Deciding When to Take Social Security

One of the most common questions people ask about Social Security is when they should start taking benefits. Making the right decision for you can have a meaningful impact on your financial income in retirement.

Before considering how personal circumstances and objectives may play into your decision, it may be helpful to preface that discussion with an illustration of how benefits may differ based on the age at which you commence taking Social Security.

As the accompanying chart reflects, the amount you receive will be based on the age at which you begin taking benefits.

Monthly Benefit Amounts Based on the Age that Benefits Begin¹

*This example assumes a benefit amount of $1,500 at the full retirement age of 67 months for those born after 1960.

At first blush, the decision may seem a bit clear-cut: Simply calculate the lifetime value of the early benefit amount versus the lifetime value of the higher benefit, based on some assumed life expectancy.

The calculus is a bit more complicated than that because of the more favorable tax treatment of Social Security income versus IRA withdrawals, spousal benefit coordination opportunities, the consideration of the surviving spouse, and Social Security’s lifetime income guarantee that exists under current law.²

Here are three ideas to think about when making your decision:

1. Do You Need the Money?
   Retiring before full retirement age may be a personal choice or one that is thrust upon you because of circumstances, such as declining health or job loss. If you need the income that Social Security is scheduled to provide, however reduced, then taking benefits early may be the only choice for you.
2. Consider the Needs of Your Spouse
   If your spouse expects to depend on your Social Security income, the survivor benefits he or she receives after your death may be reduced substantially if you begin taking benefits early. It’s important to remember that, based on current life expectancy tables, women are likely to live longer than men.
3. Are You Healthy?
   The primary risk in retirement is running out of money. The odds of living a long life in retirement call for waiting until you reach full retirement age so that you receive a full benefit for as long as you live. However, if your current health is poor, then starting earlier may make sense for you.

There are several elements you should evaluate before you start claiming Social Security. By determining your priorities and other income opportunities, you may be able to better decide at what age benefits make the most sense.

1. SSA.gov, 2024
   2. Once you reach age 73 you must begin taking required minimum distributions from a Traditional Individual Retirement Account in most circumstances. Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. Contributions to a Traditional IRA may be fully or partially deductible, depending on your adjusted gross income.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

How the Federal Reserve Works

Have you ever taken a close look at paper money? Each U.S. bill has the words “Federal Reserve Note” imprinted across the top.

But many individuals may not know why the bill is issued by the Federal Reserve and what role the Federal Reserve plays in the economy. Here’s an inside look.

The Federal Reserve, often referred to as “the Fed,” is the country’s central bank. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Prior to its creation, the U.S. economy was plagued by frequent episodes of panic, bank failures, and limited credit.¹

The Fed has four main roles in the U.S. economy.

Economy Watch

In addition to its other duties, the Fed has been given three mandates with the economy: maintaining maximum employment, maintaining stable price levels, and maintaining moderate, long-term interest rates.¹

It’s important to remember that the Fed cannot directly control employment, inflation, or long-term interest rates. Rather, it uses a number of tools at its disposal to influence the availability and cost of money and credit. This, in turn, influences the willingness of consumers and businesses to spend money on goods and services.

For example, if the Fed maneuvers short-term interest rates lower, borrowing money becomes less expensive, and people may be motivated to spend. Consumer spending may stimulate economic growth, which may cause companies to produce more products and potentially increase employment. When short-term rates are low, the Fed closely monitors economic activity to watch for signs of rising prices.

On the other hand, if the Fed pushes short-term rates higher, borrowing money becomes more expensive, and people may be less motivated to spend. This may, in turn, slow economic growth and cause companies to decrease employment. When short-term rates are high, the Fed must watch for signs of a decline in overall price levels.

Supervise and Regulate

The Fed establishes and enforces the regulations that banks, savings and loans, and credit unions must follow. It works with other federal and state agencies to ensure these financial institutions are financially sound and consumers are receiving fair and equitable treatment. When an organization is found to have problems, the Fed uses its authority to have the organization correct the problems.

Financial System

The Fed maintains the stability of the financial system by providing payment services. In times of financial strain, the Fed is authorized to step in as a lender of last resort, providing liquidity to an individual bank or the entire banking system. For example, the Fed may step in and offer to buy the government bonds owned by a particular bank. By doing so, the Fed provides the bank with money that it can use for its own purposes.

Banker for Banks, U.S. Government

The Fed provides financial services to banks and other depository institutions as well as to the U.S. government directly. For banks, savings and loans, and credit unions, it maintains accounts and provides various payment services, including collecting checks, electronically transferring funds, distributing new money, and receiving and destroying old, worn-out money. For the federal government, the Fed pays Treasury checks, processes electronic payments, and issues, transfers, and redeems U.S. government securities.

Each day, the Fed is behind the scenes supporting the economy and providing services to the U.S. financial system. And while the Fed’s duties are many and varied, its focus is to maintain confidence in banking institutions.

A Decentralized Central Bank

The Federal Reserve System consists of 12 independent banks that operate under the supervision of a federally appointed Board of Governors in Washington, D.C. Each of these banks works within a specific district, as shown.

Source: FederalReserve.gov, 2023

1. FederalReserve.gov, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Pickleball in Retirement

Staying Active in Retirement

Over the last couple of years doctors have made clear the benefits of regular physical activity, especially for older adults. In fact, adults 65 and older gain substantial health benefits from regular physical activity. Being physically active can increase mobility, lessen the chance of injury, and lead to an overall better quality of life.¹

The benefits of exercise extend beyond the physical though. Regular exercise also lowers the risk of dementia and reduces the symptoms of anxiety and depression. Even knowing all the advantages associated with staying active, it can be tough to find an activity that’s fun, mentally challenging, and physically taxing.²

A Nation of Pickleballers

But if having fun, engaging in friendly competition, and burning calories sounds like your kind of exercise, pickleball may be the sport for you. With over 4.8 million people in the U.S. playing pickleball right now, this fast growing sport is quickly becoming the favorite of active retirees nationwide.³

Where did it come from?

In 1965, Congressman Joel Pritchard and his close friend Bill Bell invented the game as a means to give their families something to do on vacation. Using an old badminton court, they improvised a game using ping-pong paddles and a perforated plastic ball. Over the course of a couple weeks, their family and friends discovered that this strange new game was tons of fun!⁴

How do you play?

Pickleball is played either as doubles (two players per team) or singles, but doubles is most common. This doesn’t mean you have to bring a partner though. Many leagues and communities have members that are more than happy to play with new teammates.

A standard pickleball play area is the same size as a doubles badminton court and measures 20×44 feet with the net set at tennis court height. There are a number of easy to grasp rules, but the biggest difference between pickleball and tennis is the “serve” and the “kitchen.”

In pickleball, the serve is made underhand and paddle contact with the ball must be below waist level. Much like tennis, the serve is made diagonally crosscourt and must land within the confines of the opposite diagonal court.⁵

“The kitchen” is a colloquial term for the non-volley zone. This is a 3.5-foot wide section of the court closest to the net and extends to each sideline. It’s not uncommon to hear yells of “Kitchen!” followed by roars of “Ohhhh!” or bellows of laughter during a game. Even seasoned players can find themselves celebrating a great volley, only to realize they’re standing squarely in “the kitchen” where volley’s are a big no-no.

Fun for Everyone

Because pickleball rules are so similar to ping-pong, the barrier to entry can be quite low. Grandparents, grandchildren, and anyone in between can pick up this fun game with little frustration. So next time you’re looking for something to break up the monotony of your normal exercise routine, why don’t you give pickleball a try? Whether you’re a beginner who just wants to learn a new sport for fun, or a seasoned athlete who craves the thrill of competitive play, pickleball offers something for everyone.

1. CDC.gov, 2022
   2. CDC.gov, 2022
   3. USAPickleBall.org, 2022
   4. USAPickleBall.org, 2022
   5. USAPickleBall.org, 2022

Countering Counterfeit Currency

Believe it or not, the agency responsible for protecting U.S. currency is the United States Secret Service. The agency was founded on July 5, 1865, as part of the Department of the Treasury to combat the widespread counterfeiting of currency happening at the end of the Civil War.¹

Combating counterfeiting remains core to preserving the integrity of the nation’s money.

Money Matters

The advent of high-tech printers and inks continues to raise the bar on what the federal government needs to do to limit counterfeiting, leading to a range of new strategies.

To make U.S. paper currency more difficult to copy, there have been continual changes to the artwork, paper, and ink. Summarized below are some of these recent changes.²

Portrait – The portrait has become much more sophisticated by becoming closer to a lifelike picture than the screen-like background it was previously. On counterfeit bills, the portraits often appear to be unclear or unnaturally white.

Border – The border design is now composed of intricate, crisscrossing lines that are clear and unbroken, distinguishing them from the smudged or broken lines of counterfeit bills.

Paper – The paper is now embedded with tiny red and blue fibers. A polyester thread is also woven inside $10, $20, $50, and $100 bills with “USA TEN, USA TWENTY” printed on them to match the denomination. This makes it nearly impossible for photocopiers to reproduce.

Ink – The ink used is a special, “never-dry” ink that can be rubbed off. This is not foolproof, however, since ink on some counterfeit bills can be rubbed off as well.

Microprinting – Surrounding the portrait are the words “The United States of America” in miniature letters. It appears to be a black line to the naked eye, and is how a photocopier would reproduce it.

Keep in mind that you are not reimbursed for any counterfeit currency that may come into your possession. So you are advised to be careful about the large bills you accept for payment.

1. SecretService.gov, 2023
2. USCurrency.gov, 2023

A Bucket Plan to Go with Your Bucket List

John and Mary are nearing retirement and they have a lot of items on their bucket list. Longer life expectancies mean John and Mary may need to prepare for two or even three decades of retirement. How should they position their money?¹

One approach is to segment your expenses into three buckets:

• Basic Living Expenses— Food, Rent, Utilities, etc.
• Discretionary Spending — Vacations, Dining Out, etc.
• Legacy Assets — for heirs and charities

Next, pair appropriate investments to each bucket. For instance, Social Security might be assigned to the Basic Living Expenses bucket.²

For the discretionary spending bucket, you might consider investments that pay a steady dividend and that also offer the potential for growth.³

Finally, list the Legacy assets that you expect to pass on to your heirs and charities.

A bucket plan can help you be better prepared for a comfortable retirement.

Call today and we can develop a strategy that may help you put enough money in your buckets to complete all the items on your bucket list.

1. John and Mary are a hypothetical couple used for illustrative purposes only. Diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if security prices decline.
2.  Social Security benefits may play a more limited role in the future and some financial professional recommend creating a retirement income strategy that excludes Social Security payments.
3.  A company’s board of directors can stop, decrease or increase the dividend payout at any time. Investments offering a higher dividend may involve a higher degree of risk. Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

Retirement Questions That Have Nothing to Do With Money

Preparing for retirement is not entirely financial. Your degree of happiness in your “second act” may depend on some factors that don’t come with an obvious price tag. Here are some non-monetary factors to consider as you prepare for your retirement.

What will you do with your time? Too many people retire without any idea of what their retirement will look like. They leave work, and they cannot figure out what to do with themselves, so they grow restless. It’s important to identify what you want your retirement to look like and what you see yourself doing. Maybe you love your career and can’t imagine not working during your retirement. There’s no hard and fast rule to your dream retirement, so it’s important to be honest with yourself. A recent Employee Benefit Research Institute Retirement Confidence Survey shows that 73% of workers expect to work for pay in retirement, whereas just 23% of retirees report that they’ve actually worked for pay.¹

Having a clear vision for your retirement may help you align your financial goals. It’s important to remember that your vision for retirement may change—like deciding you don’t want to continue working after all.

Where will you live? This is another factor in retirement happiness. If you can surround yourself with family members and friends whose company you enjoy, in a community where you can maintain old friendships and meet new people with similar interests or life experiences, that may be a plus. If all this can occur in a walkable community with good mass transit and senior services, all the better.

How are you preparing to get around in your eighties and nineties? The actuaries at Social Security project that the average life expectancy for men turning 67 is 84.6 years old, and the life expectancy for women turning 67 is 87.1 years. Some will live longer. Say you find yourself in that group. What kind of car would you want to drive at 85 or 90? At what age would you cease driving? Lastly, if you do stop driving, who would you count on to help you go where you want to go and get out in the world?²

How will you keep up your home? At 45, you can tackle that bathroom remodel or backyard upgrade yourself. At 75, you will probably outsource projects of that sort, whether or not you stay in your current home. You may want to move out of a single-family home and into a townhome or condo for retirement. Regardless of the size of your retirement residence, you should expect to fund minor or major repairs, and you may need to find reliable and affordable sources for gardening or landscaping.

These are the non-financial retirement questions that no pre-retiree should dismiss. Think about them as you prepare and invest for the future.

1. EBRI.org, 2023
2. SSA.gov, 2023

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Five Tough Questions to Ask Before Retirement

Retirement is a significant life milestone, but achieving a successful and fulfilling transition requires answering some tough questions. Whether you’re nearing retirement or just beginning to plan, these critical considerations can help ensure your financial security and peace of mind in this next chapter. 

Do I Have Enough Money?

This is often the first question people ask, and for good reason. The ability of your savings to support your desired lifestyle is fundamental. But it’s not just about crunching numbers; it’s about believing in your plan and being mentally ready for the transition. Partnering with a financial advisor can provide valuable reassurance and ensure your plan is realistic. 

To begin to answer this question, evaluate your retirement income sources, including Social Security, pensions and personal savings. Don’t forget to plan for healthcare costs—insurance premiums, out-of-pocket expenses, and potential long-term care needs can significantly impact your budget. Additionally, account for inflation by building a buffer into your plan to preserve your purchasing power as prices rise. 

Where Will I Live? 

Where you choose to live can significantly affect your retirement experience and budget. Some retirees prefer to stay in their current homes, while others opt to downsize, relocate for better weather or scenery or move closer to family. 

Consider whether your current home is suitable for aging in place. Think about maintenance, accessibility and potential mobility challenges like stairs and exterior walkways. If you’re considering relocating, research the cost of living and tax implications in different areas. Prioritize locations with access to essential services such as healthcare, recreational activities, and social networks. 

How Do I Start Accessing My Money?

Most people are well-versed in saving for retirement but less confident about withdrawing from their nest eggs. The idea of tapping into a fixed amount of savings can be intimidating, but preparation can ease this process. 

Creating a withdrawal strategy that balances income needs with tax efficiency is key. Learn the logistics of initiating withdrawals, rollovers, and managing tax withholding. Familiarize yourself with required minimum distributions (RMDs) to avoid penalties.

Additionally, consider whether annuities might provide the stability you need to complement other income sources. 

What Does Retirement Life Look Like?

Retirement is more than a financial milestone; it’s a new chapter that requires careful thought about how you’ll spend your time. Beyond finances, envision what your “life 2.0” will look like. Will you travel, work part-time, volunteer, or take up new hobbies? 

Having a plan for your days with no commute times, set schedules or places to be can help reduce stress and provide a sense of purpose. Explore new hobbies, stay socially engaged and incorporate physical activity into your routine to enhance your quality of life. 

What About Taxes?

Taxes don’t disappear in retirement. Managing them efficiently is crucial to sustaining your income. Generating sustainable, tax-efficient retirement income can be complex but highly rewarding with the right strategies in place. 

Understand which accounts to draw from first, how much to withdraw, and how to minimize taxes. Allocate investments strategically across taxable, tax-deferred, and tax-advantaged accounts to reduce liabilities. Assess whether converting traditional IRAs to Roth IRAs aligns with your goals and stay informed about potential changes to tax laws by consulting with financial and tax professionals. 

Take the Next Step

These five questions form the foundation of a secure and fulfilling retirement. Addressing them early and thoroughly will give you the confidence to transition into this new phase of life with clarity and purpose. Consult with trusted financial and tax professionals to create a plan tailored to your unique needs. Retirement can be the most rewarding chapter of your life, but it starts with asking the right questions today. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.