Press Room: Financial & Estate Planning

Avoiding Medicare Premium Shocks




Yes. In our 46-year history of advising clients, we’ve consistently received questions about this milestone. People worry a good deal about their health insurance, so it’s often a key item for them as they approach age 65. However, you might be surprised to know that we actually receive more questions after clients have enrolled. Medicare premiums are not one size fits all, so it’s often a shock to someone when their premiums increase, sometimes, significantly.


Depending on an individual’s total income, Medicare premiums can jump by more than 200%.  This jump can be triggered by a bump in your income, including retirement payments, selling property at a capital gain or receiving Required Minimum Distributions (RMDs) from IRAs. We recently met with a retired power company executive who had sold a few shares of company stock to pay off his daughter’s student loans. This one-time sale generated a relatively small, $6,000 capital gain. However, this sale also had the unintended consequence of increasing the retiree’s Medicare premiums by $2,100. That’s a 42% adjustment!

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Facing Corporate Restructurings: The Terminator




“Terminator” is from the movie by the same name; but we’re talking about the increasingly common occurrence where companies engage in restructurings and some long-tenured employees receive termination notices earlier than they might have expected. If you are one of these individuals, you suddenly face a number of important financial decisions that may be compressed into a short time period. Perhaps a severance package sweetens the deal, but not always. Regardless, it can feel somewhat overwhelming to confront these important decisions that may have lifelong implications.


Sure. Some relate directly to your separation from the company where you’ve been working. Health benefits and their continuation are critical to almost every family. If you have investments in a 401(k) plan, there will be decisions related to that account. If you have a pension benefit, there may be certain elections related to the timing and form of your benefit. These decisions are typically overarching and create interplay with other personal financial planning objectives.

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Women and Social Security: What Every Woman Needs to Know




It is very well recognized that women, on average, live longer than men and therefore are likely to spend a longer time in retirement. As a consequence, they will need more money. The decisions about how to make wise Social Security elections is therefore of special importance to women because poor decisions can have long-run consequences for them.

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Taxing Your Portfolio


Q:  2016 was a pretty good year for most investors. Now it’s time to settle up with Uncle Sam, right?

A: Yes, but most investors are over-paying their income tax because their advisors are not managing their assets in a tax friendly way. According to the Schwab Center for Financial Research, minimizing taxes falls directly behind investment selection and asset allocation in the list of the most important determinants of investment success. What we’ve learned in our 45 years of talking to families is that most families and their investment professionals do not manage their investment portfolio with tax impact anywhere on the radar screen. The result is that their clients end up paying “stealth” taxes – more than they need to be paying.

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Turkey, Football and Year-End Planning

Financial markets have had their ups and downs this year centered on events that are largely outside of any one person’s control. Examples include the U.S. presidential election, the U.K.’s vote to leave the European Union (“Brexit”), as well as the potential for the Federal Reserve to raise interest rates. As year-end draws nearer, we wanted to take a step back from the news headlines and focus attention on those planning opportunities that are much more within our control… some food for thought if you will ahead of the Thanksgiving holiday.

If you have taxable investment accounts managed by L&W, we will be sending our Tax Planning Estimates Report to clients around December 1st. However, you do not have to wait… Using the link below, you can access portfolio related information in addition to the investment reports we send each quarter. Given the nature of this particular article, I’ll specifically mention three reports that are available through the portal under the “Reports” heading: 1) Income & Expenses, 2) Projected Income, and 3) Realized Gains/Losses. All three of these reports can be used for tax planning purposes ahead of year-end. Click the following link and take a few minutes to explore your Client Portal.

Have you contributed to your employer retirement plans, IRAs, and Roth IRAs?

Contribute the maximum amount to a retirement plan you are eligible and able to make. Be sure to make catch-up contributions if you are age 50 or older. Also, if you have children with earned income, they should consider contributing to an IRA or Roth IRA to get a head start on saving. (A $5,000 contribution to an IRA that earns 8 percent for an 18-year-old will be worth $186,000 at age 65. The same contribution made at age 25 will only be worth $108,000 at age 65. They’ll thank you later!)

Are you getting the most out of your 401(k)?

We often encounter 401(k) and 403(b) accounts that have not been reviewed in quite some time. Investment options in these accounts change; as do markets, fund managers and risks. Click here to continue reading Getting the Most Out of Your 401(k).

Have you spent all of the funds in your flexible spending account (FSA)?

Any funds remaining in your FSA could be lost if not spent on qualified expenses before year-end.

Did you take your required minimum distributions (RMDs)?

Once you reach age 70½, you are generally required to start taking RMDs from traditional IRAs and employer sponsored retirement plans by year-end. RMDs are also required for non-spousal inherited IRAs (including inherited Roth IRAs).

Are there charitable gifts you would like to make before year-end?

Cash gifts are simple, but there are other strategies that may further maximize your tax benefits, including gifts of appreciated securities, Donor Advised Funds (DAFs) or Qualified Charitable Distributions (QCDs) for IRA owners age 70 ½ and older. Click here to continue reading more about Charitable Planning Strategies.

Are there annual exclusion gifts you would like to make before year-end?

You can gift up to $14,000 ($28,000 per married couple) to as many individuals as you want without incurring federal gift tax or utilizing a portion of your gift tax exemption. Keep in mind that gifts to 529 plans or trusts holding life insurance may utilize all or a portion of your exclusion in a given year.

Have you considered important thresholds when planning for income taxes?

There may still be opportunities to plan around income tax thresholds that could result in higher taxes. This might include the relatively new 3.8 percent Medicare surtax, phase outs for itemized deductions, and higher tax rates for long-term capital gains and qualified dividends. Planning for trust distributions is especially important as the various thresholds come into play much sooner than they do for individuals. Often, distributing some income earned by a trust to the beneficiaries can avoid imposition of this surtax.

Have you withheld enough to avoid underpayment penalties for federal income taxes?

Check your federal income tax withholding and estimated quarterly income tax payments to verify you won’t be subject to underpayment penalties for 2016. The IRS safe harbor rules require that individuals pay in at least 90 percent of their current year income tax liability or 100 percent (110 percent above certain income levels) of their prior year liability.

Should you pay property taxes before year-end or wait until early 2017?

For income tax purposes, sometimes it may be beneficial to “double-up” and pay two years’ worth of property taxes in a single year. If your annual Itemized Deductions are only moderately higher than the Standard Deduction, there is a good chance this doubling up strategy could benefit you. Don’t forget to watch out for the alternative minimum tax (AMT).

Are there opportunities for harvesting losses or gains in your portfolio?

Harvesting investment losses can be an effective tax savings strategy, especially when you can offset short-term capital gains that would be otherwise taxed at higher rates.

Are you considering participating in your employer’s deferred compensation plan?

When it comes to making decisions about deferring compensation, your options are numerous, essential to your financial security, complicated, and often irrevocable. Click here to read more about Deferred Compensation.

Have you ever considered the use of a Family Limited Partnership?

The IRS has issued proposed regulations that could eliminate valuation discounts for family limited partnerships (FLPs). This change could occur close to year-end or shortly after the new year. With the maximum gift and estate tax rate currently set at 40 percent, valuation discounts have been a very useful tool for those individuals with a taxable estate. Current exemption amounts are $5,450,000 per person or $10.9 million for a married couple. Visit with your estate planning attorney or Wealth Advisor if you’d like to learn more about planning opportunities and the proposed regulations.

We encourage your feedback and don’t hesitate to contact your Wealth Advisor if you have any questions. Have a great Thanksgiving and Holiday Season!

Refinancing: Your Personal “Economic Stimulus” Package?

Your Personal “Economic Stimulus” Package?

In our 40+ years as wealth advisors, we’ve heard the question many times. Should I refinance? The reasons vary, but it typically comes down to saving more or getting out of debt sooner. Either way, our clients envision a better lifestyle and less stress as more cash becomes available for important goals like retirement funding, college savings for children, or living debt free. Of course, it can also be as simple as our clients spending some newfound cash on the things they enjoy. Your reason might be something different still. Whatever the reason, the extra cash is a pleasant shutterstock_14174845surprise.

So, is it really worth the trouble? Typically, the monthly savings as a result of refinancing is a few hundred dollars. That doesn’t sound like much, but compounded over many years, the savings can really add up. A simple example may help. Imagine refinancing a $300,000, 30-year mortgage and lowering the interest rate from 4.5 percent to 3.5 percent. The savings is about $173 per month. Invest that savings and you could grow your investments to about $250,000 over 30-years. The mortgage is paid off and you have an extra account that’s almost as large as the original mortgage itself. Not too bad!

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Paychecks that Keep on Going

Paychecks that Keep on Going

A frequent topic of conversation at meetings of the Linscomb & Williams Investment Committee: The change we have seen during our 45 years in how clients plan for the transition in giving up a regular paycheck at retirement. The biggest change?  Today, very few people can count on a company pension to help replace their paycheck when they retire.

Data from the Pension Benefit Guaranty Corp (PBGC) confirms this. When we founded L&W in 1971, these were the statistics for private sector workers:

  • 4 workers out of 10 started their retirement entitled to a monthly pension from their company. This was an attractive addition to their Social Security income.
  • Hardly anyone had a 401k-type account. As late as 1980, less than 1 in 10 workers had a 401k account.

Today, only 1 worker in 7 has a pension from their company when they retire. 401k-type plans or other Defined Contribution plans, such as 403(b)s, are clearly predominant, covering 1 of every 2 workers in the private sector. Retirement cash flow planning for today’s retirees is clearly different. They are not living their parent’s retirement.

What today’s retirees need is a retirement “paycheck.” Imagine having a predictable cash flow throughout retirement to supplement Social Security. And imagine a retirement paycheck that, like your working-years paycheck, could keep pace with or even out-pace inflation. That starts to paint a retirement picture with much more security and peace of mind. Is it realistic to create a retirement “paycheck” like this?

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High Anxiety Over Finances? Get a Plan!

Every American Needs a Long-term Financial Plan

Plato said, “Nothing in the affairs of men is worthy of great anxiety.” Plato must have had a sound financial plan or at least a competent Wealth Manager. In America, contrary to Plato’s advice, we are a nation of worriers. If you are a psycho-therapy professional, perhaps that is encouraging news. But for the rest of us, that is bad news. One of the top things Americans worry about is their personal finances and financial security.Financial-Anxiety-300x200

On a periodic basis, Northwestern Mutual Life Insurance Company (NML) in Milwaukee commissions a comprehensive survey by the Harris Organization to find out what is on peoples’ minds regarding personal finance and financial security. The survey’s most recent version is entitled “2016 Planning and Progress Study” and was concluded in February of 2016. As surveys go, it is statistically rigorous, covering more than 2,500 U.S. households, ages 18 and older. It is weighted to be representative of the entire U.S. adult population as to gender, age, education, race, region and household income. It surveys to discover U.S. adults’ attitudes and behaviors about money, financial decision making, and the broader issues around long-term financial security. We reviewed the study and its conclusions in a recent Linscomb & Williams Wealth Planning Committee discussion among our professionals.

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The High Cost of the College Investment

Second to purchasing the family residence, the financial support parents provide to children attending college is the largest financial expenditure made by most families.  It is no secret that education costs have risen faster than the general rate of inflation for almost two decades.  This is true for both private and state supported institutions of higher education.   Costs for state-supported 4-year institutions average $17,500 per year while private universities run approximately $35,000 per year, according to the latest data from the U.S. Department of Education.  Elite institutions are much higher.

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The Weekly Business Hour with Rick Schissler on Lone Star Internet Radio

J. Harold Williams, President and CEO of Linscomb & Williams, was the featured guest of interviewer Rick Schissler on the January 18th episode of The Weekly Business Hour. The live interview was broadcast on Lone Star Radio, Montgomery County’s Community Radio Station.

Harold discusses building a long-term business and expanding that business into new markets. Linscomb & Williams was selected as one of the 2015 Forbes Magazine Top 100 Wealth Managers.

Harold Williams, President/CEO of Linscomb & Williams joins us today to talk about building a long-term business and expanding that business into new markets. Linscomb & Williams was selected as one of the 2015 Forbes Magazine Top 100 Wealth Managers. “Tips You Can Use” touches on Upgrading Your Technology, how to improve your Google Search and “Where Easy Money Has Helped and Hurt.” The Silver Fox Advisor Tip of the Week, “Why You Need a Mentor.”