I recently read an article in the Wall Street Journal that had an interesting comment that is important to contemplate as we get older: “Since dying the richest person in the graveyard shouldn’t be the goal ……..we should take risk off the table as clients reach their financial goals”. It clearly articulates what many of us are feeling, especially as we experience the market turbulence and volatility over the last year. The message is this: Planning must be a continuous process rather than a onetime event!

Most of our members we meet with articulate their goals as falling into the following three broadly defined areas: 1) To ensure they can achieve certain life activity goals, now popularized as one’s “bucket list”; 2) To maintain their financial independence; and 3) To help family members and/or their community and charities achieve their goals as a legacy.

For most individuals and families the key to creating a successful plan and strategy to reach one’s goals is much more than just maximizing investment returns but additionally focusing on all elements of a Financial Life Plan, including:

  • The establishment and regular reexamination of one’s goals to ensure they are realistic, relevant, achievable and truly desired
  • An assessment of all variables that impact those goals, including:
    • Employment and business variables
    • Taxation and maximization of one’s after tax resource/savings contribution • Disciplined savings and spending strategy
    • Optimization of tax deferral strategies
    • Risk management including life, health and liability concerns
    • Philanthropic goals and maximization of giving impact
    • Legacy planning and estate planning
    • Understanding investment risk and goal achievement horizons
  • A modification of goals based on environmental/market changes and the above reassessment process

A successful Financial Life Plan should be a dynamic, ongoing process as opposed to a static one. Our goal with The Telemus Wealth Letter going forward will be to examine current and timely topics that are relevant in the planning process so as to highlight how factors outside of investments can impact one’s financial life planning. In this inaugural version we want to highlight a few very timely topics that could impact certain members.


As previously communicated in November, 2015, Congress changed a popular Social Security planning technique that has been a mainstay for most retirement age individuals that potentially provided over $50,000 in benefits to a married couple. However, while the benefit has been taken away, there is a small window about to close for those lucky few who are either turning Full Retirement Age (or “FRA” - age 66 by April 29, 2016) or those who are over FRA and have not claimed social security by that date.

This law changed the ability for a couple to use what was called the “file and suspend” technique. For a married couple, when this strategy was combined with what is called the “restricted application strategy,” it allowed a couple’s social security benefits to grow due to delayed retirement credits (or “DRCs”). Each year a beneficiary delays receiving payments past FRA, his or her benefit grows by 8% until reaching age 70. This strategy allowed a couple to let each of their benefits grow - but if properly structured - allowed one member of the couple to receive spousal benefits equal to half of the other member’s FRA benefit. 

If applicable, this strategy is still available but action must be taken before April 29, 2016! If you are or will be over age 66 by the above date, and have not filled for social security, you must file a restricted application before April 29th to lock in the ability to take full advantage of this strategy. As long as your spouse turned age 62 before January 1, 2016, he/she will be able to obtain a spousal benefit upon reaching FRA while allowing their benefit to grow to age 70 via the filing of a restricted application and claiming their spousal benefits.


During down market cycles, we ensure our members always consider how down markets can be used to their advantage to save taxes and enhance their legacy goals by leveraging some effective techniques to enhance their after-tax return:

  • If one converted a regular IRA to a Roth IRA in 2015, consider doing a reversal or recharacterization if the value of the account has decreased. Doing so will save paying income taxes this April on phantom income and one can then “redo” or a reconvert by waiting at least 30 days
  • When the market moves lower, it may be an appropriate time to consider doing a Roth Conversion. Lower market values equate to lower income tax conversion costs. A Roth has no RMD requirement so this can also impact future income and enhance estate planning transfers
  • Down markets are an excellent time to consider wealth transfer techniques if you will be subject to estate taxes. There are ways to transfer the eventual stock market rebound growth to younger generations without being subject to gift taxes while retaining the principal value for future retirement needs


In late 2015 Congress finally passed legislation making permanent certain favorable tax provisions that for the last few years were extended on a year by year basis. One of the provisions, which applies only to individuals over age 70, allows them to donate up to $100,000 directly from their regular Individual Retirement Account (IRA) to a qualified public charitable organization without treating the distribution as income. In addition, the distribution will count towards the IRA owner’s annual required minimum distribution (RMD) for the year providing a way to manage annual taxable income that can have an impact on itemized deduction limitations, Medicare insurance premium cost, and numerous other tax provisions that are income based.

Please reach out to your Telemus Financial Life Advisor to help you explore these ideas or help you create or update your very own Financial Life Plan.

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. This commentary is a matter of opinion and is for informational purposes only. It is not intended as investment advice and does not address or account for individual investor circumstances. Investment decisions should always be made based on the client's specific financial needs, goals and objectives, time horizon and risk tolerance. The statements contained herein are based solely upon the opinions of Telemus Capital, LLC. All opinions and views constitute our judgments as of the date of writing and are subject to change at any time without notice. Information was obtained from third party sources, which we believe to be reliable, but not guaranteed.

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