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Joe Lucey

3 Common Questions About Social Security

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While Social Security shouldn’t be relied upon to be the sole source of income during retirement, it can play an important role in your overall financial strategy for retirement. But making sense of the basic ins and outs of Social Security can be overwhelming. Here are three questions people commonly ask as they approach retirement age:

When can I start taking benefits?

While full retirement age is 66 for people born between 1943 and 1954 and gradually increases to age 67 for those born in 1960 or later, you can start receiving Social Security benefits at age 62. Keep in mind, however, that there is a cost to early distribution; your benefits are reduced by about 0.5 percent for each month you receive benefits before full retirement age. For example, those born in 1955 with a full retirement age of 66 and two months who start taking benefits at age 62 will receive about 75 percent of the full benefit.

On the flip side, delaying benefits past full retirement age, up to age 70, increases your distribution amount. If the same individual in the previous example waits until age 68 to take benefits, his or her benefit will increase 8 percent each year after full retirement age. This increase continues until you reach age 70 or you start taking benefits, whichever comes first.

What happens to my benefits when I die?

It depends. If you are married and your spouse is age 60 or older, he or she may be eligible to collect a survivor’s benefit. The benefit amount remains the same as the deceased’s amount, although that amount is reduced if benefits are started before the surviving spouse’s full retirement age. A spouse cannot collect both survivors benefits and retirement benefits based on their own work record. They will collect whichever benefit is higher.

If you have a minor child or children, your surviving spouse (regardless of age) may also be eligible for a survivors benefit until the minor child turns age 16. If you have no surviving spouse or minor children, your benefit remains in the Social Security trust fund and is not paid out to any other named beneficiaries, unless they qualify under the Social Security survivors benefits eligibility rules.

Can I work while receiving benefits?

Yes. However, if you haven’t reached full retirement age, your benefit amount will be reduced if your earnings exceed the limit. Starting with the month you’ve reached full retirement age, your benefits will not be reduced no matter how much you earn. The earnings limit and reduced amount vary according to your age. To find out how much your benefits might be reduced, use the Social Security earnings calculator at https://www.ssa.gov/OACT/COLA/RTeffect.html.

Understanding Social Security can be challenging, but you don’t have to go it alone. Contact us today to learn more about  how to incorporate your Social Security benefits  into your complete financial strategy. We may be able to identify potential retirement income gaps and may introduce investment and insurance products as a potential solution.

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice. Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Tax-Deferred or Tax-Exempt? Potential Benefits to Having Both

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Over the years, you may have heard it’s good to have different “kinds” of money as you head into retirement. A financial advisor may recommend a combination of tax-deferred and tax-exempt financial products, diversifying your money to help take advantage of the tax benefits both types of products provide.

What many people don’t understand, however, is why it’s important to take advantage of the different types of financial products available. What are the potential benefits of utilizing both tax-deferred and tax-exempt products? First, let’s take a look at the difference between the two.

A tax-deferred financial product means simply that: You owe taxes on the money, but those taxes have been deferred or pushed back. You haven’t paid any taxes on the contributions or the growth that’s occurred over the life of the product. When you take money out of it, those distributions are 100 percent taxable at ordinary income rates. Withdrawals taken prior to age 59 1/2 may also be subject to an additional 10 percent federal tax.

What types of financial products are tax-deferred? A 401(k), 403(b) or traditional IRA are all examples of tax-deferred investment products. Growth in some types of annuities or life insurance policies may also be tax-deferred.

Tax-exempt means no taxes are owed on qualified distributions made from the financial product. A Roth IRA or Roth 401(k) is a good example of a tax-exempt account. Contributions to a Roth are made with money that’s already been taxed.

So why can it be beneficial to have a mix of tax-deferred and tax-exempt financial products in your financial strategy? Mostly, it gives you flexibility in how you take distributions during your retirement. For example, you might use distributions from tax-deferred products to pay for your fixed expenses every month. If you have expenses that are outside of your “normal” spending — such as a vacation or a large purchase — you could use money from a tax-exempt product and not incur a taxable event.

While it could be tempting to go heavy in tax-exempt financial products when you’re establishing a financial strategy, using a tax-deferred product may put more money in your pocket in the long run. Many people are in a lower tax bracket during their retirement years. If that is the case, you may pay less taxes on distributions during retirement than if you were paying taxes on your contributions up front while still working.

What’s the right mix of tax-deferred and tax-exempt financial products for you? Every situation is unique. If you’re not sure what types of financial products you should be using, give us a call. We can look at your existing financial strategy and make recommendations based on your specific circumstances. We can also help you determine if life insurance and annuities could play a part in your tax-efficient strategy. Our mission is to help you plan for the best retirement possible.

Preventing Elderly Financial Abuse

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A recent study by the Center for Retirement Research at Boston College concluded that many retirees who do not suffer from any cognitive impairment can still manage their money through their 70s and 80s. The study reports that financial capacity relies on accumulated knowledge and that knowledge stays mostly intact as we age.

However, the study points out that it generally is not a good idea to start managing financial decisions in your late 70s and 80s if you haven’t had experience doing this before — such as after the death of a spouse who handled the finances. We work closely with our clients to help them develop financial strategies designed to last a lifetime, with the goal of reducing the need to make dramatic financial changes later in life. However, we are here to address any questions or concerns of our clients no matter what stage of their financial planning. Please give us a call; we’re here to help.

Having a plan for late-stage financial management is important due to the increase in elderly financial fraud. With more than 45 million seniors in America, this is a large and tempting market for scammers. One study estimated that about 5 million older Americans are financially exploited each year. In New York state alone, allegations of elderly financial abuse spiked by more than 35 percent between 2010 and 2014.

In response to this growing problem, several government regulatory agencies have stepped up efforts to help prevent and address elder financial abuse, including the following:

  • The SEC requires brokers to make “reasonable efforts” to identify a “trusted contact” for investment accounts and allows them to prevent the disbursement of funds from the account and notify the trusted contact if the broker suspects abuse.
  • The Financial Industry Regulatory Authority, or FINRA, set up a senior help line at 844-57-HELPS (844-574-3577)
  • In 2016, four state legislatures approved a rule requiring advisors to notify adult protective services and state regulators if they detect abuse; 10 more states are expected to adopt similar rules this year, and three other states already had such rules in place.

According to the National Committee for the Prevention of Elder Abuse, some of the most common ways the elderly are taken advantage of financially are: forging their signature; getting them to sign a deed, will or power of attorney through deception, coercion or undue influence; using their property or possessions without permission; and telemarketing scams. Some of the most likely perpetrators of elder financial abuse are: family members; predatory people who seek out vulnerable seniors; and unscrupulous business professionals. If you believe you are a victim of fraud, contact your local law enforcement, state agency on aging and/or a community senior services group.

Equifax Cybersecurity Incident

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You have likely heard that on July 29, 2017, Equifax discovered a breach of some of the sensitive information that they maintain in their data bases. Equifax estimates that as many of 143 million Americans were impacted by this hack. This data security incident may have exposed some of your personal information, including your Social Security number and other identifying information.

Because of the extent of this cybersecurity incident, we suggest that you visit https://www.equifaxsecurity2017.com/. This site explains the incident and steps Equifax has undertaken to address it. In addition, it provides guidance on what you can do to protect your personal information.

As always, feel free to contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your personal financial situation.

Teaching Investment Lessons

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If you’re planning to leave assets to your children, you’re not alone. According to a recent report, baby boomers will pass on $30 trillion in assets in the next 30 to 40 years. And yet, according to a survey from RBC Wealth Management, 30 percent of U.S. households say they have no plan in place to pass on their wealth to heirs.

One reason for this lack of planning could be that, with a general rise in longevity expectations, many people may be unsure if there will be much of their assets left over to pass on after their death. But that’s the point: When you have unknown variables, having a plan in place can help you and your family be prepared for whatever financial situations life may bring.

It’s a good idea to start having “the money talk” with your children sooner rather than later, particularly if you anticipate leaving them investments. Many people in the younger generation might not have much experience with investments, particularly with a large amount of assets. Consider taking the opportunity to teach them what you’ve learned so they gain exposure under your tutelage.

A few ways to get started are to introduce them to your financial advisor, engage in general discussions about finances and share the lessons you’ve learned over time. It might be beneficial to reveal some of your failures or misjudgments while you’re at it, so they understand the value of your past mistakes and take care not to make them.

If you’re worried your children can’t responsibly manage a financial inheritance, there are several strategies you can deploy now. For instance, give them a test run by gifting smaller amounts to see how they manage the money. A potential advantage of this strategy is that gifts of money or property can help reduce estate taxes. Be sure to speak with a qualified tax professional about your unique situation before utilizing this strategy.

You may also want to consider estate planning vehicles such as trusts in order to structure how your assets will be disbursed. You should consult with a qualified estate planning professional who can help your heirs create a tax-efficient plan to work toward their own financial goals. A financial advisor can help you to create a financial strategy that you and your beneficiaries can be confident in. We are happy to work with you and a qualified estate planning attorney to help you pass on the legacy you choose.

 

The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice. Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

Ways to Relate to Your Teenage Grandchildren

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During the different stages of being a grandparent, you may go from getting great big hugs to a casual nod, scant eye contact and a request for the Wi-Fi code. Welcome to grandparenting a teenager.

You might complain about your grand-teen’s constant connection to headphones, apparent inability to hold an intelligent conversation and utter lack of interest in all things family oriented, but do try to remember when your own kids were that age – it’s not an easy time for anyone.

Instead of bemoaning the lack of giggles and bedtime stories, consider ways you can bond with grandchildren on their terms. For example:

  • Ask your grandchild to teach you how to play one of his video games. The task may amuse him, and it could give you an opportunity to spend an hour or two bonding — not to mention help you understand why he’s so into them.
  • Offer to take your grandchild shopping. Tempt her with a fixed-dollar budget and let her choose where she wants to shop. You may not like her choices, but try to let it go and enjoy the day.
  • Ask the grandkids about their favorite restaurant and then take the whole family there. Aga­in, you may not like the venue, but the point is to find out what they like because they’re more likely to talk to you about it.
  • Ask for help. Consider a task that falls in their wheelhouse, like showing you how to do something on the computer, download and use an app on your cell phone, pick out clothes for a special occasion or bake brownies together. The point is not to force them to do some odd job for you; it’s to give them the opportunity to take responsibility, experience the good feelings that accompany helping out and share quality time.

Danielle Christensen

Paraplanner

Danielle is dedicated to serving clients to achieve their retirement goals. As a Paraplanner, Danielle helps the advisors with the administrative side of preparing and documenting meetings. She is a graduate of the College of St. Benedict, with a degree in Business Administration and began working with Secured Retirement in May of 2023.

Danielle is a lifelong Minnesotan and currently resides in Farmington with her boyfriend and their senior rescue pittie/American Bulldog mix, Tukka.  In her free time, Danielle enjoys attending concerts and traveling. She is also an avid fan of the Minnesota Wild and loves to be at as many games as possible during the season!