Consider a gift you can give yourself

It’s benefit election season! And this is the time of year when you can consider a gift to yourself that you will celebrate years into the future.a gift you give yourself

While many employees concentrate on making selections related to insurance plans, it’s also time to consider your contributions to your 401K or other retirement savings accounts for the 2019 plan year. It’s also a great time to think about other ways you can ensure your retirement income will be adequate when the time comes to start drawing on it.

Since 2007, when the median retirement savings was only about $75,000, there has been a significant increase in the amount baby boomers are saving. That’s good news, considering that an estimated 39% of baby boomers expect their primary source of retirement income to be self-funded from 401Ks and similar retirement savings accounts. While the median amount of baby-boomer retirement savings is closer to $165,000 now, it still falls short of what will be needed to fully fund retirement that could be 20, 30 or even more years long.

In 2018 you can contribute up to $18,500 to your 401K plan and if you’re age 50 or older you can make a “catch-up” contribution of $6,000 more for a total of $24,500. In 2019 the contribution limit will increase to $19,000. While an increase in your monthly contribution might not be realistic for your financial situation, if you are able to give yourself this gift, it can help secure your later years and reduce your tax burden at present.

Many people may not be aware that the full retirement age (FRA) for Social Security benefits has been gradually increasing. FRA is now age 67. According to a Boston College study, 42% of men and 48% of women begin drawing benefits at the minimum allowable age of 62. This can significantly reduce your amount of benefit you receive.

You can defer Social Security benefits until age 70 and increase your monthly income about 8% per year for each year you defer.  Unfortunately, many opt to begin receiving benefits early because they haven’t saved enough in other areas to fund their retirement. From its inception, Social Security was designed to supplement retirement income not serve as the primary source. Among Social Security beneficiaries, 50% of married couples and 71% of singles receive at least 50% of their retirement income from Social Security.

If you’re at or nearing retirement age, you may want to consider continuing some form of work. By continuing to work, even with reduced pay, hours, and stress, you’ll be able to have an additional retirement income source that, coupled with savings from 401K, pensions or other income, could allow you to defer your Social Security benefits thereby increasing the amount you’ll ultimately receive.

Consider giving yourself a gift toward your retirement income this holiday season. It is certainly one you’ll be grateful for in the future.


Social Security & You – March 19, 2015

[vc_row][vc_column width=”1/1″][vc_column_text disable_pattern=”false” align=”left” margin_bottom=”0″]Join Justus Morgan, CFP® and Justin Moilanen to learn the basics of Social Security including how benefits are determined for workers, spouses, and surviving spouses, the interaction between claiming now versus delayed benefits, and how different claiming strategies can significantly impact your retirement income sustainability.

This interactive presentation to be held at our office on March 19 from 6:30 p.m. to 8 p.m. is for individuals and couples getting close to the age when they may start collecting Social Security retirement benefits.

To reserve your seat, please call Lori at (262) 554-4500 ext. 105 or use our registration form below. Seating is limited.[/vc_column_text][mk_content_box heading=”Register for the Workshop”][vc_column_text disable_pattern=”false” align=”left” margin_bottom=”0″]Social Security & You
Date: March 19, 2015
Time: 6:30 p.m. – 8 p.m.
Location: Financial Service Group[/vc_column_text][/mk_content_box]


Undoing Social Security decisions

As published in the Racine Journal Times | February 4, 2014

Have you ever made a decision you later regretted? rewindWouldn’t it be nice if you had a chance to rewind the clock? In many areas of life this is not an option but when it comes to collecting Social Security benefits  there are actually a couple of ways to undo your benefit decision.

Why would anyone want to change their benefit once it began? Besides winning the lottery, perhaps you received an inheritance or had another change in your financial circumstances resulting in less dependence on Social Security benefits for income. Or maybe you decided to go back to work because golfing everyday started losing its appeal. Finally, maybe you realized claiming early was just a poor decision because of the reduction in future benefits which can have a significant impact on you as well as your spouse.

If you started claiming benefits in the last 12 months, you can unwind the whole decision as if it never happened in the first place. In order to do this you need to repay any benefits received. If you paid taxes on the income in a previous year, you can receive a credit or deduction for the tax paid. In the future, when you apply for benefits, the new benefit amount is based on the new application date removing the penalty for filing early.

If it’s been more than a year since you started collecting benefits, all is not lost as there are two additional opportunities. If you’re still below your Full Retirement Age (typically age 66 for most people facing this decision), you can earn above certain amounts from wages or self-employment income which results in benefits being withheld. People often confuse this as losing benefits but your benefit is actually increased at Full Retirement Age as if you had never collected the benefit. In other words, the impact is the same as if you suspended benefits resulting in a higher future benefit amount.

A third strategy to consider is only available once you reach Full Retirement Age which also involves suspending your payment resulting in benefit increases of 8 percent per year until age 70. These increases are added to the monthly benefit you received until suspending benefits but could potentially increase your total benefit by 32% over the four years!

A survey released last year, indicated almost 40 percent of people who started collecting their benefit early now regret it. Will you be one of them?

To learn more about Social Security, I recommend Jim Blankenship’s book “A Social Security Owner’s Manual.”