Tag: Retirement

Social Security: By the Numbers

February 27, 2019
Retirement Planning, Social Security, Taxes

Social Security has been a pillar of retirement life for several decades, but how much do you really know about it? Here are a handful of facts that might surprise you:

The Social Security trust fund exceeds the gross domestic product of every country in the world except: China, the United States, India, Japan, Germany, Russia, Indonesia, and Brazil.[i]

For 61% of retirees, Social Security is a major source of income.¹

Benefits are subject to federal income taxes, but it wasn’t always so. Amendments to the Social Security Act made benefits potentially taxable beginning in 1984.¹

Benefits are determined by your average earnings during a lifetime of work, based on your 35 highest-earning years.¹

If you receive Social Security, you no doubt welcome cost-of-living-adjustments (COLAs) to your benefits. Did you know that Social Security COLAs once required an act of Congress? That was the case before 1975, when they were finally pegged to advances in the Consumer Price Index.¹

In the middle of 2018, more than 1 in 6 Americans were collecting Social Security benefits. Older Americans constitute about 80% of Social Security recipients, and their average monthly benefit in June 2018 was $1,413.[ii]

When should you begin taking Social Security? That may depend on several factors, but many people choose to claim benefits as soon as they are eligible. You can receive benefits beginning at age 62, but if you take them before reaching Social Security’s Full Retirement Age (67 for those born in 1960 or later), your monthly benefit will be fractionally reduced. You can wait until age 70 to claim your maximum potential benefit.

There are many factors to consider when determining the age at which you should begin taking benefits. We believe this decision should be made in conjunction with your overall financial planning process.

We would welcome the opportunity to discuss this further or to begin a conversation regarding your financial plan and how Social Security benefits fit into the plan. Contact CapSouth at 800.929.1001.

To read more about financial and retirement planning visit http://capsouthwm.com/services/financial-estate-planning/

Investment advisory services are offered through CapSouth Partners, Inc., dba CapSouth Wealth Management, an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. This material has been prepared for planning purposes only and is not intended as specific tax or legal advice. Tax and legal laws are often complex and frequently change. Please consult your tax or legal advisor to discuss your specific situation before making any decisions that may have tax or legal consequences.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third-party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third-party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third-party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.waddell.com/explore-insights/market-news-and-guidance/planning/9-facts-about-social-security

[ii] https://www.cbpp.org/research/social-security/policy-basics-top-ten-facts-about-social-security

Certain Uncertainties in Retirement

February 20, 2019
Budgeting, Financial Planning, Life, Retirement Planning, Taxes, Wisdom

The financial uncertainties we face in retirement may risk reducing our sense of confidence, potentially undermining our outlook during those years.

Indeed, according to the 2018 Retirement Confidence Survey by the Employee Benefits Research Institute, only 17% of pre-retirees said they are “very confident” about having enough assets to live comfortably in retirement. In addition, just 32% of retirees were “very confident” in their prospects for doing so.[i]

Today, retirees face two overarching uncertainties. While each one can lead even the best-laid strategies awry, it is important to remember that remaining flexible and responsive to changes in the financial landscape may help you meet the challenges posed by uncertainty in the years ahead.

An Uncertain Tax Structure

A mounting national debt and the growing liabilities of Social Security and Medicare are straining federal finances. How these challenges will be resolved remains unknown, but higher taxes – along with means-testing for Social Security and Medicare – are obvious possibilities for policymakers.

Whatever tax rates may be in the future, taxes can be a drag on your savings and may adversely impact your retirement security. Moreover, any reduction of Social Security or Medicare benefits has the potential to increase financial strain during your retirement.

Consequently, you will need to be ever mindful of a changing tax landscape and strategies to manage the impact of whatever changes occur.

Market Uncertainty

If you know someone who retired (or wanted to retire) in 2008, you know what market uncertainty can do to a retirement blueprint.

The uncertainties have not gone away. Are we at the cusp of a bond market bubble bursting? Will the eurozone find its footing? Will U.S. debt be a drag on our economic vitality?

Over a 30-year period, uncertainties may evaporate or resolve themselves, but new ones may also emerge. Solutions for one set of financial or economic circumstances may not be appropriate for a new set of circumstances.

Scottish philosopher Thomas Carlyle said, “He who could foresee affairs three days in advance would be rich for thousands of years.” Preparing for uncertainties is less about knowing what the future holds as it is being able to respond to changes as they unfold.[ii]

To read more about financial and estate planning, visit our website at capsouthwm.com/services/financial-estate-planning/

[i] https://www.ebri.org/docs/default-source/rcs/1_2018rcs_report_v5mgachecked.pdf?sfvrsn=e2e9302f_2

[ii] https://www.brainyquote.com/quotes/thomas_carlyle_118785

What Would You Like Your Retirement to Look Like?

December 5, 2018
Budgeting, Guidance, Retirement Planning

You’re on a beautiful golf course. It’s a sunny afternoon. Once you finish the 18^th hole, you’re on your way to meet with friends for lunch at the new restaurant on the corner.

Perhaps you prefer putting your life skills to work by volunteering at a charity or maybe working part time at the local home supply store.

‘Tis retirement. You decide how you spend your leisure.

You’re no longer constrained by the demands of a job or a work routine. You set your own schedule. You choose how you’ll spend your day. Those long years of employment are over, and you’re setting sail for your golden years, on your own terms.

Questions and concerns about retirement

While the scenes described above appear idyllic, they do require preparation and planning.

How do you envision your retirement? What do you want it to look like? And, most important, what do you plan to do, and what kind of retirement strategy will you implement during your working years to pursue your retirement goals?

Those are some of the questions you should ask yourself. In the years prior to retiring, you should begin painting that picture. You’ll have to compare and contrast your retirement dreams with your financial ability to sustain a comfortable lifestyle.

Here are additional questions to consider as you shape your financial strategy:

How long do you want to keep working full time? Are you interested in taking part-time work once retired? If so, do you want to pursue something in your current profession or try something new?

Once you’re retired, with or without a part-time job or doing charity work, what types of hobbies or activities do you wish to do?

How do you want to spend most of your time? If you’re so inclined, plot out your typical day of retirement.

Sometimes planning for retirement and being retired can feel like work. But the “work” is necessary. After all, you can probably expect to live nearly another two decades[i] or more, according to estimates.

Are you healthy?

As you dig deeper into developing your plan, consider these questions: Are you healthy? What do your genetics reveal about your longevity? Does your family line have predispositions or tendencies to certain conditions (heart disease, cancer, diabetes)? In other words, what do you think is your projected lifespan, and how do you expect to maintain an active lifestyle during those years?

As you start laying out your retirement plan, you also have to assess your financial condition. The federal government requires seniors to make minimum withdrawals (required minimum distributions) from certain accounts, including your IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts at the age of 70 ½.[ii]

Basically, you have to look well into the future—sometimes as much as 35 years or more depending on your health and lifestyle—in determining your budget. To oversimplify it, how can you make your retirement savings stretch across several decades or so of retirement? Your investments have the potential to continue generating interest income over your retirement.

Don’t forget your health maintenance. Medical expenses, which may include long-term care, in the later years of retirement must be factored into the equation. Some estimates put health and medical costs for a retired couple at $280,000.[iii]

Shifting gears

The shift from work to retirement can feel jarring. Some people ease into it while others take the leap. After retiring, some retirees, still healthy and active, work part time to keep income at a comfortable level.

Delaying taking Social Security allows retirees to increase their benefits by about 8% per year after their full retirement age to a maximum of about 125% of your full retirement age amount.[iv]

Consult with a financial professional to help you wade through the financial morass of retirement preparations. Financial professionals have the tools, the resources, and the experience to help you develop the most productive retirement plan to suit your needs.

If you’d like more information about your financial options or to learn more about your financial needs, we’re happy to help. Call CapSouth at 800.929.1001 or visit our website.

This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth Partners). The policies and procedures governing these third party sites may differ from those effective on the CapSouth company website, as outlined in these Disclaimers. As such, CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from the CapSouth website. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

[i] https://www.forbes.com/sites/wadepfau/2016/08/25/how-long-can-retirees-expect-to-live-once-they-hit-65/#72e7700b6b4f

[ii] https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

[iii] http://time.com/money/5246882/heres-how-much-the-average-couple-will-spend-on-health-care-costs-in-retirement/

[iv] https://www.ssa.gov/OACT/quickcalc/early_late.html

Tag: Retirement

What Would You Like Your Retirement to Look Like?

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