The SECURE ACT (The Act) legislation — which stands for “Setting Every Community Up for Retirement Enhancement” was signed into law by President Trump earlier this month as part of the government’s spending bill. Over the next three weeks, we will talk about three key changes that may impact you and your retirement planning. In this article, we want to talk about the new required minimum distribution (RMD) rules. Before the SECURE ACT, required minimum distributions for … [Read more...]
Using a HECM to move up in house in retirement
I'm sure you've heard of downsizing in retirement, but have you ever considered using retirement as the time to finally get into the home of your dreams? Some would say that you would need to sell your home in California and move to a much less expensive location in order to accomplish this without having a mortgage payment. In actuality, upsizing may be possible in the same neighborhood that you actually live in right now. You may have seen the previous article about using the HECM for … [Read more...]
Company introduces new creative investment options
In the past, Allianz has been a company that I have gone to time and time again for income annuities. In particular, they have the strength for income annuities that have increasing income over the years. Recently, Allianz caught my eye again for a different tool they have rolled out. This investment does not have any income benefits, rather it is used for growth only. What I like about the tool is that it has four investment options that can be mixed and matched depending on the level of … [Read more...]
Calculating Social Security early claiming reductions
As most people know, Social Security benefits are reduced when claimed before full retirement age (FRA). But did you know that there are three different formulas to calculate the reductions depending on the kind of Social Security benefits? Also, there are two sets of calculations based upon the total number of months that one is claiming early? Of course, you can always contact the Social Security Administration for your exact benefit in any particular month and year you elect to … [Read more...]
Choosing a pension survivorship option
If you have a pension offered to you at retirement, and you have decided that it is the best option over a lump sum (or you don't have a choice in the matter), one of the critical decision-making points is how to take the pension in terms of survivorship options, if you are married. The most common survivorship options provide 100% of the monthly payment to the survivor, 75% of the monthly payment to the survivor, and 50% of the monthly payments to the survivor should the pension owner die. … [Read more...]
Using Roth Conversions in low income years
It's not uncommon during the early years of retirement to be in a low income tax bracket. There is little to no work income and much of your Social Security benefits may only be partially taxable. This creates a unique opportunity to use Roth IRA conversions. Money that is converted from a traditional IRA to a Roth IRA is taxable in the year of conversion. But if you are in a low income tax bracket for that year, you may be able to pay extremely low historical rates on these Roth conversions. … [Read more...]
Why your Social Security isn’t growing as fast as you think
Social Security announced a 1.6% cost-of-living (COLA) adjustment for benefits in the year 2020. The question is, will recipients receive the full 1.6%? Unfortunately, the answer is “no”, assuming that the Social Security beneficiary is also on Medicare. Medicare premiums are rising by 7% in the year 2020. The net result for Social Security beneficiaries after factoring these two numbers is only a 1.0% increase in their Social Security benefit. Unfortunately, this is not … [Read more...]
When to use the 1st year RMD exception
I've written a previous article on Required Minimum Distributions (RMD) in terms of what they are and how to calculate them. In this article I want to talk about the one-time exception to the first year RMD. The IRS allows individuals to postpone their first year RMD to the April 15 tax deadline of the year following the year they turn 70 1/2. This extension applies only to the first year. (As a reminder, any other years that you do not take your RMD by the end of the calendar year, the … [Read more...]
Tax Savings Now or Later?
Most of my clients contributed a majority of their savings during their accumulation years to company retirement plans using pre-tax dollars. They now have large 401(k) and IRA account balances. They also have large tax liabilities and onerous required minimum distributions. I think if you asked each of them if they would go back and make a different decision about using pre-tax dollars into a company retirement plan versus after-tax dollars into a Roth or Roth-like option, they probably … [Read more...]
Wise Wealth Transfer
Have you ever thought about the transfer of your wealth at your death and who should get your “stuff”? Assuming that your surviving spouse is taking care of, where do you want the bulk of your money to go? If you're like most of my clients, they consider their adult children as the primary beneficiaries of their wealth once they’ve passed. Let's consider this… Most individuals will die in their 80s and 90s. This will put their adult children in their 50s and 60s. I think that most … [Read more...]
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