Monday, February 22, 2016

The New Big Changes in Social Security Rules for Married Couples

The New Big Changes in Social Security Rules for Married Couples


It is fair to say that on November 2, 2015, when President Obama signed The Bipartisan Budget Act of 2015 into law, some pretty major changes happened to the way married folks get to claim Social Security benefits going forward, because the new rules effectively ended two of the popular spousal claiming strategies widely used for the past 15 years.

The somewhat good news is that for some folks there still is a window of opportunity to act and get in under the old rules. We’ll get to that later, but to make things easier to understand, let’s begin by reviewing the now old rules.  


The Old Rules


Until now, Social Security rules have allowed a worker who has reached their Full Retirement Age (FRA) – which for most folks retiring is now age 66 – to file and then immediately turn around and suspend their benefits so that they would not actually collect the checks. Why was this necessary? Your spouse could begin to receive spousal benefits from your work after you “filed” – you didn’t have to actually claim the money at the time – hence the “suspend” part. Meanwhile, by “suspending” your benefits, you would get to earn delayed retirement credits of 8 percent a year between the ages of 66 and 70, for a total of a 132 percent larger monthly check when you finally did begin collecting the money. This was advantageous for workers who desired to delay their benefits past FRA, but the law was flexible and also allowed spouses to start collecting benefits as early as age 62.


Pretty powerful, wasn’t it? It got even better if this worker’s spouse had also reached his/her FRA, because they would be able to file a “restricted” application which enabled him/her to collect their spousal benefit check while also growing their own retirement checks – assuming they worked outside the home – by earning another and completely separate 8 percent yearly delayed retirement credit. Then, whenever that retirement check had peaked or exceeded the smaller spousal check, they’d simply switch over and begin collecting the larger amount.

The New Rules

According to the new law, when you suspend your benefits, no one – including your spouse – will be eligible to collect a check based on your record. Additionally, no one will be allowed to file a “restricted” application. Now when you file to claim your spousal checks, you will receive the higher of either your spousal check or your own retirement benefits. So Congress and the President pretty much ended suspended benefits.

Now to the grandfathering opportunity I mentioned earlier. First, if you are age 66, you can still use the old file-and-suspend rule, but you must file your application with the Social Security Administration by Friday, April 29, 2016. Second, if you were 62 or older by December 31, 2015, you will still be allowed to file a restricted application. I must mention, though, that if you are already collecting benefits, you are not impacted by the changes.

Obviously, this will potentially impact millions of families in the coming months and years. Retirement income plans may need to be revisited and reanalyzed to respond to these changes. But that’s assuming that your advisor knows as much as he/she should know about Social Security in the first place. If you need assistance to revise your retirement income plans, please contact Laser Financial Group at LaserFG.com or call 877.656.9111 for a complimentary review.

Monday, February 8, 2016

It Sounds Counterintuitive, Yet Rebalancing Could Be Your Single Greatest Investing Move

It Sounds Counterintuitive, Yet Rebalancing Could Be Your Single Greatest Investing Move


Looking to hit that home run with your investments? Of course, who wouldn’t be? Then you must be prepared to be counterintuitive and take actions that go against the grain of conventional wisdom. I’d even go so far as to say that you must be willing to take the occasional odd action.

Here’s why. One of the fundamental things that every long-term investor must do religiously – based on the occurrence of certain predetermined triggers – is what is referred to in financial planning as rebalancing. In basic terms, rebalancing is the process of realigning your investment portfolio back to its original and/or predefined target setup.

For example, let’s say that prior to investing, Mary determined that the appropriate level of risk for her timeframe and risk tolerance is 40 percent equities/stocks and 60 percent fixed income/bonds.

However, because real-world markets often tend to change, and rather unexpectedly, this 40/60 mix is bound to get out of sync. Let’s assume that Mary’s equities did really well, but her bonds went south. As a result, stocks now make up 60 percent of Mary’s portfolio and fixed income represent 40 percent. So her portfolio has changed from her original 40/60 to 60/40.

Although things may look great for Mary because her account balance may have increased, here’s the catch. The current portfolio mix contains much more risk than she set out to take. Stocks now represent 60 percent and bonds only 40 percent - a whopping 20 percent higher than her actual stock tolerance.

Mary needs to rebalance her portfolio back to her target 40/60. To do that, she must sell 20 percent of her stocks and buy 20 percent more bonds. Yes, I know. That sound like the wrong move. Stocks are up bonds are down, so why sink her money into what is presently down?

Remember what I said earlier? Rebalancing is completely counterintuitive to conventional investing wisdom. You’re basically selling the winners and buying losers. Wow, that's hard to accept. But it is precisely the right thing for Mary to do. You never want to plan based on what you perceive might happen in the future - because no one knows. Neither is it done based on what you feel. Rebalancing must be entirely based on what has already happened.

Now back to Mary’s portfolio. Think about it this way. She’s selling stocks at the time that they are higher in value and, in turn, buying bonds that have dropped in value. Bonds are practically on sale, which if you really think about it is precisely the right time to buy, isn’t it? What about the stocks she’s selling at a higher value? That’s great, too, isn't it?

When it comes to money and investing, conventional wisdom most of the time has nothing to do with wisdom. Please find yourself an experienced, honest financial professional who can help you build a suitable plan and, most importantly, help you do the difficult but prudent things that are good for your future.

All the best.
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Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. Youll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If youre ready, were here to help.