Is it true that your age or wealth meter is what determines a person’s retirement age? Popular belief depicts that the closer you are to 60, retirement is on the horizon. Alternatively, many assume that if you are wealthy you are better set to retire even as early as 40. As a business entity, wouldn’t you want to know what retirement news your clients may be thinking about? Read on to find out.
1. What the latest change in social security percentage rate means for you
According to an expert sourced by EBN News, Social Security benefits will increase 2.8% next year. For retirement savers, it is imperative to stay on your toes for changes that may affect your retirement savings. Following these changes, 2019 is offering you better circumstances to save more. The IRS has increased retirement plan limits across the board. Employees with 403 (b), 401 (k) 457 plans and thrift savings could only save up to $18,500 in 2018 but can now save up to $19,000. On the other hand, those with individual retirement savings accounts can now save up to $6000 up from $5,500.
2. IRA conversions, all you need to know
Is moving from the traditional IRA to the Roth IRA conversions all that it is set out to be? Depends on your point of view. Currently, every withdrawal a retiree makes on their previous savings is subject to deferred income tax deductions. With Roth IRA, however, you are not obligated to any tax deductions imposed on your withdrawals once you get to retirement age.
Here are a couple of common burning questions frequently asked by those considering IRA conversions:
Will I pay taxes on my conversions?
Yes. While converting from the traditional IRA to Roth IRA is a good route to choose for anyone who is tired of paying taxes and wants nothing to do with it in retirement, you will be liable to pay taxes on your funds during the conversions. Note, however, that if the conversion is properly done, you are not subject to the 10% penalty for early withdrawal.
Are there other retirement accounts I can turn into Roth IRA accounts?
Yes. They include:
- 401(k) plan
- SEP IRA
- 403(b) plan
- 457(b) plan
- SIMPLE IRA
3. Spousal retirement tidbits
When exactly is the right time for a couple to retire? What security benefits are you liable for? Career, age, and health are the main reasons why spouses consider retiring. Some do it together while others do it at different points in time. With proper financial and psychological preparations, the transition is often seamless. Nevertheless, many are found stuck between a rock and a hard place when two people depend on only one active source of income.
In this regard, a spouse can get up to 50% of his or her spouse’s social security income. There are, however, a few thresholds that must be met. They include:
- The spouse making the claim should be 62 years or above
- The spouse of the claimant should also be 62 years or older
- The couple should be legally married
- The spouse who is the sole beneficiary of the social security benefit should have already made the application to start receiving the benefits
Employee participation plan infographic created by Mowery & Schoenfeld.