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Question I am 64 and plan on working until I am 70. My wife is 63 and has not worked for 15 years. Also we have 2 adopted children ages 18 and 8. What are my wife's options to start collecting benifits now?   Answer Did she pay into the SS system while she was working? If she worked for a government agency — federal, state or local — sometimes they are outside the system, and other rules would apply.   Social Security retirement benefits are based on a person's earnings record over their working years. A person needs at least 40 credits (10 years of work for most Americans) to qualify for retirement benefits, and the 35 years with your highest earnings count toward your benefit level.   If she did pay into the SS sytem while she was working, worked long enough to be vested, and had substantial earnings, she should be able to get her own benefit — probably a small one because of these last 15 years, i.e., not working. It would also be reduced because she is filing earlier than her full retirement age.   She should register at the mySocialSecurity website and see her statement. mySocialSecurity.gov - My Account Registration   Don't think she will get anything for the kids since you are still working.   Once you retire (70), she may want to switch to her spousal benefit which will be 1/2 of yours — but it is 1/2 of only your full retirement benefit and not the extra you will be getting due to working until 70, IF that is higher than her own benefit. By then the 18-year-old will be out of the dependent picture due to age, but you may get a bonus for a few years on the younger one.   She can also go to a local Social Security office and get the figures from them and make a decision — the mySocialSecurity account would be easier, and it will also block anybody else from filing for her benefit fraudently. Keep the info when she sets it up. 
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Question For a couple that is married for 10 years, if the husband pays into Social Security for those 10 years while his spouse does not work, when they get divorced, is the non-working ex-spouse eligibible for Social Security benefits (because  the marriage lasted 10 years )?    If the husband keeps working for years after the divorce, will the ex-spouse's benefit amount be impacted?     Answer The divorced spouse, if all the eligibility requirements are met, is entitled to 50% of the ex-spouse's benefit at retirement age as long as her own benefit, if she qualifies for one, is not greater than this amount.   Social Security - Divorced Spouse Benefits   All the other rules for benefits still apply — early filing, full retirement age, etc. If the ex-spouse keeps working until he is 70 — to earn a higher benefit for himself than he would have gotten at his FULL Retirement age, it does not count towards any sort of spousal benefit — married or divorced.   Question   This is assuming the ex-wife will not work in U.S. and will have zero Social Security credits, the husband's post-divorce payments into Social Security will grow the ex-wife's Social Security benefit amount, right?    Answer  As long as all eligibility rules apply (see the link), her full retirement age divorced spouse benefit will be 50% of his benefit at full retirement age. If he continues to work past his full retirement age to age 70, she will get none of this benefit bonus.   If she wants these divorced spouse benefits received while she is living outside the U.S., that has more rules of its own. 
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Question I just turned 62 and applied to start collecting my checks early. My first one will arrive next month. I am still working, but now my doctor is talking about putting me on disability due to some medical issues. So if that happens and my checks have already started, will the amount go up to the amount you would receive when on disibility or will it stay the amount collected at 62?   Answer   You perhaps need to talk to SSA before beginning your early retirement benefit.   Being declared disabled by the SSA, you would get 100% of your retirement benefit as your SSDI amount. Filing early (at 62, or earlier than your Full Retirement Age) for your old age SS retirement benefit, you will get a reduced retirement benefit because you are filing for it early — and it will continue to stay reduced forever by the calculated "reduction factor"..   If you get disability benefits — which are your full benefit — at your full retirement age, the amount will not change but the classification of it will change from SSDI to SSOAI (from Social Security Disability Insurance to Social Security Old Age Insurance).   However, you cannot just file for disability and get it. It has to be approved by the SSA — sometimes a very long process depending upon your medical condition and diagnosis. Now certain medical conditions or being terminally ill can make this disability qualification pretty much a certainty. Here are the medical conditions which the SSA approves pretty readily. If your disease is not listed, you can submit it for consideration. SSA: Compassionate Allowance Conditions   The thing about disability is the approval might take a while depending upon your condition. If one of the above Compassionate Allowance Conditions isn't met or you are not terminally ill, you might not get approval at all. Also keep in mind, depending upon your condition, they may also make a ruling to see if you could work again at some job that does not tax your health — although for people over 60, that is not too much of a deal.   Once the disability claim is approved, there is a lag time of about 5 months from the last time you had income from employment to begin disability benefits.   I am pretty sure there is a way to file for both at the same time and get the early retirement benefit started — then if you are finally approved for disability, there are some cost adjustments done by the SSA. You would need to work closely with the SSA to handle all of this so as to not get caught up in government complexity — need I say more? The calculations would be based on your paying back the early retirement amount to be offset against the (whatever) disability award and how far back they go with it. It is this part for which you need to visit your local SSA office and talk to a knowledgeable person about it. If you consider this, you might want to hold off on the early retirement application.
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Question I was curious if anyone has looked at longetivity annuities/QLACs? I'm trying to figure out if I should be looking at these, or if there are too many pitfalls.     Answer It's an annuity that can be used to reduce your RMD. Of course, that's not the only idea. It's simply an investment vehicle to guarantee a lifetime of income.    I know there are some major downsides like dying before you start receiving the annuity, in which case, none of it goes to your estate. It all goes to the company from whom you purchased (unless I misunderstand). A number of financial advisers are stating it's a pretty good idea, for someone with substantial assets, to put some portion of their portfolio into one of these.     I need to be sure I understand all the risks — all the 'worst case' issues if I purchased one.    "....In 2014, the Internal Revenue Service (IRS) and the Department of Treasury revised rules regarding MRDs. These rules may provide you with greater flexibility for a portion of your pre-tax assets, allowing you to delay taking income payments until you may need them. A QLAC is a deferred income annuity that allows income to begin beyond age 70½ without conflicting with MRD rules. QLACs provide you with flexibility to defer the income start date until age 85 and can only be funded with assets from a Traditional IRA, or with assets from an eligible employer-sponsored qualified plan — 401(k), 403(b), and governmental 457(b). With a QLAC, you shift the risk of outliving your income to the insurer, who promises to pay you a certain amount of income for the rest of your life. The insurer also assumes your interest and market risk; even if the market and interest rates go down significantly during your deferral period, you still get the same guaranteed income stream...".     People commenting here don't seem to know about QLACs. You specify the start date for receiving income, it does not start at age 95. You actually cannot defer it past age 85. You can do single or joint life. Also surviver payments and and a Return of Premium death benefit less any payment that has been made to you. https://www.immediateannuities.com/qlac-qualified-longevity-annuity-contract/   I won't repeat the basics you can get by googling "what is a QLAC." What I can tell you is to think of it exactly like an immediate annuity with payments starting at age 85 (rather than now).   You do not want to buy a QLAC or immediate annuity now because you get stuck with a very low interest rate. THE INSURANCE COMPANY WILL NOT TELL YOU THE RATE! (It would be very good for AARP to lobby for disclosure of the rate with the NAIC.) It is clearly and obviously taking advantage of seniors — those who buy these products — to not disclose the rate. The insurance companies will tell you how much to deposit and how much you will get as a payout. YOU need to calculate that compounded rate of return (you would think your financial advisor could do this, but most do not have the competence — ask your CPA).   If you die before age 85 or before you have recovered your initial deposit, you are guaranteed to get back whatever you invested (with 0% interest).   It occurs to me that an investor who has done well in stocks and wants to remain in stocks may be best suited for a QLAC (or a deferred longevity annuity). It allows the investor to take risk while knowing that they have a guaranteed income later in life (i.e, it is a good emotional tool)     You can also buy a QLAC with a total refund option on it where you don't lose your deposit. I ran some numbers at QlacQuote.com for a 64-year-old female starting income at age 85.  Life only (No return of $) at age 85 $3,467/month vs. total refund at death $2,758. Loss of some income with the refund option, but they both give lifetime income.   It's a fixed annuity plain and simple. When used in an IRA, you don't need to take distributions from it until age 85 (rather than age 70.5). If you are a conservative investor, this may be fine for you as fixed annuities typically pay 1% more than long-term CDs at the bank. Currently, the yields on QLACs is 3-4%. You won't ever see that rate published — you need to know how to use a financial calculator. You cannot lose money (assuming the insurance company stays in business, which is a very good best given the low rate they pay you). For an investor who usually chooses mutual funds, QLACs will likely not be a rewarding investment.     I am sorry, but may I suggest that you check your sources. QLAC stands for Qualified Longivity Annuity Contract. It is a setup so that a portion of the seniors' long-term savings is NOT EXPOSED to the risks of the market's volatilities. How is that ever a BAD thing, when us seniors do not know when we may kick the bucket or required higher withdrawls? The whole goal of the QLAC is not about the returns but to deferr a portion (the lesser of the $130,000 or 1/4 of your retirement savings) to a later RMD (Required Minimum Distribution) age of 85 from 70.5. So for those who are able to plan out their usage, they can move their retirement to a GUARANTEED payment schedule and earning. This move tends to take $ away from money managers who see it as a threat to their managed portfolios. In reality, it is a lower risk, as the payout is far more than your suggested 1%. The payment is based upon # of years in deferral, and your age. If a female, 64, choses to put away $125,000 until age 80, at the time she is 80, she will receive a little over $1700 per month for the rest of her life.... GUARANTEED, as stated on the contract per requirement from our government. It will not matter if the market goes up or down... This was an important piece that the securities (401K) and mutual fund companies avoid... It helps seniors to put their retirements away in GUARANTEED CONTRACTS at a VERY REASONABLE RETURN so that their retirements are away from the volatilities of the market.... Think how you would feel when 2008 rolled around and suddenly over 1/3 of your retirement evaporated overnight. And it would take nearly 6 years for it to get back to where it was IF YOU DON'T TOUCH THE PRINCIPLE... imagine all the seniors who had to live off the principles at the time!!!!!!! They pretty much will never be able to get back to even!!!!!!  I really get irritated when people skew the facts to make that extra commission.... I am in that business, but there is not need twist the facts. Peace, Steven Chao     QLAC is one of the best hedges against longivity and the volatility of the market. Remember, this is NOT all your retirement. It is most likely that some of your retirement are still invested in the growth sectors (through your multiple mutual funds).    Congratulations on that sale to the 64-year-old woman who is going to get a whopping $1,700 a month starting sixteen years from now. Did you tell her what that $1,700 will mean in actual dollars in the year 2034? Or did you tell her what her $125,000 would grow to — based on historical returns — if she put it all in VG Index500 and just forgot about it for 16 years?    No, market volatility and "longivity" are not the biggest threats to senior citizens. Inflation is the bigger threat. And the best protection against that is to develop a disciplined plan of investing in low-cost, no-load mutual funds with an emphasis on asset allocation (AA). Re-balancing when appropriate for aging.    There is good reason why annuities have always had a bad rep. Nothing has changed.  Salesmen still trot out the gloom and doom talk of a bear market coming, other scare tactics. Hoping that the prospect is too feeble-minded to look up the published average annual returns of stock investing since 1926. Which is around 10%.      Let us take your suggestion with the lady that purchased QLAC (a version of Guaranteed Income Annuity). Since I am not a fortunate teller, I cannot look into the future. Hence, I have to use history as a point of reference (even though according to some, it is not likely to repeat). So, my client purchased 125,000 worith of S&P 500 stocks around the first week of August 2000. Tossing out commission and dividents, she will receive 88.03 shares at $1420 Year S&P 500 Value 2000 1420 125000 2004 1064 93663.92 2008 1296 114086.9 2012 1391 122449.7 2016 2183 192169.5 2018 2820 248244.6   So as of today, if my client took your advice, she would have profited $123,103. Basically at a withdrawl rate of $1700 per month, that profit would have lasted her 6 years until it eats into her principle $125,000 (reglardless of the value of the $). Which is all good, until you realize that it took you 18 years to generate 6 years of income! You're right, I am using history to scare the readers. You're right history never repeats. You tell that to the seniors who worked at Walmart between 2000 and 2014 who could not retire because they could not withdraw from their principle retirement accounts that were tied to the market. BTW, the average return on the S&P 500 between 2000 to today is around 5.48% (as you can see). However, in reality it is no better than the same account receiving a fixed annual 4.12%. You can see the evidence below; 2000 125000 2001 124999 2002 130148.9 2003 135511.1 2004 141094.1 2005 146907.2 2006 152959.8 2007 159261.7 2008 165823.3 2009 172655.2 2010 179768.6 2011 187175.1 2012 194886.7 2013 202916 2014 211276.1 2015 219980.7 2016 229043.9 2017 238480.5 2018 248305.9   Here is another thing... if you actually purchased a deferred income annuity back in 2000.  You would have received a monthly income of well over $2,000 per month. On the final assessment of your suggestion that inflation is the enemy: I don't disagree, but might I remind you, inflation, deflation, stagnation, hyper inflation, and a host of other possible economic issues may all be unknow risks that become problems. However, it is only a problem if the client lives that long. Therefore isn't the unknown in the story of longivity the issue at play here. I don't suggest people to avoid the growth in the market, but I would not paint a rosy picture either. You can do so with your money. More power to you. My client choses to use a portion of her $ to have a safety net. You clearly don't know people who had to work at Walmart.   If you can tell me when someone dies, when the payments end, then I can figure out the return of the QLAC.  Its all about INCOME in retirement.   Example: 1. S&P500 fund $100,000 getting 8% annually would give you $215,893 in 10 years (4% income, $8,636/yr) Google "4% rule"    vs 2. QLAC $100,000 at age 61, Male income at age 71 would give you $13,356 income for life!   The QLAC gives you $4,720 MORE guaranteed income for life than the S&P 500 portfolio.  You don't have to wait until age 85 to start income with a QLAC. Anytime from deposit to age 85 to start income. -income rates at www.QLACQuote.com/get-quote     You can choose the "refund" option to allow your deposit to go to your name beneficiaries.  By choosing this option, your income will be a little lower than the full "Life only" option. You can also add your spouse for the income payments which cut down the risk of losing the income. 
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Question I receive none of my husbands benefit since I have a pension from driving a school bus. He ran his own business and paid into the system BOTH parts for 24 years before he passed with cancer. I still work and must work to maintain what little we have. A $236 check from SSI after medicare and my $900 check after taxes for the pension leaves little without working. The federal pensioners receive SSI if they had earned it. Why don't state pensioners?     Answer As a widow/widower or spouse with a government pension from a federal, state or local government who did NOT participate in the Social Security system, you are being affected by the Social Security - Government Pension Offset It affects both Social Security spousal benefits as well as widow/widower benefits.   If you receive a pension from a government job in which you did not pay Social Security taxes, some or all of your Social Security spouse's, widow's, or widower's benefit may be offset due to receipt of that pension. This offset is referred to as the Government Pension Offset, or GPO.   The GPO reduces the amount of your Social Security spouse's, widow's, or widower's benefits by two-thirds of the amount of your government pension. For example, if you receive a monthly civil service pension of $600, two-thirds of that, or $400, must be used to offset your Social Security spouse's, widow's, or widower's benefits. If you are eligible for a $500 spouse's benefit, you will receive $100 per month from Social Security ($500 - $400 = $100).   Some individuals are exempt from the offset. Generally, your Social Security benefits as a spouse, widow, or widower will not be reduced if you: Are receiving a government pension that is not based on your earnings; or Are a federal (including Civil Service Offset), state, or local government employee whose government pension is based on a job where you were paying Social Security taxes; and You filed for and were entitled to spouse's, widow's, or widower's benefits before April 1, 2004; Your last day of employment (that your pension is based on) is before July 1, 2004; or You paid Social Security taxes on your earnings during the last 60 months of government service. (Under certain conditions, fewer than 60 months may be required for people whose last day of employment falls after June 30, 2004, and before March 2, 2009.) The Social Security Windfall Elimination Provision reduces the Social Security benefits of the person who has earned it with some work covered by Social Security but not enough to give them a full benefit and they also have a government job with a government pension where they were not covered by Social Security.   More information: Social Security Administration pamphlet - Government Pension Offset:   There is a lot more conversation on each of these provisions under the board here entitled "Social Security".  AARP Community Board: Social Security 
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Question   What do I need to know about estate planning for an elder relative? Is there a good book or information out there to help my Mom with her will and estate planning? She is 75 years old and has asked me to be her executer of her estate.   Answers   I usually post responses that often have a theme of 'take personal responsibility' and do your homework. But, I'm a believer in consulting a lawyer (of course, one that specializes in elder law) to handle will and estate planning. There are different laws among the states, and it's too easy to leave something out of a will that should be noted. It also depends on how complex your mom's finances are, and if other family members are involved.   Now, having stated that, I still believe in doing some homework, which you are asking about.   Planning Your Estate: Ten Things You Should Know ... - Law   AARP - Estate Planning - Living Wills, Trusts, Inheritance ...   Do I Need Estate Planning? - The State Bar of California   (This last link is for California, but I believe it contains a lot of good info in general)   It is always recommended that you consult an estate planning lawyer with experience in drafting wills before attempting to make or interpret a will.   Your local probate court or the probate court that your mother's estate would go through when she dies would also be a good resource about a role as an executor or personal representative. Although they cannot give legal advice, they do have information and answers about administering an estate.       Yes, I agree that you should contact an estate planning attorney, for example:  https://estatelawtexas.com/   It would be a good idea to search for a local elder law attorney in your area on the NELF website.   https://www.nelf.org/   The National Elder Law Foundation (NELF) is the only national organization certifying practitioners of elder and special needs law. There are nearly 500 Certified Elder Law Attorneys across the country.  
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