Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer. Member FINRA SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice.
Announcer:
Now, here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus, brought to you each and every Wednesday morning right here on KROS. Well, this is Nate, James joining me again this morning. James, I was always joking around a little bit, but it seems to be true with the transition of weather we’re going through right now, but 35, 40 degree temperatures this time of year feels so drastically different than 35, 40 degree temperatures in late October, early November. It’s weird how that’s-
James Nelson:
Yeah, why is that? It’s so true. Hopefully another week of this, we can get rid of the rest of the snow. So, yeah.
Nate Kreinbrink:
There’s still a lot out there, but again, you start getting these consecutive 35, 40, and I’ve seen even some hidden in the low to mid-40s here coming up, that it’ll continue to melt away. We still got a lot out there, but-
James Nelson:
Yeah, we’ll take it.
Nate Kreinbrink:
We can take it. You see spring training starting up on TV, and you kind of look at some of these youth baseball teams that are starting to get started and wanting to get started here March, April-ish, and those fields got a lot of drying out to do.
James Nelson:
No doubt, but it’s always a fun time of year. Spring’s always a fun time of year to get back outside and see some of the spring sports and whatnot. So yeah, I think we’re anxious after a couple weeks of the deep freeze, this is nice to see some decent weather.
Nate Kreinbrink:
The boys went out and built a little snowman in the backyard, and so we’ll see how long that lasts out there.
James Nelson:
Yeah, maybe by Friday.
Nate Kreinbrink:
So today’s topic, I know the last couple of weeks and the last week I had Andy Fergurson with NelsonCorp Tax Solutions on talking a little bit about how filing your taxes this year may or may not potentially impact your stimulus. If you’re eligible for that stimulus, the week before had John on talking 401(k)s and rollovers and what you should all look at, and the different options that you have, pros and cons of each one.
Nate Kreinbrink:
Another topic that James and I were throwing around or whatever that came up a lot over the past week or so is, again, social security. We’ve talked a lot of social security and the differences in filing between your benefit amount at 62, your full retirement age, whether that’s 66, 66 and two months, whatever the case, up to age 67, and then delaying getting those 8% a year increase up until age 70.
Nate Kreinbrink:
Today, we’re going kind of switch it a little bit with social security and talk about the eligibility to file off of maybe a spouse’s record. Where this comes into play is if you had one spouse that maybe stayed at home, took care of the kids, raised the kid, watch the kids, whatever the case may be, and you had one spouse that was working. The spouse that was out working obviously is going to have a little higher benefit than the one that didn’t.
Nate Kreinbrink:
There’s some eligibility rules that come into play, most notably if the marriage lasted 10 years or longer, you may be able to file off that other spouse’s record, where you would be eligible to get up to 50% of their full retirement age amount. Now, that full 50% amount that you would be eligible for would be as if you waited till your full retirement age to take that. Just the same as if you take your benefit at 62, it’s going to be reduced. If you take a spousal benefit before your full retirement age, that benefit is going to be reduced a little bit. So you won’t get the full 50%, but it does allow you to maybe have a little larger benefit than what you maybe would off your own record.
James Nelson:
Yeah, and I think that’s a key point, because a lot of people think, “Hey, I get 50% and I can draw it whenever I want.” Doesn’t work that way. You’ve got to get to your full retirement age to get that full 50%, otherwise, like Nate said, you’re taking a little bit of a haircut there. So yeah, it’s very important, and it’s also important to look at the different options. I mean, that’s one option.
James Nelson:
If somebody’s getting remarried or there was multiple marriages that maybe lasted more than 10 years and the person’s now single again, there might be some optionality there, but it’s important to know those options. Social security is very complex, especially if you have a deceased spouse or you’re divorced, or whatever the case may be, there’s a lot of those things that kind of add to the complexity and knowing the rules.
James Nelson:
It’s also important to know the age difference between a spouse. Like Nate said, you can’t just draw it when you feel like it, there’s got to be certain marks that are met before you can draw that benefit. But sitting down and knowing the options and going through this is really crucial, and this is what we spend a lot of time on when we go through the financial planning process.
Nate Kreinbrink:
Yeah, and I think one other misconception that always comes up is that people don’t realize as well, that, yes, you may be eligible for a spousal benefit, but that spouse that you’re going to draw that benefit of has to have filed for their benefit.
James Nelson:
Right.
Nate Kreinbrink:
So again, if you have a spouse that’s continuing to work, or maybe the larger benefit, we’re going to try to wait until their full retirement age or to age 70. I’m 62, I don’t have any earned income, so the earnings test doesn’t apply. I’m going to file for my benefit and I’ll file for the spousal benefit. Well, you’re not eligible for that spousal benefit until that spouse that you are filing off of files for their benefit.
Nate Kreinbrink:
Now that’s not to say that you can’t still file for your benefit, and whenever that spouse does file theirs, you may get a little bump up at that time. But again, that spousal benefit only applies when that spouse that you’re filing off of has already filed. This also does apply for those couples that are divorced. You are still potentially eligible to file off of an ex-spouse’s record if that marriage has lasted longer than 10 years and you personally have not remarried.
Nate Kreinbrink:
It doesn’t matter if your spouse that you’re going to file off of, your ex-spouse remarries, it’s just you personally. If you are going to file that ex-spousal benefit off of an ex-spouse’s record, the marriage, again, has to have lasted 10 years and you personally can not be remarried.
Nate Kreinbrink:
Now again, and people get this confused all the time too, you don’t have to contact that ex-spouse to get permission to be able to do that. Again, they probably won’t even know that you are going to be filing off of their record. It does not impact their benefit at all. So again, if this does apply to you, it’s understanding these options. Again, you are eligible for that. Again, if the marriage has lasted longer than 10 years, and if you currently are not remarried, you potentially could look at an ex-spouse’s benefit.
James Nelson:
Like you said, Nate, it’s not like you got to go and ask for permission.
Nate Kreinbrink:
Right.
James Nelson:
That’s a misconception where, “Oh, I don’t want to go back and talk to so-and-so, or is that going to impact their benefit if I draw it?” No, it doesn’t. So it’s not impacting them, but knowing those rules and knowing … now if you do get remarried, Nate, correct me if I’m wrong, that negates that, right?
Nate Kreinbrink:
It does, it does. Then you would be eligible then potentially for the new spouse that you just remarried to, whenever you’re eligible, off of their record then.
James Nelson:
Right. I think that’s important, because we see it all the time, “Hey, seeing so-and-so, we’re thinking about getting married.” Well, knowing those options ahead of time, probably be a pretty good idea. So again, just complexity, a lot of moving parts there, but worth noting. Again, it’s affecting more and more people. It seems like the old simple claiming strategy almost doesn’t exist anymore, it seems like there’s always something being thrown in there and multiple options for folks to consider at least.
Nate Kreinbrink:
Right. Now I think it’s important too to also have a little understanding of, so we just talked about spousal benefit, so you’re filing off of a benefit of an individual that is currently still alive, it’s different when you look at a survivors benefit or a widows benefit. So when we switch gears and talk survivors or widows benefit, you technically are eligible for 100% of the benefit that would be eligible to that deceased person.
Nate Kreinbrink:
Now again with this type of filing, whether it’s a survivors, a widows, a widowers benefit, all the same thing, they just have a couple different names, is again, that 100%, you have options now. So you may be able to take that widows or survivors benefit as early as age 60, which is a difference as the normal claiming age for social security benefit off your own or a living spouse’s benefit is 62, you’re able to take that survivors benefit as early as age 60.
Nate Kreinbrink:
Now again, it’s still going to be reduced a little bit even farther, because you’re getting those benefits earlier on, but it could be an option. Where we want to try to look at these is, is you are then able to then pick and choose which benefit you want to start now and maybe delay a benefit and not have it impacted. So we try to coordinate and see, okay, what is the benefit off of your personal record? What is the benefit that we would be eligible for off of a deceased spouse, a survivors or a widowers benefit and say, okay, which one do we want to take now? Is it going to be beneficial to have one wait, and then try to maximize that at a later time?
Nate Kreinbrink:
So again, it’s all understanding these options, understanding what it is that you’re able to do and being able to file this. Again, if you are not remarried and you have an ex-spouse that passed away and you were married for longer than 10 years, you are still eligible to claim off of their record. There is a little different strategy with this is then as far as the remarriage then, is if you remarry prior to age 60, you are no longer eligible for that deceased spouse’s benefit. Now you get remarried after age 60, you possibly could.
Nate Kreinbrink:
So again, if you’re right in that time period looking to possibly get remarried, your previous spouse had unfortunately passed away and you’re approaching that age 60 time period, it may make sense to push that back a couple months, just to remain that eligibility in order to file off of whatever benefit, is again, you would be entitled to.
James Nelson:
Yeah, well, and I think people who are listening can tell how complex this is just going through a few of these scenarios. Again, it’s not to bury anybody, but really to show the different options and the complexity. Nate’s the social security guru in the office and spends a lot of time on these strategies. Again, there’s optionality in most cases, it’s not just as simple as claiming your benefit, a lot of times there’s a few other avenues that somebody should consider.
James Nelson:
So, please give us a call if there’s questions. This is complex and continues to get more complex almost each year it seems like, Nate, but you’re on it and we’re on it, and we’d love to help if anybody’s got any questions concerning social security.
Nate Kreinbrink:
It’s kind of funny. Andy Fergurson with the tax part always gets all jacked up when we start talking taxes in the morning. You get me rolling with social security a little bit, and I could be here for a while.
James Nelson:
Yeah. Yeah, just get out of your way, right?
Nate Kreinbrink:
I did want to mention real quick that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of February will be donated to the Clinton Rotary Club Scholarship Fund. As always, James, appreciate you joining me this morning.
James Nelson:
Yeah, thank you.
Nate Kreinbrink:
Again, Nate and James with NelsonCorp Wealth Management bringing you this week’s Financial Focus. Thanks again for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated. A broker dealer member FINRA SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.NelsonCorp.com.