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Social Security Changes

For many Americans, Social Security has always been a paramount factor when determining one’s retirement income.  Over the years, claiming tactics have been very effective in maximizing Social Security benefits. However, due to the Budget Act of 2015, certain claiming strategies have been slated to change in a big way for the coming year. These changes may have negative impacts on those close to retirement who may have benefited from the tactics that will soon cease to exist once these changes take effect on April 29, 2016. As one nears retirement, it is very important to remain vigilant of new legislations that can directly impact one’s retirement income benefits. In order to plan effectively and circumvent potential speed bumps, it is crucial to develop a concrete understanding of the impending changes to Social Security.

One of the most profound changes that will result from the passing of this act is the end of the “file-and-suspend” claiming strategy. The “file-and-suspend” option was a way for married couples to increase their Social Security claiming options by allowing themselves to take advantage of spousal benefits and "delayed retirement credits" simultaneously. With this strategy, his or her spouse could claim a spousal benefit while allowing his or her own retirement benefit to grow at 8 percent per year until age 70. Spouses who did not have a work history of their own were likely to deploy this claiming strategy. This claiming tactic was especially useful for the generation of retirees and those near-retirees whose demographics were that of single-earner families.

The other major change to prepare yourself for is the shutdown of the restricted-application option. This option allowed inpiduals who had not yet filed for any benefits, and whose spouse has an established filing date, to file (a specific restricted application) only for the spousal benefit that is based upon the spouse’s record.

It is important to note that no one turning 62 in 2016 will be able to implement the “file-and-suspend” or restricted-application claiming strategies. Additionally, these reforms are not retroactive. This means that those inpiduals already collecting benefits through file-and-suspend and the restricted-application tactics will not be affected and thus their social security benefits will remain unchanged. Unfortunately, not everyone will be so lucky.

With these powerful claiming tools coming to an end, millions of Americans who were planning on implementing these strategies to maximize their household’s lifetime benefits must now figure out an alternative path. Both of the aforementioned approaches generate higher benefit payouts for entitled recipients and have already been baked into the retirement planning of many aging citizens. The removal of these claiming tactics may cost an average middle class couple $70,000 over their life-time of collecting social security benefits.

Given the impending changes to Social Security, many inpiduals nearing retirement may find themselves in a bind to make up for the lost retirement income without these claiming strategies. It is crucial to factor such changes into your current financial plan in order to discern the impact.  In anticipation of May 2016, contact Mitlin Financial, Inc. today to have your inpidual situation reviewed. Also be sure to check out the latest Mitlin Minute to learn more about the changes coming to Social Security benefit claiming options. Let Mitlin Financial assist you with your financial planning and help to facilitate your financial future!

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Financial Aid

With higher education costs at unprecedented levels, financial aid has become more important than ever. College financing has evolved into a familiar issue that millions of American families find themselves struggling with. Unfortunately, the severity of this issue does not seem to be waning. With rising college costs and the increased competitiveness for the small amounts of aid available, it is crucial for parents and students alike to have a strong understanding of their specific financial aid eligibility in order to maximize the amount of aid they can receive.

Financial aid is best known as funding granted to students to be used specifically for costs associated with a post-secondary educational institution, a professional school, community college, four-year college or university. Aid can consist of grants and scholarships, low-interest government-subsidized loans, work-study, and education tax benefits. A common misconception pertaining to financial aid is that grants and awards are only for those who cannot afford the costs associated with higher education. This fallacy is easily reconcilable as there are two main types of aid; merit-based and need-based financial aid.

Merit-based aid is awarded on the basis of student achievements or accomplishments. This type of aid is usually awarded for outstanding academic achievements, such as high SAT or ACT scores. There are also some instances where this type of aid can be awarded for special talents, leadership potential and other personal characteristics.

There is also need-based financial aid. This type of aid is awarded on the basis of the student’s financial needs and circumstances. One’s eligibility to receive federal, state and/or institutionally need-based financial aid is determined by the FAFSA form. The FAFSA form contains the formula that calculates how much need-based financial aid a student is eligible to receive.

To maximize the amount of aid you receive, it is vital that you take on a proactive mindset. Being cognizant of who holds assets can actually affect the amount of aid you can receive down the stretch. According to the FAFSA form and the expected family contribution (EFC), roughly 25% of assets held in the child’s name are expected to be used for higher education. While only 6% of assets held in the name of the parent are expected to be used for higher education costs. It is important to begin applying for financial aid very early on. It is also very beneficial to keep your eyes open for non-need-based aid that can supplement whatever you are granted from a needed basis standpoint.

A common theme associated with financial aid is the fact that many families are unable to afford college costs and yet are considered to be earning ‘too much’ to be eligible to receive financial aid. This paradoxical double-standard has led many students into great amounts of student loan debt, as they are left with no other option but to take out high interest loans.

Financial aid can be a very powerful tool when implemented strategically. Given there are many variables and financial scenarios involved in the financial aid qualification process, it is crucial that you review your specific situation with a financial professional prior to applying for financial aid. Contact us today at Mitlin Financial to have your unique circumstances reviewed to make sure that you are on the correct track to receiving optimal financial aid and ultimately affording the costs of today’s higher education. Also, be sure to check out the latest Mitlin Minute to learn more about financial aid. Let Mitlin Financial assist you with your early planning and help to facilitate your financial future!

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Volatility

There appears to be a pre-notion that market volatility is nothing but a detriment to markets and investors. Although there are inherent negative aspects, this line of thinking can be dangerous. Acting solely on short-term volatility can do more harm than good. Volatility can drive the novice investor to question his or her own investment strategies, strictly due to short-term fear. It is crucial for investors to understand that volatility is inevitable and attempting to navigate around it is risky. Markets tend to move up and down in the short-term and volatility should not be the deciding factor as whether investors should or should not immediately exit. With a strong understanding of volatility and its causes, investors potentially can take advantage of investment opportunities which may result from volatile markets. 

Although volatility sounds terrifying, it is important for investors to develop a strong working knowledge of it so they can make educated investment decisions. Market volatility is the statistical measure of a market’s or security’s tendency to rise or fall sharply within a short period of time. Measured by standard deviation, volatility can be caused by the imbalances seen within trade orders in one direction or another. Volatile markets are characterized by wide price fluctuations and/or heavy trading. It is important to note that there are no conclusive catalysts behind the causes of market volatility. With that in mind, investors can leverage their time more effectively by learning strategies to deal with volatility instead of trying to prevent it.

One effective method commonly used in times of market volatility is to stay the course. This means that as an investor, you ignore the short-term chaos and leave your investments status-quo until the volatility passes. You stay the course despite the current overreaction of the market. Even though this may seem lazy and counterproductive, it may insulate you from losses associated with attempting to time the market.

Market volatility can also create opportunities that an astute investor can take advantage of. Volatility can actually provide entry points for those investors whose time horizon and investment strategy is long-term. Downward market volatility presents investors, who are bullish and believe markets will perform well in the long-run, with the opportunity to purchase additional shares at lower prices. Increasing your position at a discount can be a very powerful strategy. In effect, you are lowering your average cost per share of that particular security.

No matter how you elect to handle your investments during times of market volatility, it is very important to review your portfolio with a qualified financial advisor. Having a distinct philosophy for all markets will help you navigate without emotion. Be sure to check out the latest Mitlin Minute to learn more about volatility. If you are unsure how to proceed the next time the markets become volatile, or you just want to be proactive, contact Mitlin Financial at (631) 952-4466 x12 and allow us to help you navigate in a fashion that is conducive to your goals, investment needs and risk tolerance.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Mitlin Financial Inc. Supports Local Hockey Team’s Breast Cancer Awareness Event

(HAUPPAUGE, New York)   As many things around us start to turn pink this October a local group of boys will be tying up their pink skate laces and slipping into custom pink jersey's as they step on the ice.  Hauppauge -based Mitlin Financial Inc. is sponsoring the PAL Peewee AA Ice Hockey team as they honor Breast Cancer Awareness month.

Lawrence Sprung, CFP®, President of Mitlin Financial, who lost his mother to breast cancer was humbled to step up and support these young men in their effort to raise awareness about breast cancer.

In conjunction with wearing the jerseys the boys will be raising money for the Long Island 2 Day Walk to Fight Breast Cancer Inc. and auctioning off their jerseys here:  https://www.32auctions.com/Peewee-AA. The boys whose home rink is The Rinx in Hauppauge, NY will be wearing their custom jersey’s starting October 24th through November 8th.

 

About Mitlin Financial
Mitlin Financial, Inc. is wealth management firm that helps small business owners, entrepreneurs, corporate executives and retirees secure their financial future through financial planning, independent investment guidance and wealth management.

About LI2DAY
LI2DAY is a non-profit organization that was originally founded in 2004 responding to the critical need for funding of community-based organizations that provide assistance to Long Islanders with breast cancer. To date, LI2DAY has raised over $6 MILLION to fund programs at local grassroots breast cancer and other women’s cancer organizations, breast cancer research and the LI2Day Scholarship Fund.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Market Corrections

We all know that anything in excess is never good over the long term. Not only does excess breed complacency, but unsustainability as well.  This holds true with regards to stock market growth. As the markets have experienced nothing but continuous growth since 2009, investors have become accustomed to this upward trend and desensitized to the fact that the market would eventually need to pullback. Although market corrections may be viewed as a detriment, when analyzed in the appropriate context, they happen to be a very necessary evil. In today’s market environment, it is crucial to understand the role that market corrections play. With a clear understanding, investors can take advantage of potential buying opportunities while mitigating the downside risk that can result from these pullbacks.

What is a market correction? A market correction is a decline or downward movement, of at least 10 percent, of any stock, bond, commodity or market index. These pullbacks that we have come to recognize as market corrections, tend to last a shorter period of time when compared to bear markets. It is important to note that not all market declines are corrections. Based on past corrections, there are some indicators that may help an investor discern whether or not the market is experiencing a correction.

 It is very easy to mistake a market correction with a bear market or capitulation. A correction differs from a bear market in a multitude of ways. For one, corrections are shorter in length and tend to be far less severe than the declines seen in a bear market. Historically, it is common that market corrections manifest once the market has become overbought. Lastly, in a market correction, bottoms are formed far more quickly than in a bear market. Delineating between a market correction and bear market can be challenging at times, however, making this distinction can bode well for the long term investor.

How can an investor with a long time horizon benefit from a market correction? First and foremost, a 10% correction can reduce values and prices in the equity market. This may give an investor, who otherwise would not be able to afford such stocks, the ability to purchase the holding during that correction. A prime example of this type of investor would be Millennials. This demographic tends to look for market pullbacks in order to obtain stocks at lower prices, higher pidend yields and lower valuations.

Another potential advantage that may result from a market correction can be for those investors who are looking to increase their position in a company, they are already invested in, at a discount. For pidend seeking investors currently invested in a stock, their reinvested pidends actually go further, as they are being reinvested at a lower price. Additionally, there is an added benefit for those employees who already have an active retirement plan that they currently and continue to contribute to. When the market is in correction territory, their contributions actually go a longer way since the market is down and their contribution (whether or not it has increased) will buy more shares.

It is also very important to note the benefits of a market correction for those investors whose portfolios get rebalanced. The purpose of rebalancing is to sell those assets that have appreciated in value and to do so during a market correction, allows the investor to buy low and sell high.

In a market environment with significant declines, it is crucial for investors to discern whether or not this is a correction or a bear market. Although market corrections may seem doom and gloom, there are many potential advantages that investors can benefit from. How did your portfolio fare in the recent market correction? You should contact us today at (631) 952-4466 x12 to see how Mitlin Financial can help devise a market correction game plan for your investment portfolio.


Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

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