Not too long ago, retirement planning was built on the concept of a three-legged stool. One, a pension, negotiated by you and promised by your employer. Two, your own investments, saved by you and supported by an ever-growing economy. Three, Social Security, provided by you and your employer and mandated by your government.

With this secure and sturdy stool in place, a solid retirement plan was once likely, if not probable. For many today, retirement security is based not on a concept of a stool, but rather a pogo stick, where Social Security plays a huge role for those who struggle to save and invest.

Given its importance, the next Money Series event will delve into Social Security; how the program works and the rules you should understand to get the most out of it.

To highlight Social Security’s impact on our lives, a few facts speak volumes.

Approximately 60 million people receive almost $1 trillion in benefits every year. On average, the program provides about one third of household income for the elderly. Yet, even those statistics don’t properly paint the full picture.

Digging deeper, about half of all retired married couples and three out of four retired single people receive more than half of their income from Social Security. Shockingly, almost half of retired singles rely on Social Security for over 90% of their income.

Social Security is a big deal. Even so, its various rules and options remain a mystery to most. It literally pays to know them better.

Far too many fail to realize the advantages of simply waiting to file for benefits. As a result, millions leave billions of dollars on the table by choosing to file at their earliest possible age of eligibility. In fact, just less than half file for benefits at age 62. Astonishingly, waiting until age 70 to file for benefits results in nearly 80% more per month.

In an age of constant medical advancements, longevity can be both a friend and foe. Earning Social Security’s delayed-retirement credits, earned by waiting to file for as long as possible, is just one tool tilting things in your favor.

For married couples, it’s important to understand that lower-earning spouses may be entitled to receive additional benefits – called, spousal benefits – in exchange for supporting the careers of their higher-earning spouse and/or choosing to raise the children.

Many people also fail to understand that even after a divorce or the death of a spouse they are entitled to benefits connected to their former married status. Spousal benefits for divorced retirees and survivor benefits are yet another wrinkle that deserves a deeper education.

Finally, since April is just around the corner, it’s also important to understand how your Social Security benefits are taxed. From the limits on what you are allowed to earn when you are under age 66 to the amount of income allowed before Social Security starts to tax away your benefits, various strategies do exist to help you minimize the taxman’s bite.

To hear more on Social Security’s rules and options, join me on Wednesday, Feb 15th at 6:30pm for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Visit MoneySeries.org

A client of mine, but more importantly a family friend of four decades, recently passed away. As I sat down with her loved ones, I immediately recognized the gift she provided them. Her gift was the overall simplicity of her estate plan. It’s something everyone should strive to leave behind. It all starts with a purposeful conversation.

While it’s true the duties assumed by an estate’s personal representative or a trustee still require time – often spent in the midst of grieving – your thoughtful planning can ease their workload considerably.

Upon reflection, I view my client’s well-organized affairs as a model to follow. So much so, I now consider it one of my professional New Year’s resolutions to help all of my clients review their plans. I strongly suggest readers do the same.

To help spur your own review, attorney Diane Kuhn Huff of Stephen & Anderson will be speaking this month on estate planning at the Front Street Foundation’s Money Series. Her goal is to help you begin your own meaningful conversation on a topic too many neglect.

Her presentation will help uncover and better define your wishes about the type of health care you really want, where and in what manner you’d like to live your later years and the various resources you’d like to provide your chosen personal representatives to help fulfill your life plan.

In my client’s case, she had expressed a deep desire to remain at home in the final months of her life. The steps she took in her planning – through a combination of her financial set up and open conversations with her family members – allowed her to access the support she needed to achieve that goal.

Your own conversation might begin with a review of the choices you can make now to either remain at home or to gradually transition to other living environments with built-in levels of support. Your conversation might also enhance your understanding of the complex eligibility rules for Medicaid or VA benefits and how you can plan accordingly. In addition, you could discuss the trade-offs created by strategic asset transfers to your spouse or your heirs.

To close, I’d like to add a special note: As is often the case during difficult moments in life, positive things emerge. For my client’s family, a lasting impact was made by the wonderful care provided by the people at Hospice of Michigan. We are very fortunate to have available such high quality resources in our community.

To learn more, join Diane Kuhn Huff on Wednesday, January 18 at 6:30pm for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library.

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Sentiment is a peculiar thing. It can turn on a dime. Recently, those dimes have piled up quickly. Since early November, significant new paper wealth has been created from rising stock prices.

The big shift in investor sentiment over the past eight weeks undoubtedly centers around Trump’s victory and the anticipation of Republican control of all three levers of the federal government.

Since the election, the broad stock market has leapt about 7% and stock indexes of smaller, domestic companies have popped about 15%. Is this supportable?

Perhaps it’s true plans for fewer regulations and coming tax cuts may explain some of it. Possibly it’s true that plans for increased infrastructure spending has had some effect. Maybe it’s also true the president-elect’s cabinet appointments foreshadow even more pro-business policies to come.

Yet, these factors alone are difficult for me to explain such a sudden mood shift. Change often happens slowly and, as a result, markets often overshoot expectations.

Here are a few things that concern me with investors’ recent – almost instant – positive reaction to the election.

First, tax cuts aren’t all created the same. Much depends on who receives the tax cuts and what they choose to do with the extra money.

When tax cuts accrue to the wealthiest households, they tend to spend less of their windfall than do the poor. The Bush tax cuts – also heavily weighted to the wealthy – were an example of a lower “multiplier” effect on economic growth. Similarly, if the currently anticipated tax cuts end up sitting in the bank, the effect on the economy may be far smaller than many now anticipate.

While it’s true some will invest back in the economy, that decision will be driven only by a clear-eyed assessment of unmet demand for goods and services. Absent that new demand, many businesses may choose to instead increase dividends, buy back their own stock, or pay down debt. These actions aren’t nearly as impactful on growth as hiring new workers, investing in research and development, building new factories or even raising wages for workers.

Second, given the importance of global trade, it’s troubling to hear the chatter of imposing tariffs, watch the strengthening of the US dollar or read threatening tweets about trade wars. The notion that it’s all just tough talk may be unwise to assume. In response, large multinational corporations will flex their well developed lobbying muscles. But, it may prove quite difficult to put the protectionist genie back in the bottle.

Finally, stocks are trading at all-time highs. Reputable measures of the stock market’s value, such as the Shiller Price-Earnings metric, should not be waived off so readily. An immutable law of finance is the higher price you pay, the lower your future return.

The past two months of 2016 reminds me of something Warren Buffett once said, “Investors pay a very high price in the stock market for a cheery consensus.” If today’s sentiment on Wall Street can be described in a single word, cheery, most certainly fits the bill.

While the end of the year is admittedly busy, I feel compelled to add to your to-do list!

I was recently reminded of a clever habit of one of my newer clients who hold their very own financial “State of the Union” around their kitchen table each year. For them, this serves as a structured time for them to reflect on the past year and to help them financially plan forward.

In preparing for our upcoming Money Series joint presentation, where we will each share tips regarding year-end financial planning ideas, local attorney Greg Luyt of Bowerman, Bowden, Ford, Clulo & Luyt introduced me to an expanded and robust version of this same disciplined habit.

For those who have been left behind to piece together the puzzle of another person’s life, being handed a cheat sheet is truly welcome. Mr. Luyt’s important idea is to encourage you to create what he calls a Family Guidebook to make things much easier for your loved ones after you are gone.

This essentially entails the creation of a set of communications that may encompass an inventory of – among other important items – your various financial accounts, the location and your intentions for your cherished personal belongings and even a narrative reflecting your final wishes with regard to your funeral arrangements.

Luyt stresses that, regardless of your financial means, your Family Guidebook can cost you next to nothing to create. All it takes is your time to reflect, review and routinely renew your intentions. Add this one to your list of soon-to-be-successful New Year’s resolutions.

Now, I’ll move on to time-sensitive things that you probably shouldn’t put off until next year. As I mentioned a couple weeks ago, it might actually save you money.

If we assume the nearly identical tax plans of the House Republicans and President-elect Trump will actually be implemented, your ability to deduct charitable donations, property taxes, state income taxes, and in most cases, even your mortgage interest, may be long gone.

Even if the contemplated changes fail to materialize, we absolutely know we can still deduct these expenses in 2016. So, your proactive planning has no downside.

To ensure your ability to deduct these expenses, consider paying early your winter property tax bill, your next estimated state income tax payment and even your January mortgage payment before the end of the year. Under most scenarios, and for most taxpayers, this will result in lower taxes.

Importantly, for those with charitable intent, talk to your adviser soon about storing up multiple years of your charitable donations by opening a “donor-advised” fund. It’s extraordinarily easy, anyone can do it and there’s still time. To add to your pressure, there are only twenty six days left to plan. Start now!

For more tips on year-end financial planning, join Jason P. Tank, CFA and local attorney, Greg Luyt, on Wednesday, December 14 at 6:30pm for their joint presentation for the Front Street Foundation’s Money Series held in the McGuire Room at the Traverse Area District Library. Visit FrontStreetFoundation.org or call (231) 714-6459 to register.

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