FINANCIAL POTPOURI

Most surveys show that younger Americans believe they will have to work past
what is considered today’s retirement age. This could become reality given
the increasing amount of “retired” Americans who choose to continue working.
But life has a way of altering the best-laid plans so it’s important to
establish a “what-if” strategy that could address a shorter work life and
longer retirement than you may plan.

With fewer pensions and inadequate retirement account balances, many
older workers not only continue their jobs past normal retirement age but
hope to keep working indefinitely. According to the Bureau of Labor
Statistics, the labor force participation rate is expected to increase
fastest of all for people ages 65 and older through 2024, While older
Americans may be healthier and more active than previous generations,
there’s no sure thing to this scenario. For example, the Bureau of Labor
Statistics notes that the labor force of the 75 and older age group is
expected to grow 86% going from years 2014 to 2024. It can certainly be said
those workers are putting a lot of faith into a future that could be
uncertain. 

What is not known can be anything from poor health or a changing job
market to the death or disability of workers and their loved ones. That is
why many recommend to plan for a normal retirement age from 66 and 67 for
most people retiring in the next few years. And then hope for the best…..
How best to get going? Start with a budget you can live with. Next,
make sure you have the proper health insurance beyond Medicare that covers
out-of-pocket costs such as deductibles and co-pays.  
And, for as long as you’re working, increase your retirement plan
and IRA contributions. If you qualify, contributing to a Roth IRA may also
make sense because the distribution you take from them are tax free. Then,
if you have to stop work around ages 65 or 66, you have built some
retirement income. The key here is; if you keep working, don’t stop and keep
building for as long as you possibly can. 

Lost a Spouse recently? Here are some TAX TIPS for recent widows(ers):

1) Claim any tax refund if available: You may be entitled to your
deceased spouse’s tax refund.

2) Understand your tax status: If you were able to file as a qualifying
widow(er) for two years, you’ll have to change your tax filing status in
year three. If you are providing support to a child, grandchild or other
relative, you may qualify for head of household status. This is normally
preferable to filing as a single taxpayer.

3) Sell Your Home: If you are holding on to a home that has enjoyed
good appreciation, you may want to consider selling it within two years.
This preserves a much larger $500,000 capital gains exclusion than waiting
past the two years and only receiving a $250,000 exclusion available to
single filers.

4) Assess your Life Insurance Needs: Your life insurance situation will
probably have changed. It’s healthy to review what your financial needs may
be in the future.

5) Social Security: If you and your deceased spouse were both drawing
Social Security retirement income, you will now only be receiving one of
those checks. The new benefit should be the larger of the two. Some will
compensate for the loss of one monthly social security check by taking out
more from retirement accounts. But this could trigger a tax of up to 85% of
your social security benefits. However, non-taxable income from Roth IRAs
doesn’t count against you when calculating taxes on social security
benefits. 

Opinions and data presented are general in nature and not intended as
specific advice or recommendations

Ike S. Trotter, CLU, ChFC is a well recognized career professional in the
financial services industry. He operates his own planning and risk
management firm, IKE TROTTER AGENCU, LLC in Greenville