Planning for Medicare

Contributed by: Center for Financial Planning, Inc.®

Here it is again…time for changing leaves, cooler weather, and open enrollment for Medicare. Medicare coverage is an important decision, and we suggest reviewing your coverages on an annual basis.

Sign up today for our upcoming seminar on Monday, October 2nd hosted by Sandy Adams, CFP® of Center for Financial Planning, Inc., and presented by Cynthia Brown of Powers Financial Benefits, LLC, an independent agent, that provides details on Medicare, open enrollment, and what is important for 2023. And feel free to check out the replay from last year’s presentation below!

Raymond James is not affiliated with and does not endorse Cynthia Brown or Powers Financial Benefits, LLC. Center for Financial Planning, Inc.® is an Independent Registered Investment Advisor. 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. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Secure Act 2.0 Roth Catch-up Change Delayed

Contributed by: Kali Hassinger, CFP®, CSRIC™

In late 2022, Secure Act 2.0 was passed by Congress with the intention of expanding access to retirement savings. The package requires retirement plans to implement many changes and updates based on the new rules. Of the nearly 100 provisions within Secure Act 2.0, only a few went into effect in 2023, and many changes were scheduled to become effective in 2024.

One of these provisions would require future retirement plan catch-up contributions (those ages 50 and over) to be categorized as Roth for participants who earned more than $145,000 in the prior year. Although more employer-sponsored retirement plans have included access to Roth savings over the years, not all plans offer that option to participants. With the new rule, they would either need to offer Roth savings to all employees or remove the option to make catch-up savings contributions for future years.

As the fall open enrollment period for 2024 is quickly approaching, many plan administrators and participants were waiting for guidance on implementing and monitoring this change for 2024. In late August, the IRS announced a two-year delay or “administrative transition period,” meaning that plans don’t need to implement this change until 2026.  

For those retirement plan participants who are 50 and older and contributing more than the base savings amount ($22,500 for 2023), pre-tax catch-up contributions can continue for 2024 and 2025 as they have in the past. For retirement plans that aren’t already offering a Roth savings option, they won’t need to make any changes yet!  

We are monitoring this and future changes as information and guidance are released on Secure Act 2.0 provisions. As always, we are here to help if you have questions on how this could affect you and your financial plan! 

Kali Hassinger, CFP®, CSRIC™ is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

The information contained in this letter 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. Any opinions are those of Kali Hassinger, CFP®, CSRIC™, and not necessarily those of Raymond James. Expression of opinion are as of this date and are subject to change without notice. There is no guarantee that these statement, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Individual investor’s results will vary. Past performance does not guarantee future results. 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. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.

The Dangers of Ignoring Financial Planning When You're in a Couple

Contributed by: Sandra Adams, CFP®

In an ideal world, a committed couple would be on the same page about most of the important things in life, especially about their financial future. Not only would they be on the same page, but they would equally participate in the planning process — all the way through the process. So, what happens when one partner is not engaged in the planning process — whether it be lack of interest in the process at all, or lack of engagement and/or follow-through once a plan has been completed? And what can be done, if anything, to make sure the couple and their plan are successful?

If both partners have been involved in going through at least an initial planning process, this is a good first step. This means that the couple has worked through the steps of establishing common goals, gathered their common financial information, and worked with a financial planner to review the analysis regarding how the assets and income they have may work to fulfill their specific goals, both now and in the future. These couples likely worked with the planner to establish at least an initial set of action steps to start working towards meeting their short- and long-term goals in the key areas of their financial plan.

Why One Partner May Be Unengaged:

Here is where there is usually a disconnect — where the less engaged spouse likely becomes unengaged. Once the initial financial plan is complete and the action steps are in place, the less engaged spouse may check out for various reasons:

• They may decide they don’t see the full value of the financial plan;

• They may get too busy with “life” and not make the financial plan a priority; or

• They may not see themselves in the “financial” lead role in the relationship and be simply delegating the action items to their more financially savvy spouse (whether or not this makes sense remains to be seen.)

If one of the partners is not involved in the planning process at all, this can be an even harder situation to address. When one partner is not engaged in the process at all, it is hard to discuss, set, and include common goals in the planning process. If one partner goes ahead with a plan, it can be one-sided or incomplete if done without the unengaged partner. The plan will lack input from one partner and may, in fact, be missing important information about assets, employment benefits, and/or future income resources if the participating spouse isn’t privy to all of the couple’s collective financial resources. Not having a financial plan that both partners have participated in putting together will be one that is lacking in some way — whether it be a lack of information or resources or a lack of input or agreement on current or future goals.

Why You Should Move Ahead Anyway:

Why might someone decide to move ahead with the financial planning process even if their partner is hesitant to participate in the process? In my experience, there are clients who have wanted to do planning for years and haven’t been able to get their partner on board. They may finally decide that they need to move forward, with or without their partner, for fear that they will end up without a plan and completely unprepared for the future. In addition, they may have had an experience as a caregiver for an older adult parent or watched someone they are close to go through the process of becoming a widow or widower and decide they want to be prepared if either of these major life transitions ever happens to them. For these clients, the personal experience of seeing others go through major life transitions without proper planning may compel them to want to plan more urgently than their partner.

What are some actions that a couple can take if one is more engaged than the other in the financial planning process so that their plan can be successful?

1. Come to a base agreement that a financial plan is needed. If you can come to a common agreement that a financial plan is needed, even if one of you is more enthusiastic about it than the other, that can be okay. If you can come to an agreement about who will take charge of scheduling a meeting with an advisor, collecting and organizing the information, scheduling appointments, etc., that is the first step. It is best if both partners will agree to participate in the full process, even if one takes the lead. This is the best way to ensure that you agree to and set common goals.

2. Set a regular “date” with your partner to discuss and review your finances. This blocks out time on your common schedules to concentrate on just your plan when you are working on preparing for the initial financial plan, and then can be helpful when you are working on the action items following your plan. This helps with the issues related to partners who get busy with life and can’t seem to make finances a priority.

3. Find a financial advisor that you feel you can trust and can delegate to. For those who have trouble with follow-through, or again, for those who have trouble carving out time, having a trusted professional to whom they can delegate to make sure that the plan gets carried out fully can be valuable and worth the cost.

As with many things in a relationship, partners aren’t always 100% on the same page or always rowing in the same direction all of the time. Finances are one of the most important issues a couple faces, and being in lock-step as much as possible is important. If a couple can find a way to work together in some way to complete and follow through on the financial planning process, even if one of the two takes the lead, but both participate, the process can still be a successful one.

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 Sandra D. Adams and not necessarily those of Raymond James.

Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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.

When to Use Your Emergency Fund

Contributed by: Sandra Adams, CFP®

Who actually has an emergency fund? “For those age 50 and up, it’s typically those who work with a financial advisor”, says Sandy Adams, CFP®. “The general population is bad at this. It’s particularly important to have an emergency fund as you get closer to retirement”, she says.

Read the full AARP article HERE!

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.

Any opinions are those of Sandy Adams, 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 Raymond James Financial Services Advisors, Inc.

Raymond James is not affiliated with AARP.

The History of Labor Day

Contributed by: Kelsey Arvai, CFP®, MBA

We celebrate Labor Day to recognize the contribution and achievements of American workers. It unofficially marks the end of summer and is traditionally observed on the first Monday in September.

The history of Labor Day is somewhat grim. At the height of the Industrial Revolution, in the late 1800s, the average American worked 12-hour days and seven days a week to scrape together a decent living. To emphasize the dire working and living conditions, children as young as five or six worked in mills, factories, and mines across the country.

Most workers faced unsafe working conditions with insufficient access to fresh air, sanitary facilities, and break time. Because of this, labor unions first appeared in the late 18th century. Workers began organizing strikes and rallies to protest poor conditions and compel employers to renegotiate hours and pay. On September 5, 1882, 10,000 workers took unpaid time off to march from City Hall to Union Square in New York City, holding the first Labor Day parade in US history.

The “workingmen’s holiday” caught on in other industrial cities, and many states passed legislation recognizing it. Congress legalized the holiday 12 years after workers in Chicago went on strike to protest wage cuts and the firing of union representatives.

We can thank our labor leaders for the fact that we get to enjoy weekends off, a 40-hour work week, sick days, and paid time off. Thousands of Americans have marched, protested, and participated in strikes to create fairer, more equitable labor laws and workplaces – and still do today. So kick back, relax, and enjoy your long weekend!

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

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 Kelsey Arvai, MBA, CFP® and not necessarily those of Raymond James.

Impending Social Security Shortfall?

Contributed by: Josh Bitel, CFP®

About 1 in 4 married couples, and almost half of unmarried folks, rely on Social Security for a whopping 90% (!) of their retirement income needs. While the Social Security Administration recommends that no more than 40% of your retirement paycheck come from Social Security, the reality is that many Americans depend heavily on this benefit. The majority of Social Security funds come from existing workers paying their regular payroll taxes; however, when payroll is not enough to cover all claimants, we must then dip into the trust fund to make up the difference. According to the 2023 Social Security and Medicare Trustees Reports, the 'trust fund' that helps supply retirees with their monthly benefits is projected to run out of money by 2033. This estimate has many folks understandably worried, but experts have proposed several potential solutions that could help boost solvency.

One popular solution is to raise the age at which retirees are permitted to file for benefits. Currently, a claimant's full retirement age (the age at which you receive 100% of the benefits shown on a statement) is between 66 and 67. Studies published by the Congressional Budget Office show that raising by just two months per year for workers born between 1962 and 1978 (maxing out at age 70) could save billions of dollars annually in Social Security payments, thus helping cushion the trust fund by a substantial amount.

Another hotly debated solution is reducing annual cost-of-living adjustments (COLA) for claimants. As it currently stands, your Social Security benefit gets a bump each year to keep up with inflation (the most recent adjustment was 8.7% for 2023). This number is based on the consumer price index report and is a tool used to help retirees retain their purchasing power. Recent studies from the SSA show that if we reduced COLA by 0.5%, we could eliminate 40% of the impending shortfall. This goes up to 78% if we assume a 1.0% reduction in COLA. Neither of these solutions completely solves the shortfall, but a combination of COLA reductions and changes to FRA, as shown above, would go a long way toward solving this issue.

These are just a few of the several solutions debated by experts each year. It is important to note that even if no changes are made, current beneficiaries will continue to receive their payments. However, estimates show that if the trust fund ran completely dry, payments may be reduced by as much as 25%. While this is not an insignificant haircut, it is certainly better than cutting payments altogether.

The point is that Social Security is a crucial part of many retirees' livelihoods. It would be safe to assume that Congress would act and make changes before any major benefit cuts are required. These are several options to consider that would have varying impacts on not only solvency but also benefits themselves. If you are concerned about the role of Social Security in your personal retirement plan, discuss with your advisor how these changes may impact you.

Josh Bitel, CFP® is a CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® He conducts financial planning analysis for clients and has a special interest in retirement income analysis.

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 Josh Bitel, CFP® and not necessarily those of Raymond James.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

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.

Family Experiences Can Trigger Planning for Long Term Caregivers

Contributed by: Sandra Adams, CFP®

My grandmother died recently. She was 96 (almost 97) years old. The leading cause of death listed on her death certificate was Alzheimer’s disease. The last years of her life were not what I would call the best of “quality” – she had not been able to get out of bed to walk for several years, and while she did recognize her children until the end of her life, she would forget they had been there to see her within minutes. She outlived all of her siblings and most of my grandfather’s siblings (and my grandfather by almost three decades) and had been saying she was “ready to go” for quite some time.

Most of us familiar with Alzheimer’s and related dementias know that there are many types, and it is often hard to diagnose, especially if there are other health concerns. For many, it is more a result of older age than genetics; for those where early onset can be an issue, the symptoms can be masked by stress or other mental health issues, and the dementia can go untreated for years. Alzheimer’s and dementia causes and treatments are making some real progress but remain more of a mystery than they should for the more than 5.5 million Americans living with the disease.

While we are still being told that only a small fraction of those developing the disease are those that are not inherited (1 in 100 according to the Alzheimer’s Association), witnessing my grandmother spend her last several years in a nursing home floor of a hospital prompted me to make sure I had my Long Term Care plans covered.

When my grandparents were my age, Long Term Care insurance was unavailable. And because of that, my grandmother ended up spending down the assets my grandfather worked so hard for during his working life and living out her last years in a hospital nursing home on the memory care floor. She was fortunate to have ended up where she did — she was so well taken care of in a small town hospital. Some people don’t have it so well.

I want to make sure to have more control if this happens to me — and want to make sure that I can afford for care to be provided for me (rather than to have my kids have to do it), so I recently took steps to make sure I have a long term care policy in place that suits my needs. I am taking care of this now to have a plan in place for later.

As I tell clients all of the time, many of us don’t feel it is important to take action until we have had a personal experience with something. For me, watching my grandmother experience Alzheimer’s and Alzheimer’s care for the last several years has prompted me to put a Long Term Care plan into place for myself. If you have had a personal experience prompting you into action and would like our help, please do not hesitate to reach out — 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.

Any opinions are those of Sandra D. Adams, 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 Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services. As with most financial decisions, there are expenses associated with the purchase of Long Term Care insurance and policies are subject to exclusions and limitations. Guarantees are based on the claims paying ability of the insurance company.

Term vs. Permanent Life Insurance

Contributed by: Kelsey Arvai, CFP®, MBA

Life insurance serves a crucial purpose for your family and heirs, as it ensures your beneficiaries will be cared for in the event of death or another tragic event. Finding the right life insurance can seem intimidating. However, the good news is that life insurance starts with two options, term (temporary) or permanent, each with unique benefits and features. 

Term Insurance:

Term life insurance provides affordable coverage that lasts for a period of time and is typically the least expensive insurance you can buy. Most policies are designed for premiums to remain at a level rate for a set number of years, but some premiums may increase annually. If the policyholder passes away when the policy is in force, the death benefit is paid to the beneficiaries of the policyholder, typically in a tax-free lump sum.

Length of Coverage – Common term lengths include an annual renewable term, 10-year-level premium term, 15-year-level-premium term, 20-year-level premium term, and 30-year-level-premium term.

Taxability - Death benefit is tax-free with very few exceptions (business planning and transfer for value rules are pretty much the only exceptions). 

Premiums – Based on a person’s age, health, and life expectancy. 

Cash Value - Term insurance doesn’t build equity, meaning there is no cash value accumulation. Premium pays for the cost of insurance and nothing more.

Option to convert – It may be possible to turn your term life into permanent life insurance without additional evidence of insurability, depending on the insurance company. This is usually only available for a specified amount of time. 

When to consider term life insurance policy?

Term life insurance is ideal for people who would like the maximum amount of life insurance for the lowest cost. Term helps to protect your spouse, your home, and your children. Other common reasons to purchase term life insurance are income replacement, mortgage or debt protection, college funding, funding a buy-sell agreement, and key person protection for a business.

Permanent Insurance:

Permanent life insurance often doesn’t have an expiration date; as long as premiums are paid, most permanent life insurance policies will remain in force as long as the policyholder is alive. Permanent life insurance is more expensive because this policy type typically offers coverage and a cash value.

Universal Life Insurance:

“Permanent Death Benefit” product; underwritten so that the death benefit will be in force until age 90, 95, or 100. The age depends on what product you choose at the onset; many products will have the age the policy will lapse in the product title.

Premiums – Flexible premium payments that may or may not guarantee death benefit and may or may not build a cash value. It’s ideal to slightly over-fund premiums in the early years of the policy to accumulate cash value to help pay the cost of insurance later.

Cash Value – The rate of return on your cash value and any investment options vary depending on the type of Universal Life Policy you buy (guaranteed, indexed, variable, etc.).

Death Benefit Types – Option A or “Level Death Benefit,” meaning when the insured dies, is when the beneficiaries don’t get the cash value and the death benefit; they just get the death benefit. Option B or “Accumulating” cash value, depends on the policy and insurer. When the insured dies, the beneficiaries receive the cash value PLUS the death benefit. 

Other forms of universal life insurance exist; variable universal life forgoes the guaranteed crediting rate that the carrier provides, and instead, the policyholder assumes the risk on their own shoulders. This is done by allocating excess premiums to sub-accounts; in order to come out ahead, the policyholder would need to consistently outperform the crediting rate provided by the insurance carrier. These policies allow you to invest your cash value across a choice of stocks, bonds, and money market funds. 

Whole Life Insurance:

Whole Life offers coverage for the rest of your life and includes a cash value component that lets you tap into it while alive. This is typically the most expensive form of life insurance due to the cash accumulation and having to front-load the insurance cost. Given that many people do not need insurance for their entire lives, it’s crucial to consider if whole life insurance is a good fit for you. 

Death Benefit – Guaranteed Death Benefit with guaranteed premiums and cash values. Underwritten to provide a permanent death benefit and accumulate cash value. Unlike Universal Life Insurance, this policy will be in force regardless of whether the insured dies at 80 or 120.

Premiums – Level premiums guarantee a death benefit when the insured dies. You’ll pay a fixed amount monthly, quarterly, semi-annually, or annually. Single premium, you’ll pay the entire policy cost upfront. Depending on the policy and carrier, you may pay limited or modified premiums. 

Taxability - If a policyholder surrenders a contract for the cash value, they will pay ordinary income tax on the gains above their cost basis. Cost basis is defined as premiums paid minus loans or withdrawals.

There are many flexible options for the dividend or crediting rate. The most common option is to use the dividend to purchase “paid-up additions” to increase the death benefit or cash value over time without medical underwriting or increasing the premium payment. Some policies are non-participating, meaning that you won’t receive any dividends.

When to consider a permanent life insurance policy?

Permanent life policies are an expensive way to buy coverage. Depending on your goals, a different type of life insurance might better fit you. Permanent life insurance might be purchased for the following reasons: legacy planning for family or charity, estate tax planning, asset diversification, retirement income planning, and executive compensation. 

When deciding what’s right for you, it’s important to have your plan tailored to fit your and your family’s individual needs, making it crucial to consult with your financial advisor.

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

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 Raymond James Financial Services Advisors, Inc.

These policies have exclusions and/or limitations. The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. There are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Investors should carefully consider the investment objectives, risks, charges, and expenses of variable universal life sub-accounts before investing. The prospectus and summary prospectus contains this and other information about the sub-accounts. The prospectus and summary prospectus is available from your financial advisor and should be read carefully before investing.

Have You Prepared Your Advocates?

Contributed by: Sandra Adams, CFP®

Going through the process of completing your estate planning documents is not an easy process. Working with an attorney to determine what documents you need, how you want the language written so that your assets are handled and decisions are made the way YOU want them, and choosing the best advocates to carry out those instructions can be very involved. No wonder it is a task that many people put off doing – it can be overwhelming!

Common Documents With Named Advocates

The most common estate planning documents that individuals have drafted (and that will require advocates to be named) are the following:

Most clients are so relieved when their documents have been drafted; it is a huge weight off their shoulders to have so many important decisions made and in place. It feels satisfying to have the binder of documents drafted by the attorney in hand and completed. 

Perhaps if you are even more “on the ball,” you follow through and get copies of your documents to your financial advisor and update your asset titling and beneficiaries according to the funding instructions provided by the attorney. If you have done that, you are ahead of the majority of clients, most of whom take the big binder home and file it away in a safe place and consider their estate planning completed! But is it?

Have you taken the final step and communicated to those you have chosen as your advocates that you have named them in your documents? 

The Importance of Communicating With Your Advocates

It is not uncommon for people to name others as future advocates for them in their legal documents, but not to communicate to them that they have been named. If you’ve ever been in the shoes of being that named advocate, and getting that “surprise” call that you suddenly need to make a life and death decision about someone’s health treatment when you had no idea you were named as their health care advocate and had not had conversations with them regarding their wishes around end of life treatment, you might think differently about having those proactive conversations.

It is extremely important to take this last step, and not only communicate with your advocates that they have been named in your documents but also give them the key information that they will need to fulfill your wishes.

Here is the key information you need to share:

Patient Advocate/Health Care Advocate:

• Drug allergies

• Current medications (or where to find your medications list)

• Your primary providers, your wishes on Code Status (i.e. DNR or full Code), and where your estate planning documents are located

• Your past surgical history

• Whether or not there is metal anywhere on your body

• What your wishes are for end-of-life care and treatments (i.e. aggressive vs. comfort treatment)

• Plans for future care and any professional relationships and resources that can be used to assist the advocate in their role (social workers, Geriatric Care Managers, etc.)

Durable Power of Attorney/Successor Trustee:

• Contact information for your professional advisors and, if possible, an introduction to those professionals.

• Instructions on where to find an “open me first” document (ex. Personal Financial Record System) that details your financial life (bank accounts, investment accounts, insurance policies, government benefits, employer benefits, etc.)

• Where to find your estate planning documents and a review of your Trust (especially for your successor Trustee, so they have a heads-up on how they might be managing your assets)

• An overview/general conversation about your wishes regarding handling your assets for future care and your values around money.

Executor/Advocate:

• Contact information for your professional advisors and, if possible, an introduction to those professionals.

• Instructions on where to find an “open me first” document (ex. Personal Financial Record System) that details your financial life (bank accounts, investment accounts, insurance policies, government benefits, employer benefits, etc.)

• Instructions on where to find your Letter of Last Instruction document outlining your wishes for after death.

• Where to find your estate planning documents, especially your Last Will & Testament, which will be the guiding document for your Executor.

• An overview/general conversation about your wishes regarding after-death arrangements, about your Will, and how you would like your assets handled post-death, especially if there is no Trust for assets to flow to.

The more information you can share with your future advocates, the better prepared they will be to make the decisions you would want them to make on your behalf should they ever need to serve. An advocate’s job is to be your fiduciary, which means to make decisions in your best interest; without the benefit of having full information on you and your situation, you make it almost impossible for them to do their job to the best of their ability.

If you have taken the time to draft your estate planning documents, our best advice is to complete the process by fully preparing your advocates to serve in your best interest – they’ll be glad you did!

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.

Opinions expressed in the attached article are those of Sandra D. Adams, CFP® and are 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.

Q2 2023 Investment Commentary

Contributed by: Angela Palacios, CFP®, AIF®

While Federal Reserve (the Fed) policy, macroeconomic headlines such as inflation, and geopolitical uncertainty are themes investors continue to hear about, U.S. large cap stocks finished the first half of 2023 up 15.5%. It is important to look under the hood of these returns as they have been entirely driven by the market's largest stocks, with the top 10 companies in the S&P 500 accounting for over 95% of gains. Beyond the largest companies, performance fell off quickly. Developed markets equity (International) has had notable returns year to date ending over 11% in positive territory for the year so far. While their returns struggled to eclipse the top 10 companies in the S&P 500, international investments handily outpaced the balance of the companies in the S&P 500. Commodities struggled the most as economies and production started to slow, and inflation is coming down (even though it is still elevated higher than we would like to see).

Much of the quarter was dominated by the banking sector headlines that cropped up at the end of the first quarter and debt ceiling negotiations in Washington. Two larger regional bank failures put the markets on edge, waiting for contagion to kick off this quarter. However, the backstop provided by the government and FDIC quickly seemed to curb potential contagion. Then all attention turned toward Washington dragging its feet over raising the debt ceiling, which led to intra-quarter volatility. As the U.S. government approached the date it was expected to run out of money to pay its bills, a deal was reached on June 1st to suspend the debt ceiling through January 2025 while cutting federal spending. As we mentioned in our previous commentary, this is the outcome that would likely occur as history has served as a guide for this. This agreement averted a U.S. government default ahead of the deadline.

The strong equity returns in the year's first half may have taken many by surprise. The question is, where do we go from here? Summer tends to be a time of weakness for markets, and a strong first half of the year could cause buyers to pause. It's not uncommon to see the market stop and gather itself and digest strong gains after they occur.

Higher interest rates

We have witnessed a large amount of excitement surrounding higher interest rates in CDs, money markets, and short-term treasuries. While this is great for money, we need to keep liquid for a shorter-term need or a place to park cash while implementing a dollar-cost averaging strategy; it is important to not give up on investing in a diversified portfolio. When rates were attractive in the early 2000s, it may have been tempting to divert some of your equity investments into cash equivalents rather than invest in the S&P 500 during a recession and continue with this throughout the years. But the opportunity cost is high. The chart below shows how investing $12,000 per year into equities, whether perfectly timed or the most poorly timed, outweighs diverting excess additions beyond need into cash equivalents. Even the worst timing over the years ended up well ahead of cash equivalents.

So, what has happened in the shorter term after times when CD rates peaked and seemed their most attractive? The chart below shows 12-month forward returns for different asset classes after rates peaked. While they may offer the added protection of FDIC insurance, notice that the 6-month CDs never returned more than the peak rate. This makes sense, as you are locking in a rate. The dark blue is the U.S. bond index, the light blue is high-yield bonds, and the green is the S&P 500. As you can see, the other asset classes returned far more than the CD rates 12 months after rates peaked in most of the periods shown below.

Again this reiterates the point not to allocate more than is appropriate for you into short-term fixed strategies.

Check out the video for an economic update!

This summer, all eyes will be on the next Fed decision when the FOMC meets at the end of July. In June, the Fed decided to pause and let the economy digest the drastic rate increases of 2022 and earlier this year. They did signal that we could likely see up to two more rate hikes this summer/fall. The U.S. economy still looks strong, so the FED feels they have room to continue to increase interest rates, even though at a much slower pace to get inflation under control. GDP growth worldwide continues to hold up, signaling we aren't in a recession yet (see the chart below). The Fed will continue to remain very data-dependent when determining their next steps, but the risk is rising that they will overtighten and push the economy into recession.

While the taxable bond yield curve remains strongly inverted, the Municipal bond yield curve is less inverted. This means that investors are better compensated for moving out longer in duration. For those in a higher tax bracket, municipal bonds can provide attractive taxable equivalent yields.

Continue to expect some volatility through the summer as markets digest hefty first-half returns, and we learn more regarding future interest rate action. A sound financial plan and regular rebalancing, when needed, help bring a portfolio through uncertain times. We are here to answer any questions you might have! Do not hesitate to reach out! Thank you for the trust you place in us each and every day!

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

Any opinions are those of the Angela Palacios, CFP®, AIF® 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 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. 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.