Asset Planning, Inc Blog

The latest from the team.

Carol Somoano, MBA, CFP®
Financial Advisor

Carol Somoano, Vice President of Asset Planning Inc., is a Certified Financial Planner, CFP®, and is responsible for portfolio and financial plan analysis. Before Carol joined API, Inc in 2005 she worked as a management accountant for 15 years before deciding to concentrate on financial planning. ...

Carol Somoano, MBA, CFP®
Financial Advisor

Carol Somoano, Vice President of Asset Planning Inc., is a Certified Financial Planner, CFP®, and is responsible for portfolio and financial plan analysis. Before Carol joined API, Inc in 2005 she worked as a management accountant for 15 years before deciding to concentrate on financial planning.  Carol obtained her B.S. in accounting from Cal Poly Pomona and her MBA from Cal State Fullerton.  She completed the UCI Financial Planning program and passed the CFP exam in March of 2004.  She is also a Notary Public and Realtor®

She is an active member of the Orange County Financial Planning Association and has participated in the OC Register Annual Financial Planning Hotline.  She is an active volunteer in her community and has received an Honorary and Continuing Service Award from the California State Legislature in 2003 and 2007.

Carol’s core values are client-focused, emphasizing long-term relationships built on confidence and trust.  She works diligently to increase her client’s net worth, plan for their future, and ultimately enhance their lives today.

Carol's hourly financial planning rate is $250. Carol's portfolio management fee is a maximum of 1% and is discounted for portfolios over $250,000.

PH: 714-827-5794 | Email Carol 


Personal Financial Plans

In a recent study by deVere Group, one of the world's largest independent financial consultancy groups, they asked clients with investable assets over $1,000,000 what was their number one financial regret. The top 3 answers:

  1. Not putting in place a regular reviewed personal financial plan earlier in life. (57%)
  2. Not consistently scrutinizing personal investments (18%)
  3. Taking on too much unnecessary debt. (13%)

While this survey only surveyed high-net worth families, I think middle-class families would answer the question with similar results.  It is clear the benefits of long-term financial planning and routinely reviewing or revising the plans help keep families on-track to reach their financial goals. 


It is interesting to note that all those surveyed have done well financially, but the regret is that it might have been less stressful if they had a plan in place and were monitoring it consistently.


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Social Security Statements Online

Last year, to reduce costs, the Social Security Administration (SSA) stopped mailing annual paper statements to anyone under age 60. These statements are a great tool to use for retirement planning. The statements provide a history of your annual earnings and estimates of your social security benefits at various retirement ages, along with estimates for disability and survivor benefits.

Last week, the SSA added the ability to access your Social Security statements online. Here is the website to start the process to access your statement:

I recommend that you review this at least once a year to make sure that your income is recorded accurately in the Social Security database. Your future monthly benefit is based on your average earnings over your lifetime. If your earnings are incorrect, your benefit will most likely be wrong.

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Social Security and Medicare changes for 2012

For the first time since 2009, social security recipients will get a 3.6% cost-of-living adjustment (COLA).  The COLA adjustment will also affect other areas:

  1. The maximum amount of earnings subject to the social security tax will increase from $106,800 to $110,100.
  2. The minimum amount a worker must earn to qualify for a quarter of coverage under social security is $1,130.
  3. The amount a social security recipient can earn before having to forfeit social security benefits is increased to $14,640.  This only applies to people that are receiving benefits before their “Full Retirement Age” (FRA) and are also receiving wages.  For example, if you started to receive benefits at age 62 and your FRA is 66, you cannot earn more than $14,640 in wages without being penalized.  The income limit does not apply to investment or pension earnings.


Medicare also just announced their premium adjustments for 2012.  The new premium for part B will be $99.90/month.

  1. If you were on Medicare in 2008, your premium was frozen at $96.40, due to a law that freezes part B premiums in years that there are no COLA increases if you also receive social security.
  2. If you started Medicare in 2009 – 2011, the premium was $115.40, so the premium will be reduced to $99.90 for those recipients.
  3. Medicare premiums are higher for recipients that have Adjusted Gross Incomes of more than $85,000 for single and $170,000 for married taxpayers.  Those premium adjustments have not been announced yet.

Medicare Part D prescription drug coverage and Medicare Advantage enrollment runs until December 7th this year, which is earlier than in previous years when enrollment ran until the end of the year.  A great resource to help you decide is on the medicare website:

You just need to provide information about your prescription drugs and you will see what each plan in your area will cost in premiums and out-of-pocket expenses.


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Time is running out for tax planning on IRAs inherited last year

Normally, heirs get to take distributions from inherited IRAs over their lifetimes. But if just one beneficiary of the account isn't an individual person, the IRA has to be distributed within 5 years for all beneficiaries. The problem can occur when a decedent names a charity or college as one of the beneficiaries. Tax Planning Tip: The IRS allows the individual beneficiaries to take distributions over their lifetime (enjoying tax free earnings growth) as long as the charity, school, etc. is paid off by September 30 of the year following the death of the IRA owner.

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Debt Ceiling Debate and Possible US Default

The debate about whether to raise the debt ceiling and under what conditions has been loud, harsh and somewhat misleading. The debt ceiling is currently set at $14.2 trillion. They don't admit it, but lawmakers basically agree to raise the debt ceiling every time they vote for a spending hike or tax cut. So when they argue over the debt ceiling they are arguing over whether to pay the bills that have already been incurred. The likelihood of a default is virtually 0%. This is because the government still takes in more tax revenue each month than is needed to pay interest on its debt and the same for Social Security payments.

A great deal of what is happening in the media is political posturing and emotional rhetoric and this creates uncertainty. And uncertainty creates nervousness among consumers. And nervous businesses do not expand or hire. Overall, Corporate earnings for the past 6 months have been positive and the stock market has reacted well to good earnings news, but any gains are tempered by uncertainty of the future. Even though the market has been volatile as of late, we expect positive growth to continue, once the political show comes to an end.

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Social Security Tax Break

For the next two years, the social security tax that is withheld from an employee's paycheck is reduced from 6.2% to 4.2%. This concerns me because I keep hearing that social security is not going to be fully funded in the future. I guess the logic is to worry about that problem later. So my purpose today is to give you some recommendations of what to do with your larger paycheck.

I think this is a great opportunity for you to increase your retirement contributions. If you make $100,000, you will have a extra $2,000 for the year. I recommend that you increase your 401K (457 or 403B) or IRA accounts by 2%. This amount is tax deferred and able to grow tax free until you need it in retirement. This will help you increase your retirement savings so that you are not completely dependent on social security.

If you are younger than 50 years old, you can contribute as much as $16,500 to your 401K in 2011, And another $5,500 if you are 50 or older for a total of $22,000.

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Correction: California Unclaimed Property

The website to search for your unclaimed property was incorrect in the last post. The correct web site is:

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California Unclaimed Property

Yesterday, I attended the Orange County Financial Planning meeting. The California State Controller - John Chiang, spoke to us about being controller of a state that is operating in a deficit.  Once a balanced budget is passed, he is fairly confident that the state can pay its bills for the next 2 years.  He is most concerned about 2012, because that is when the stimulus money is over and the temporary tax hikes expire.  He recently set-up a website that shows what he can and cannot pay without an enacted budget.  Here is the website:

He also talked about the unclaimed property program that is run by his office.  They have a system in which you can type in your name and they list all the money that is sitting unclaimed for you.  There are forms that you have to complete and send in.  I found $27.44 owed to me!  This is from an old refinance I did a long time ago. The web site is Look under the Featured Links Column and click on "Search for Unclaimed Property" and then click on "Start Your Search" .  Good Luck! 

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Stock Circuit Breaker Implementation

Tomorrow - Friday, June 10, the SEC will implement new circuit breaker rules on all US stock exchanges.

This is what the circuit breaker does: when a stock in the S&P 500 drops 10% in a 5 minute period, there will be a 5 minute trading halt across all exchange platforms for that stock. The new rules are aimed at preventing a repeat of the May 6 "flash crash" in which the Dow Jones industrials lost 1,000 points in less than a half hour.

This is a pilot program for 6 months. For some reason ETFs are not included in this test. I am hopeful that they will be included soon, because an ETF is traded just like a stock and should come under the same rules.

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Financial Planning Regulation

Senator Kohl (D-Wisc) has added a provision to the financial reform bill to regulate financial planners. This important provision will fill a significant regulatory gap and provide consumers with the ability to identify qualified financial planners who can help them make sound financial decisions on their path to the American dream. As a financial planner, I urge you to support this needed consumer protection reform.

Currently, financial planners are unregulated as a profession. Instead, they operate under a patchwork of regulation that allows hundreds of thousands of people to hold themselves out as financial planners without meeting baseline competency, practice, or ethics requirements. Because there are currently no standards or regulations prescribing who can identify themselves as a financial planner, incompetent and unethical people have free reign to call themselves financial planners. Many of these individuals have given bad advice, engaged in unethical behavior, and even committed outright fraud, costing consumers huge financial losses and further diminishing confidence in the American financial system.

One example involves a so-called financial planner who sold a 90-year-old man a fixed annuity that could not be cancelled for 13 years. Individuals such as these take advantage of the goodwill created by legitimate financial planners to profit from unsuspecting consumers. New standards with clearly defined requirements for becoming a licensed financial planner will help the public identify qualified financial planners and prevent these types of abusive practices.

The Financial Planner provision would establish a professional oversight board for financial planners. The board would require financial planners to pass a competency examination and meet ethical standards, and would have the power to discipline those who fail to meet the standards. In order to better protect the public, the oversight board would make information about licensed financial planners available to consumers so they can better evaluate a financial planner before hiring one. The ability of consumers to identify a competent and ethical financial planner is a key component to restoring consumer confidence and financial health.

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