Planning Ahead

The general impression these days is to delay taking Social Security if it does not cause too much of a hardship. You could take Social Security as early as age 62 but could boost your benefit 76% if you wait until age 70. The difference between taking it at what is now full retirement age (66+) and age 70, is 32%, a fairly generous secure rate of return. This may be relevant to your spouse’s financial survival if your spouse earns less than you. If your Social Security is higher on death than your spouse’s, she (or he) may claim on your higher benefit.

So what do you do? You make reasonable assumptions and build them into your plan. If conditions change, you change the assumptions. This is what we do all the time with clients.

Regarding single life distribution on retirement vs. joint and survivor annuity, the question is — do you take the higher figure on retirement or a somewhat lower one that continues both through your life and the life of your surviving spouse? Consider this: You could choose to receive the higher sum up front and die a week later. This would leave your spouse without an additional source of income for the rest of her or his life.

Years ago, when planning estates, it would have generally been assumed that a surviving spouse might not live long after her husband or his wife died. If both died in their 60s or early 70s there would not be an extended period when the survivor would need to fend for herself. Today it is not out of the question for one spouse to die at age 60 and the other go on to live into her 90s or beyond.

One factor that has seriously complicated estate trust planning is the top heavy incidence of IRA, 401(k), 403(b) and similar retirement and pension accounts in the overall portfolios of couples in higher tax brackets. Retirement funds such as IRA’s need a “designated beneficiary” and do not lend themselves easily to trusts without considering tax consequences. It can be done, but with extreme care.

Finally, without knowing how long you or your spouse will live, it can be difficult to know how to plan. Do you plan so your children will inherit sooner or are you concerned your spouse who is your widow or widower will run out of money? You make decisions that of necessity have to be based on inadequate information about the future which in some ways has probably always been the case.

Janet Colliton, Esq. is a Certified Elder Law Attorney and limits her practice to elder law, retirement and estate planning, Medicaid, Medicare, life care and special needs at 790 East Market St., Suite 250, West Chester, Pa., 19382, 610-436-6674, colliton@collitonlaw. com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, co-founder of Life Transition Services LLC, a service for families with long term care needs. Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.

JEFFREY COLLINS — THE ASSOCIATED PRESS Christy Kasler, center, from Ohio, enjoys a day at the beach last week while her daughter-in-law Cory plays with her grandson, Bentley, in Myrtle Beach, S.C. Across America, people are leaving their cares — and sometimes their masks — at home after months of worry about the virus as Southern states like South Carolina open hotels and restaurants and like Myrtle Beach advertise “Yes, the beach is open!”