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Planning Strategies During Market Uncertainty & Volatility: Social Security and Retirement Plan Contribution Timing, Charitable Structures and Grants

May 7th, 2020

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This is the fourth piece of our "mini-series" on strategic and planning opportunities during challenged market conditions. This piece focuses on Social Security Timing/Claiming strategies, Retirement Plan Contribution Timing and Charitable Structures and Grants.

  1. Social Security Timing & Claiming Strategies – While future tax dynamics are unknown, fiscal and monetary stimulus will likely create more state and federal demand for tax revenues. It may also create additional changes to Social Security and Medicare. Whether that happens, and what form it may or may not take is as-yet unknown. However, for retirees both pre- and post-RMD age, current market dynamics might prompt a re-examination of the timing of their election to claim Social Security benefits. Why? A few potential reasons stand out:
    1. Asset Preservation - Those who have retired before required minimum distribution (RMD) age (policy changes this year pushed back the age of distributions to age 72 if your 70th birthday is July 1, 2019 or later) but have not yet claimed Social Security benefits (having expected to draw on non-qualified accounts that have fallen in value) may wish to preserve investable assets and replace that income stream with Social Security payments;
    2. Tax Optimization - In some cases, client financial plans that might be updated with some of the strategies outlined herein will change previously projected tax circumstances and make claiming of Social Security neutral or even more-advantageous. A comprehensive plan that takes cash flow, tax, investment and income considerations into account can be easily updated to analyze and optimize for current conditions.
    3. Life Expectancy - Current Social Security rules provide higher annual benefits for retirees who delay claiming. Individually optimized timing of claiming, particularly relative to both need and long-term growth of overall net worth, requires additional analysis. The unknown "bet", of course, is always the timing of the claim (known) versus actual life expectancy (unknown). As COVID-19 understandably prompts a re-assessment of many things, retirees might desire to have more income certainty.
  2. Retirement Plan Contribution Timing - Many participants in employer-sponsored retirement plans contribute on a routine basis, either by dollar amount or percentage across each pay period for the duration of the calendar year. Over an extended period of time, this averages investor balances into their chosen investment selections. However, when market values fall dramatically, some plan participants may choose to "pull forward" their contributions for all or part of the year into one of a few pay periods following a market decline. Increased deferrals of this type would reduce take-home pay, but would have the effect of investing more of the participant's plan balance at then-lower market value(s). This strategy also has the effect of increasing cash flow (take-home pay) later in the calendar year as well. Clients who feel they can afford to take advantage of this strategy will want to carefully calculate their budget, cash flow, deferral amounts and plan investment selections.
  3. Charitable Structures & Grants - We'd be remiss in all of these updates if we did not mention that many of our clients have established Donor Advised Funds or Charitable Trusts in recent years. These contributions create tax benefits in the year of contribution but do not, in and of themselves, put dollars in the hands of community or other qualified charitable organizations. The health, economic and community challenges created by the COVID-19 pandemic has and will create greater need. While we only ever offer suggestions on where to give when asked directly, it is important to note that past contributions to Donor Advised Funds are irrevocably dedicated to charitable causes. If you feel you'd like to support those organizations or causes now or in the future by making a grant out of your DAF, please let us know so that we can assist you in making those grants.

We are available to discuss any of these or other strategies. We have worked with clients on Social Security claiming and charitable strategies for many years and especially recently. Our financial planning software is exceptional at capturing, demonstrating and comparing the likely effects of various strategies or decisions.

Not all of the strategies outlined herein will be applicable for every individual client. Resonant Capital Advisors does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

Resonant Capital Advisors, LLC (“Resonant”) is an SEC registered investment adviser located in Madison, Wisconsin. This newsletter is limited to the dissemination of general information pertaining to Resonant’s investment advisory services, and should not be construed as the provision of personalized investment advice. Investing involves risk, including risk of loss. This newsletter contains certain forward‐looking statements (which may be signaled by words such as “believe,” “expect” or “anticipate”) which indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward‐looking statements. There is no guarantee that the views and opinions expressed in this newsletter will come to pass. For additional information about Resonant, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure web site ( Please read the disclosure statement carefully.