With Democratic Presidential candidate Joe Biden recently releasing his proposed tax plan, we thought it would be good to compare what Biden is proposing to our current tax law. Here is a simple side-by-side comparison of some of the major differences. What does this mean for clients of Hill Investment Group? At this point, not much. While Biden’s proposed plan is certainly different from current law, and in some cases significantly different, we are planning for the future, but aren’t making any changes to clients’ plans (at least not yet). As always, if you have specific questions about your specific situation, please call or email us to set up a time to talk.

Imagine owning an asset that has increased by 25% during the recent coronavirus pandemic. Now let me tell you a little secret: you probably already own it! I’m talking about Social Security benefits.

At Hill Investment Group, we help clients with all kinds of important decisions to optimize their portfolios. One of these decisions is when to collect Social Security benefits. The question is much more complicated than you might think. Some clients have seen six-figure differences in options after we run our analysis. Timing when to collect on Social Security is even more important today with interest rates near zero. If you are curious about how we do this analysis and are interested in what the answer might be for you, schedule a call here.

Recently, New York Times financial columnist, Jeff Sommer, wrote a piece arguing we should think of our social security as an annuity. Sommer argues it’s an annuity we all own that has skyrocketed in value – to the tune of $1 million for some. As many of you know, we generally advise AGAINST owning annuities of any type and better explain why this is different.

The key points:

• Social Security can be compared to annuities because similar to an annuity, Social Security provides a monthly guaranteed income for a specified period of time. 
• With low-interest rates, the income-producing power of other investments has dropped while the value of Social Security has held strong.
• Because of this, coupled with Social Security payments increasing with inflation, the effective value of the Social Security income stream has soared.
• As an added benefit over annuities, the US Government guarantees the payments, so it’s virtually risk-free, unlike a stock portfolio. 
• If you tried to purchase an annuity on the market with similar features, it would be an expensive annuity indeed. Example: for a high-income earner who delays claiming Social Security benefits until age 70, Sommer suggests an annuity providing comparable benefits might cost about $1 million today, an increase in the cost of about 25% from prior years.

 Be sure to check out his article here.

We have a lot of planning-obsessed people on staff at HIG and hope it gives you comfort knowing that we are thinking about things on your behalf – even when you aren’t. It’s a huge part of what makes Hill Investment Group different. Don’t be surprised if you hear us talking a lot more in the coming year about the value our planning process adds to our investment management approach. We normally don’t share our client quarterly letters with everyone, but enjoy an exclusive peak this time!

Enjoy our client quarterly report letter.