Monthly Archives: February 2018

How Does Divorce Affect Social Security?

Posted by Gary Raetz How Does Divorce Affect Social Security?

We all know that divorce can make a deep impact on our financial lives, especially during the immediate time period surrounding the event. However, some people are surprised to discover, a decade or more after the divorce, that the consequences are more far-reaching than they had imagined! In particular, those who expect to claim Social Security spousal benefits should brush up on their knowledge of Administration’s rules. We don’t want you to be caught off guard when it’s time to retire.

You must be married for ten years in order to claim spousal benefits in the future. Those who divorce before the ten-year mark miss their opportunity to claim spousal benefits on their former spouse’s work record one day – even if you had children together.

You won’t lose spousal benefits if he/she remarries. If you’re otherwise eligible for spousal benefits through Social Security, you won’t lose those benefits if your former spouse remarries. However, you will lose them if you remarry. This is something to carefully consider, on multiple levels, before remarrying.

You can receive spousal benefits if your former spouse dies. Their death won’t affect your eligibility, as long as you are otherwise eligible.

Your spousal benefit amount is based upon your former spouse’s earning record. Social Security calculates everyone’s benefits according to their 35 highest-earning years of work. As a spouse or former spouse, your spousal benefits check will amount to half of that benefit. If your former spouse retires early, becomes disabled, takes a big pay cut, otherwise makes less money than you would have anticipated, this could negatively impact your future spousal benefits amount. Obviously, you can’t really control those factors whatsoever.

You can still claim benefits on your own earnings record. Of course, your own benefit will be based upon your earnings history.

As you can see, Social Security spousal benefits can be a tricky issue. If you’re the lower-earning spouse of a married couple, a spousal IRA might be a useful tool for you. This retirement fund allows you to save for your own retirement, and provides somewhat of a safety net in the event of a divorce.

Give us a call to discuss these issues in further detail. We can help you learn how to plan for retirement, whether you’re married, divorced, or unsure where you will end up in the future.

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7 Signs of a Smart Saver

Posted by Gary Raetz 7 Signs of a Smart Saver

When is your expected retirement date? Whether you’ll be retiring in just a few years, or you still have a decade or more to go, one thing is certain: Retirement is one life situation for which we all need to plan.

So how do you know whether your plans are on the right track? That’s a complicated question, and professional guidance is necessary to help you sort through the details. But these seven signs should give you a few clues on where your retirement savings plan stands.

You’re living within your means. Experts often say that you should be living on 85 percent of your income, and saving the other 15 percent for retirement. Of course, that’s just a ballpark figure, and you might need to save a bit more depending on your needs and lifestyle goals.

You have set a retirement savings goal. You wouldn’t go on a long road trip without first choosing a destination, so why would you save for retirement without setting a savings goal? Everyone needs to estimate their future living expenses and set a target for their savings.

You know how much you’re saving each pay period. You should be able to state a number, right off the top of your head.

You avoid credit card debt. You’re smart about credit. You use a credit card occasionally, but you aren’t wasting piles of money on interest by carrying large balances.

You don’t borrow from yourself. You know that borrowing money from your retirement account will not just cost you money; it will cost you time that you can’t get back. You have a savings account, line of credit, or some other means of covering emergency expenses so that you never have to dip into your 401(k).

You understand the purpose of Social Security. You know that Social Security was designed as supplemental retirement income, and will not cover all of your living expenses in retirement. This knowledge has led you to make plans for a stream of income that will sustain you.

You take advantage of savings perks. You contribute enough to your retirement account, to take advantage of matching funds from your employer each year. You also know that contributions to a qualified retirement account help you earn a major tax deduction, and you utilize that deduction to its full potential each year.

Do all of these signs apply to you, or do you need help on a few points? Saying “yes” to each item on this list is no guarantee that you’ll retire comfortably, but they are definitely signs of a smart saver. Contact us to learn more about retirement savings, especially if a few of these items are tripping you up.

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