The Year in Special Needs Planning
Retirement Planning and The SECURE Act: It really is all about YOU.
The Setting Every Community Up for Retirement Enhancement or SECURE Act and its impact on retirement planning has been outlined extensively in the mainstream media. The law contains significant changes that are important to understand and talk through with your financial, tax and legal advisors.
Throughout February we will offer a series of 4 blogs focused first upon general retirement planning strategies, followed by a discussion and case examples of the SECURE Act and its potential impact on your planning.
I. Ten Answers You Need to Begin Retirement Planning
We often work with individuals and families having complex life situations. For families of people with disabilities, this means planning for two generations as many children with a disability will need support their entire lives.
Over the past 20 years, we have learned that a broader, multi-dimensional approach is required in order to take into consideration all of a family’s goals and responsibilities.
It is also our experience that families are very busy and when making decisions may provide answers before all of the questions have been asked. Here are 10 answers you need to have to consider in your analysis before beginning planning for retirement.
1. The ages of you and your spouse.
• Are you a 67-year-old with a 55-year-old spouse? Your ages could significantly impact the decision on how to most effectively fund your retirement accounts.
2. Your health status.
• Do you and/or your spouse have any significant or potentially significant health considerations? This could be important in funding and withdrawing from retirement accounts; you may consult your accountant to determine tax implications of allowable medical expenses.
3. Your health insurance coverage.•
Be aware that your employment circumstances, compensation and benefits may change over the remainder of your working life. Understand your options including COBRA eligibility.•
Many folks assume Medicare will cover everything they will need when they retire but dental, vision, hearing and long-term care are all examples of additional policies or out-of-pocket expenses,
4. If you are divorced, be sure you have designated your beneficiaries to align with your current wishes. •
It is relatively common for a divorcing couple to enter into a property settlement agreement in which each spouse waives any interest in the other spouse’s retirement plans. It is still critical to amend your plan documents to reflect your new beneficiary designations. Courts have recognized that Plan Administrators are obliged to act in accordance with Plan documents and this supercedes the legal waiver. (Kennedy v. Plan Administrator For Dupont Savings & Investment Plan, 555 U.S. 285 (2009)).
5. You have a family member with a disability.•
Individuals with a disability (consistent with IRS regulations) are exceptions to the SECURE Act.
Is a Special Needs Trust one of the beneficiaries of your IRA?
The SECURE act may have a significant effect on this planning strategy. See our blog later this month, The SECURE Act: “Stretch” IRA no longer.
6. Know your financial position.•
Be completely familiar with your personal balance sheet: what you have and what you owe.•
Know and understand your marginal tax bracket and implications of state income taxes in retirement.
7. How much will you have coming in and what you will spend when you are retired. •
Will you receive social security (over a certain level it is taxable), a pension or retirement plan distribution?•
Many people assume their expenses will be lower when they retire but sorry, data does not support this assumption. You may want to start by assuming your expenses will be the same less what you contribute to retirement savings.
8. Know what percentage of your money is in retirement assets and non-retirement assets. •
This is a key determinant in choosing a strategy determining which accounts should be drawn upon for your income needs.•
In the current low interest rate environment, you must be sure your asset allocation provides the opportunity to keep pace with inflation.
9. Know your level of financial security and understand what you need for your personal well-being.•
It is easy to be mis-led by standard formulas and calculators. Even if you think you know what you want for your future, life is unpredictable. There is no magic number for everyone. How much you will need in retirement depends on how much you will spend when you retire. Think about it and add it all up.
10. Know your personal goals and objectives.•
What do you want to work toward?
Is it about early retirement, paying off the mortgage, travel, a second home, downsizing, leaving money for your children or paying for college for the grandkids? Write it down and set your priorities!•
While it is great to gather information, don’t let other people’s opinions influence your priorities and goals.•
One thing is for sure and that is noth
ing is for certain.
Have a Plan B!
II. The SECURE Act: If you keep working, you can keep savingIII. The SECURE Act: You and your RMD -IV. The SECURE Act: “Stretch” IRA no longer
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Asset allocation does not ensure a profit or protect against a loss.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor
Financial planning and investment advice offered through Affinia Financial Group, LLC, a registered investment advisor. Securities offered through LPL Financial, member FINRA/SIPC. Special Needs Financial Planning LLC, Affinia Financial Group, LLC and LPL Financial are separate entities.