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Most US Workers Say They Will File for Social Security Early

To secure the maximum amount in monthly Social Security retirement benefits, Americans must wait until full retirement age to start receiving their payouts. Results from a 2023 survey show that most of today’s workers know about this stipulation – and yet the vast majority say they’re willing to file for their Social Security benefits early anyway.

UK-based wealth management company Schroders surveyed 2,000 working Americans to learn more about their readiness for and perspectives on retirement. The results showed that a mere 10 percent of respondents said they plan to hold off until age 70 to take their Social Security benefits. This is the case even though 72 percent of them are aware their payments could be higher if they waited.

Why Are So Many People Willing to Give Up More Income?

Many of the survey participants – roughly 44 percent – said they worry about Social Security running out of funds. Their fears may not be entirely unfounded. The Social Security program has served as a safety net for millions of retirees, providing monthly benefits since 1940. However, based on some projections, timely payments may not be possible beyond 2037.

Another 36 percent of the respondents said they would take benefits earlier because they need the money sooner.

These fears, said Deb Boyden, head of US defined contribution at Schroders, reflect “a crisis of confidence in the Social Security system.”

“Fear about the stability of Social Security has people walking away from money that could improve their quality of life in retirement,” she said.

Other Key Findings

• Nearly half of all survey respondents (49 percent) acknowledged that they do not have any strategies in place for retirement income.

• Less than a quarter (24 percent) of those aged 60 to 67 who are still in the workforce said they believe they’ve accumulated sufficient retirement savings.

• Among respondents aged 45 and older, 69 percent say they fret over money daily – on average, 1.6 hours every day. More than half of this same group (53 percent) said they worry that stress over finances will have a negative impact on their overall health.
   
• Retirees who’d worked with a financial planner had higher average monthly incomes than those who had not sought out the help of an advisor ($5,075 per month versus $3,000 per month). Those who had set up a formal financial plan received nearly twice more per month on average in retirement – about $5,810.

Find more information on the survey results online.

Highlights of How the Omnibus Bill Will Benefit Older Adults

The Senate and House have cleared the passage of a year-end $1.7 trillion appropriations bill that will benefit older adults on a number of fronts.

The bill, which runs more than 4,000 pages and includes a wide variety of legislation, heads to President Biden next for his signoff.

Here is a breakdown of some of the highlights that relate to supporting older Americans:

Health and Housing

• Opt to age at home – The Money Follows the Person (MFP) Program has been helping older adults age in their own home or a community setting, rather than in nursing homes, since 1972. The newly passed bill extends MFP through September 2027.
   
• Age in place safely – The omnibus bill has also doubled funding for the federal government’s Older Adult Home Modification Program from $15 million to $30 million.
  
  For seniors with limited income, this program covers the cost of simple, low-cost home modifications – such as railings and temporary wheelchair ramps – that help them age in place safely.
   
• Provide for your healthy spouse if you are on Medicaid in a nursing home – Medicaid beneficiaries who must reside in a long-term care facility but have a spouse still living at home will continue to see their healthy spouse protected from poverty.
  
  Known as spousal impoverishment rules, these protections ensure that the healthy spouse receives income while their institutionalized spouse keeps their Medicaid eligibility. These protections, which are adjusted each year, will continue to be in place until September 2027.
   
• Continue to see doctors online – Lawmakers have extended access to telehealth services for Medicare enrollees for another two years.
   
• Find affordable housing with support services – The Housing for the Elderly Program has received a billion-dollar bump in funding as well.
  
  This program seeks to aid seniors with very limited income in securing housing that is within their means while also offering supportive services such as assistance with cooking and cleaning.

Retirement Savings

• Contribute more to retirement – For older workers, the omnibus bill raises what are known as “catch-up” contribution limits for retirement savings. Taxpayers ages 60 to 63 will be allowed to contribute an extra $10,000 to their 401(k) starting in 2025.
   
• Access 401(k) funds for emergencies – If you need to take money out of your 401(k) before reaching age 59½, under certain circumstances you will no longer have to pay the 10 percent penalty fee for withdrawing money early. As of the end of 2023, you will be allowed to withdraw up to $1,000 a year for unforeseen emergencies without incurring a penalty.
   
• Wait longer to withdraw money from your retirement accounts – Previously, you were required to begin withdrawing money from your retirement plan account starting at age 72. This mandatory withdrawal is known as a required minimum distribution (RMD).
  
  As of January 1, 2023, the new bill allows you to hold off until age 73 to take funds from these types of private retirement accounts.

疫情下長者是否需要提早退休 （廣東）

疫情下長者是否需要提早退休（國語）

New year, new tax updates. What you need to know for 2020

KEY POINTS

• Put up to $19,500 in your workplace 401(k) plan, plus another $6,500 if you’re 50 and over in 2020. This also lowers your taxable income.
• The standard deduction for single filers will be $12,400. It rises to $24,800 for married couples filing jointly.
• Giving away wealthy? An individual can transfer up to $11.58 million free of estate and gift taxes in 2020.

Standard Deduction

Pay attention to your standard deduction for the 2020 tax year.  The IRS has bumped it to $12,400 for singles, up from $12,200 in the prior year. 

The standard deduction for married joint filers will be $24,800 up from $24,400 in 2019. 

Workplace Retirement Savings

Resolve to save a few extra dollars in your retirement account at work. 

The IRS has raised the employee contribution limit for 401(k), 403(b) and most 457 plans to $19,500, up from $19,000 in 2019. 

If you’re 50 or older, you can save an additional $6,500.  That’s up from $6,000 in 2019. 

The contribution limit for individual retirement accounts, whether traditional or Roth, is holding steady at $6,000, plus another $1,000 for savers 50 and over. 

One caveat: The IRS limits high-income earners’ ability to make direct contributions to Roth IRAS-accounts in which you can save after-tax dollars, have the money grow tax-free and use it in retirement free of taxes. 

In 2020, if you adjusted gross income exceeds $124,000 and you are single ($196,000 for married couples filing jointly), you won’t be able to make a full contribution directly to a Roth IRA. 

Instead, those savers might consider using a strategy known as the “backdoor Roth”, where they make a nondeductible contribution with after-tax dollars to a traditional IRA and then covert it to a Roth. 

Health Saving Opportunities

Got a high deductible plan in 2020? You most likely have access to a health savings account. 

These accounts allow you to put away pretax or tax-deductible money and have it grow free of taxes.  You can take a tax-free withdrawal to cover qualified health expenses. 

In 2020, you can save up to $3,550 if you’re an individual with self-only health coverage.  That’s up from $3,500 in 2019.  Account holders with family plans can save up to $7,100 in this account (up from $7,000 in 2019). 

Gift and Estate Tax Savings

Good news for people sitting on millions of dollars: The Tax Cuts and Jobs Act nearly doubled the amount that decedents can bequeath in death-or gift over their lifetime-and shield it from federal estate and gift taxes, which are 40%.

Before the tax overhaul, the gift and estate tax exemption was $5.49 million per person. 

For 2020, the lifetime gift and estate tax exemption will be $11.58 million per individual, up from $11.4 million in 2019. 

Finally, the annual gift exclusion-the amount you can give to any other person without it counting against your lifetime exemption-will hold steady at $15,000 for 2020.

Five Tips for Starting Retirement Planning in Your 50s

When it comes to retirement planning, many Americans find themselves underprepared. A majority of baby boomers (born between 1946 and 1964) and Generation X’ers (born between 1965 and 1978) often end up without retirement savings or don’t have realistic expectations about post-retirement costs. According to the Insured Retirement Institute, only 25 percent of boomers are confident of having sufficient savings in retirement. If you are in your 50s and nearing retirement without substantial savings or a plan, don’t despair -- it is never too late to start planning.

Although every working professional should contribute towards retirement from their early days, for various reasons they often delay the process. If you are nearing your 50s without a post-retirement plan and see yourself working for another 10 to 15 years, this is an opportunity to plan judiciously and save for your retirement right away.

Here are five strategic steps for achieving the best retirement plan:

1. Set Specific and Practical Goals

Proper retirement planning begins with setting specific goals. Calculate your current income, total savings, and ongoing investments to understand how much you could save, and be sure to set realistic goals.

While providing for emergency expenses and paying off a mortgage can be your short-term and intermediate goals, saving up for retirement should be your long-term goal. An annual financial review is helpful in evaluating your past goals and understanding your earnings as well as liabilities.

2. Plan a Realistic Budget Focusing on Retirement

Review your monthly and yearly expenses and list the factors that are likely to remain constant for the next few years. Now allocate funds to each category in a way that will allow you to save more for your retirement.

According to financial experts, if you are saving for retirement after 50, it is best to contribute 30 percent of your salary towards this end. If you find that goal difficult to meet, look at your budget list and reduce optional expenses.

3. Pay Off Debts

Paying off debts early will help you meet your retirement budgets and ease the financial burden. According to an AARP report, 44 percent of Americans continue to pay for their home after they retire.

Clearing off outstanding debts, credit card bills, loans, and mortgages will make it much easier to prioritize retirement funds.

4. Invest in Retirement Plans

401(k)s, 403(b)s and IRAs are some of the retirement plans available in the U.S.  While 401(k)s are one of the most popular plans, not all companies offer them and those that do have their own, often restrictive, investment rules. Then there are two types of IRAs:  traditional and Roth IRAs.

To make the best choice among the many retirement plan options, it is essential to have a thorough understanding of IRA vs 401(k), Roth IRA vs 401(k) and other investment alternatives, as well as contribution limits.

5. Diversify Your Investments

Investment diversification will help keep you on a firm financial footing. Do not stash all your money in banks; instead, create an investment portfolio and explore your options.

It is important to diversify and distribute your money among multiple sectors. Considering the volatility of markets, diversification of your investment portfolio safeguards your capital and helps it grow.

It’s Time to Step Up a Gear

A concrete retirement plan with emphasis on savings is essential to ensure a comfortable and healthy post-retirement life. Saving for your retirement is the first priority and the sooner you start, the better your chances of achieving your retirement goals.

How Am I Going to Have Enough Money to Retire?

“How much do you need to save? How much can you really afford to put away and still live the life you deserve today? How does anyone make it work?”

It can be very overwhelming to save for retirement. How are you expected to take care of your responsibilities to your family, enjoy life and put away enough to have an enjoyable retirement that might last 10, 20 or even 30 years? That’s the question posed in the Twin Cities Pioneer Press article, “Your Money: Helping you live in the moment and plan for the future.”

The question is asked frequently by people at all ages and stages of their lives. Here are some tips on how you can use comprehensive financial planning — by looking at a variety of retirement income savings methods and income strategies — to make the most of retirement savings. Some of them may not apply now, but you’ll need to know about them in the future, like Social Security.

Do you have a retirement savings strategy? Not everyone takes advantage of the 401(k)s, 403(b)s and IRAs that are available. Some of these retirement accounts come through an employer, and a traditional IRA can be set up on your own. If you work for a company that offers the option of having a Roth IRA and you’re just starting your career, it could be a great option. You pay taxes on contributions now, when your income may be lower, but when you take distributions, you won’t pay income tax on them. There are no required distributions for a Roth IRA — other retirement accounts require a certain amount of yearly withdrawals. If you are in a high-income tax bracket, the Roth IRA is not for you.

Social Security strategies make a big difference in retirement income. Deciding when to take benefits is complicated. However, it is well worth the effort. It could be a difference of thousands of dollars over time. Realize that the later you start taking benefits, up until your 70^th birthday, the greater the benefits will be. Your Full Retirement Age or FRA is currently age 66 for Americans born between 1943–1954, and a few months older for those born later. You can apply for benefits as early as age 62, but you’ll get a reduced benefit — as much as 25%!

What about a Roth conversion? For some people, enhancing their retirement savings by moving existing savings into accounts that offer better tax advantages, adds up nicely for current and future tax brackets. A Roth conversion is when you pay the tax on all or a portion of a traditional IRA and move it into a Roth IRA, where it continues growing. If you have owned the account for at least five years, you can then take withdrawals out tax free, once you turn 59½. Note that this is a complicated decision that must be made in conjunction with all of your other retirement and investment funds.

Planning for retirement income is just that: planning. The alternative — winging it and hoping for the best — rarely works out. The earlier you begin planning for your retirement, the more likely it is that you’ll enjoy this phase of your life.

Reference: Twin Cities Pioneer Press (Jan. 26, 2019) “Your Money: Helping you live in the moment and plan for the future”

More than a Will: What Else Should Your Estate Plan Include?

“A will directs how your probate assets will be distributed upon your passing, designates an executor to be in charge of your estate, and allows you to create trusts for minor grandchildren or disabled beneficiaries. However, having a will is just part of the story.”

A will is the cornerstone of an estate plan, but it is by no means the only document needed to distribute assets and prepare for both incapacity and death. The Island Now reviews a number of things that an estate plan should address in the article “Five things that will impact your will.”

How are your bank accounts structured? If you have a bank account set up as “joint with right of survivorship,” when one of the owners dies, the other owner automatically inherits the whole account. Remember that this will occur, no matter what is stated in the will. If you have added a child to that account for convenience, is it your wish that the child should inherit the entire account? That’s exactly what will happen. You may be better off letting a child help you, using Power of Attorney rather than structuring the account that way.

When was the last time you reviewed beneficiary designations? Like titling bank accounts, as explained above, the beneficiary designation takes precedence over anything in your will. If you opened an IRA at your first job and now two decades—and two marriages—have passed, that IRA will still be passed on to the person who you named two decades ago, unless you have updated the beneficiary name. Accounts that often pass directly to beneficiaries include life insurance, annuities, 401(k), 403(b), brokerage accounts and some bank accounts.

Each asset that has a beneficiary, should also have a contingency beneficiary in the chance that the primary predeceases you or does not wish to receive the asset.

Are you prepared for the cost of a health crisis? The cost of a health crisis can, and often does, wipe out a family’s years of retirement savings. There are several strategies that an estate planning attorney can help you with to plan in advance for this. Long-term care insurance may be an option and placing assets in an irrevocable trust may be another, depending on your situation. There is a five-year look-back for any Medicaid benefits, so planning in advance is critical.

For many families, placing their primary residence into a trust while retaining the right to live in the home, retaining any STAR or Veteran’s exemptions and possibly even securing capital gains advantages for heirs is a possibility but requires the help of a skilled estate planning attorney.

Is gifting part of your estate plan? Most people know about the annual exclusion gift, which allows anyone to make a gift in the amount of $15,000 per year to a beneficiary with no gift tax consequences. However, if you need to apply for Medicaid coverage within a five-year period, any gift will trigger a waiting period before you can be eligible for Medicaid. Therefore, you can make a gift for tax purposes but it’s not something you can do for Medicaid planning. This is an expensive mistake. Talk with an estate planning attorney to make sure you get this one right.

Who is your Power of Attorney? Everyone should have a Power of Attorney. This is a person who is your legal representative, if you become incapacitated. The durable power of attorney gives your agent the authority to handle banking matters, real estate transactions and other financial matters. You’ll also need a health care proxy and a living will.

All these issues are part of a comprehensive estate plan, which is best created with an experienced estate planning and elder law attorney.

Reference: The Island Now (Nov. 12, 1018) “Five things that will impact your will”

What Comes First: College Expenses or Your Retirement?

“About one-third of Americans with children under 18 say they plan to use retirement savings or "could use if needed" to help pay for their children's education, according to a recent survey by Sallie Mae, one of the nation's largest student loan lenders.”

Here’s the biggest difference between retirement savings and college expenses: you can get a loan for college. No financial institution will give you a loan for retirement. Therefore, when it comes to finding money for college, financial planners and estate planning attorneys agree, as does this article from the Star Tribune: “Do your kids a favor: Pick retirement savings over tuition.”

The number of people who are making that decision are on the decline. The 2016 edition of that survey is down from 39%. It’s good that more parents are thinking twice about making this financial mistake.

Paying for college expenses from a tax-advantaged employer retirement account, like a 401(k), can become very costly. Here’s why:

• How does a 10% tax penalty on early withdrawals, if you’re under 59½ sound? Not good.
• The money you withdraw is taxed as income.
• You’re losing the tax-free growth of your savings. Remember, these retirement accounts grow tax-free.
• You lose the benefit of compounding, so your growth potential is losing ground.

The “least worst” option, say experts, is to fund a Roth IRA. Unlike qualifying contributions to a 401(k) or traditional IRA, the Roth IRA contributions are not tax-exempt. As a result, there are fewer restrictions on early withdrawals.

However, you’re still losing out in many ways. This includes when you get further along into your retirement years and you don’t have enough money to support yourself. Take a very long-term perspective on what will happen in the future.

Parents must understand that while it’s nice that they want to sacrifice to help their children through college, they may actually be generating far more stress for their children when the kids have to help Mom and Dad during retirement years. That’s likely when their kids are having children of their own, paying a mortgage and saving for their own children’s college expenses.

One last, major consideration is: college aid. Your withdrawals from retirement funds will be counted by financial aid offices as ordinary income. If it pushes your total wages up too high, your college-bound student may not qualify for assistance.

Retirement accounts are not counted, when considered if your student qualifies for financial aid. Therefore, your best bet is to continue funding retirement accounts. If you start cashing them out to pay for college expenses, everyone loses in the long run.

Reference: Star Tribune (Nov. 6, 2018) “Do your kids a favor: Pick retirement savings over tuition”

There’s more than a Roth or an IRA to Your Retirement 您的退休不僅僅是Roth或IRA (中英對照)

“From well-known options, like IRAs and 401(k)s, to more obscure ones, like Cash Balance Pension Plans or Rich people Roths, these accounts can help you to grow your savings.”

Most people work at a company that offers them a way to contribute to a retirement account, usually an IRA.  However, there are more options available, according to a recent article from Forbes titled “10 Retirement Accounts You Should Know About.”

Few of us need less money in our retirement accounts. Most of us enjoy the tax benefits we get from retirement accounts. Americans, in general, do a terrible job of saving for retirement. Some say the IRA, Roth IRA and other similar accounts were created to give us an incentive to do a better job. The tax advantages of these accounts make it more attractive to sock away money every year. These accounts were also set up with deliberate penalties, so people wouldn’t raid their accounts every time they needed a few extra dollars.

If you are among those who work for companies that have a retirement savings plan match, make the most out of it. If you put in the annual percentage or amount your plan requires, your employer will match that contribution. Most workers walk away from this money.  However, it’s free money!

Employees usually are offered a 401(k), 403(b) or 457 plan from their employer. The financial institution is already chosen, the money is automatically taken out of your paycheck and often you can only make decisions about what kind of funds you can select at certain times of the year. In 2018, you can contribute up to $18,500. If you’re 50+, you can make an additional $6,000 contribution, known as a catch-up contribution.

Self-employed? You need a retirement plan more than someone who works for a company. Self-employed people have many more options. If you need help, talk to your CPA. There may be some plans that are better suited or have more tax advantages than others.

For self-employed people, the basic choices are the solo 401(k) for a sole proprietor or someone working with their spouse. You can make contributions as both the employer and the employee. You could contribute as much as $55,000 in 2018 (or, if you are 50+, $61,000). Your total contributions are determined by your net business income.

Another choice for retirement savings for the self-employed is a SEP IRA, the Simplified Employee Pension. It’s easier to set up than a 401(k)and is typically used by people with self-employment income or small business owners. As the employer, you can contribute up to a quarter of your income, or $55,000, or whichever is less. There are no catch-up contributions for a SEP IRA.

Self-employed or working for a company, your retirement plan needs to include an estate plan. Your estate planning attorney will be able to help you with a will, power of attorney and healthcare directive. She will also be able to give you valuable insights, as to how your retirement plan and your estate plan can work together to minimize taxes and maximize the estate you leave behind.

Resource: Forbes July 23, 2018 “10 Retirement Accounts You Should Know About”

 “從眾所周知的選項，如IRA和401（k），到比較少人知的選項，像現金餘額養老金計劃 (Cash Balance Pension Plans)或富人Roth，這些帳戶可以幫助您增加儲蓄。”

大多數人在一家公司工作，為他們提供的退休賬戶方式，通常是IRA。但是，根據福布斯最近發表的一篇文章，有更多的選擇 “10 Retirement Accounts You Should Know About.”( 你應該知道的10個退休賬戶)

大部分人都是覺得退休賬戶的錢不夠用。我們大多數人都喜歡從退休賬戶中獲得的稅收優惠。總的來說，美國人並不擅長為退休儲蓄。有人說IRA，Roth IRA和其他類似的賬戶是為了激勵我們做得更好。這些賬戶的稅收優惠使得每年存錢都更具吸引力。這些帳戶是有懲罰條款的，因此人們不會在每次需要額外的錢時使用他們的帳戶。

如果你是那些為退休儲蓄計劃匹配的公司工作的人，請充分利用它。如果你在計劃存入所需的年度百分比或金額，你的雇主將與該存款相匹配。大多數工人都忽略了這筆錢。但是，這錢是免費的！

員工通常會從雇主處獲得401（k），403（b）或457計劃。雇主已經選擇了金融機構，這筆錢會自動從​你的薪水中扣除，而且你通常只能決定在一年中的某些時候可以選擇投資在那些基金。在2018年，你可以貢獻高達18,500美元。如果你是50歲以上，你可以額外支付6,000美元的存款，稱為追加捐款(catch-up contribution)。

自僱？你比一般受僱人士更需要退休計劃。自僱人士有更多選擇。如果你需要幫助，請諮詢你的註冊會計師。可能有一些計劃比其他計劃更適合或有更多稅收優惠。

對於自僱人士，不管是單獨經營者或與其配偶一起工作的人的基本選擇是獨自401（k）。您可以同時以雇主和僱員的身分存錢。你可以在2018年貢獻多達55,000美元（或者，如果你是50歲以上，61,000美元）。你的總捐款由您的營業收入決定。

自僱人士退休儲蓄的另一個選擇是SEP IRA，即簡化員工退休金 (Simplified Employee Pension)。設置比401（k）更容易，並且通常由自僱人士的收入或小企業主要使用。作為雇主，你可以提供高達四分之一的收入，或55,000美元，或比較哪個方法需要較少錢。SEP IRA沒有追加捐款。

自僱人士或為公司工作的人，退休計劃需要包括資產計劃。你的資產規劃律師將幫助你完成遺囑，授權書和醫療保健指令。她還能夠為你提供有價值的見解，了解你的退休計劃和你的資產計劃如何共同努力以最大限度地減少稅收並最大化地留下你的遺產。

參考: Forbes July 23, 2018 “10 Retirement Accounts You Should Know About”