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Forbes
a day ago
- Business
- Forbes
When Should I Start Taking Social Security?
The question of starting claims early or late is a common one among those eligible - or about to ... More become one. As an American citizen who has earned wages, you're eligible to begin receiving Social Security benefits as early as age 62. However, if you delay your first payment, your monthly benefit will increase, reaching its maximum at age 70. Somewhere between 62 and 70 you'll reach your Full Retirement Age (FRA), which is based on your birth year. FRA is important because the Social Security Administration (SSA) typically bases your reported benefit amount based on that age. This is what the SSA calls Primary Insurance Amount, or PIA. The PIA also determines the benefit your spouse could receive before or after your death. When considering taking Social Security early, you may want to think about how it might affect your spouse. A spouse may be eligible to receive up to 50% of your PIA, but only if they claim at their own FRA. If either of you claims early, the spousal benefit will be reduced accordingly. Also, spousal benefits are based on your PIA and do not include any delayed retirement credits you earn by waiting past your FRA. Survivor benefits work differently. If you claim early and pass away, your surviving spouse generally receives the reduced amount you were receiving. But if you delay benefits beyond your FRA, your survivor may receive up to 100% of your higher, delayed benefit — including any delayed retirement credits — subject to SSA rules pertaining to the surviving spouse. A key consideration is longevity—how long you expect to live. If you don't live long after claiming benefits you might receive less over your lifetime. Conversely, starting too early and living a long life could lock you into reduced payments for decades. So, what's the right move? Let's consider those born on September 1963, turn 62 this year after September 1st. Their FRA is 67. Starting benefits at 62 and one month—the earliest allowed—results in a 30% reduction from PIA. Waiting until 70 yields a 24% increase (8% per year). SSA's full table is here. If they claim at 62 and live to 78, they'll receive 16 years of benefits at 70% of PIA—totaling 11.2 years' worth. Claiming at 67 yields 11 years at 100%, or 11 total. Waiting until 70 gives 8 years at 124%, or 9.9 total. In this case, starting at 62 or 67 gives nearly the same outcome, while waiting until 70 means missing more than a full year of PIA. If they live to 80 the differences narrow even more: The differences are modest unless they live well beyond average life expectancy. For those who live into their 90s, waiting can result in over five years' worth of PIA because of the extra credits. Ultimately, since no one knows how long they'll live, the decision comes down to personal factors: current income needs, health, family history, lifestyle, taxes and risk tolerance. Some people are comfortable starting early, accepting lower payments in exchange for peace of mind. Others prefer to wait, betting on longevity and maximizing their future benefits. Some people, thanks to savings or family wealth, don't need their Social Security right away. They often choose to wait until 70 to receive the largest possible benefits, which they then invest alongside their other assets. Investing your Social Security benefits can significantly boost their value over time. For example, someone who starts benefits at 62 and simply puts the money in a no-interest checking account will receive the equivalent of 14 years of PIA by age 82 (20 years × 70%). But if those benefits earn a 2% real return annually, that total amount during those 20 years goes up by more than three years' worth of PIA. You will be better off claiming Social Security benefits early if you don't expect a long life, or ... More if you can invest those benefits. The higher the rate at which you invest them, the better off you will be if you claim early. So does it matter if you plan to invest your benefits? Absolutely. If benefits aren't spent but invested, starting earlier is often the better option because the breakeven point (the age after which having waited would have been the better move) is pushed out further. This makes intuitive sense: Early payments have more time to grow through compounding. For example, if someone lives to 80, the difference between starting early or late is minimal, as we saw earlier. But at a 2% real return, that point of indifference goes up to 83. At 4%, it moves to 87. That means investing your benefits makes early claiming increasingly the better choice, especially when investing in U.S. Treasuries or high-quality bonds held to maturity that minimize or even eliminate the introduction of market risk.
Health Line
02-06-2025
- Business
- Health Line
How Your Marital Status Affects Your Medicare Coverage
Your marital status can affect your Medicare coverage, eligibility, and costs. Understanding the role of marriage in Medicare can help you plan your healthcare for yourself and your spouse. In general, you qualify for Medicare if you are over 65 or younger but living with certain disabilities. You must also have worked in the United States and paid taxes for at least 10 years. If you meet these criteria, your legal spouse may also qualify for Medicare even if they do not meet the criteria. This article discusses the rules of eligibility for Medicare based on having a spouse who qualifies for the program, as well as considerations regarding coverage, costs, and changes in marital status. How does marital status affect Medicare eligibility and benefits? To be eligible for Medicare Part A benefits based on your spouse, you must have been married to a spouse eligible for Social Security benefits for at least 1 year before applying for those benefits. Once you qualify for Medicare Part A, you are also eligible to enroll in Part B and Part D. In addition, you can choose to enroll in Medicare Advantage (Part C) instead of Original Medicare (Parts A and B). Once you enroll, both you and your spouse are eligible for all the benefits of Medicare. How does marital status affect Medicare costs? For Medicare Part D, you'll each need to meet a deductible of $1,676 before coverage will apply. If you or your spouse worked and paid taxes for the required period, there's no premium for Part A. If you worked 30 to 39 quarters, you can buy Part A for $285 each, monthly, in 2025. Working less than 30 quarters results in a $518 premium for each spouse. For Part B, each spouse pays an individual premium starting at $185 each, depending on income. The same structure applies to Part D, Part C, and Medigap plans, with private insurers setting their premiums and deductibles. Each spouse must choose their separate plan and meet their individual deductible. How does marriage affect Medicare income limits? Your Part B and D premiums may be higher depending on your income and whether or not you are filing taxes jointly. The following chart summarizes the income tiers and their equivalent Medicare Part B and Part D premiums. Income (married and filing jointly) Income (married and filing separately) Part B premium Part D premium $212,000 or under $106,000 or under $185 your plan's base premium $212,000 to $266,000 not applicable $259 +$13.70 $266,000 to $334,000 not applicable $370 +$35.30 $334,000 to $400,000 not applicable $480.90 +$57 $400,000 to $750,000 $106,000 to $394,000 $591.90 +$78.60 $750,000 or above $394,000 or above $628.90 +$85.80 Medicare Savings Programs and Extra Help Medicare savings programs (MSPs) can help you cover the costs of Part A and B premiums, deductibles, copays, and coinsurance. To be eligible, your monthly income and household resources must not exceed certain limits as follows: Note that Medicare typically defines resources as funds in checking, savings, or retirement accounts, stock investments, or bond holdings. Some states may exclude certain things from counting as assets. These include: your residence a single vehicle a burial plot up to $1,500 earmarked for burial expenses from Social Security furniture other personal and household belongings Like MSPs, the Extra Help program, also called the Part D Low Income Subsidy, offers financial assistance for prescription medications. Eligibility for this subsidy depends on income and economic necessity. The married income and asset thresholds to qualify for Extra Help are: How does divorce or death affect Medicare coverage? If you are divorced, you can still qualify for Medicare based on your former spouse's eligibility for Social Security benefits if you were married for at least 10 years. Similarly, if you're widowed, you must have been married for at least 9 months before your spouse's death, and they must have been eligible for Social Security benefits. You must also be single now. Whether or not you have to pay a premium for Part A with your former spouse will depend on the exact length of time they worked and paid taxes. Can one spouse be on Medicare and the other not? Eligibility for Original Medicare is automatic for both of you as long as your spouse is eligible. That said, Medicare enrollment is not necessarily automatic. If you don't qualify for Medicare yourself but your spouse receives benefits from the Social Security Administration (SSA) or Railroad Retirement Board (RRB), you may be eligible for premium-free Part A. However, you'll have to enroll manually. You'll be enrolled automatically only if you are receiving these benefits yourself. After enrollment, you'll both receive your Medicare cards 3 to 4 months before the birthday of the qualifying spouse. Note that while Medicare Part A is mandatory, Part B is not. You have the option to cancel Part B if you do not need it. If your spouse qualifies solely by age, manual enrollment is required, and you can choose not to enroll in Part B or Part D. That said, delaying enrollment can result in a late fee if you don't qualify for a special enrollment period. In addition, if your spouse qualifies by age and you have employer group insurance, you can usually keep your group plan, with Medicare as a secondary payer for costs not covered by your employer's insurance. Special enrollment periods for married couples Generally speaking, there are only specific periods during which you can enroll in Medicare or switch Medicare plans without a penalty. These are known as Medicare enrollment periods. However, you can enroll outside of these periods in certain situations, including when you undergo a qualifying life change, such as a divorce or the death of a spouse. Takeaway Because the rules around Medicare in relation to marriage can be complex, it's essential to educate yourself thoroughly about your eligibility and that of your spouse. Generally, Medicare is for those over 65 or with specific disabilities who have worked in the U.S. for at least 10 years, along with eligible spouses. That said, special rules may apply for eligibility and enrollment following a divorce or a spouse's death. Your enrollment options include Original Medicare, Part D, Medicare Advantage (Part C), and Medigap. Spouses pay separate premiums for each Medicare part. These premiums can be affected by a couple's total income and their joint or separate tax filings. Financial assistance programs like Medicare Savings and Extra Help can help you pay for Medicare costs, but eligibility for these can also depend on your total married income and resources.
Yahoo
23-05-2025
- Business
- Yahoo
Ways to give money to grandchildren who have maxed out their RESPs
Q. My spouse is near the end of her life and she has approximately $60,000 she wants to transfer to her son to be used for her two grandchildren's education. I suggested she could transfer the amount to her son's registered retirement savings plan (RRSP) while living without triggering any tax implications. He has the contribution room available. No one agrees with me. What is the best and cheapest way to get these funds to her son for the grandkids? And is the RRSP contribution a good way of doing it? If not, is there something better? We have already topped up both of my grandkids' registered education savings plans (RESPs). —Thanks, John FP Answers: I am sorry to hear about your spouse's health issues, John. Planning at a time like this can be difficult. From a tax standpoint, Canada does not have gift or inheritance tax, but several provinces have estate administration tax or probate that can range from a few hundred dollars to as much as 1.695 per cent of the value of an estate. From that standpoint, if she left the $60,000 to either your son or grandchildren at death, those funds would likely be subject to probate if they passed through your spouse's will. Keep in mind that U.S. citizens could face gift or estate tax implications that may or may not apply in this case. Also, if these funds are left to her son via her will probating the will could take several months, which means a delay in receiving any funds. The major perceived downside of gifting the funds now would be the loss of control of the money as it changes ownership. If your spouse's funds are currently held in her RRSP account, there would be tax on her withdrawal. RRSP withdrawals could be taxed at marginal rates in the 20 per cent to 50 per cent range depending on what other income your spouse has in the year of withdrawal. Similarly, at death the RRSP is considered to be withdrawn in full and the amount will be added to that year's income tax return. Whether the funds are withdrawn during her lifetime or at death, and even if her son is a named beneficiary, the proceeds are taxable to your spouse. To be clear though, John, if these funds are in your spouse's RRSP, she cannot transfer them directly to her son's RRSP on a tax deferred basis. She will have tax on the RRSP withdrawal and he may save tax with his RRSP contribution. Assuming your spouse gives $60,000 to her son, it would be his choice to make an RRSP contribution or not. If he has contribution room as you stated and his income falls into a high enough tax bracket he will have a tax refund for making this contribution. The deduction for this contribution could also be carried over to a future year and deducted over multiple years if it made sense or he could even provide the money to his spouse to make a spousal RRSP contribution to an RRSP in his name. If there is a desire for these specific funds to flow directly to the grandchildren someday a separate RRSP could even be established listing them as beneficiaries (which is revocable). The problem with this strategy is that if the goal is for the ultimate beneficiary of the gift to be the grandchildren, having her son put the money in his RRSP may not be the best way to implement the strategy. If your spouse wants him to withdraw from his RRSP for educational expenses for her grandkids, he may be in a higher tax bracket at that time, making the strategy less beneficial. The cheapest way to implement this strategy likely requires a level of trust that the funds are going to be used for education purposes if your spouse makes a direct gift during her lifetime. Any other plan will involve more complexity in order to provide more assurance that the proceeds end up used for the grandchildren's education. An example of a formal strategy could be the use of a testamentary trust in her will for her grandkids, with her son as trustee. The trust could be established specifically for the grandchildren's education or it could be more generally for their education and advancement in life in order to be more flexible. The testamentary trust could invest the money until the grandchildren start attending a postsecondary program, at which time the proceeds could start to be provided to the children. A downside of trusts is that formal trusts have accounting and legal fees to consider. If we are looking at a $60,000 trust, the cost to maintain it could be high. I have seen parents over the years hold funds in a taxable investment account on behalf of their children — a so-called informal trust. The parents pay the taxes on the income as if it is their own. In a situation where there is RESP room, an obvious strategy would be to top up those accounts. But if there is no RESP room, an informal trust that is simply in her son's name is another less formal, less certain solution. Retiring surgical nurse Richard wants to know whether to max out RRSPs or top up TFSAs How can I ensure a neighbour with a $10 million estate is not taken advantage of? In summary, John, there is no right answer here. But if the RRSP idea is because the funds are in your spouse's RRSP, she cannot transfer the money on a tax deferred basis. A formal testamentary trust in her will may be the most ironclad way to do this for her grandchildren's education. A gift to her son to hold the money informally in trust for the grandkids is also an option. Andrew Dobson is a fee-only, advice-only certified financial planner (CFP) and chartered investment manager (CIM) at Objective Financial Partners Inc. in London, Ont. He does not sell any financial products whatsoever. He can be reached at adobson@ Sign in to access your portfolio
Yahoo
13-05-2025
- Business
- Yahoo
Ignoring this form could delay pension inheritance and risk 40% tax
Our pensions can become one of the largest assets that we own, forming the basis of our family's retirement security, but you may be putting this in jeopardy by failing to complete a key form, outlining who'll get the pension when you die. These forms are called expression of wish and they allow you to stipulate who should receive your pension in the event of your death. They aren't legally binding, but the scheme does take them into account when making decisions around benefits. If they aren't filled in or updated after key life events, there's a risk your loved ones could face a significant delay in receiving the pension. It could mean financial hardship at an already difficult time. Read more: Why Trump's tariff turmoil should not sway pensioners If you don't update an expression of wish after a divorce or relationship breakdown, there's also a chance that your ex-partner could receive the pension that is intended for your current one. There's an extra reason to keep your expression of wish forms up to date — that is the decision to include unused defined contribution pensions in your estate for inheritance tax purposes from April 2027. Putting the wrong name on the form in this instance potentially means landing loved ones with a 40% tax bill. If you name your spouse of civil partner on your expression of wish form, the pension will pass to them free of inheritance tax no matter what its value. However, if you had someone else on the form — a child for instance — then if the overall estate exceeds the nil rate band, there could be 40% tax to pay. On the other hand, if you're older, or in poor health and unlikely to live to see April 2027, you can take advantage of the current more generous rules, and pass money to children or grandchildren tax efficiently before the inheritance tax rules come into play. This is only an option if your surviving partner has enough to be financially secure without your pension. Should you live beyond the rule change, you can change your instruction — just set up a reminder so this important task doesn't slip through the cracks. Providers will often let you do this online and it is easy to do. Just make sure you update your expression of wish across all your pensions. It's all about making the right choice for your situation and revisiting it over time. An outdated nomination risks the money ending up in the wrong hands. Marriage, divorce, new loved ones, or changes to your health, as well as new tax rules, are all reasons to review your nomination. Read more: How inheritance tax on pensions will impact retirement spending Home renovation mistakes and how to avoid them The cost-effective way to boost your state pensionError while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Washington Post
10-05-2025
- Health
- Washington Post
Carolyn Hax: Parent with anxiety diagnosis balks at having child evaluated
Adapted from an online discussion. Hey, Carolyn: My 10-year-old is exhibiting anxiety about changes to routines or scheduled activities recently. It seems fairly developmental, and kid and I talk through it when it crops up. I have diagnosed anxiety and it's well in check, but my spouse saw it pre-diagnosed and keeps saying, 'We need to take her in for an evaluation.'
