Craig Larsen named 2014 President of The Financial Planning Association of Illinois

The Financial Planning Association™ of Illinois announces that member Craig Larsen, CFP® of St. Charles, IL has been named as its President and assumed responsibilities for 2014.

In this role, Larsen will help guide the policy and direction of the nearly 1000-member association that seeks to foster the value of financial planning and advance the profession within Illinois.  Prior to being named President of FPA of IL, Larsen served  on the Board of  Directors as President-Elect and Treasurer.

Larsen, President of AHC Advisors in St. Charles, IL, began his financial services career in 1987 and has built a fee-only investment advisory firm that that focuses on comprehensive financial planning and delivering wealth management services.  AHC’s clients include both individuals and institutions such as pension funds and 401k plans.

Larsen is the Vice-Chairman of the St. Charles, IL, Chamber of Commerce, and a member of the board of directors of TriCity Family Services.  Larsen is also a member of the Downtown St. Charles Partnership, and serves as the chairperson for the St. Charles Holiday Homecoming and St. Patrick’s Day parades.

“It is a privilege and an honor to be named President of the FPA of Illinois,” said Larsen. “I look forward to the opportunity to work with fellow members in our continuing efforts to be the recognized voice for the financial planning profession.  I am excited to be a part of the FPA and our efforts to promote the value of financial planning, provide pro-bono services and deliver high quality education to our members.”

The Financial Planning Association of Illinois is a not for profit corporation offering a wide variety of personal finance advice from Certified Financial Planners, and other professionals. The FPA of Illinois is currently the largest of the 97 regional chapters of the national FPA with nearly 1000 members.

For more information about the Financial Planning Association of Illinois please visit our website at

Eugene Fama Awarded the Nobel Prize in Economics

In October 2013 Eugene Fama was awarded the Nobel Prize in Economics. Fama is one of the most important names in finance, and his research has broad implications for every investor. His findings are also central to how we deliver investment advice to our customers.

At AHC, our approach is built squarely on the foundation of Fama’s important work. We construct very broadly diversified, low cost portfolios that are designed to take advantage of the science of how the markets work. Our goal is to efficiently capture return premiums that we know, through Fama’s work, certain types of stocks offer over time.

Join us in saluting a man who is truly one of the giants of modern finance and had done so much to help investors build better investment portfolios.

Social Security – The WEP and GPO


If you receive a pension from a government job in which you did not pay social security taxes, any social security benefit that you did earn from other employment could be reduced by the Windfall Elimination Provision (WEP).

The WEP will never completely eliminate your earned social security benefit but it will reduce it significantly. There are some exceptions to the WEP. The main exception is for people who are considered to have “substantial” earnings in jobs that did pay into social security. If you fit into this category than your benefit will be reduced by a smaller percentage than other people who are affected by the WEP.


The Government Pension Offset (GPO) affects your benefit as a spouse or widow/widower. If your receive a pension from a government job in which you did not pay social security taxes, the social security benefit you collect as a spouse or widow may be reduced or eliminated.

The GPO reduces your spousal or survivor social security benefit by two-thirds of the amount of your government pension. For example, if you receive a government pension of $600/month, than your spousal or survivor social security benefit would be reduced by $400/month.

It is important to note that GPO only affects spouses and widows who are collecting a government pension that is based on their own earnings. If the pension you are collecting are based on someone else’s earnings than GPO does not apply.

Social Security Survivor Benefits

Most people view Social Security as a retirement program. In fact, social security also provides disability and survivor benefits. Survivor benefits can be a very important income source for families who lose their main financial provider due to death.

In order for a worker’s family to qualify for survivor benefits, the worker must have earned enough social security credits. You receive 1 credit for every $1,160 (in 2013) you earn in income up to a limit of 4 credits each year. Any worker with 40 credits is fully insured. However, younger workers, who have not had time to earn 40 credits, may qualify with less than 40 credits. There is a special rule that says a worker has qualified for survivor benefits if he or she has earned 6 credits in the past 3 years.

There are several groups of people who are eligible to receive survivor benefits.

Widows and Widowers: Widows are eligible to receive 100% of their deceased spouse’s retirement benefit beginning at their full retirement age (somewhere between age 65 and 67 depending on when you were born). They can also begin collecting a reduced benefit as early as age 60. If the widow is disabled, she has the option to begin collecting as early as age 50. Finally, widows are eligible to collect a benefit if they are caring for the deceased workers children under the age of 16.

Divorced Spouses: Divorced spouses who were married to the worker for more than 10 years are eligible for the same benefits as the widows/widowers as long as they have not remarried. However, divorced spouses who were married for less than 10 years are still eligible to collect a benefit if they are caring for the deceased workers children under the age of 16.

Children: A deceased workers children qualify for a benefit if they are age 18 or younger (19 if they are still attending secondary school). In addition, a child qualifies at any age if they were disabled before the age of 22.

Dependent Parents: If a worker provided 50% or more of the financial support for his parents, then the parents may be eligible to collect a survivor benefit if they are age 62 or older.

Visit the official Social Security website at to find more information about survivor benefits.

Social Security Spousal Benefits

If you have a spouse that works and pays into the social security system, you may be eligible to collect a spousal benefit from their record.

Most people know that if they are working and paying into social security they are eligible to collect a benefit from their own work record. You can collect your full unreduced benefit at your full retirement age. Your full retirement age is determined by when you were born, but it falls somewhere between the ages of 65 and 67 for everyone. You can begin collecting as early as 62 or delay taking as late as age 70. Every year you take before your full retirement age, your benefit is reduced. Every year you delay taking after your full retirement age, your benefit is increased.

What many people do not realize is that if you have a spouse who works, you are also eligible to claim a benefit from their work record. You can collect half of your spouse’s social security benefit if you claim at your own full retirement age. If you claim before your full retirement age, the spousal benefit will be reduced. There is no benefit to delaying a spousal benefit past full retirement age. The spousal benefit is very helpful for households where only one spouse worked or where one spouse earned significantly more than the other spouse.

If you and your spouse both have similar sized social security benefits then there are strategies you can consider to help maximize your lifetime social security benefit. Once you reach your full retirement age you can choose to file for only a spousal benefit and continue to let your own benefit grow until age 70. At age 70, you would then stop collecting a spousal benefit and switch to your own higher benefit. To do this, you would file what is known as a “restricted application” for spousal benefits only. It is very important that you do not attempt to collect only a spousal benefit before you reach your full retirement age because you will be deemed as filing for all of your benefits and you will forever reduce the amount of social security that you can collect from your own benefit.

Social security is a complicated system and choosing the correct claiming strategy can be confusing. However, taking the time to understand your options is important and can help you choose a strategy that will pay you significantly more money over your lifetime.

Social Security Cost of Living Adjustments

As people move deeper into their retirement years they start to see the effects of inflation on their budget. Many retirees live on a fixed income and while their standard of living does not increase, the cost of the goods and services they are purchasing does.

Retirees often depend on the cost of living increase provided in their social security benefit to help offset the increasing prices. However, it is important to know that social security does not guarantee a cost of living increase each and every year.

Social security calculates it cost of living adjustment (COLA) annually using the consumer price index for urban wage earners as a measure of inflation. The cost of goods and services for the current year are compared with the cost from the previous year. If the index if flat year over year then there will be no cost of living adjustment.

This is what happened in 2010 and 2011 when there were no social security cost of living increases applied to benefits. In 2012 the COLA was 3.6% and in 2013 the COLA was 1. 7%. The COLA for 2014 is anticipated to be announced next month.

Top Ten Money Excuses

We all make excuses to avoid tasks that we feel are unpleasant, take time, or that make us uncomfortable.  Often, making financial decisions is one of the tasks.  These are some reasons why people are not more proactive about taking control of their finances.  Do you recognize yourself in any of these?

Top 10 Money Excuses

A Look Back at 2012

Stocks had strong gains in 2012.  The S&P 500 Index with dividends reinvested closed the year 3.3% above its previous record set in October of 2007.  While it has certainly been a wild 4 ½ year ride you may be surprised to find out that the time it took for the stock market to recover its value from our most recent recession is consistent with past cycles.  Take a look at this article from DFA that examines what 2012 held for investors.  Down To The Wire – A Look Back at 2012

Year End Update – Tax Planning Tips

One of the areas where we help our customers is with tax planning.  Tax planning is always complex, but it is especially difficult as 2012 draws to a close.  With so much uncertainty about taxes in 2013 take a moment and consider these tax planning tips.

Don’t be fooled by the year end “Best Mutual Fund” lists!

Often, at the end of the year, the financial press assembles lists of which mutual funds have done well during the year, and which ones have performed poorly.  Those mutual funds which have performed well are held up as having been good places to put your money.  What is usually never reported is that it is very probable that the mutual funds that did well earned their high returns through luck as opposed to skill.

Think about it this way – if you flip a coin 10 times and get heads 8 of those times were you skillful?  If you flipped a coin 10 times the next year it is equally as likely that you will get heads only 2 times.  Over time, year after year, you would expect to average 5 heads each year.  You would be the average mutual fund.

But how likely is it that 50% of the actively managed mutual funds that you have to choose from today will beat their benchmark over time?  The answer is that the odds are pretty dismal.  Due in large part to high fees the odds are stacked against you, and you may be astounded by how few mutual funds do well over time.

For example, 77.19% of “large cap core” managers didn’t beat their benchmark in 2011.  And, over the the ten years ended December 2011 an amazing 94.58% of managers didn’t beat their benchmark.  Put another way, you had a 5.42% chance of picking the right mutual fund ten years ago.  When it comes to actively managed mutual funds the deck is stacked against you.  Take a look at this study to see just how badly active management fails.

So why do people continue to buy these funds that promise to beat the market?  In large part for two reasons.  The first is hope.  The dream of hitting it big and buying the next big winner is enticing.  The problem is that no one has a crystal ball to determine what that winner will be.

The second is marketing and commissions, which adds costs that in turn hurt performance.  Wall Street spends millions of dollars each year touting the mutual funds that have done well in the past.  A broker or financial advisor may tell you that they predict that a certain mutual fund will do very well, and that you should buy it.  But if you take a look at how the advisor is compensated it is likely that the advisor will have commissions paid to them from the very same investments that they say will do well.  This is at the least a possible conflict of interest.  Alternatively, an advisor may not earn commissions but try to prove their worth by telling you they can pick the best investments.  Sadly, they have the same odds as you of picking the right mutual fund, and those odds are terrible.

So what should you do instead?  Consider building a portfolio of low cost, broadly diversified, passively managed mutual funds that harness the power of the market over time, rather than charging a higher fee in the losing effort to beat the market.  Don’t be enticed by the “Best Mutual Funds To Buy” lists.