Tips on How You Can Maximize Social Security Benefits

For married couples where both spouses have a work record and will be entitled to receive Social Security retirement benefits, there are some strategies that will help you maximize your benefits for the largest possible payout.  These include:

File and Suspend – When the highest earning spouse – we’ll call him Bob — reaches retirement age, he files for benefits and then immediately suspends them.  This allows Bob’s wife Carol to choose the higher benefit – half of Bob’s benefit or her own benefit.  Bob can continue to work or draw income from an IRA and delay receiving his benefits – which will be larger – until he is 70.

Double Dip – This term is applied to the ability to draw your spousal benefit and your own benefit at different times.  To do this, you must file for the spousal benefit first, even though it may be smaller.  Taking your own benefit down the road will mean a bigger check.

62/70 Strategy – If you can’t afford to postpone taking your Social Security benefits, this strategy allows you to maximize your benefits as a married couple.  The lower earning spouse files first at age 62, and the higher earning spouse delays filing for benefits until age 70.  Even though Bob is waiting until age 70 to begin taking his benefits, he can file for a spousal benefit based on Carol’s record once he reaches full retirement age.  When he turns 70, he then drops the spousal benefit and starts taking his larger benefit.

If you would like additional information on strategies to protect your personal and business assets, contact our law firm to schedule an appointment with one of our top rated asset planning attorneys.

Spring is the time when most people start planning their summer vacations.  If you usually take a month or two to plan your next week-long vacation, shouldn’t you give at least as much thought to planning what could be a 30-year vacation – i.e., your retirement?

In the long run, a successful retirement is infinitely more important than a successful vacation.  And just like a vacation, it is not only about what you will need to save to pay for it, it’s what you will be doing and where you will be doing it that ensures a happy retirement.

An essential part of planning your retirement is creating a detailed vision of how you will be spending your time.  If you don’t know yet how you will spend a typical day in retirement, how can you make a valid plan?  Does your vision coordinate with that of your spouse or partner?  If not, those issues need to be resolved.

Last week, the Employee Benefit Research Institute released its annual Retirement Confidence Survey with some startling findings:  for the first time, a majority (54%) of Americans have done no retirement planning.

Survey respondents said for the most part that they are just guessing at how much money they will need, and assuming they will be working longer or perhaps never be able to retire at all.  So have Americans given up on retirement altogether?

One thing is for certain: if you don’t make a plan to get somewhere, you’ll never get there.  It’s true for vacations and it’s true for retirement.

Contact our Orange County law firm today for retirement planning strategies that meet your individual circumstances.

Retirement Planning Strategies and Asset Protection Guidelines for California Residents

Married couples with significant age gaps – 10 years or more – need to understand and employ different retirement planning strategies that may benefit them specifically because of their age difference.  These include:

Taking advantage of qualified retirement plans – if you have a 401(k), IRA or other qualified retirement plan, you will be required to take minimum distributions at age 70 ½.  Those with spouses who are younger by 10 years or more can take a smaller distribution, which reduces their taxable income.

Deferring Social Security benefits – couples with significant age gaps should defer Social Security for the older spouse as long as possible, which will allow the younger spouse to collect spousal or survivor benefits longer and provide larger payments.

Maximizing pensions – the older spouse elects the single life pension option and the couple uses the additional income to purchase a life insurance policy on the elder spouse that the younger spouse will use later to fund his or her retirement.

Contact our Costa Mesa law firm for more retirement planning strategies.

10 Tips for Wealth Preservation and Retirement Success

It’s no secret that millions of Americans’ retirement savings took a wallop during the recent recession, and many pre-retirees are scrambling to catch up.  Here are some ways to help you replenish your retirement savings account:

1. Check your 401(k) to ensure you are taking full advantage of employer matches and tax breaks, and that the investment decisions you have made are still the right ones for you.

2. Don’t let your IRAs stall.  Continue contributing to your IRAs and consider investing in a Roth IRA, allowing you to withdraw investment earnings and not owe tax on investment gains after five years.

3. Do let your Social Security benefit claim stall.  If you wait longer than age 62 to begin claiming Social Security benefits, those benefits will increase by 8 percent annually for each year you wait until age 70.

4. Budget for retirement.  You need to set a budget and begin living within those means before you retire; see if you can cut debt and other expenses to align your retirement spending with your retirement income levels.

5. Shop around for better insurance rates.  Before you automatically renew your auto, life, home or health insurance, see if you can get a better deal elsewhere.  Check coverages to ensure you’re not paying for more than you need.

6. Bundle up for savings on communications plans.  Bills for Internet, phone and TV services can really add up to a big number.  Many providers offer discounts for bundling services, and you need to check the details to choose only what you really need.

7. Get healthy.  If you’re physically healthy, chances are your retirement budget will be a lot healthier as well.  If medical bills could run your happy retirement off the road, consider setting up an emergency fund or investing in long-term care insurance.

8. Downsize.  Do you have more house than you need for retirement?  Downsizing to a smaller home with little or no yard can mean big savings.

9. Consider relocation.  Some states and countries are more retirement-friendly than others, so if your retirement dream includes a relocation, make sure the move is still the right one for you and your family.

10. Seek a senior-friendly environment.  If your home has lots of stairs or your neighborhood would be hard to navigate as a senior, you may want to make a change to your living environment.  Consider availability of transportation options, too, if you would become unable to drive.

If you have questions regarding retirement planning strategies, contact the retirement planning attorneys at Matsen Voorhees for a free initial consultation with a top rated wealth preservation lawyer.

An article in today’s USA TODAY reports on a growing phenomenon that has the potential to wreck many retirement plans:  divorce after 50.

Boomers are divorcing more than any other previous generation and the article cites two likely factors:  boomers are living longer and many are experiencing what researchers have called a “second mid-life crisis”; in addition, boomers grew up as children of divorce, so the stigma that was historically attached to divorce doesn’t come into play for most boomers.

The fact is, if you divorce late in life, the retirement savings you were both planning to last you the rest of your lives now has to be split in two, and support two people living in two different places.  This can be ruinous to any retirement nest egg.

Some recommendations for those who experience a later-life divorce and still hope to retire one day include:

Get a financial adviser to work with your divorce lawyer on a settlement that can be the foundation for your separate retirement.  Work out a plan that takes your new economic reality into consideration.

Realize that if you divorce in your 50s, you still have at least a couple of decades to rebuild your retirement savings, so don’t panic and put off the planning.

Increase your savings and reduce your spending.  Consider renting instead of buying a new place and readjust your lifestyle, cutting back on things like dining out and travel.

Stop supporting adult children.  For most boomers who divorce, it is not possible to keep sending money to adult children and still build a healthy retirement portfolio. Help is available to you by contacting your Southern California financial planning experts today.

Wisdom from Financial Planning Attorneys

Ameriprise Financial’s recent Retirement Check-In Survey found that many Americans are wearing rose-colored glasses when it comes to planning for retirement, thinking their retirement years will be spent in luxury that their savings cannot support.

According to the survey of 1,000 men and women between the ages of 50 and 70, there is a true gap between retirement expectations and reality.  On average, those surveyed said they would need around $1 million for a comfortable retirement – but then said they had only saved 70 percent of that, leaving a big gap and few years to catch up.

Yet 78 percent said they expected to be “extremely happy” in retirement and 83 percent noted they felt emotionally “ready to retire”.

To take control of your retirement, experts recommend you:

• Have a written financial plan that addresses how you will cover your expenses in retirement and addresses any savings gap.
• Have at least six months of emergency cash on hand.
• Take inflation into consideration.
• Review your retirement portfolio to determine how much income your assets will produce every year in retirement.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

Observations from California’s Zero-Tax Planning Attorneys

According to a recent NBC News report, the generation of baby boomers that broke the mold in every stage of life is continuing to do the same when it comes to retirement.  Here are 7 ways that boomers – 10,000 of who reach retirement age every day – are redefining retirement:

Going overseas.  The adventurous boomer generation is packing up and moving out of the U.S. to countries where living costs are lower, the pace of life is slower and the climate is warmer.  It is estimated that as many as three million boomers may retire overseas in the next 20 years.

Becoming entrepreneurs.  Boomers age 55 to 64 accounted for approximately 49 percent of all business startup activity in 2011, according to the Kauffman Foundation.

Going digital.  Boomers are plugged into the digital revolution, and are the fastest growing demographic segment to use social media networks.

Taking on more debt.  Higher debt levels are following boomers into retirement, due primarily to the refinancing boom prior to the housing crash that had them cashing out home equity for education and other expenses.

Living longer.  The life expectancy rate has risen two years, to 75.7 years, for men and by 1.5 years, to 80.8 years, for women in the last decade.  Unfortunately, most boomers are underestimating their life spans when it comes to retirement planning.

Providing more financial support.  Almost 58 percent of boomers are providing financial assistance to aging parents and a whopping 93 percent say they provide some sort of financial support for their children.

Not flocking to Florida.  Boomers have not followed the previous generation to retirement havens in Florida and Arizona.  Instead, the states with the highest growth rate of retirees include Texas, North Carolina, Nevada, Colorado, Idaho and Georgia.  Boomers are moving to be closer to their kids and to large university towns that offer cultural diversity and affordable housing.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

A recent Investor Index Survey by TD Ameritrade found that a third of baby boomers are financially unprepared for retirement.  But those who are prepared had these five traits in common:

1. Limited use of credit
2. Saving early and consistently
3. Limited discretionary spending
4. Excellent salary during employment
5. Maintaining a well-balanced investment portfolio

In addition, the survey found that the three biggest factors affecting retirement preparedness include:

One of the largest factors for boomers prepared for retirement was that their parents talked to them about money management and saving for retirement.  They also started saving younger than those who are unprepared for retirement – starting at age 30 vs. 35.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.

Commentary From A California Retirement Planning Lawyer

Retirement planning for married couples differs significantly from that for singles, since you are planning for the lives of two individuals – one of who (statistics say the wife) will outlive the other by an average of 5-10 years.

And a lot of couples are not doing it right, since recent studies show the rate of poverty for women over the age of 65 is more than 12 percent, significantly higher than for men in the same age group.

Healthcare costs take a big bite out of most couples’ retirement income, leaving scant resources available for the surviving spouse.  Here are some tips on how married couples can plan strategically for retirement:

Figure out how much retirement savings you need to generate a reliable lifetime income.

Whoever has the higher earnings history (usually the husband) can max out their Social Security benefits by delaying the start date as long as possible.  According to the Social Security Administration, taking retirement benefits at age 70 will double what you would have received if you took retirement at age 62.

Make 401(k) accounts and retirement savings last as long as one of you is still living.

Have a strategy for addressing long-term care expenses.

If the husband has a substantial benefit from a pension plan, take the joint and survivor annuity — most retirees outlive their lump sum payments.

Try to stay in good shape by practicing healthy habits.

Try to retire without a lot of debt – if possible, plan to pay off your mortgage before you retire, since housing is the #1 retirement expense for the majority of retirees.

Contact us today for individualized planning strategies to meet your unique needs.

The Business Roundtable, a group of over 170 of America’s leading CEOs, has put forth a proposal aimed at reforming Social Security and Medicare and says it can best be done by extending the qualification age for both entitlement programs to age 70.

As outlined in its Social Security Reform and Medicare Modernization Proposals, the essential elements include:

Social Security

Raise the Social Security retirement age from 67 to 70 while accommodating the unique needs of those in physically demanding jobs via a reformed Social Security Disability Insurance Program.  Protect the initial benefits of those 55+ today.

Adjust benefit formulas to include means testing for high-income individuals.

Update method for calculating Cost of Living Adjustments by tying them to the Chained Consumer Price Index.

Include new sate and local workers in Social Security.

Incentivize private retirement savings programs.

Medicare

Raise the Medicare age of eligibility to 70, not to affect those age 55+ today.

Expand competitive models of care, allowing seniors to choose between Medicare and private plans.

Adjust Part B and Part D premiums to include additional means testing for high-income individuals.

Retain existing program for low-income Americans.

Contact us today and let our Newport Beach law firm help you with all your financial planning needs.