Tehachapi's Online Community News & Entertainment Guide
Tehachapi's Online Community News & Entertainment Guide
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4. When should you begin receiving retirement benefits? Should you begin receiving benefits early and receive smaller payments over a longer period of time, or wait until your full retirement age or later and receive larger benefits over a shorter period of time? There’s no “right” answer. It’s an individual decision that must be based on many factors, including other sources of retirement income, your marital status, whether you plan to continue working, your life expectancy, and your tax pic...
3. What will your retirement benefit be? Your Social Security retirement benefit is based on the number of years you’ve worked and the amount you’ve earned. Your benefit is calculated using a formula that takes into account your 35 highest earnings years. If you earned little or nothing in several of those years, it may be to your advantage to work as long as possible, because you may have the opportunity to replace a year of lower earnings with a year of higher earnings, potentially res...
Ever since a legal secretary named Ida May Fuller received the first retirement benefit check in 1940, women have been counting on Social Security to provide much-needed retirement income. Social Security provides other important benefits too, including disability and survivor’s benefits, that can help women of all ages and their family members. 1. How does Social Security protect you and your family? When you work and pay Social Security taxes, you’re paying for three types of benefits: ret...
How much income will you need? Another important piece of the puzzle is to look at how much retirement income you’ll need, based partly on an estimate of your retirement expenses. If there is a large gap between your projected expenses and your anticipated income, waiting a few years to retire and start collecting Social Security benefits may improve your financial outlook. If you continue to work and wait until your full retirement age to start collecting benefits, your Social Security m...
Is 62 your lucky number? If you’re eligible, that’s the earliest age you can start receiving Social Security retirement benefits. If you decide to start collecting benefits before your full retirement age, you’ll have company. According to the Social Security Administration (SSA), approximately 73% of Americans elect to receive their Social Security benefits early. (Source: SSA Annual Statistical Supplement, 2014) Although collecting early retirement benefits makes sense for some people, there...
File for one benefit, then the other To file a restricted application and claim only spousal benefits at age 66, you must be at least age 62 by the end of December 2015. At the time you file, your spouse must have already claimed Social Security retirement benefits or filed and suspended benefits before the effective date of the new rules. If you were born in 1954 or later, you will not be able to use this strategy because under the new rules, an individual who files a benefit application will...
If you’re retired or close to retiring, then you’ve probably got nothing to worry about--your Social Security benefits will likely be paid to you in the amount you’ve planned on (at least that’s what most of the politicians say). But what about the rest of us? The media onslaught Watching the news, listening to the radio, or reading the newspaper, you’ve probably come across story after story on the health of Social Security. And, depending on the actuarial assumptions used and the political...
Strengths You can avoid having part or all of your Social Security retirement benefit withheld By postponing or bunching your earnings in retirement, you may be able to avoid earning more than the retirement earnings test exempt amount. By timing when you first begin receiving Social Security retirement benefits, you may be able to lessen the impact of earned income on those benefits. But see Tradeoffs. Tradeoffs The Social Security retirement benefit you keep may not be enough to offset the...
Bunch your earnings If you believe that all of your retirement benefit in one year will be withheld due to excess earnings, you may be able to bunch your earnings for that year in order to avoid affecting your benefits the following year. Example(s): Consider the following case: Situation: Allen receives a monthly Social Security retirement benefit. When he is 63, he opens his own painting business and, by September, has already earned $30,000 more than the retirement earnings test exempt...
What is it? If you work after you begin receiving Social Security retirement benefits, all or part of your retirement benefit may be withheld if your earnings exceed the retirement earnings exempt amount. However, excess earnings won’t affect your benefit once you reach normal retirement age, and it’s possible to time your earnings in retirement in order to optimize your benefit. Example(s): Lewis retired in 2015 at age 62. In 2016, he goes back to work and earns $17,720 working part-time. Sin...
In an ideal world, your retirement would be timed perfectly. You would be ready to leave the workforce, your debt would be paid off, and your nest egg would be large enough to provide a comfortable retirement--with some left over to leave a legacy for your heirs. Unfortunately, this is not a perfect world, and events can take you by surprise. In a survey conducted by the Employee Benefit Research Institute, only 44% of current retirees said they retired when they had planned; 46% retired earlier...
Social risk Social risk refers to the possibility that a segment of society will institute boycotts, litigation, publicity campaigns, or lobbying efforts against a company due to its social policy or business practices. The actions of society can negatively affect that company’s performance. Tobacco, energy, gaming, and weapons companies often face this type of risk, as do companies that face environmental or discrimination concerns. Example(s): A large oil company ships crude oil overseas in g...
What is risk? In the investment world, risk generally is associated with uncertainty. It refers to the possibility that you will lose some or all of your investment or that an investment will yield less than its anticipated return. Simply stated, risk is the degree of probability that an investment will make or lose money. Every investment carries some degree of risk because its returns are unpredictable. The more volatile an investment is--the more unpredictable its returns--the riskier it is g...
How to do it Decide whether you want to delay receiving retirement benefits by comparing your options You can estimate your retirement benefit online using the Retirement Estimator calculator on the Social Security website (www.ssa.gov). You can create different scenarios based on current law that will illustrate how different earnings amounts and retirement ages will affect the benefit you receive. Consider the following questions before making your decision Why do you want to delay receiving...
Your delayed retirement credit isn’t counted toward your family maximum When you retire, your family may be eligible to receive benefits based on your PIA. These benefits may be limited by the family maximum, which generally ranges from 150 to 180 percent of your PIA. However, if you delay receiving retirement benefits, your delayed retirement credit won’t count toward your family maximum and can be paid whether or not your family’s benefits are limited by the family maximum. Tradeoffs Delay...
You can elect to delay receiving Social Security retirement benefits You can choose to delay receiving Social Security retirement benefits until you are past normal (full) retirement age. Perhaps you want to work longer because you enjoy it, or maybe you want your retirement benefit to be higher when you finally do retire. Your benefit will be increased by the delayed retirement credit If you are eligible to receive Social Security retirement benefits but you delay receiving benefits until...
If you become disabled at or after age 62 and have not yet retired, is it better to apply for Social Security disability benefits or early retirement benefits? If you’re unable to work because of illness or injury at any age, you may qualify for Social Security disability benefits. Although there is a five-month waiting period for benefits, once you begin receiving benefits you will receive 100 percent of your primary insurance amount (PIA). Even though there is no waiting period for early retir...
How to do it Decide whether you want to retire early by weighing your options. Although for some people, the financial advantage of retiring early will outweigh other concerns, you should carefully consider all aspects of retirement before deciding to retire early. Consider the following questions: • Will your lifetime benefit be higher if you retire early or you retire at normal retirement age? • Can you wait to receive benefits, or will you need retirement income as soon as you retire? • Are y...
You can invest your Social Security retirement benefit Investing your Social Security retirement benefit is an option if you don’t need to use all of it for living expenses. If you are able to invest all or part of your Social Security benefit, receiving early retirement benefits might be advantageous. Not only would you receive more benefit payments, but also you would earn money on those payments when you invest them. The rate of return you would receive would depend upon your investment. (...
Financial professionals typically recommend that you review your employer-sponsored retirement savings plan annually and when major life changes occur. If you haven’t revisited your plan yet in 2015, now may be an ideal time to do so. Reexamine your risk tolerance This past year saw moments that would try even the most resilient investor’s resolve. When you hear media reports about stock market volatility, is your immediate reaction to consider selling some of the stock investments in your pla...
If you’re a penny pincher but your spouse is penny wise and pound foolish, money arguments may frequently erupt. Couples who have opposite philosophies regarding saving and spending often have trouble finding common ground. Thinking of yourselves as two sides of the same coin may help you appreciate your financial differences. Heads or tails, saver or spender If you’re a saver, you love having money in the bank, investing in your future, and saving for a rainy day. You probably hate credit card...
As the year draws to a close, there might be a slew of tasks on your to-do list. One task to consider is setting up a meeting with your financial professional to review your investments. If you take the time to get organized now, it may help you accomplish your long-term goals more efficiently. Here are some steps that might help. Evaluate your investment portfolio During the meeting with your financial professional, review how your overall investment portfolio fared over the past year and...
IRAs The longer you delay retirement, the longer you can contribute to your IRAs, up to a point. If you have a traditional IRA, you have to start taking required minimum distributions (and stop contributing) once you reach age 70½. If you fail to take the minimum distribution, the IRS will assess a 50 percent penalty on the amount that should have been distributed. If you have money in your current employer's retirement plan, as long as you are not a more than five percent owner, the required mi...
What are year-end investment decisions? Year-end investment decisions may sometimes result in substantial tax savings. Tax planning may allow you to control the timing and method by which you report your income and claim your deductions and credits. The basic strategy for year-end planning is both to time your income so that it will be taxed at a lower rate, and to time your deductible expenses so that they may be claimed in years when you are in a higher tax bracket. In terms of investment...
Do you really know as much as you think you do about your 401(k) plan? Let’s find out. 1. If I leave my job, my entire 401(k) account is mine to keep. This may or may not be true, depending on your plan’s “vesting schedule.” Your own contributions to the plan--that is, your pretax or Roth contributions--are always yours to keep. While some plans provide that employer contributions are also fully vested (i.e., owned by you) immediately, other plans may require that you have up to six years of ser...
