What Financial Planning Really Means for You and Your Family

Contributed by: Kelsey Arvai, CFP®, MBA

Let me start by telling you what financial planning is not. Financial Planning is not one-size-fits-all. It’s not only for the wealthy. It’s not a one-and-done exercise. And it’s certainly not just about creating a budget or calculating your net worth. Comprehensive financial planning is deeply holistic. It often starts with the numbers (budgets, investments, retirement projects, etc.), but it is ultimately driven by every area of life: social, emotional, physical, and even spiritual well-being.

Building wealth over the long term incorporates aspects of not only financial strategy but also your relationships, mental health, lifestyle, and values. At its core, financial planning is about designing a life that speaks to you and what really matters to you and your family—spending time with loved ones, creating meaningful memories, and making your money work in ways aligned with your values. Time and energy are some of our most finite resources. The art of planning lies in striking the right balance between the two, along with our financial resources while navigating the ever-shifting demands of life. To quote our recent publication, Finding Your Center, which I will do throughout this blog: “The Center was built on a belief that people deserve more than financial advice—they deserve partners who listen.”

Even when you’re not quite sure what outcome you’re aiming for—or how you might get there, you and your family are the starting point. Your unique talents, desires, fears, values, and current life circumstances shape your financial strategy. Think of it like a fitness plan or a nutritional diet: the best one is the one that is tailored for you and your family. Financial Planning is a tool to help optimize your life, not just your portfolio. “True wealth is found in the freedom to live life on your terms, with clarity and confidence.” Whether that looks like living on $2,000/month or $200,000/year, the goal isn’t a specific dollar amount or net worth value. It’s that deeply satisfying sense of clarity, confidence, and calm that comes from designing a plan, following it, and living it. There is no crystal ball that can protect us from pain, fear, or grief. That’s not the goal of planning. “Financial planning isn’t about predicting the future. It’s about preparing you to meet it—wholeheartedly.”

Financial planning can have ripple effects in every direction: from saving for your children or grandchildren’s education to supporting your aging parents or grandparents to navigating windfalls or inheritances to hardships and difficult times. One of the greatest gifts you can give your family is not money; it’s clarity and confidence. “Our work isn’t just for today—it’s for the generations that come after, and the values they’ll carry forward.”

The clients we serve are diverse—young professionals, retirees, blended families, small business owners, your next-door neighbors, your kid’s teachers, and college graduates who are just starting out. “You don’t need to have it all figured out to begin. In fact, that’s why we’re here.”

At the end of the day, financial planning is about more than money, dollars, and cents. It’s about living with alignment and purpose. It’s about being proactive, not reactive, and finding freedom in structure. So, let me leave you with this question: What would it mean to you and your family to feel financially at peace? “Our greatest joy is helping people write their own definition of success—and walking with them as they live it.”

Are you curious about what a personalized financial plan might look like for you or your family? Let’s talk: Discovery Call with Kelsey Arvai, MBA, CFP®.

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

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Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kelsey Arvai, MBA, CFP®, and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through the Center for Financial Planning, Inc. The Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Helping Aging Parents: Financial Planning for Longevity

Contributed by: Sandra Adams, CFP®

More of us are living in a new reality. One in which we are working and caring for our own families while simultaneously facing the needs of aging parents. It is not uncommon that our older adult parents have simply "fallen" into their retirement without a real plan. Many became retirement age and decided it was time to retire without any real certainty that they had enough income and assets to support their plan for their lifetimes. In their minds, they felt secure with what they had, did not spend all that much, and would make it work — no worries. But now that you are more involved and are helping them as they get older, it worries you that they have never really planned. What should you do?

Just as you would think of planning for yourself to make sure that you are on track for your future financial goals, it makes sense to help your older adult parents get their financial ducks in a row. It is never too late for them to make sure they are on track and to adjust and find resources if they are not.

To start, it makes sense to find a financial planner who specializes in longevity planning to work with your parents. You will want to make sure that the planner will be able to review your parent's full financial plan (the technical side of the plan) in addition to looking ahead at aging plan considerations that may come into play for your parents in the future.

What should be included in the plan?

• Review of Net Worth and Financial Assets – it is important to review what assets are held, where they are held, and what the registrations of those assets are. It is here where we can identify opportunities for simplifying the investment assets holdings, inconsistencies in investment account registrations, etc.

• Review of Income, Cash Flow, and Debt Items – it is important to review where income currently comes from, how much income is needed to support normal cash flow needs, and any debt items. The more a client(s) have in guaranteed income sources (Social Security, pensions, annuity payments, etc.) towards their retirement income needs, the stronger their overall plan will be.      

• Review of Overall Retirement Cash Flows — the ability to fund their retirement incomes over time with the income and assets that they have available. Here, it is important to be realistic about future life expectancies, ongoing inflation, and returns on any investment assets that are available. The major unknown here is the possible need for Long Term Care in the future, especially if no Long-Term Care insurance is available.

• Review of the Investment Portfolio — for many older adults, we find that there is a measure of extremes. Either they have left their portfolios extremely aggressive from when they were working and never adjusted them, and thus they are taking on way more risk than they should be at their age and stage of life, OR they are extremely conservative and almost all in cash, CDs and bonds and they are at risk for not being able to keep up with the cost of living. Either extreme could be detrimental to a retirement plan long term.

• Review of Risk Management – review of insurances on an ongoing basis is more important than many people realize. This means everything from reviewing personal lines insurances to ensure that liability coverages are sufficient, to ensuring that life insurance policies are still relevant and understood, and that any riders on those policies are documented for future use (i.e., long-term care, etc.).

• Review of Estate Planning – reviewing and updating of estate planning documents on a regular basis is particularly important, especially as clients get older. Powers of Attorney should be regularly reviewed so that the older adult can ensure that those they have named are still the people they wish to manage their affairs if they cannot act on their own behalf. Trust and/or Will provisions should also be reviewed regularly to make sure that wishes have not changed and/or do not need to be updated. In addition, beneficiary designations and investment accounts should be reviewed regularly to make sure that they are consistent with your estate plan.

• Longevity Planning – Reviewing your current and future challenges, alternatives, resources, and desired experience as it relates to finances/money, housing, and care should be part of the planning with your older adult parents. Planning AHEAD is crucial here for both you and for them. For them, this gives them the most amount of control over their future aging life. For you, this helps you to help them plan, saves you from guessing their wishes, and helps make decisions easier as things change for them going forward. An aging plan should include some specific resources and action steps that can be reviewed and monitored as time goes on.

Since you are an active participant in your parent's care and their planning for the future, we encourage you to be a part of their planning process if they are open to that. Having open communication amongst the family as clients age makes the planning process a much better process for all involved. If helping your aging parents with longevity planning is something you are interested in doing, please feel free to reach out to us for help: Sandy.Adams@Centerfinplan.com

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Enjoyed this blog? Boost your financial confidence with our book, Finding Your Center: Achieving Confidence Through Financial Planning. Click HERE to learn more and get your copy.

If you're in the Metro Detroit area, join our book tour and receive a FREE copy!

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

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. 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.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Social Security Taxation

Contributed by: Nick Defenthaler, CFP®, RICP®

In my experience, there is typically a high level of confusion when it comes to understanding how Social Security benefits are taxed (consumers AND many financial advisors!). Understanding how other forms of income interact with Social Security is imperative when constructing a tax-efficient retirement income for a client. As we'll explore in this article, the impact other forms of income can have on Social Security can often make or break a financial planning/tax decision in a given year.

Social Security Tax Basics  

Are you ready for your head to spin? The taxation formula and application of this formula for Social Security benefits is tricky! Let's start with the formula for what's known as 'provisional income' or 'combined income.' An individual's provisional income will then determine how much of their Social Security benefit will be included in their overall income for the year.

• Adjusted Gross Income (AGI) + tax exempt bond interest + ½ Social Security benefit = Provisional Income (PI).

What income counts as AGI? Great question! Income from pensions, annuities, employment wages, dividends, interest, capital gains, and pre-tax 401k/IRA distributions would all be included in AGI.

• Provisional income less than $25,000 for single filers, $32,000 for joint filers = $0 tax paid on Social Security benefits.

• Provisional income between $25,000 - $34,000 for single filers, $32,000 - $44,000 for joint filers, up to 50% of Social Security benefits will be taxable.

• Provisional income above $34,000 for single filers or above $44,000 for joint filers, up to 85% of Social Security benefits will be taxable.

Provisional Income Example

As you can see, there are many moving parts, so let's look at an example. Mark and Jenny have a pension income of $40,000, distribute $36,000 each year from their Traditional IRAs, and recently started their Social Security benefits, which total $50,000. To determine their provisional income, we would complete the following calculation:

$76,000 AGI (pension + IRA distributions) + $0 tax exempt bond interest + $25,000 (50% of total Social Security benefits) = $101,000 of provisional income.

Given $101,000 of income, $42,500 (or 85%) of Mark and Jenny's Social Security combined benefit of $50,000 will be included in their income for the year.

• Pension = $40,000

• IRA Distributions = $36,000

• Social Security = $42,500

• Total Adjusted Gross Income = $118,500

The IRS has a great resource on its website that will help you calculate your provisional income and help forecast the taxability of your Social Security benefit – click HERE to check it out.

Reducing Tax on Social Security

As you can see from the example above, increasing one's provisional income will inevitably increase the taxability (and possibly the rate of tax) of one's Social Security benefit. The timing of realizing income such as capital gains, IRA distributions, or Roth IRA conversions is all important when creating a well-thought-out income plan that takes Social Security taxation into consideration.

We have seen many examples before where, on the surface, a Roth IRA conversion appeared to make sense for a client, given their current tax bracket. However, after running the numbers and seeing how much their provisional income would increase as a result of the conversion, we ultimately advised against converting funds to Roth. In many cases, the increased taxability on Social Security benefits diminishes the value of a Roth IRA conversion and can even be the source of increasing one's Medicare premiums and subject you to 'IRMAA' (Click HERE to read one of my past articles on this topic).

The impact of taxes on Social Security is a very important aspect of your retirement income plan. There are multiple 'push and pulls' when determining how much tax you'll pay on your benefit. While quite confusing, it's critical your advisor understands these nuances to help ensure your retirement income stream is as tax efficient as possible!

Nick Defenthaler, CFP®, RICP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® Nick specializes in tax-efficient retirement income and distribution planning for clients and serves as a trusted source for local and national media publications, including WXYZ, PBS, CNBC, MSN Money, Financial Planning Magazine and OnWallStreet.com.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Center for Financial Planning, inc. is not a registered broker/dealer and is independent of Raymond James Financial Services. 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. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James.

Q1 2025 Investment Commentary: Diversification Results in Smoother Ride than Headlines Portray

Contributed by: Angela Palacios, CFP®, AIF®

Contributed by: Nicholas Boguth, CFA®, CFP®

The past few months have been a whirlwind—new leadership in Washington, escalating trade tensions, geopolitical conflicts, and market swings have dominated headlines. Even the Federal Reserve noted heightened 'uncertainty' after holding the Fed Funds Rate steady, and that might be an understatement.

The S&P 500 started out steady this year, gaining a few percent by mid-February and reaching a new all-time high! But the short-term whims of the stock market turned from that point as it fell sharply and briefly hit a 10% decline from its peak by mid-March (those famous "Magnificent 7" stocks got hit even harder, the notable one being TSLA that was down a whopping 53% from its high a few months prior). The S&P 500 ended at -4.5% this quarter.

While all that turmoil was occurring in the big U.S. stock names, international stocks were quietly having a fantastic quarter. The MSCI EAFE (a common stock index covering international stocks) was actually positive for the entire quarter, outperforming its U.S. counterpart by over 16% at times and ending the quarter at a positive +8%.

Bonds also did their job and provided the support we want to see during times of volatility, the Bloomberg U.S. Aggregate Bond Index added +3%.

If you were just watching the headlines, it may not have felt this way, but all of that adds up to a balanced portfolio* being essentially flat to start the year. U.S. stocks dragged down performance, while bonds and international stocks were additive. Our ultimate goal has always been to help you achieve your goals; therefore, we continue to focus on the risk reduction benefits of a diversified portfolio, and so far this year, the benefits of diversification have added up to a smoother ride.

*Morningstar's Moderate Allocation category average for the quarter was -0.3%.Source: Morningstar Direct.

Diversification

It is quarters like this that remind us why we invest in diversified portfolios and create a plan BEFORE there is market volatility.

Famed Nobel Laureate Harry Markowitz, whose investment principles still shape how portfolios are created today, said, "Diversification is the only free lunch in investing." We tend to agree, which is why we strongly believe in diversified portfolios. The only pushback I'd give is that it isn't "free"; it is actually very difficult for most investors to stay diversified. The hard part is that there is always a piece of your portfolio lagging, tempting you to second-guess it. Lately, that's been international stocks—but those who stayed the course just reaped the rewards of a quarter where international outperformed by more than 10%. Over the long haul, we believe diversification leads to favorable outcomes for investors, and we will continue to allocate accordingly.

Trade War Deja Vu

With all of the recent volatility directly induced by the trade war escalation, we have to look backward before deciding what, if anything, to do with portfolios. The most recent time period we have to look at from history is President Trump's first term when he tackled international trade, starting in late 2017 and continuing through into 2019. You can see that as various headlines escalated throughout the year, the market (the gray area) reacted mildly at first and even continued to climb higher through the summer as the war escalated. It is also important to remember that the volatility late in 2018 was not simply induced by the trade war. At the same time, the Federal Reserve (The Fed) took a tighter policy stance, increasing interest rates and giving forward guidance that it would continue to shrink its balance sheet.

The difference this time is we have lived through this before, so markets are reacting poorly and more quickly than they did before. Perhaps because they are remembering what happened in 2018 and the volatility we saw at the end of the year was still fresh in investors' minds. What is lacking in all commentary we read, though, is experts and investors forget we had a HAWKISH Fed that was raising interest rates then. Now, we have a Fed that is expected to cut rates later this year.

How We Are Trading It?

As we have warned previously, media headlines are often wrong or sensationalized. But this doesn't mean that we ignore them and what is happening. As an investment committee, we digest and step back to calmly make decisions when warranted. So, what have we been up to?

1. Taking profits in positions that have been big winners. This may look different depending on what stage of life you are in and your portfolio needs, but for all, regardless of stage, it's called rebalancing. Rebalancing isn't just a process, it can also be a very tactical tool. We have let our winners run for a long time; once they were overweight, we shifted from US Large cap to areas like bonds (big winners recently) and into areas that underperformed for years like international (also big winners recently). This was done much nearer the market top for US Large before the recent volatility occurred.

2. Lengthening duration in our bond portfolio now that intermediate term bonds are yielding more than short duration bonds. We harnessed that higher yield for your portfolio. Not to mention, some great price performance induced by market volatility recently too.

3. Raised cash for those in withdrawal stage. We did this early this year before the drawdown started. Taking advantage of a good start to the year for markets, we made sure people taking withdrawals had ample cash to fund future withdrawals, getting to sell while markets were up rather than being forced to sell down the road into weaker markets if they continued.

Remembering that portfolio management is not an "all or none" process is crucial. It is about positioning yourself to minimize emotional decisions so you can find the "opportunity" that exists in crisis. Stay tuned for more change to come in portfolios as we assess the consequence of tariffs, especially reciprocal tariffs, being put into place!

If you have questions, it is important that you reach out to your advisor.  We recommend stepping back to remember your investment goals and ask yourself if those have changed. Remember, when we are doing your planning work, we expect times like this to occur, "when, why, and how much" are the surprise but not the "if."  Our planning work knows this volatility occurs and builds cushion into your plan to be able to help manage periods like this.

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.

Nicholas Boguth, CFA®, CFP® is a Senior Portfolio Manager and Associate Financial Planner at Center for Financial Planning, Inc.® He performs investment research and assists with the management of client portfolios.

Any opinions are those of the Angela Palacios, CFP®, AIF® and Nick Boguth, CFA®, CFP® and not necessarily those of 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. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. The MSCI EAFE (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 22 developed nations. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Past performance does not guarantee future results. Diversification and asset allocation do not ensure a profit or protect against a loss. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not a guarantee or a predictor of future results. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

The Magnificent Seven are a group of companies including Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla. Raymond James makes a market in these stocks. This is not a recommendation to purchase or sell the stocks of the companies mentioned.

Social Security Fraud Prevention

Contributed by: Kelsey Arvai, CFP®, MBA

Contributed by: Nick Errer and Ryan O'Neal

The Social Security Administration (SSA) has a zero tolerance for fraud, and it works diligently at the national, regional, and local levels to combat fraud that undermines its mission to serve the American Public. To accomplish this goal, the SSA works with the Office of Inspector General (OIG), which investigates allegations of fraud and seeks to bring offenders to justice.

Many cybersecurity experts agree that most individuals' social security numbers (SSNs) are comprised at least once. Your Social Security card is not an identification document, and, in many situations, you only need to know your Social Security number (you do not need to show the physical card). What is Social Security Fraud? Fraud involves obtaining something of value through willful misrepresentation.

Examples of fraud include:

• Identity theft

• Filing claims under another person's SSN

• Concealing facts or events that affect eligibility for benefits.

• Making false statements on claims or misusing benefits

• Failing to notify the agency of the death of a beneficiary and continuing to receive the deceased person's benefits.

Recognize scammers. They may PRETEND to be from an agency or organization you know. Say there's a PROBLEM or promise a prize. PRESSURE you to act immediately. Tell you to PAY in a specific way. Do not give scammers money or personal information- Ignore them!

What should you do ASAP after finding out you have been exposed?

• Place a security freeze on your credit report through one of the three major reporting agencies (Equifax, Experian & TransUnion)

• Lock your Social Security Number

• Report the incident(s) to the Federal Trade Commission at IdentityTheft.gov and local authorities.

• Often required to close fraudulent accounts. 

Measures you can take to prevent identity theft:

1. Remember to remain calm.

2. Talk to someone you trust.

3. Hang up or ignore the message.

4. DO NOT click on links or attachments.

5. Protect your money.

Criminals will insist that you pay in a hard-to-trace manner, such as with a gift card, prepaid debit card, cryptocurrency, wire transfer, money transfer, or by mailing cash. Protect your personal information. Be skeptical of a contact you don't initiate. Spread the word.

Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Exploring the Mega Backdoor Roth: Is It The Right Strategy For You?

Contributed by: Kelsey Arvai, CFP®, MBA

As financial planning professionals, we often seek advanced strategies to maximize clients’ retirement savings. One such strategy that has gained considerable attention is the Mega Backdoor Roth IRA. But is this complex approach suitable for everyone? In this blog, we’ll explore what the Mega Backdoor Roth is, how it works, and whether it might be a beneficial option for your financial planning strategy.

What is a Mega Backdoor Roth?

The Mega Backdoor Roth IRA is an advanced retirement savings technique that allows high-income earners to contribute more to their Roth IRA than traditional limits permit. Typically, Roth IRA contributions are capped at $7,000 annually for individuals under 50 (or $8,000 for those 50 and older). However, the Mega Backdoor Roth strategy enables individuals to funnel significantly larger amounts into a Roth IRA by leveraging after-tax contributions made to a 401(k) or 403(b) plan.

How Does It Work?

Here’s a step-by-step breakdown of how the Mega Backdoor Roth works:

1. Contribute to Your 401(k) or 403(b) Plan: Start by contributing to your retirement plan up to the annual limit of $23,000 for individuals under 50, or $30,500 for those 50 and older, through pre-tax or Roth contributions.

2. Make After-Tax Contributions: Once you reach the annual pre-tax or Roth contribution limit, you can make additional after-tax contributions to your retirement plan. The total defined contribution limit for 2024 is $69,000, including employee and employer contributions.

3. Convert to Roth IRA: Periodically, or as your plan allows, you can roll over the after-tax contributions and any earnings into a Roth IRA. This conversion avoids taxes on the earnings as Roth IRAs grow tax-free.

Benefits of the Mega Backdoor Roth

• Increased Contribution Limits: The Mega Backdoor Roth allows you to contribute significantly more to your Roth IRA than the standard limits, which can be a substantial advantage for high-income earners seeking to maximize their tax-free retirement savings.

• Tax-Free Growth: Contributions to a Roth IRA grow tax-free, and qualified withdrawals in retirement are also tax-free. This can be particularly beneficial for individuals who expect to be in a higher tax bracket during retirement.

• Flexibility: Roth IRAs offer flexibility in terms of withdrawal options. Contributions (but not earnings) can be withdrawn at any time without penalties or taxes, providing added financial flexibility.

Considerations Before Implementing

While the Mega Backdoor Roth offers compelling advantages, it’s not suitable for everyone. Consider the following factors before deciding if this strategy is right for you:

• Plan Availability: Not all retirement plans permit after-tax contributions or in-service withdrawals, which are necessary for executing the Mega Backdoor Roth strategy. Review your plan’s rules to ensure this option is available.

• Income and Contribution Limits: Ensure you are within the income limits and contribution caps that apply to your situation. The strategy is generally most beneficial for high-income earners who have already maxed out their regular 401(k) and IRA contributions.

• Administrative Complexity: Implementing the Mega Backdoor Roth can involve additional administrative steps and paperwork. Ensure you are comfortable with these requirements or seek assistance from a financial advisor to navigate the process effectively.

The Mega Backdoor Roth IRA is a powerful tool for those looking to significantly boost their Roth IRA contributions beyond standard limits. It offers the potential for substantial tax-free growth and flexible withdrawal options, making it an appealing strategy for high-income earners with the proper 401(k) plan structure. However, it’s important to weigh the benefits against the complexities and ensure they align with your overall retirement planning goals.

If you’re considering the Mega Backdoor Roth strategy, consult with a financial advisor to evaluate whether it fits your financial situation and to navigate the process efficiently. The right strategy can make a significant difference in your long-term retirement savings, and the Mega Backdoor Roth might be just the key to unlocking greater financial growth.

Kelsey Arvai, MBA, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kelsey Arvai, MBA, CFP®, and not necessarily those of 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. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Conversions from IRA to Roth may be subject to its own five-year holding period. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals of contributions along with any earnings are permitted. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Like Traditional IRAs, contribution limits apply to Roth IRAs. In addition, with a Roth IRA, your allowable contribution may be reduced or eliminated if your annual income exceeds certain limits. Contributions to a Roth IRA are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Contributions to a traditional IRA may be tax-deductible depending on the taxpayer's income, tax-filing status, and other factors. 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. 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.

What to Expect Every Day in the Stock Market

Contributed by: Nicholas Boguth, CFA®, CFP®

I’ve written about expectations before, but I wanted to revisit the topic after a volatile day in the stock market this past January.

There was a headline that shook up the tech space, and when you opened a financial news website or turned on your TV – the headlines and reactions made it seem like we were entering the next financial crisis. I checked the markets to see what the damage was, and to my surprise, the S&P 500 was only down -1.46%! Sure, some stocks were down big, but the overall market was mixed. The Dow Jones Industrial Average was actually positive on the day, most bonds were positive, and international stocks were only down slightly. It was a volatile day in the markets, but nothing like the media was portraying.

It reminds me of the quote, “Happiness = expectations minus reality.” We often cannot change reality, but we CAN make sure we have realistic expectations. So, what expectations SHOULD we have for daily stock market moves?

Here’s some historical data on the S&P 500 for the past 40 years.

• Worse than a -1% day: 1191 times, ~30 times per year, or ~2-3 times per month.

• Worse than a -2% day: 350 times, ~9 times per year, ~2-3 times per quarter.

• Better than a +1% day: 1350 times, ~34 times per year, or ~3 times per month.

• Better than a +2% day: 306 times, ~8 times per year, or ~2 times per quarter.

So when the media talked about a -1.46% day like the world was ending, I found some relief in the data and the ability to say, “This might be big news, but a market move like this happens a couple of times per month.” It isn’t consistent, as you can see from the second chart. Some years give us more large down days than others, but that is part of the risk we accept when investing in the stock market. No risk, no reward!

There is noise coming at us all the time, which can make it hard to stay committed to our financial plan. The louder the noise, the more we might be pressured to do something-anything! But in an ideal world, our portfolio and financial plan are set up with the proper expectations so that we see right through the noise and can return to enjoying our life knowing that our financial plan is still on track. Please contact any of us at The Center if you have any questions about your investments or overall financial plan.

Nicholas Boguth, CFA®, CFP® is a Senior Portfolio Manager and Associate Financial Planner at Center for Financial Planning, Inc.® He performs investment research and assists with the management of client portfolios.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Diversification and asset allocation does not ensure a profit or protect against a loss.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Inclusion of indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transactions costs or other fees, which will affect actual investment performance.

Any opinions are those of Nicholas Boguth, CFA®, CFP® and not necessarily those of Raymond James.

Highlighting a Center Service Value

Contributed by: Andrew O’Laughlin, CFP®, MBA

Here at The Center, we focus a lot on our Values! Most commonly, you’ll hear us talking about the Core Values that are near and dear to us as a company. You’re probably already familiar with those if you’ve seen our CENTER acronym, which we use to easily remember them.

• Commitment to the Financial Planning Process

• Education & Personal Growth

• Nice & Kind

• Teamwork & Collaboration

• Energy & Enthusiasm

• Real & Down to Earth

These Values are central to our company’s culture and a big part of why The Center is such a special place to work. 

Less commonly talked about but also essential to the day-to-day work we do for our clients is a set of guiding commitments and values that we refer to as our Service Values. Our Service Values guide how we provide service The Center Way and are designed so that everyone who comes into contact with The Center sees, feels, and hears the difference in working with us.   

Without delving too deeply into all of our Service Values, the purpose of this short blog is to highlight one that I believe makes a very positive difference for our work environment and, therefore, for the clients we serve as a team.

I present to you our Service Value #6: “Treating colleagues as internal clients - providing the same courtesy as shown to external clients.”

This Service Value made a big impression on me when I first joined The Center. It really sets a tone of respect, kindness, and support for colleagues and is a big driver of our distinctively collaborative team environment. It’s great to come to work every day in that sort of environment! Helping hands abound when a colleague needs assistance.

What does this Service Value mean for our clients?

For each interaction you have with an individual from The Center, know that an entire team of supportive, engaged, and caring colleagues is working together and collaborating behind the scenes with that individual, guided by this shared value and commitment.

Andrew O’Laughlin, CFP®, MBA; is the Director of Client Services at Center for Financial Planning, Inc.® He has the CERTIFIED FINANCIAL PLANNER™ certification.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the author and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc.® is not a registered broker/dealer and is independent of Raymond James Financial Services.

Center Clients Donate over $1.3 Million in Tax-Savvy QCD’s in 2024!

Contributed by: Lauren Adams, CFA®, CFP®

We are proud to announce that The Center assisted clients in donating over $1,350,000 to charities using the Qualified Charitable Distribution (QCD) strategy in 2024!

The QCD strategy allows clients with assets in an IRA account and who are over age 70.5 to donate funds directly from their retirement account to a charity. Giving directly from an IRA to charity results in those dollar amounts not being included in taxable income for that year. That usually results in a lower tax bill for our clients and can also have positive downstream effects like lowering the amount they may pay for Medicare premiums and the portion of Social Security that is taxable to them, depending on their situation and income level. For those 73 or older, QCDs also count towards the distributions they need to take each year for their Required Minimum Distribution.

Now, there are some caveats for QCDs — you need to be at least 70.5. Also, the charity has to be a 501(c)(3). There are limits on how much you can give each year through this method, but that number is actually relatively high at $108,000 per person per year right now.

The Center’s mission is to improve lives through financial planning done right, and we are so proud to be able to help clients make such a positive impact on the world (bonus points for it being in a tax-savvy manner!).

Did you know that QCDs are only one of many charitable giving strategies that our team helps clients deploy? Watch this video to learn more about ways our clients make their charitable dollars stretch further for the causes they care about while potentially lowering their tax burden.

As always, we recommend you work with your tax preparer to understand how these strategies affect your individual situation. If you want to explore these strategies and more, contact your Center financial planner today!

Lauren Adams, CFA®, CFP®, is a Partner, CERTIFIED FINANCIAL PLANNER™ professional, and Director of Operations at Center for Financial Planning, Inc.® She works with clients and their families to achieve their financial planning goals.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Lauren Adams, CFA®, CFP® and not necessarily those of Raymond James. 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.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

The Problem with Having Excess to Spend in Your Retirement Plan

Contributed by: Sandra Adams, CFP®

You spent your entire working life saving for your future retirement. You may have sacrificed things you wanted or wanted to do, at times, to make sure that you were saving enough for your future financial security. And now that you are retired, you may find that you saved so well that you have more than you need to support the retirement income you need for your projected life expectancy. What a problem to have!?!

Now, more likely than not, when you meet with your financial advisor each year, you discuss “what would add more to your life to add value and meaning” for which you might be using your excess funds. For many clients, this is a difficult question to answer. They feel that they have and have done most of the things that have meaning for them (or they are already doing them within their current cash flow and do not need to spend additional money to add further value to their life).

Many clients DO plan to leave legacy gifts to children, grandchildren, other family members, OR charities at the end of their lives. When there is excess in the retirement plan, even if a long-term care event were to occur for one or both spouses, the plan would still be in good shape, so giving thought to gifting during a lifetime might make sense.

For children, grandchildren, and other family members, at least taking advantage of the annual gift exclusion amounts (in 2025, $19,000 per person) to help fund retirement accounts, college education accounts, etc., is a wonderful way to gift. This is also a terrific way to help get family members started with their own financial planning and get them introduced to a planner (whether it is someone with the firm you work with or someone else they can trust). From a charitable perspective, beginning to use the various tools you have available, whether it be Qualified Charitable Distributions to gift directly from your IRA if you are over 70 ½, donating appreciated investment positions in an after-tax investment account so that both you and the charity avoid paying capital gains taxes (makes sense if you have enough other deductions to itemize), or potentially using a Donor Advised Fund to get a large deduction in the year you contribute cash or appreciated securities and then making grants from the fund to charities over time.

When you find that you have saved more than you ever thought you would, and you feel like spending to spend is not something you are not interested in doing, it might make sense to accelerate the legacy gifting you had planned for after your death and do the gifting during your lifetime. This will allow you to enjoy seeing the gifts “do their good work” during your lifetime and add value and satisfaction to your life that you might never have expected.

If any of these gifting strategies are of interest to you, please reach out to your planner at The Center to discuss. We are always happy to help!

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

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. 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.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.