Author: becky

Managing your finances has never been more convenient, thanks to artificial intelligence (AI). From automated investment strategies to real-time spending insights, AI tools are making it easier than ever to track and manage your money. But while AI offers impressive capabilities, it can’t replace the personalized guidance and strategic insight of a human advisor.

 

This month’s Article of Interest, “Why Artificial Intelligence Can’t Replace Your Financial Advisor,” explores the unique value that human advisors provide. From emotional insight into complex family dynamics to staying current on changing tax laws and financial regulations, human advisors offer a level of understanding and adaptability that AI simply can’t match.

 

We’re here to help you navigate your financial future with confidence. If you have any questions about how AI and human guidance can work together to strengthen your financial strategy, don’t hesitate to reach out to our office.

 

 

Why Artificial Intelligence Can’t Replace Your Financial Advisor

 

In today’s digital age, artificial intelligence (AI) has transformed how we shop, communicate, and manage our finances. From budgeting apps to automated bill payment systems that track spending patterns, AI tools provide convenient ways to monitor and organize your financial life. They’re available 24/7, typically cost less than human services, and can process vast amounts of data in seconds.

 

With all these benefits, you might wonder: Do I still need a financial advisor? The answer is a resounding yes. While AI brings impressive capabilities to financial services and can certainly supplement your financial strategy, it falls significantly short of replacing the comprehensive value a human advisor provides. Here’s why the human touch remains essential in financial planning.

 

Human Understanding and Emotional Insight

AI excels at analyzing numbers and identifying patterns, but financial decisions aren’t just about the math—they’re deeply personal, tied to your life goals and values.

 

An AI-enhanced tool may calculate the maximum amount to contribute to a retirement plan or education funding, basing the figure purely on numbers. Still, it won’t understand the deeper emotional significance—the pride in helping family, the desire to leave a meaningful legacy, or how their own experiences with financial hardship affect what they consider “enough” for retirement security. These emotional dimensions require the human understanding a financial advisor provides.

 

Human advisors bring emotional intelligence to the table. They can help you process the complex emotions that often come with money decisions—whether it’s the anxiety of market volatility or the excitement of buying a home. Unlike AI, a human advisor can recognize when the “rational” financial choice isn’t the right one for you emotionally and help you balance both.

 

Regulatory Knowledge and Technical Expertise

Financial advisors stay current on the ever-changing landscape of tax laws, retirement rules, and financial regulations—areas where AI might lag unless specifically updated.

 

When tax laws change (as they often do), your advisor will understand how these changes affect your specific situation and can adjust your strategy accordingly. They can tell you when it makes sense to harvest tax losses, which retirement accounts to draw from first, or how new regulations might affect your estate plan.

 

This specialized knowledge becomes particularly valuable during major life transitions. When you’re navigating a career change, inheritance, or retirement, your advisor can bring technical knowledge and contextual understanding that automated systems simply can’t match.

 

 

Complex Family Dynamics

Financial planning often extends beyond individual goals—it could involve navigating complex family relationships and financial legacies.

 

Issues like inheritance planning, supporting aging parents, or managing family business assets require sensitive conversations and thoughtful solutions. Dividing an estate fairly among siblings or deciding how to support a child with different financial needs involves more than just math—it requires emotional insight and negotiation skills that AI lacks.

 

An advisor who knows your family history and financial dynamics can offer tailored advice that AI can’t replicate. They can help prevent family conflicts over money and create plans that honor both financial efficiency and family harmony.

 

Behavioral Coaching and Accountability

Money decisions aren’t just logical—they’re psychological. Fear, greed, and overconfidence can cloud judgment, even when the data points one way.

 

A good financial advisor acts as a coach, helping you manage emotional reactions and stay focused on long-term goals. AI might send automated “stay-the-course” messages, but it can’t replicate the impact of a trusted advisor reminding you of your objective-driven strategy and reassuring you during uncertain times. Your advisor knows your financial history and can remind you of how you’ve weathered previous market downturns when panic starts to set in.

 

Data Privacy and Security

AI tools that handle sensitive financial information are potential targets for hacking and data breaches. While human advisors are also vulnerable to cyberthreats, they provide added layers of protection, such as secure communication channels and strict confidentiality protocols.

 

Additionally, when you work with a human advisor, you know exactly who has access to your financial information. With AI platforms, especially free ones, your data might be shared with third parties or used for purposes beyond your immediate financial needs.

 

Real-Time Adaptation and Strategic Insight

AI relies on historical data to make decisions, but it can’t fully anticipate unprecedented events or shifting market conditions.

 

During a market crash, AI might recommend selling assets to minimize short-term losses because that’s what the algorithm suggests. A human advisor, however, can step in, remind you of your long-term goals, and help you stay the course—potentially avoiding costly decisions driven by panic.

 

Beyond market fluctuations, life itself is unpredictable. Divorce, an unexpected illness, or a sudden career opportunity can change your financial picture. An advisor who knows you and your goals can adjust your plan thoughtfully, considering both financial and personal factors. AI can’t replicate that kind of nuanced, real-time guidance.

 

The Value of Human Advice

 

Perhaps the most compelling reason human advisors remain essential is their ability to serve as true thinking partners. They bring perspective gained from working with hundreds of clients through different life stages and market cycles. They understand not just how markets work—but how people work with money.

 

Human financial advisors are legally required to act in your best interest. AI tools, on the other hand, are not held to the same ethical standards. In some cases, algorithms may be designed to prioritize the platform’s profitability over your financial well-being. Having a human advisor helps ensure that your interests remain the priority.

 

AI will continue to evolve and enhance financial services, but the human connection, contextual understanding, and strategic guidance that advisors provide are irreplaceable. The future of financial advice isn’t about choosing between human and artificial intelligence—it’s about combining the strengths of both to create better financial outcomes for you and your family.

As parents and caregivers, we strive to equip the children in our lives with the skills they need to succeed. One essential skill that often gets overlooked is financial literacy. The earlier kids learn the basics of saving, spending, and investing, the better prepared they’ll be for a financially secure future.

 

This month’s Article of Interest, “The Importance of Financial Literacy for Kids,” explores practical ways to introduce money management concepts to children. From budgeting their allowance using the “three jars method” to setting and achieving savings goals, these lessons help instill lifelong habits of financial responsibility. By teaching kids the value of money early on, we can empower them to make smart financial choices as they grow.

 

We’re here to support you in fostering strong financial habits for your family. If you have any questions about teaching financial literacy at home or would like guidance on setting up savings or investment accounts for your child’s future, please don’t hesitate to reach out to our office.

 

 

The Importance of Financial Literacy for Kids

Presented by Jay w. Stenzel

 

Picture this scenario: Your 10-year-old receives $20 for their birthday and asks, “Can we go to the store so I can buy a new toy?” As you think about how to answer, you realize this is a perfect chance to teach an important life lesson. The impulse to get something new as soon as possible is undoubtedly a strong one—in both kids and adults—but this could be an opportunity to explain the merits of saving for a larger purchase. Helping kids understand how to manage money can create habits that stick with them and help them make smart choices in the future.

 

Teaching children about money isn’t just practical—it’s about giving them the tools to handle life’s challenges. Early lessons about saving, spending, and planning can set them up for success.

 

Why Start Early?

Kids pick up habits and lessons starting at young ages, and money skills are no different. Studies show that attitudes about money are generally formed by age seven. Teaching kids while they’re young helps them build a healthy relationship with money and equips them with skills to manage it—to save, spend, and budget responsibly. These lessons can give them the tools they’ll need to avoid financial mistakes later on. In addition to helping your child make better decisions about saving, borrowing, and investing, early money lessons will help them learn to distinguish between needs and wants, a key skill for managing money wisely.

 

Allowance and Budgeting

An allowance is often a child’s first encounter with money, making it a great tool for teaching the basics of finance. While you may want to designate some chores as an expectation for contributing to the household (therefore, not allowance-worthy), try giving your child a weekly allowance tied to age-appropriate tasks that go beyond their expected contribution. For example, a seven-year-old might be expected to make his bed every day, but he can earn cash for changing the sheets or putting the dirty ones in the laundry.

 

Here’s one way to use an allowance to teach budgeting:

• The three jars method: Give your child three jars labeled “Save,” “Spend,” and “Give.” Encourage them to divide their allowance among these jars. A common split is 50% for spending, 40% for saving, and 10% for giving, but you can adjust this based on your family’s priorities.
• Discuss spending choices: Let them decide how to use their “Spend” money. If they want a toy, talk about whether they’ll still enjoy it a week later—in other words, is it worth the spend?
• Track their money: Use a simple notebook or a basic app to keep track of allowance, savings, and spending. This helps kids see where their money is going and gain practice keeping a record of their finances.

 

Setting Saving Goals

Saving teaches kids patience and discipline, which can be tough when they’re naturally drawn to instant rewards. Help them set a goal for something they want, like a game or a bike, and show them how to save for it.

• Set a goal together: Ask your child what they’d like to save for and figure out how much it costs. Then, break it into smaller, manageable steps. For instance, if the goal is $20 and they save $5 a week, they’ll reach it in four weeks.
• Make it visual: Create a savings tracker, like a thermometer, sticker chart, or a jar they can color in as they save. This makes the process fun and the progress visible.
• Celebrate success: When they reach their goal, congratulate them and tell them how impressed you are that they did it. Reinforce how saving leads to worthwhile rewards.

 

Introducing Investing

Investing might sound too complicated for young minds, but it can be easy for kids to understand with age-appropriate explanations.

• Use familiar examples: Explain investing by comparing it to planting a seed and watching it grow. Relate it to companies they know, like ones that make their favorite toys or snacks.
• Open a custodial investment account: Some financial institutions offer accounts where you can manage small investments for your child. Show them how money can grow with time and patience by explaining how the account works.
• Use simple analogies: Talk about risk versus reward. For example, keeping money in a piggy bank is safe but doesn’t grow, while investing is like planting a garden—it takes time but can yield bigger rewards.

 

Everyday Teachable Moments

Using ordinary situations to teach money lessons helps make the concepts stick:

• Grocery store shopping: Involve your child in comparing prices, discussing needs versus wants, and finding the best deals.
• Family budgeting: Share how you budget for things like vacations or household expenses. Simplify it so they can understand how money is allocated.
• Holiday or birthday money: If your child receives money as a gift, encourage them to split it among saving, spending, and giving.

 

Encouraging Generosity

Teaching kids about giving helps them develop empathy and gratitude. Suggest they donate a portion of their money to a cause they care about—like helping animals or supporting a local food bank. Explain how even a small amount can make a big difference.

 

A Lifelong Skill

By teaching kids about money early, you’re giving them skills they’ll use forever. Financial literacy helps them make smart decisions, avoid debt, and even build wealth. Whether it’s through an allowance, saving for a goal, or exploring investing, these lessons will prepare them for the future. Start small, keep it consistent, and watch them grow into confident, money-savvy adults.

 

 

© 2025 Commonwealth Financial Network^®

For many Americans, social security benefits make up a significant portion of retirement income. When it comes to how much you will receive, you may be surprised to learn that you have a choice in the matter—and timing is everything. The longer you wait to claim your benefits, the larger your monthly payment will be, so when you start can determine whether you’ll have sufficient funds to achieve your retirement goals.

Here are considerations to keep in mind as you think about your social security choices.

When Are You Eligible?
Based on the year you were born, the Social Security Administration (SSA) has determined your full retirement age (FRA)—in other words, the normal retirement age at which you become eligible to receive full social security benefits. If you were born before 1955, you’ve already reached your full retirement age (see Figure 1). If you were born after 1960, you’ll reach your FRA at age 67.

The Early Bird Gets . . . Less
Although your FRA serves as the baseline, you can claim your social security benefits at an earlier age. Keep in mind, though, that taking your benefits early will permanently reduce the amount you receive.

Let’s say your FRA is 66 and your monthly benefit amount is $1,000. If you decide to take benefits at age 62, your monthly benefit will be permanently reduced by 25 percent. That might be a hefty sum to leave on the table, so remember that you have up to 12 months to withdraw your application for benefits if you change your mind.

Good Things Come to Those Who Wait
If you don’t need the cash when you reach your FRA, you can opt to delay your claim—and the SSA offers an economic incentive to do that. Should you decide to wait until after you’ve passed your FRA, the SSA compensates you for allowing those funds to stay in its reserves by guaranteeing an 8 percent increase in benefits for each year you delay, up until age 70. So, if you wait until 70 to claim benefits, your payment will be 76 percent more than what you would have received if you claimed early at 62. If you’re in a position to do so, it literally pays to wait.

Remember, though, that the maximum benefit amount you can receive tops off at age 70, so there’s no financial motivation to delay your claim past then.

Deciding the Right Time for You
Claiming your benefits as soon as you reach your FRA shouldn’t be a given—nor should holding out longer for a bigger benefit. The right timing depends on your specific circumstances, and there’s a lot to consider.

Life expectancy. Longer life expectancies are a large factor in determining the best claiming strategy, so a break-even analysis—the age when your cumulative benefits will even out—can provide helpful insight. Handy life expectancy calculators and benefits calculators are available to help you estimate your benefits based on the age you want to make your claim.

Your spouse. Married couples should consider various strategies for maxing out benefits. If you’re the primary earner, you’ve been married at least one year, and your spouse is at least 62, your spouse may qualify for a spousal benefit of up to 50 percent of your FRA benefit when you make your claim. Although your dependent spouse receiving a benefit won’t affect the amount of your benefit, keep in mind that if you make an early claim, your spouse’s benefit will also be reduced. The flip side is, if you wait until age 70, you maximize benefits for both of you—and potentially the survivor benefit for your spouse.

If you have two incomes, for example, depending on your benefits estimates, you might consider making your claims at different times. It may make sense for the lower earner to take benefits first when they reach their FRA, and the higher earner to wait until age 70 because their increases will amount to more over time. Depending on life expectancy, this approach could also mean a higher survivor benefit for the lower earner should the higher earner pass away first. Note, however, that your spouse’s benefits will be permanently reduced if they apply before their FRA. (There is an exception if they are caring for a dependent child younger than 16 who has a disability, making them eligible for dependent benefits.) For dual earners born before 1954, you can opt to apply for only the spouse benefit and delay taking your own benefit until a later date.

If you and your spouse have similar lifetime earnings, each of you might want to wait until age 70 if it’s financially viable. This positions both of you to receive the maximum amount and ensures that one of you receives the highest possible survivor benefit after the other passes away.

Tax implications. Because some of your social security benefits may be taxable, depending on your income, some people may factor the tax impact of their claiming strategy into their decision-making process.

Keep in mind, if you or your spouse worked at a job at which you didn’t pay into social security because you were earning a pension, your retirement and your spousal/survivor benefits may be affected by the Windfall Elimination Provision and Government Pension Offset. (This is common for teachers and government employees.)

The Math Is Personal
Depending on your specific financial situation, deciding when to claim your social security benefits may have a significant impact on your retirement goals. Time may be on your side if you’re looking to maximize your benefits, but the choice can be complicated; it depends on your health, family circumstances, and overall financial wellness. We invite you to talk with us about the various ways we can support your retirement goals. For more detailed information about benefits, call the SSA at 800.772.1213 or visit www.ssa.gov.

Did you know that the total projected lifetime health care costs (excluding long-term care) for the average 65-year-old couple retiring this year are expected to be $295,000 in today’s dollars? This figure highlights how important it is for you to start planning to manage your health care expenses in retirement.

For many people, Medicare becomes the primary source of health care coverage in retirement. This guide to Medicare planning will help answer the many questions you may have about Medicare, including who is eligible, what services are covered, and how to avoid potential penalties and surcharges.

What Does Medicare Cover?
Let’s start by defining the letters that make up the Medicare alphabet soup and what they mean in terms of coverage.

• Part A: Generally covers inpatient hospital services
• Part B: Usually covers doctor visits, outpatient services, and durable medical equipment
• Part C: Known as Medicare Advantage; an alternative to original Medicare Parts A and B plus D (This plan typically offers drug coverage, plus vision and dental care. Individuals must first enroll in original Medicare to be eligible for Part C Medicare Advantage. The cost of the plan may be the same as original Medicare, but there could be additional charges, depending on the plan selected.)
• Part D: Prescription coverage

Now that we’ve covered the building blocks, let’s move on to eligibility and enrollment.

Who Is Eligible for Medicare?
Individuals who are 65 or older are eligible for Medicare. Medicare requires enrollment at particular triggering events and at specific times throughout the year. If you are receiving retirement benefits under the social security program, you will be automatically enrolled in Medicare Part B at age 65. If you are covered under a larger group health plan (20 or more employees), you can opt out of Part B and Part D coverage without a penalty.

A specific triggering event (e.g., when you lose group employer coverage) requires that you enroll during the special enrollment period. Enrolling within eight months of a triggering event will help avoid Part B penalties but may not prevent coverage gaps. You should start the enrollment process at least three months before a triggering event occurs to avoid gaps in coverage or the risk of missing a penalty deadline.

A key factor in determining a Medicare penalty is whether you have “creditable coverage.” Let’s take a closer look.

What Is Creditable Coverage?
COBRA coverage, group employer plans for businesses with fewer than 20 employees, and retiree health plans may not be considered creditable coverage for Medicare Part B. With one of these plans, you would not avoid the Part B enrollment penalty. Medicare would be the primary payer for health services, while these plans are secondary. These plans, however, may qualify as creditable coverage to avoid the Part D enrollment penalty. Here’s a breakdown of those penalties:

• Part B: Individuals pay a surcharge of 10 percent of their Part B standard premium for each 12-month period they fail to enroll.
• Part D: The penalty is 1 percent of the “national base beneficiary premium” per month. In 2021, the national base beneficiary premium is $33.06 per month. This 1 percent penalty is applied to the total number of months an individual is without creditable coverage. This surcharge is added to the Part D premiums.

Please note: You should verify that your current insurance is considered creditable coverage for Medicare purposes to avoid these permanent surcharges.

What Is Supplemental Coverage?
If you are covered under original Medicare Parts A and B plus D, you might consider purchasing Medigap coverage. Medigap, also known as Medicare Supplement Insurance, offers supplemental coverage for expenses that traditional Medicare doesn’t cover, including vision, dental, medical coverage during international travel, and copays.

Medigap plans (e.g., Plans A through D or Plans G, K, L, M, and N) are federally mandated to provide specific core coverage and are regulated under state law to offer additional supplemental coverage. The coverages and costs will vary between plans.

Please note: Effective January 1, 2020, Medigap Plans C and F are generally no longer available for new enrollees.

Who Pays First?
The coordination of claim payments between Medicare and other health insurance coverage can directly affect your health care costs. Your Guide to Who Pays First outlines the coordination of benefits for Medicare-eligible individuals. Let’s review some common scenarios and how Medicare coordinates payments.

Employer health plans. If an employer has fewer than 20 employees, Medicare may be the primary payer and the employer coverage is secondary. So, if you are 65 and covered under a smaller employer plan through your spouse’s employer or are still working and covered under this type of employer plan, you should verify with the provider whether the plan is creditable to avoid a penalty for Part B and/or Part D. If the plan is not considered creditable coverage for either Part B and/or Part D, you should enroll in Medicare.

If the employer has 20 or more employees, the employer plan is the primary payer and Medicare is the secondary payer.

TRICARE. If you are 65 and inactive duty military covered under TRICARE, Medicare is the primary payer for Medicare-covered services and TRICARE is generally secondary (unless services are received in a military hospital).

There are special rules for TRICARE-insured military members who are enrolled in specific plan types. Generally, if you are retired, you should enroll in Part B to remain eligible for TRICARE (including drug coverage).

Federal employee health benefits (FEHB) plan. If you are 65 and covered under an FEHB plan and are an active employee, the FEHB plan is the primary payer and Medicare is secondary. Once you are no longer an active employee, the FEHB plan for Part B is not considered creditable coverage. At that point, Medicare is the primary payer. On the other hand, FEHB may be creditable coverage to avoid the Part D prescription plan penalty. FEHB may also serve as your supplemental gap plan.

Retiree employer health plan. Medicare is the primary payer and the retiree health plan is secondary when you are 65 and covered under a retiree employer health plan.

Once you are no longer an active employee, the retiree health plan for Part B is not considered creditable coverage. Medicare is the primary payer. This plan may be creditable coverage to avoid the Part D prescription plan penalty and may serve as your supplemental gap plan.

What About Health Savings Accounts?
Once you enroll in any part of Medicare, including Part A, you can no longer contribute to a health savings account. If you are considering collecting social security benefits, in general, you should stop making contributions six months before enrolling in Medicare to avoid a potential health savings account contribution penalty.

What Is the Cost for Medicare?
Medicare premiums are means tested. The higher your modified adjusted gross income (MAGI), the higher your monthly premium costs. If you have a higher MAGI, you will pay a surcharge, known as the income-related monthly adjustment amount (IRMAA).

In the case of IRMAA for Medicare, your MAGI is generally your adjusted gross income, which includes all taxable income (e.g., retirement account distributions, capital gains, and interest), plus dividends from tax-free bonds, interest from savings bonds used to pay higher education tuition and fees, and foreign earned income excluded from gross income. For 2021, the premium cost will be based on your 2019 MAGI.

Hold harmless rule. This rule protects current social security beneficiaries from increasing Medicare costs in a year when there is no or a very low cost-of-living adjustment. When this rule applies, the cost of any increase in premiums for Medicare are absorbed by a smaller group of recipients: new enrollees and current beneficiaries subject to IRMAA.

• In 2021, the standard Part B cost is $148.50 per person per month. The top Part B IRMAA threshold for a married couple filing jointly is a MAGI of $750,000 or greater. The monthly premium, including the IRMAA surcharge per person, for these enrollees is estimated to be $504.90 per month.
• In 2021, the top Part D IRMAA threshold for a married couple filing jointly is a MAGI of $750,000 or greater. In addition to the monthly premium, an IRMAA surcharge per person for enrollees is $77.10 per month.

You can appeal the IRMAA surcharge amount for specific life-changing events, which include death, divorce, loss of pension, loss of income-producing property, work stoppage, or an error in the determination records. Further information on the appeal process is available on the U.S. Department of Health & Human Services website.

Need Additional Information?

If have any questions about the information shared in this guide, please contact me. Medicare planning is a complex topic, and I am happy to talk through the available options and help guide you to appropriate decisions.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.