Tuesday, December 26, 2006

One Piece of the Puzzle

Cross one more item off the New Year's Resolution list--from 1999--THE WILL IS DONE. Now everything is done, right? Maybe not.

Getting your will or trust is only piece of the puzzle. Equally as important is reviewing you assets that have named beneficiaries: life insurance, 401(k), 403(b), IRA, Keogh and annuities. It may have been some time since you last updated these beneficiaries and your financial advisor or IRA custodian may not have followed up with that assistance. It is not uncommon to see ex-spouses and parents as "surprise" beneficiaries. With large retirement plans and insurance policies, these assets may comprise up a majority of your assets so it is important that you incorporate these beneficiary designations into your global estate plan.

There are certain income tax benefits to having your spouse as a named beneficiary of a qualified (retirement) plan, which permits tax deferral. But as to your contingent beneficiaries and other named beneficiaries assets, it is important that your estate planner assist you with incorporating these items in your estate plan so that you have a complete picture with all of the pieces.

Monday, December 04, 2006

Timing Receipt of Social Security Benefits

I recently attended a seminar sponsored by A.G. Edwards concerning the timing of receiving social security benefits and the impact on retirement planning. Individuals are entitled to begin receiving social security benefits as early as age 62, although at a reduced rate. If the individual waits until the full benefit age (currently 65) the recipient will be entitled to receive their full benefits for the remainder of their life. Thus the question is "do I want some money now, but a in smaller amounts? Or do I wait a few more years and get the maximum monthly payment?" To keep things interesting, there are earnings limitations if a person elects to get their social security benefits prior to their full benefit age.

Every situation is different and there isn't a right or wrong answer as to when you should choose to start receiving social security benefits. Your financial planner can guide you on the ideal timing issues for your particular situation and the impact for your situation. Generally speaking, receiving benefits at an earlier age is the better option although there may be some reasons to wait.