Baby Boomers are retiring every day and have important decisions to make. Last year, the Government Accountability Office (GAO) offered two pieces of advice for retirees:
1. Delay the age when you elect to start receiving Social Security payments
Most people should avoid the temptation to begin payments early. While it may be tempting to start receiving Social Security payments early, you are most likely to receive a greater lifetime income if you wait until your full retirement age. Statistically if you live 12 years of more after you retire, delaying payments would make sense. Remember that Social Security does not provide enough income for most retirees so it is important to accumulate assets in other plans (i.e., IRAs and employer sponsored plans).
2. Convert your cash-balance defined benefit pension into a lifetime income annuity rather than take a lump-sum payment upon retirement
Only one third of Americans are covered by a defined benefit plan. The rest are accumulating assets in a retirement plan and will receive a lump sum distribution. Of course, even if an employer retirement plan only offers a lump-sum payment, retirees can go to an insurance company and buy their own annuity. However, statistics show that most retirees who are required to put in the effort themselves to find an annuity do not do so. Converting at least a portion of a lump-sum retirement-plan payout into a lifetime income annuity may substantially increase the odds of achieving a comfortable retirement.
You can read the full article about the GEO report here.
As promised, we’re taking a look at the impact DOMA will have on insurance planning, specifically concerning social security spousal benefits, for same-sex couples.
Will states start recognizing out-of-state same-sex marriages or even allow them to happen?
Pennsylvania and Virginia could possibly follow Maryland and Delaware’s footsteps, which legalized same-sex marriages in January and July, respectively.
A federal lawsuit was filed in Pennsylvania by the America Civil Liberties Union on behalf of 21 plaintiffs who either wish to get married or want their out-of-state same-sex marriage recognized. Importantly, Attorney General Kathleen Kane publicly announced that she would not defend the state against the lawsuit claiming that she found Pennsylvania’s ban “wholly unconstitutional.” The state will have Gov. Tom Corbett’s general counsel defend the state’s anti-gay-marriage law.
In Virginia, the ACLU says a lawsuit is currently in the works that would challenge the constitutionality of Virginia’s ban on same-sex and recognizing out-of-state same-sex marriages.
What changes will happen in the 13 states and Washington DC where same-sex marriage is legal?
We already discussed that same-sex couples can now transfer property from one partner to another without worrying about a federal gift tax.
Same-sex couples in marriage equality states are now eligible for Social Security’s spousal benefits. They can now apply for
- Spousal retirement: if your spouse or ex-spouse is receiving or eligible for retirement or disability benefits and if you are at least 62 years of age, you may be able to receive money
- Disability: if you cannot work because of a medical condition that is expected to last at least one year or result in death, certain family members can receive money
- Survivor benefits: if you die, members of your family could be eligible for benefits based on your earnings
The claims processing instructions will allow for payment of claims when the claimant “was married in a state that permits same-sex marriage” and “is domiciled at the time for application, or while the claim is pending a final determination.”