Retirement Redux or Rewrite the Plan?

January 23, 2012

Never place a period where God has placed a comma.                ~Gracie Allen

This quote really resonates with me  when I begin thinking about the myriad of challenges that my clients (especially women)  face when they seriously begin planning for their retirements. 

Punctuating with a period?  Constantly bombarded with the images of that ‘ideal’ retirement, we’ve all seen pictures of retirees walking in the sun on a beautiful beach, playing golf, boating or traveling to exotic destinations. Of course,  these pictures never show a cloudy sky or a hint of rain.

We all dream of being able to have a sunny  retirement. – And, for sure, keep your ideal retirement dream alive!  But, if you’ve got rain in your retirement financial picture, you don’t need to get stuck by placing a ‘full stop’ on your retirement plans when your financial reality doesn’t match up… 

Time to punctuate with  a comma? I have occasion to welcome clients into my office who are very close to or beyond retirement age who despite their best efforts are falling short of attaining their retirement dreams. Many are really ‘down on themselves’ or ‘beating themselves up’ for  their current gap in retirement assets needed versus what they have actually saved. Oddly enough, I say that this is the perfect time to re-evaluate your situation and move forward to ‘reinvent’ your retirement.

As the new year begins, this certainly is the perfect time to rewrite your very own plan for retirement.  Remember it’s not supposed to be the retirement picture or plan that an advertiser has shown you. -Truthfully, who do you know that  really has that idyllic life?  So,  I’m talking about you, drawing-up a retirement picture or plan that matches your financial reality.

 In the last several years, I’ve read and tweeted  many ideas that may be helpful to those of you who are working on retirement redux or reinventing your retirement plans:

  • Working longer full or part-time doing something you actually enjoy
  • Develop a new computer-based career you can work from the comfort of your home
  • Living  together with other ‘Golden Girls’ or Golden Guys’
  • Retiring in here or in another country that has a retiree-friendly costs and standard of living
  • Move in with a family member

Your picture of your retirement will be as unique as you. Remember it’s not your Mom, Dad’s or an advertiser’s retirement –it’s yours. Take the plunge and reinvent your retirement.

Need more ideas? Give me a call.


Jane Nowak   is a CERTIFIED FINANCIAL PLANNER™  and Certified Divorce Financial Analyst™  who specializes in Women’s Retirement and Divorce Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA,  Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently had articles published or has been quoted in articles that have appeared on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC
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Just Scratching the Surface -Divorce and Social Security

October 11, 2011

For those of you who are divorced, you may have some Social Security eligibility options that you don’t even know about. Everyone’s case is different. But, in this article, I have touched on some of the most general eligibility rules for those of you who are divorced.

Please read the footnotes too. There are lots of potential disqualifying events. 

Can I claim Social Security benefits based on my ex-spouse’s earnings? 

In many cases, if all 5 requirements below are met, a divorced party can qualify as a dependent for Social Security purposes. As a dependent, you may be entitled to 50 percent[1] of your former spouse’s benefits. 

So,  if your former spouse has reached full retirement age and he/she is still alive, to qualify for one-half of your ex-spouse’s Social Security benefits, all of the following conditions must be met: 

  1. Your ex-spouse is now entitled to receive Social Security retirement or disability benefits
  2. You and your ex-spouse had been married for at least 10 years before the divorce became final
  3. You are not currently married
  4. You are age 62 [2]or older
  5. You aren’t entitled to collect a retirement or disability benefit based on a PIA[3] that equals (or exceeds) one-half of your ex-spouse’s PIA 

Example: Assume John has retired and collects $1000 per month in Social Security benefits. If he was married to Jean for at least 10 years before he divorces her, Jean can collect $500/month (one-half of John’s benefit) when she reaches age 65. Note that Jean will have the option to take the Social Security benefits she earned in her own name. Of course, she’ll choose the higher figure. 

What if one or both of us has remarried?  

If your ex-spouse gets remarried and you don’t, your Social Security entitlement will be unaffected. If your ex-spouse is married to a second spouse for at least 10 years and then they get a divorce, you and that second spouse will each be entitled to collect an amount equal to one-half of the former spouse’s benefits (assuming that you each meet the requirements set forth above).

If you’re the one who remarries, you would then look to your current spouse’s PIA in computing your dependent Social Security benefit. However, if you worked for a sufficient period of time, you may be entitled to a larger benefit amount computed based on your own earnings record.[4] 

I know that many of you may think that understanding Social Security eligibility is easy. But, if the number of footnotes for this short article is any clue, you’ve already guessed that determining Social Security eligibility is neither easy nor straightforward. There are many qualifying events and specific guidelines that will be used to determine eligibility including: the age of recipients,  the number of  years you were married, number of years you’ve been divorced, if there are children, the ages of the children, if the ‘wage earner’ is alive or deceased etc. 

So, always check directly with the Social Security Administration to see what benefits you may be entitled to. And, take the time to understand the advantages and disadvantages (penalties) of each option that you may have.

 Jane Nowak is a CERTIFIED FINANCIAL PLANNER™ specializing in , Women’s Retirement,  Financial Planning for Women and AT&T Retirement Plans. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA, Jane’s goal is to educate and help her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently been quoted in articles or published  on-line at the: NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites. She can also be found on Facebook and on Twitter as @MoneyGal2020.

 Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC

 

 
 

[1] Note: That this entitlement doesn’t reduce your ex-spouse’s benefits by one-half; rather, this merely establishes the amount of money you may collect. For basic information about the Social Security program and for detailed treatment of Social Security rules, see Social Security.

[2] Note: If you’re age 62 or older and you’ve been divorced for at least two years, you can receive Social Security benefits immediately (based on your former spouse’s earnings) regardless of whether that spouse has chosen to retire or has submitted an application for Social Security benefits. This, of course, is assuming that the other four requirements listed above have been satisfied. However, if you choose to receive benefits at age 62 instead of your normal retirement age, the benefit that you would have received at your normal retirement age will be reduced by at least 25 percent (assuming you don’t have a dependent child who’s entitled to benefits on the deceased spouse’s Social Security record). In other words, if you choose to receive reduced benefits at age 62, you will not be entitled to collect full benefits when you reach your full retirement age.  Jane’s comment: Be aware of the penalty!

[3] The “primary insurance amount” (PIA) is the benefit (before rounding down to next lower whole dollar) a person would receive if he/she elects to begin receiving retirement benefits at his/her normal retirement age. At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.

[4] Portions of this text were excerpted from material provided by Forfield Advisor


Must Read:Enough with the #Social #Security

October 2, 2011

Must Read:Enough with the #Social #Security scare tactics @BaltimoreSun http://ow.ly/6K8Qh Turning down the noise and swirl RE #SS


Read:#Boomer Women Focus More on #Retire

September 29, 2011

Read:#Boomer Women Focus More on #Retirement Finances than Health @RRMagazine http://ow.ly/6C69O I’m not convinced that this is true.


Social Security Pays a Lifetime Bonus -If You Delay Benefits

September 29, 2011

The Very Wonderful Magical Math of a Delayed Retirement   

Retirement credit? Good heavens! I call it a bonus. Do you know how much of a bonus that you get if you delay receiving Social Security past your normal retirement date? 

Boring Stuff AKA Fine Print about the Credit for Delayed Retirement  

Born in 1943 or after? Eligible for Social Security benefits? For every month that you delay receiving Social Security benefits past your normal retirement age you will increase your retirement paycheck by .00667 =2/3 of 1% per month! 

Why am I so excited? That itsy bitsy .00667 per month benefit doesn’t sound like much. But, the .00667 increase per month equals 8% per year!! And, you can delay taking Social Security retirement benefits up to the maximum age of 70. 

Note that because the normal retirement age will be increasing to age 67, eventually, retirees will only be able to receive a delayed retirement credit for three years instead of four or five.  

Translation of Your Social Security Delayed Retirement Math

 Chart data is for example only. The Full Monthly Retirement benefit shown may or may not show your actual benefit! Check with SSA.gov for more information. 

Actual Retire-ment Age Social Security Normal Retire-ment Age Full Monthly Retire-ment Benefit at age 66/67 Actual Benefit Amount at age 70 Dollar Amount per Mo. Difference % Amount per Mo. Differ-ence Annual Dollar Differ-ence for life
66[1] 70 $1200 $1584 +$384 +32% +$4608
672 70 $1200 $1488 +$288 +24% +$3456

 [1] At age 70 with a retirement age of 66, your credit is an increase of your monthly benefit by 32%. (That is: .00667 x 48 months for ages 66-70. You increase every dollar you earn by waiting until retirement age 70, you get $1.32 cents. So, in dollar terms, what an annual salary of $14,400 is increased to $19,008 per year, for life. 

 [2]At age 70 with a retirement age of 67, your credit is an increase of your monthly benefit by 24%.(That is: .00667 x 36 months for ages 67-70. You increase every dollar you earn by waiting until retirement age 70, you get $1.24 cents. So, in dollar terms, what an annual salary of $14,400 is increased to $17,856 per year, for life. 

Jane Nowak  is a CERTIFIED FINANCIAL PLANNER™ specializes in AT&T Retirement Plans, Women’s Retirement and Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA, Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently had articles quoted and published on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC

    

 

 

 


Social Security – The Truth About the Early Retirement Penalty

September 27, 2011

How many times have you heard that it’s better to wait before taking your Social Security? Well, if you are eligible for Social Security, in good health and don’t need the money to live, I do recommend that you wait until your full retirement age or later before drawing Social Security.

Part I The Not So Magical Math of an Early Retirement 

Hint: It’s called a penalty for a reason.

 Here it is in black and white. Its copied right from the Social Security documentation fine print and presented here for your reading pleasure. This information is also really boring stuff! First I’m going to let you read it, then I’m going to translate it into the not so magical math of the financial cost of an early Social Security retirement. 

Boring Stuff AKA Not so Fine Print about the Penalty for Early Retirement  

The minimum age at which you can retire and receive Social Security retirement benefits is now 62. If you retire at age 62, you will be eligible for reduced retirement benefits based on a percentage of your primary insurance amount (PIA) entitlement, if you are fully insured. Your retirement benefit will be reduced by 5/9ths of 1 percent (or.55556 percent) for every month between your retirement date and normal retirement age, up to 36 months, then by 5/12ths of 1 percent thereafter. 

Translation of Your Social Security Early Retirement Math 

If you qualify for Social Security benefits, you will pay a penalty forever once you begin to take your Social Security benefits early. There are no ‘do-overs’. –The ‘pay back’ loop hole has been closed. 

The chart below breaks down the math and penalties for early retirement for Social Security. Read ‘em and weep… 

Chart data is for example only. The Full Monthly Retirement benefit shown may or may not show your actual benefit! Check with SSA.gov for more information. 

Actual Retire-ment Age Social Security Normal Retire-ment Age Full Mo. Retire-ment Benefit Actual Benefit Amount at age 62 Dollar Amount per Mo. Differ-ence % Amount per Mo. Differ-ence Annual Dollar Differ-encefor life
62 66 $1200 $900 -$300 -25% $3600
62 67 $1200 $840 -$360 -30% $4320

  [1] At age 62 with a retirement age of 66, your penalty is a permanent reduction of your monthly benefit by 25%. (That is: .55556 x 36 months for ages 62-65 and .41667 x 12 for the months from ages 65 to 66). For every dollar you would earn by waiting until full retirement age at 66, you get .75 cents. So, in dollar terms, what would have been an annual salary of $14,400 is reduced to $10,800 per year, for life.

[2] At age 62 with a retirement age of 67, your penalty is a permanent reduction of your monthly benefit by 30%. (That is: .55556 x 36 months for ages 62-65 and .41667 x 24 for the months from ages 65 to 67). For every dollar you would earn by waiting until full retirement age at 67, you get .70 cents. So, in dollar terms, what would have been an annual salary of $14,400 is reduced to $10,080 per year, for life. 

Jane Nowak is a CERTIFIED FINANCIAL PLANNER™ specializes in AT&T Retirement Plans, Women’s Retirement and Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA, Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently had articles quoted and published on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC

       


Is Social Security Really Just A Ponzi Scheme?

September 20, 2011

There’s been a lot of talk over the last several years and most recently by a Presidential candidates about whether Social Security is nothing but a Ponzi scheme. Well folks, Social Security is not a Ponzi scheme. It may feel like one. But it’s not.

Here’s why…

A Ponzi scheme is investment fraud knowingly perpetrated so that early investors are paid off with money from later investors. This is done specifically to encourage more investors to take part. (Remember: If it’s too good to be true, it probably is.) Of course, the scheme’s perpetrators keep a lot of the money for themselves. Social Security lacks both the fraudulent intent and profit-making motive of a Ponzi scheme.

How was Social Security Supposed to be Funded?

Designed as a pay as you go system, the system was never designed with the idea of creating an individual savings account for each working adult. Social Security is a pool of money held in trust that pays benefits to our retired workers that have met set eligibility requirements. So, although the payment formula allows for payments based upon contribution levels, we are not necessarily supposed to be getting back the same dollar amount that we paid into Social Security. Further, the working public and their employers are supposed to be carrying the tax burden for the country’s qualified Social Security recipients. Like it or not, the Social Security system is as designed

Jane Nowak is a CERTIFIED FINANCIAL PLANNER™ specializes in AT&T Retirement Plans, Women’s Retirement and Financial Planning for Women. Located in the Smyrna, Marietta, Vinings area of Atlanta, GA, Jane’s goal is to educate and empower her clients to take control of their daily finances so they can fully fund their retirement dreams and needs. Jane has recently had articles quoted and published on-line at the NASDAQ, Yahoo Finance, Womenetics.com, Smart Money Chicks, Fox Business News, CreditCards.com, U.S. News and World Report and Financial Planning Association (FPA) websites.

Securities offered through Triad Advisors, Inc. Member, FINRA/SIPC


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