases in tuition and fees. Still, there’s plenty of needs-based and merit-based aid money available. In 2016-17, undergraduates received an average of $14,400 in financial aid, according to NACUBO. The first step to accessing that aid is to fill out and submit the FAFSA (Free Application for Student Aid). If you don’t qualify for need-based aid, private schools may be able to offer better award packages than state schools, notes Robin Giles of Apex Wealth Management in Katy, TX.


One way to avoid paying “sticker price,” adds Sotudeh, is to consider smaller and/or lesser-known institutions, which often provide more generous merit aid to attract students. She points to recent research by Alan Krueger at Princeton University and Stacy Dale at Mathematica Policy Research showing that students who were accepted to elite colleges but ended up attending less-exclusive ones ended up earning the same amount of money coming out of college as they would have had gone to the elite colleges. “As common-sense as it sounds, the students’ financial success had more to do with their individual aptitude than the school they attended.”


Also keep in mind that the aid terms offered by a specific school are negotiable — that a school may match or beat an offer from another institution if it wants a student.


Step five: Discuss the ramifications of debt.

Beware leaving college for the working world with a large debt burden, Haas cautions. “Students need to be careful to not take on too much debt when paying for their college education. They should understand the debt overhang and what it might mean once they graduate.” Carrying a lot of student debt out of college can limit a person’s ability to get a mortgage to buy a home, or a loan to buy a car, or even to rent or lease an apartment, he says.


In evaluating student loan options, look for flexibility, he recommends. “Federal student loans are the best loans to take for undergraduate education, because they have the best repayment plans and forgiveness is possible. They also can be forgiven in case of death or disability, and parents are not on the hook for the loan balances.”


Step six: Divide and conquer.

Gathering information about individual schools and about financial aid, then comparing and evaluating them, can be a time-consuming process. As you wade into the process, try to allocate responsibilities among student and parents.


Step seven: Cast a wide net.

Financial aid can come from a wide range of sources, some obvious and others less so. Sites like, (3.7 million scholarships and grants worth some $19 million), (which allows users to apply for multiple scholarships via a single form) and (particularly useful for highly targeted scholarships) serve as clearinghouses for up-to-date information on funding sources. The federal government’s Pell Grant program ( for low- and moderate-income students is also worth investigating.


But don’t stop there. Search the Internet using the word “scholarship” or “grant” plus keywords that relate to your areas of interest, or are specific to you and your background. Talk with the high school guidance counselor and the financial aid offices at the schools you’re targeting, as they can be valuable sources of information. And set your sights locally, regionally and nationally, because a variety of public and private sources offer scholarships and grants, including local businesses and philanthropic organizations, professional/business groups, community and civic organizations such as the Chamber of Commerce, Rotary, Lion’s and Elks, government entities, religious groups, even private citizens.


This column is provided by the Financial Planning Association® (FPA®) of Northeastern New York, the principal professional organization for Certified Financial PlannerTM (CFP®) professionals. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process. Please credit FPA of Northeastern New York if you use this column in whole or in part.

The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION. The marks may not be used without written permission from the Financial Planning Association.

An Investor’s Guide to Transitioning Your Money — and Your Mindset — to Retirement


The transition to retirement after years in the workplace, as welcome as it may be, can also be jolting and even downright daunting, for all the changes it brings to a person’s day-to-day lifestyle, to their state-of-mind and to the handling of their finances.


A key part of the shift into retirement mode, explains Michael Palazzolo, a Certified Financial Planner™ who heads Birmingham, MI-based Fintentional, is adjusting from a growth-focused approach to asset-management and investing, to an approach which recognizes that protecting assets from downside risk and volatility is as important as growing them. Successfully transitioning to retirement entails not only a shift in investing mindset, but also an actual shift in how assets are invested.

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And that may raise some potentially unsettling questions: Will the assets I’ve worked so hard to build last as long as I need them to, and are they adequately protected from potentially damaging swings in the financial markets? Will the sources I’m relying on for income provide enough to live the lifestyle I desire?


Questions like these can make the move into retirement “quite intimidating,” Palazzolo acknowledges. “It brings up a lot of emotions and for some people, a lot of fear.”


One way to find answers to these questions and defuse some of the anxiety that often accompanies retirement is by planning in advance for how to execute the shift from accumulation mode, where growing assets usually is top priority, to distribution or decumulation mode, where the focus is balancing growth with protection to ensure those assets are distributed efficiently to supply an adequate amount of income throughout retirement.


Here’s a look at some of the key steps involved in the accumulation-to-distribution transition and planning process:


Figure out the “when.” Financial professionals such as Palazzolo suggest starting the transition process five years before your projected retirement date. So an important first step for a person considering retirement is to pick a target retirement date.


Adjust how assets are allocated to reflect changing risk tolerance. A person for whom retirement is looming close has less time to recover from a sharp downturn in the value of their assets. For them, a sharp dip in asset value just prior to retirement can be particularly devastating, since they’ll be drawing from these assets for income during retirement. The less valuable their assets, the less the income-producing capability of these assets. So, to address this risk — sequence of returns risk, it’s known as in financial circles — it often makes sense for people whose assets are heavily weighted toward stocks to shift a portion of their money out of the stock market, into bonds and other more conservative fixed investments.


It also may make sense to shift the composition of the portfolio, including both stocks and bonds, to lower-risk investments, such as with more value-driven stocks and/or shorter-term bonds, adds Certified Financial Planner™ Leon C. LaBrecque, who heads LJPR Financial Advisors in Troy, MI.


Take steps to manage tax exposure. Because taxes can have a particularly negative impact on retirees living on a fixed income, financial experts recommend taking steps before and during retirement to manage and mitigate potential tax exposure. That can mean phasing in the aforementioned reallocation of assets over a period of years to spread out potential capital gains tax liabilities, says Palazzolo.


It also can mean taking steps to diversify assets in terms of their tax treatment. Distributions from pre-tax accounts such as a 401(k) or traditional IRA are taxed as ordinary income when they come out, unlike distributions from a Roth 401(k) and Roth IRA, which aren’t taxed when they come out. Converting a traditional IRA to a Roth IRA prior to retirement gives people access to a tax-free source of income. While they likely will incur taxes on the conversion, gaining access to that tax-free income source later can make the move worthwhile, explains Palazzolo.

Build a cash reserve. Having access to a pool of readily available cash, stowed someplace like in a money market account or CD, is vital for retirees, says Palazzolo. Say a person is planning to sell investments from their stock portfolio to provide income during the early years of retirement, only to see the stock market — and the value of their portfolio — drop precipitously. Instead of being forced to sell stocks when their value is down in order to generate income, people with a substantial cash reserve can start drawing from that reserve for income while holding onto their stock investments, hopefully until they regain their value. They also can use money from that reserve to purchase stock-based investments when their price is relatively low. All this leads back to the fundamental “buy low, sell high” investing credo.


How much cash to keep in reserve? Some financial professionals recommend stashing enough to cover one or two years’ worth of retirement income. Others suggest more, in case the stock market downturn lasts longer.

Keep assets in the stock market. Equity investments such as stocks and stock-based funds can serve as the main growth engine of a portfolio, even in retirement. Indeed, with people living longer these days, they need their assets to keep growing so they last as long as they’re needed. Equities also are proven to help investors keep up with inflation, should that become more of a factor. So while it may make sense for a person heading toward retirement to move some of their assets out of the stock market, keeping a substantial chunk of their assets in equities can be a good idea for many.


Review retirement accounts, including 401(k), 403(b) and IRAs, with an eye toward potentially consolidating them to make eventual distributions (withdrawals) from these accounts easier to manage, and, perhaps, to reduce investment fees and costs, which can free up additional money to use constructively. “By keeping [investment] costs down, you’re basically giving yourself more money to reinvest,” Palazzolo explains.


Take stock of income sources. It’s important to gain a clear picture of your retirement income well before retirement hits. That means looking at both the supply and demand sides of the equation: on the supply side, the sources you expect to provide income during retirement, how much they will supply, when they’ll supply it, for how long and in what form (lump sum or in a series of payments); and on the demand side, projecting how much income you expect to need to cover your expenses and support your retirement lifestyle. This way, if there’s an apparent income shortfall, you can start addressing it now, before it becomes a pressing problem.


In the context of income planning, it’s also important to consider when to start taking Social Security benefits. People have options as to when they can begin drawing benefits — early, at age 62, at retirement age (65 to 67), or later, up until age 70. Waiting can make a substantial difference in the monthly benefit a person receives.


Revisit your asset mix and recalibrate if necessary, to maintain an optimal allocation. As financial markets move, the percentages of stocks and bonds in your portfolio likely will fluctuate, sometimes substantially enough to warrant a process called rebalancing, which entails moving money out of one class of assets inside the portfolio, to another class. Financial professionals recommend revisiting asset allocation at least annually — and as circumstances dictate.


Turn to a financial professional for guidance. The transition from the working world to retirement, and from accumulation mode to distribution mode, involves a variety of moving parts and a series of critical decisions. One misstep can prove costly. So consider enlisting the services of a financial planner for help making the transition as smooth as possible. To find one in your area, check out the Financial Planning Association’s searchable national database of personal finance experts at

This column is provided by the Financial Planning Association® (FPA®) of Northeastern New York, the principal professional organization for Certified Financial PlannerTM (CFP®) professionals. FPA is the community that fosters the value of financial planning and advances the financial planning profession and its members demonstrate and support a professional commitment to education and a client-centered financial planning process. Please credit FPA of Northeastern New York if you use this column in whole or in part.

The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION. The marks may not be used without written permission from the Financial Planning Association.


20 Birthdays and Milestones That Matter Most in Your Financial Life


Just like certain birthdays and life milestones carry extra personal significance, there are certain points in life that carry extra financial weight.

Starting in the late teens and running through virtually every decade thereafter, the calendar of your life is dotted with dates and milestones, some representing key financial decision points and others that trigger important money-related developments.

The list below draws from input provided by members of the Financial Planning Association, the nation’s largest organization of personal finance experts. Add them to your calendar now so you won’t forget them later!

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Age 18 to 21 (depending on the state). This is the age at which the law requires that funds kept in a UGMA (Uniform Gift to Minor’s Act) or UTMA (Uniform Transfer to Minor’s Act) college savings plan

be turned over to the child, according to Peter T. Palion, a Certified Financial Planner™ with Master Plan Advisory in East Meadow, NY.

For people in the Jewish and Latino communities, B’nai Mitzvahs and Quinceañeras, respectively, symbolize a person’s move from childhood to adulthood. To mark the occasion, some people create donor-advised funds (DAF) on behalf of the person, says Portland, OR-based Certified Financial Planner™ Arlene S. Cogen. “The DAF allows the recipient an opportunity to make grant recommendations to the charities and causes they care about.”

Age 19: This is the age up to which a parent/guardian can claim a child as a dependent, unless the child is attending college, in which case he/she can be claimed as a dependent until age 24.
First “real” job after graduating (from high school/college/graduate school). That first step into the working world is a good time to start contributing to an employer’s retirement plan, such as a 401(k) or 403(b). Setting aside even a modest amount out of a paycheck each month, and doing so sooner rather than later, gives a person the opportunity to take advantage of compound growth in their investments, which can mean tens of thousands, even hundreds of thousands, of dollars more in savings down the road.

Age 26: This is the cut-off point, where kids can no longer remain on a parent’s health insurance plan and must purchase their own insurance.

Birth of your first child: A good opportunity to invest in a life insurance policy and disability insurance to replace your income and protect your family financially should the unexpected occur, and to establish a college savings plan on the child’s behalf, such as a tax-favored “529” plan.

Mid-20s to mid-30s: With earnings/salary likely on the rise and new financial responsibilities to meet, now is a good time to establish a relationship with a financial professional to provide ongoing guidance and recommendations for meeting your goals, growing your assets and managing your money. To find a personal finance expert in your area, check out the Financial Planning Association’s searchable national database at

30s and 40s. If you have a spouse and/or children, and you want to have a say in how your assets and your affairs are handled should the worst happen, it’s important to put in place the legal documents to ensure your wishes are carried out. That includes a will, powers of attorney, guardianship of children and more.

Mid-40s to mid 50s. This is the optimal age range to invest in some form of long-term care insurance to protect against a potentially financially devastating need for care later in life. People tend to qualify for much lower premiums at this age if they’re in good health, notes Certified Financial Planner™ Brett Spencer of D3 Financial Counselors in Chicago, IL. “Many will find the mid-50s to be an ideal time to buy, but for others that do not feel as optimistic about their health or for those that are more risk-averse, they may decide to purchase earlier.”

Age 50: Here’s when people become eligible for higher “catch-up” contributions to a retirement savings plan. Tax law raises contribution limits by anywhere from $1,000 to $6,000, depending on the type of plan.

50s and 60s: This is the time for more serious contemplation about targeting a retirement date — or making a plan to continue working.

Age 55: A special exception to rules governing withdrawals from qualified retirement plans [401(k)s and the like] allows people who have been separated from employment (laid off work, etc.) at age 55 or older to start taking money out of their plan penalty-free earlier than they otherwise could, according to Spencer.
Age 59½: The age at which people can start taking penalty-free distributions from a qualified retirement plan such as a 401(k).

Three to five years before your target retirement date: Time to begin positioning your assets to transition from the accumulation phase to the distribution/decumulation phase of life — the point where you start spending down the assets you worked so hard to build. The transition includes taking stock of the income sources you’ll rely upon for retirement to assess if they’ll be adequate to support you throughout retirement, whenever it happens.

Age 62: The age at which people become eligible to claim a reduced (20% to 30%, depending on age) Social Security benefit.

Three months before turning 65: This is the time to apply for Medicare, says Spencer. Applying in advance allows a person to avoid penalties for applying late. “You may decide to delay Medicare if you are still working and covered through a health plan, but you should be aware that you will have a limited time window (currently two months) to apply for Medicare after you stop working and are off of your employer’s plan,” explains Spencer.

Age 65 to 67: The “full retirement age” range at which people, depending upon their year of birth, become eligible for full Social Security benefits.

Age 70, the latest a person can elect to start drawing Social Security benefits. Waiting that long can translate into a significantly higher monthly payment.

Age 70½: This is when anyone with a qualified retirement plan [401(k), traditional IRA, etc.] must begin taking annual required minimum distributions (RMD) from their plan. RMDs do not apply to Roth IRAs.

Annually, at least, throughout your adult life, take stock of your finances, your assets, revisit the financial plan you (hopefully) put in place with the help of a financial professional, and based on that assessment, make any necessary adjustments to the plan and how your assets are allocated.

The Financial Planning Association is the owner of trademark, service mark and collective membership mark rights in: FPA, FPA/Logo and FINANCIAL PLANNING ASSOCIATION. The marks may not be used without written permission from the Financial Planning Association.

April 4 – 13, 2016 is National my Social Security Week


For more than 80 years, Social Security has helped secure today and tomorrow with information, tools and resources to meet our customers’ changing needs and lifestyles. April 4 – 13, 2016 is National my Social Security Week.

The convenience and safety of doing business online with Social Security is another way we’re meeting the changing needs and lifestyles of our customers. With a my Social Security account, you can:

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  • Keep track of your earnings and verify them every year;
  • Get an estimate of your future benefits, if you are still working;
  • Get a letter with proof of your benefits, if you currently receive them;
  • Manage your benefits;
  • Change your address;
  • Start or change your direct deposit;
  • Get a replacement Medicare card; and
  • Get a replacement SSA-1099 or SSA-1042S for tax season.


In some states, you can replace your Social Security card online using my Social Security. Currently available in the District of Columbia, Michigan, Nebraska, Washington, and Wisconsin, it’s an easy, convenient, and secure way to request a replacement card online.

To take advantage of this new service option, you must:

  • Have or create a my Social Security account;
  • Have a valid driver’s license in a participating state or the District of Columbia (or a state-issued identification card in some states);
  • Be age 18 or older and a United States citizen with a domestic U.S. mailing address (this includes APO, FPO, and DPO addresses); and
  • Not be requesting a name change or any other changes to your card.


We plan to add more states, so we encourage you to check with us later in the year.

During my Social Security Week, we will hold “Check Your Statement Day” on April 7, and you can join the millions who regularly check their Social Security Statement. It’s important that you check this document every year because we base your future benefits on your recorded earnings. Your Statement can help you plan for your financial future. We encourage you to go online to my Social Security to access your Statement whenever you have a change of employment or wish to verify any changes in your benefit estimate.

Week after week, we provide you with world-class customer service, much of which is online. During my Social Security Week, you can join the more than 23 million people who have opened their own my Social Security account at

Help secure your today and tomorrow. Open a my Social Security account today by visiting

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