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, inc. A broker dealer member, FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors, inc. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. 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. Another a pleasant drive Wednesday this week, last week you made it through what? 10 plus inches of rain, a whole summer worth of rain in five days.
James Nelson:
Yeah, no kidding.
Nate Kreinbrink:
So it’s kind of nice to see those dry weather out there. The blue skies, and again, some pleasant temperatures through this time of year.
James Nelson:
Yeah, no doubt. Nice weather for soccer practice last night. So hopefully the temperature’s cooperating for a month, month and a half and get through the soccer season.
Nate Kreinbrink:
Yeah, we had some fifth and sixth grade tackle football practice last week. And I will have to say as a player, I loved practicing in the rain. As a coach, not so much.
James Nelson:
Not so much. A little different story, huh?
Nate Kreinbrink:
Yeah, it’s not quite as enjoyable to just be standing out there for a couple hours with it just raining constantly on you for that time. But again, we needed, I’m glad we were able to get it. I’m glad we got dry skies again, though. As we transitioned into mid-September going with this kids can continue being back in school. Some of the activities being back out there. So again, I think hopefully everyone’s with me. We can take this weather for as long as it wants to stay around here.
James Nelson:
Yeah, no doubt. We’ll keep it here as it hopefully gets a good portion way through the fall before things really start cooling down.
Nate Kreinbrink:
So today’s program. I know James and I always have these conversations and again, we always, “What are we going to talk about? What are we going to talk about?” Ending up having seven or eight different topics that we want to choose from as we come up here just to do these programs. I know a couple of weeks ago, Andy Ferguson with NelsonCorp Tax Solutions was in with me. We talked a lot on end of the year tax planning, Roth conversions, looking at some gain, some losses as far as what to be able to do with those contributions. Two year retirement accounts, to maybe increase for the rest of the year.
Nate Kreinbrink:
We’ve talked to the recent events in the markets, the volatility, some things that have been present as of late again, after a little bit of a rebound attempt that we’ve experienced the last couple of months. But again, one topic that again, continues to continue to come up and what still is misunderstood is Social Security. And maybe not necessarily the claiming part of it as far as ages and deductions and then increases and then things like that. But understanding some of the other parts that go along with Social Security and potentially some other benefits that may be available to you.
James Nelson:
Yeah, exactly. And Social Security’s crucial, right? I mean, almost everybody’s going to get a Social Security benefit and it’s important to understand what benefits entitled to you. I think a few kind of get overlooked sometimes. And that’s what we’re going to spend some time on today is spousal benefits and then survivor benefits, if somebody were to pass away. And a lot of people know kind of how that works. Others tend to think that, “Oh, I worked and I’ve got my benefit and my benefit only.” And that’s not the case. And a lot of cases, you’ve got a spousal benefit or a survivor benefit that could be larger than your own benefit, that you will eventually assume if you outlive a spouse. So yeah, it’s important to know the options and to really weigh those options. But we’re going to talk specifically maybe about those two options and kind of how those work today.
Nate Kreinbrink:
Right. And I think most people hear those two things and they think they’re pretty much the same. The concept is generally the same as far as between the two, you are receiving a benefit off of another person’s record. However, there’s a lot of differences that come into play with them. When we’re talking about a spousal benefit, this means that the spouse is still alive, then you’re going to claim the records off of that person’s work history. So a spousal benefit, you would be eligible as long as you have been married for 10 plus years to be able to take half of that spouse’s benefit of their full retirement age benefit when you get to your full retirement age. So again, let’s say that spouses, their full retirement age benefit would be $2,000 a month. You technically would be able to file for a spousal benefit and receive $1000 worth of benefits at your full retirement age.
Nate Kreinbrink:
Now, if you take that benefit prior to your full retirement age, that the reduction in benefits is still going to apply because you are taking it prior to your full retirement age. So if you would take that benefit at age 62, it would probably be eligible for about 700 to $750 a month that you would technically be eligible for. Where this comes into play is let’s say one spouse was out working, another spouse remained home, had to raise the kids, brought up that and didn’t have those 35 years full of earnings. And when they did, maybe wasn’t a high wage earner. They may still, again, through this method through a spousal benefit, would be eligible to take a benefit off of spouse’s record. Now, there were some changes that came into play. You no longer can file for you for the spousal’s benefits, suspend yours and some of those that came into play during that time.
Nate Kreinbrink:
So it’s going to go on whatever benefit is highest to you when you file. So if your benefit is higher than that spousal benefit, then you’re going to just file your own benefit. Again, if it’s lower, you can go with that spousal benefit. The earliest that you can take a spousal benefit is age 62. So now we transition over to a survivor benefit. A survivor benefit is you are going to file off of a deceased spouse’s record. So again, if you had the unfortunate circumstances where your spouse passed away, you would be able to file now instead of 50% off of it, like you would for a spousal benefit, through a survivor’s benefit, you would be eligible for 100% of that deceased spouse’s benefit at your full retirement age. So again, 50% for spousal, 100% for survivor. And that difference I think, is what a lot of people, I think misunderstand sometimes as far as what they may be able to file off of from that. Another difference that comes into it with a survivor’s benefit is the earliest that you can file for a survivor’s benefit is age 60.
Nate Kreinbrink:
Whereas with the spousal benefit it’s age 62, just like you would for a normal benefit. So there’s some different options that come into play. And if you again, went through the unfortunate circumstances where you lost a spouse, you would need to look at the different options to see what your benefit would be at age 70 or what a survivor’s benefit would be at your full retirement age. And the difference between those two ages is your own benefit gets that 8% increase every year you delay filing for that benefit after your full retirement age, up until age 70. A survivor’s benefit does not qualify for that 8% increase. So the largest a survivor’s benefit would be, would be the benefit that you would receive from that at your full retirement age. So again, with your own benefit, with your survivor’s benefit, we want to look at some options because with that strategies, with the survivor’s benefit, a widow’s benefit, some people call it they’re the same thing.
Nate Kreinbrink:
There are some options that we want to look at to say, “I can possibly file a survivor’s benefit and allow mine to continue to grow, switch over to mine at age 70. If my benefit at age 70 is smaller than what the survivor’s benefit would be at my full retirement age, I’d want to file for my benefit at age 62, and then switch over to a survivor’s benefit at my full retirement age.” Again, a lot of planning that goes into play, but again, a lot of people are just not aware as far as what it is out there, what benefits may be available to them.
James Nelson:
Well, I think all of that was really good stuff. And there was a lot of information in that explanation. One quick question, Nate, I’m going to throw it back to you. So you mentioned that the 10 years that you have to be married to get the spousal. What about any marriage restrictions on the survivor benefit? Is there a timeframe that somebody needs to be married or they just need to be married when that individual passes away?
Nate Kreinbrink:
They have to be married for nine months. So that restrictions, as far as being able to file off of that benefit again, is a lot smaller than what that comes into.
James Nelson:
Yeah. So, I think all of that is very, very important and obviously people that are listening can tell that it’s a lot more complicated than just drawing your own benefit. And the timeframes is when you can draw 60 versus 62 and the reduction, if you were to take it early. All of that stuff is really, really important and very important to know prior to making that decision. Because in most cases you can’t undo them. It’s pretty much a done deal once, once you draw on the benefits.
James Nelson:
So that’s very good information. And I think it just goes to the complexity of what we deal with on a daily basis, not only in the Social Security realm, but also with taxes, investments and whatnot. People really need to understand how these things go hand in hand and how they can tie into each other, and one decision affects the other. So very good job on laying that out, Nate. And I think it’s really important that people understand all of their options and not just, “Oh yeah, I worked for a couple of years and I’ve got this benefit.” Well, maybe there’s a better option and maybe there’s a larger benefit out there somewhere.
Nate Kreinbrink:
And again, it’s a lot of things that come into it and just people that are in these situations need to ask questions. And again, if you have a spouse and this also applies to ex spouses as well. You were married for longer than 10 years, you got divorced. You can still file off of that ex spouses record. You don’t have to call them for permission. They just have to be of age to file for a benefit, so age 62. But again, you can file off of an ex spouses benefit record. And I think that’s another part that people just, “I don’t know if I can or not.” Or whatever.
James Nelson:
Yeah. Like they have to ask for permission, like you said.
Nate Kreinbrink:
You don’t have to do that. Again, they just have to be of age and do that. So again, a lot of these come into play. A lot of times people have questions on this, but it’s too important not to get it right. And I think that’s where people just need to, again, you have questions, you fall into one of these two categories, give us a call. Let’s sit down, no obligations, no costs, no anything. And let’s just help people make these right decisions and do what’s best for them going forward throughout their retirement. I did want to mention real quick, though before we do run on a time that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of September will be donated to the Harvest Hurrah event on October 17th at the first United Methodist Church in Clinton. James time flies when we get rolling with some of these, but I appreciate you joining me today again.
James Nelson:
Absolutely.
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 representatives, securities offered through Cambridge Investment Research, inc. A broker dealer member, FINRA SIPC investment advisor, representative Cambridge Investment Research Advisors, inc, 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.