Tag: Social Security

How Women Can Prepare for Retirement

April 22, 2020
Retirement Planning

When our parents retired, living to 75 amounted to a nice long life, and Social Security was often supplemented by a pension. The Social Security Administration estimates that today’s average 65-year-old woman will live to age 86½. Given these projections, it appears that a retirement of 20 years or longer might be in your future.[i]^,[ii]

Are you prepared for a 20-year retirement? How about a 30-year or even 40-year retirement? Don’t laugh; it could happen. The SSA projects that about 33% of today’s 65-year-olds will live past 90, with approximately 14% living to be older than 95.²

Start with good questions. How can you draw retirement income from what you’ve saved? How might you create other income streams to complement Social Security? And what are some ways you can protect your retirement savings and other financial assets?

Enlist a financial professional. The right person, one who understands the challenges women face in saving for retirement, can give you some good ideas. These may how include income inequality or time out of the workforce due to childcare or eldercare affect you. It could also mean helping you maintain financial equilibrium in the wake of divorce or death of a spouse.

Invest strategically. If you are in your fifties, you have less time to make back any big investment losses than you once did. So, protecting what you have may be a priority. At the same time, the possibility of a retirement lasting up to 30 or 40 years will likely require a growing retirement fund.

Consider extended care coverage. Women have longer average life expectancies than men and can require significant periods of eldercare. Medicare is no substitute for extended care insurance; it only covers a few weeks of nursing home care, and that may only apply under special circumstances. Extended care coverage can provide a huge financial relief if the need arises.^1,[iii]

Claim Social Security benefits carefully. If your career and health permit, delaying Social Security can be a wise move. If you wait until full retirement age to claim your benefits, you could receive larger Social Security payments as a result. For every year you wait to claim Social Security, your monthly payments get about 8% larger.[iv]

Retire with a strategy. As you face retirement, a financial professional who understands your unique goals can help you design a wealth management approach that might serve you well for years to come.

To learn more about CapSouth Wealth Management and our retirement planning services, call 800.929.1001 or visit our website at www.capsouthwm.com

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.

CapSouth Partners, Inc., dba CapSouth Wealth Management, is an independent Registered Investment Advisory firm. CapSouth does not offer tax, accounting or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences.

[i] CDC.gov, January 2020

[ii] SSA.gov, February 25, 2020

[iii] Medicare.gov, February 25, 2020

[iv] Investopedia, November 24, 2019

Key Questions to Answer Before Taking Social Security

July 29, 2019
Financial Planning, Retirement Planning, Social Security, Uncategorized

Social Security may be a critical component of your financial strategy in retirement, so before you begin taking it, you should consider three important questions. The answers may affect whether you make the most of this retirement income source.

When to Start? The Social Security Administration gives people a choice on when they start receiving their Social Security benefit. You can:

Start benefits at age 62 or later.
Claim them at your full retirement age.
Delay payments until after full retirement age.

If you claim early, you can expect to receive a monthly benefit that will be lower than what you would have earned at full retirement. If you wait until age 70, you can expect to receive an even higher monthly benefit than you would have received if you had begun taking payments at your full retirement age.

When researching what timing is best for you, it’s important to remember that many of the calculations the Social Security Administration uses are based on average life expectancy. If you live to the average life expectancy, you’ll eventually receive your full lifetime benefits. In actual practice, it’s not quite that straightforward. If you happen to live beyond the average life expectancy, and you delay taking benefits, you could end up receiving more money. The decision of when to begin taking benefits may hinge on whether you need the income now or if you can wait, and additionally, whether you think your lifespan will be shorter or longer than the average American.[i]^,[ii]

Should I Continue to Work? Besides providing you with income and personal satisfaction, spending a few more years in the workforce may help you to increase your retirement benefits. How? Social Security calculates your benefits using a formula based on your 35 highest-earning years. As your highest-earning years may come later in life, spending a few more years at the apex of your career might be a plus in the calculation. If you begin taking benefits prior to your full retirement age and continue to work, however, your benefits will be reduced by $1 for every $2 in earnings above the prevailing annual limit ($17,640 in 2019). If you work during the year in which you attain full retirement age, your benefits will be reduced by $1 for every $3 in earnings over a different annual limit ($46,920 in 2019) until the month you reach full retirement age. After you attain your full retirement age, earned income no longer reduces benefit payments.^2,[iii]

How Can I Maximize My Monthly Benefit? The easiest way to maximize your monthly Social Security is to simply wait until you turn age 70 before claiming your benefits.^1,2

To learn more about CapSouth and the services we provide, please call 800.929.1001 or visit our website at www.capsouthwm.com

[i] https://www.nerdwallet.com/blog/investing/take-social-security-benefits/

[ii] https://www.thestreet.com/retirement/social-security/maximum-social-security-benefit-14786537

[iii] https://www.fool.com/retirement/2018/12/01/4-things-you-need-to-know-about-filing-for-social.aspx

Where Will Your Retirement Money Come From

June 20, 2019
Estate Planning, Retirement Planning, Social Security

For many people, retirement income may come from a variety of sources. Here’s a quick review of six primary sources:

Social Security

Social Security is the government-administered retirement income program. Workers become eligible after paying Social Security taxes for 10 years. Benefits are based on each worker’s 35 highest earning years. (If there are fewer than 35 years of earnings, non-earning years may be counted in the calculation.) In mid-2018, the average monthly benefit was $1,413.[i]^,[ii]

Personal Savings and Investments

These resources can also provide income during retirement. Depending on your risk tolerance, time horizon and goals, you may want investments that offer steady monthly income over vehicles giving you the potential for double-digit returns. A quick chat with a financial professional can help you understand your risk tolerance as you approach retirement.

Individual Retirement Accounts

Traditional IRAs have been around since 1974. Contributions you make to a traditional IRA are commonly deductible. Distributions from a traditional IRA are taxed as ordinary income, and if taken before age 59½, may be subject to a federal income tax penalty. Once you reach age 70½, these accounts require mandatory withdrawals.[iii]

Roth IRAs were created in 1997. Contributions you make to a Roth IRA are non-deductible, as they are made using money that has already been taxed. Sometimes, only partial Roth IRA contributions can be made by taxpayers with six-figure incomes; some especially high-earning individuals and couples cannot direct money into Roth IRAs at all. To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Roth IRAs do not have any required minimum distribution rules.³

Defined Contribution Plans

Many workers are eligible to participate in a defined-contribution plan such as a 401(k), 403(b), or 457 plan. Eligible workers can set aside a portion of their pre-tax income into an account, and the invested assets may accumulate with taxes deferred, year after year. Generally, once you reach age 70½, you must begin taking required minimum distributions from these workplace plans.[iv] Some plans may also include an option to contribute after tax income.

Defined Benefit Plans

Defined benefit plans are “traditional” pensions – employer-sponsored plans under which benefits, rather than contributions, are defined. Benefits are normally based on specific factors, such as salary history and duration of employment. Relatively few employers offer these kinds of plans today.[v]

Continued Employment

In a recent survey, 68% of workers stated that they planned to keep working in retirement. In contrast, only 26% of retirees reported that continued employment was a major or minor source of retirement income. Many retirees choose to continue working as a way to stay active and socially engaged. Choosing to work during retirement, however, is a personal decision that should be made after considering your finances and personal goals.[vi]

To speak to a CapSouth advisor about retirement planning contact our office at 800.929.1101 or visit our website at http://capsouthwm.com/services/financial-estate-planning/

Utilize our free financial calculator at https://capsouthwm.com/resources-guides/financial-calculators/

[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

[iii] https://www.cnbc.com/2018/07/30/roth-vs-traditional-iras-how-to-decide-where-to-put-your-money.html

[iv] https://www.fool.com/retirement/2018/11/21/the-most-important-401k-rules-for-maximizing-your.aspx

[v] https://www.investopedia.com/terms/d/definedbenefitpensionplan.asp

[vi] https://www.investopedia.com/articles/personal-finance/101515/planning-retiring-later-think-again.asp