Social Security strategy: Boost lifetime payouts with the spousal benefit-Rachel L. Sheedy,

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Married couples can often boost their lifetime Social Security benefits with the strategic use of the spousal benefit. Whether only one spouse worked or both did, there's a place for the spousal benefit in any couple's retirement planning.

Couples have two key claiming strategies to boost the power of the spousal benefit, which is worth up to 50% of a spouse's monthly benefit. One is called "file and suspend," in which the higher earner immediately suspends his benefit so the lower earner can take a spousal benefit. The other is known as "restricting an application," in which the higher earner files for a spousal benefit, even though his own benefit is larger.
SEE ALSO: 9 Worst Social Security Mistakes You Can Make
Both strategies enable a beneficiary to delay his own retirement benefit, allowing it to earn 8% annual delayed retirement credits until age 70. To use these strategies, a beneficiary must be full retirement age.
With these strategies, couples can get the best of both worlds. "You get some income in your sixties and you let the higher earner's benefit grow to the maximum," says Judith Ward, senior financial planner for T. Rowe Price.
A major goal is to maximize the higher earner's benefit. If the higher earner dies first, the lower earner will qualify for a survivor benefit worth up to 100% of the higher earner's benefit. But it doesn't really matter which spouse dies first, because the higher earner's benefit "will last until the second spouse dies," says William Reichenstein, a professor of finance at Baylor University, in Waco, Tex., and a principal of consulting firm Social Security Solutions.
The difference between the size of the couple's benefits is key in determining which spouse takes what benefit when. "The amount of the benefit itself and who's the higher earner matter," Ward says. Even a few dollars' difference in benefit amounts between the two spouses can be important over the long term.

When to Employ Which Strategy

We asked Reichenstein to run the numbers for three hypothetical couples to show the different ways the spousal benefit can be used to maximize lifetime benefits. In each case, the higher earner is delaying his benefit until 70, and the lower-earning spouse is waiting until full retirement age to claim the spousal benefit. (If she claims before full retirement age, the benefit will be less than 50% of the other spouse's benefit.)
The spouses in each hypothetical couple are the same age. The wives are expected to live to 90, while the husbands are expected to live to 85. We assume the husbands are the higher earners, each with a full retirement age benefit of $2,200. The wives' full retirement age benefits vary. (Results could change if the spouses are not the same age.)
Disparate earners. In this case, the wife's full benefit is $500. Couples whose benefits differ widely have a relatively easy claiming decision. If the low earner has little or no earnings, the higher earner can file and suspend, says Thomas Wiggins, a certified financial planner with Rehmann Financial, in Farmington Hills, Mich.
A spouse can't claim a spousal benefit until the other spouse claims his. With this strategy, the higher earner files for his benefit and then suspends it. That enables the lower earner to claim a spousal benefit. And by suspending, the higher earner can allow his own benefit to grow until he collects it later -- perhaps at age 70.

This is the best strategy for this couple, Reichenstein says, because the wife's spousal benefit of $1,100 is much larger than her own retirement benefit. Even if she delayed her own benefit until age 70, it would only be $660. The strategy also provides the couple with $350 more per month between the ages of 66 and 70 than if the wife had claimed her own $500 benefit and the husband had restricted his application to get a $250 spousal benefit.
At age 70, the husband will get $2,904 (plus cost-of-living adjustments) -- $704 more than if he had claimed his own benefit at 66 without suspending. And the wife will continue getting her $1,100 spousal benefit.
Unequal earners. In this scenario, the wife's full benefit is $1,000. As the gap between benefit amounts shrinks, the best strategy is not clear-cut. It's critical to calculate all possible strategies.
Say the wife claims her $1,000 benefit and the husband files a restricted application to receive a $500 spousal benefit. That gives the couple $1,500 a month. At age 70, the husband takes his boosted benefit of $2,904, and she switches to a spousal benefit of $1,100, for a total of $4,004 a month.
But Reichenstein says the couple can do better with another strategy. At age 66, the husband files and suspends his benefit. The wife restricts her application to a spousal benefit, enabling her own benefit to grow. (If she had simply claimed a spousal benefit without restricting her application, she would not be able to allow her own benefit to grow.) They will get $400 less a month for the first four years. But the couple ends up doing better, Reichenstein says, because the wife "can grow her own benefit past her spousal benefit."

Social Security Strategies for Widows and Widowers Play video

At age 70, both spouses switch to their delayed benefits -- hers of $1,320 a month and his at $2,904. That gives them a total monthly benefit of $4,224. This strategy increases the couple's total lifetime benefits by $20,400. The lesson: Couples should consider this route if the lower earner's benefit with delayed retirement credits exceeds her spousal benefit, Reichenstein says.
Equal earners. In this case, the wife's full benefit is $2,000. For couples with a narrow benefit gap, the best strategy may be for both spouses to delay their benefits, with one spouse restricting an application to a spousal benefit at full retirement age. Since both spouses in this case are the same age, the one receiving the higher spousal benefit should file a restricted application.
The husband files and suspends his benefit. The wife files a restricted application for a spousal benefit of $1,100 a month. That will give the couple $52,800 for the four years they have to wait to switch to their boosted benefits. At age 70, he switches to his boosted benefit of $2,904 and she steps up to her delayed benefit of $2,640. That gives them $5,544 a month.

Source Kiplinger

THE ROAD TO SUCCESSFUL RETIREMENT-ODUNZE REGINALD C

Life in retirement is another kind of life, in Europe and America, the old man may be sent to an old peoples home, but in Nigeria and in most African countries , you may be lucky to enjoy the rewards of African extended relationship by enjoying a relationship and a stay within your relations house. No wonder a former president of Nigeria put a note of warning that whoever among his children that is nursing the ambition of sending him to an old peoples home, will not live to see old age.

But in Europe and America, old people look up to such homes as they reach their retirement age, that is differences in culture and tradition. So how do make out the best out of old age is entirely a function of the retiree, but the underlying reason is the ability to see the positive side of life and believe you can.

Henry Ford said “Think you can, think you can’t, either way you will be right” and according to Robert Schuller 1988 “I can! Said the retired postman.  He was a rural mailman for twenty years” Schuller (1988:64)

But when retired after two decades of postal service in Makanda, Illinois Wayman has acquired a small pension and $1100 savings. His travel company does nearly $7 million in sales a year with Presley Tours. How does a retired mail man become a prosperous businessman and according to Schuler, he did it by believing in himself and his abilities and by making people happy. Schuller (op cited)

But in my own opinion Wayman succeeded because he was doing what he loves most, and he has a positive mental attitude. Positive attitude in life is that all that matters and secondly doing whatever you have been assigned to do with dedication and happiness irrespective of how much you are paid. According to research it has been discovered that people who continued whatever they spend many years doing are more likely to succeed than those who change vocation, job after retirement.

On how many people fail during retirement, is a function of their ability to kick starting whatever they are used to even on a smaller scale during old age. Old age comes with it issues, problems, non  acceptance , health issues and  a disconnect with current happenings in life, there is also the generation gap, and so doing what you love most or whatever you have been doing most is the key to survival. So a retired policeman, or army officer can comfortable operate a security outfit and consultancy.

And how Wayman did arrived at that, “one day someone said to him” I would love to see the ocean. That simple wish enthusiastically  expressed to Wayman led to a tour of 546 people to Miami Beach , Wayman made $120  and had such a good time that he decided to go into business” Schuller op cited.

That is passion, passion is all that you need to excel, in all areas of life, everything dies without passion. With passion you can excel in all your life aspiration, its passion that makes the difference in vocation.

But from my interaction with retirees within my six years in pension industry, I want to believe that what drove Wayman was not the money but the actual sharing of one’s thought and deepest hopes fulfilled. And as Chinua Achebe will say the sharing  of one’s thought and deepest hope fulfilled can drive human beings to success. And the keen desire to return and do what he was doing before was the actual driving force for Wayman Presley.

It has been proved that people always wish for what they don’t have, I believe that Wayman was looking forward to his retirement during his working career but it did not take time for him to realize that he could have love going back to work may be after staying for the initial period of six months. That is the irony of life. The irony of life is that people tend to be what they are not, that is why you see the whites sun tanning and the blacks bleaching.

What this is indirectly saying is that within the working career ,work with zeal and dedication, know all that you need to know about the job, because you may never can tell, that you are indirectly  developing a business for yourself during old age.

In an article captioned “You may never retired” that appeared in wall street journal it states” that sum sizable number of retirees  may continue to work after retirement due to so many reasons like their pension pot  was not enough, they were ripped off  of the retirement savings and majority because they love what they do.

And according to Walter Updegrave in an article captioned “ Three Little mistakes that can sink your retirement,  which appeared in Yahoo Finance it states that “It’s almost become a cliché. Virtually every survey asking pre-retirees what they plan to do in retirement shows that the overwhelming majority plan to work. Indeed, a recent Merrill Lynch survey found that nearly three out of four people over 50 said their ideal retirement would include working. Which is fine. Staying connected to the work world in some way can not only offer financial benefits, it can also keep retirees more active and socially engaged”

But a more interesting story was the story of life of Mary Calendar, “Mary was making potato salad in an inn in Los Angeles during world war 11, her boss asked her to make pies for a large crowd. That was the start of a new career for Mary” Schuller (op cited). Continuing he stated that in 1948, she and her husband sold their car, to buy a refrigerator and an oven “in 1964 they open their first pie shop in Orange county and by 1986, they sold the family business about 115 restaurants to Ramada Inn Inc for $90 Million “What a tremendous accomplishment as that business may be hitting 2 billion Dollars in 2014.

Finally life during retirement is a great and rewarding life and what you make out of it is a function of the zeal, knowledge and experience, you acquired during your working career and when you are happy you are more likely to live long, and others will be jealous of your state and according to Dave Bernard in an article captioned “Finding Retirement state of mind”  which appeared in US News .he stated that “they appear to be genuinely happy with their state of affairs and making the most of each day. When you ask about their retirement experience they shine a genuine smile and are happy to regale you – often at length – about how wonderful it is to be in their shoes. Their happiness is infectious and you may find yourself caught up in their joy. Although it is safe to assume not everything is perfect in their world, their overall outlook is positive”. But when these are lacking, the retiree may likely not live long, thereby prompting others to fear retirement.

 

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing consultant  a social media and social marketing consultant , you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at google+ @ Reginald Odunze and at Linkedin@reginald odunze

Workers to access 25% pension savings for mortgage …to forfeit lump sum payment at retirement-Nike Popoola

Director-General, National Pension Commission, Mrs. Chinelo Anohu-Amazu

For the first time under the Contributory Pension Scheme, workers in active service will soon be allowed to withdraw 25 per cent of the balance in their Retirement Savings Account as collateral for mortgage loan before they reach retirement age.

This was contained in the draft guidelines on withdrawals from the RSA, a copy, which was obtained by our correspondent from the National Pension Commission on Friday.

The date for the commencement of such withdrawals by workers would soon be announced, it was learnt.

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According to the draft guidelines, such workers will, however, forfeit the lump sum payment and shall only be entitled to a monthly pension payment when they retire.

Section 3.5 of the draft guidelines states that an eligible RSA holder shall be allowed to access a maximum of 25 per cent of the RSA balance as equity contribution for a mortgage loan.

Section 3.4 also states that a RSA holder that has utilised a portion of the RSA balance as equity contribution for residential mortgage may not be entitled to a lump sum payment at retirement.

According to Section 89 (2) of the Pension Reform Act 2014, a Pension Fund Administrator may, subject to guidelines issued by PenCom, apply for a percentage of pension fund assets in the RSA towards the payment of equity contribution for residential mortgage by a holder of the RSA.

The guidelines also allow only contributors, who have a minimum of N6m in their RSA, to use part of it for a mortgage loan.

Specifically, Section 5.5 of the guidelines states that the mortgage loan shall be a minimum of N1.5m and a maximum of N50m.

Section 5.6 says that the mortgage loan shall be for a minimum of five years and a maximum of 20 years; while section 5.7 states that the interest rate on the mortgage loan shall be at a fixed rate for the whole duration.

The guidelines also specify that the RSA holder must be in active employment, either as a salaried employee or self-employed person. It adds that the worker must have been contributing consistently for a minimum of 10 years.

Part of the draft regulations indicates that the money can only be used to purchase either a single-family home or an apartment in a multi-unit building, which must be owner-occupied.

Section 5.3 states, “The property shall have a comprehensive insurance policy in the name of the borrower to cover the replacement or reinstatement cost of the property. The insurance policy must note the RSA fund as one of the first loss payees, to cover the equity contribution released by the PFA.”

PenCom also states, “The valuation of the property to be purchased with the mortgage loan shall be carried out by a licensed, independent valuer, who is a member in good standing with the Nigerian Institution of Estate Surveyors and Valuers. He must also have professional indemnity insurance with an insurance company licensed and in good standing with the National Insurance Commission.”

According to the requirements, a Primary Mortgage Bank or Deposit Money Bank licensed by the Central Bank of Nigeria must grant mortgage loans to qualifying RSA holders as well as provide the required documentation to the PFAs.

Culled from Punch

Technology as a medium for good customer delivery in pension Administration- Odunze Reginald C

Image credited to wisegeek

 

The need for a robust information technology cannot be over emphasized and as the Head Surveillance,M Y. Datti of National Pension Commission in the 2011 circular in raising the minimum share  capital requirement of Pension Fund Administrators to 1 billion Naira stated that as part of its oversight function observed that “the minimum share capital of 150 million naira was no longer adequate to meet the operation expenses of PFA business, given its intensive IT nature and average gestation period of 5 years.

From the presentation of Datti, it is very glaring that IT plays a prominent role in pension management, having an adequate technology infrastructure will go a long way in ensuring customer satisfaction.

There is urgent need to ensure a proper safeguard customer data against intruders, like hackers, identity theft, password sniffers, web crammers, spoofing, data kidnappers, software piracy, cyber squatting and unlawful interceptions.

The need for these safeguards are coming as a result of recent development in the world, I cloud issues, and as Scott Cornell in his article “ Effect of computer hacking on an organization  will say “ It's common for businesses to install security systems to keep their properties safe and to purchase insurance in the event of a disaster or robbery. Arguably, though, a security system feature that is of equal importance is one that business owners can implement to protect company computers from hackers and viruses. Hacking on the whole costs businesses billions of dollars each year. But there's more than just money at stake if your business were ever to encounter a computer hacker”

But technology is an expensive project and requires large chunk of money for its implementation and will definitely involves  a larger chunk of money for its safe guarding and protection, more recently we have read cases of nude pictures of celebrity being leaked on line as a result of hacking of I cloud, if people can hack naked pictures of women, then it is left for anyone’s imagination to ascertain what other areas it can hack into.

Technology is a paramount necessity in all spheres of business life and pension cannot be an exception, issues to pertaining to customer service delivery are also a great concern as far as technology is concerned.  All Pension Fund Administrators are geared towards market deepening, and market deepening comes with it a large customer base waiting to be serviced on a regular bases .But be as it may ,the servicing of these customers requires a robust IT infrastructure.

Market deepening comes with increase in pension assets and large investible funds for growth of the economy and also these are being driven for a good IT infrastructure.

What then do organization is keeping an effective and robust IT, though expensive, organizations should run a back up.

When they are migrating to another platform, is it soft ware, etc, it is always good to run the two systems concurrently in case of system failure of the new system deployed.

It is always to run what others are running that has survived over the years than to pick a new system that has not been test run by other organizations.

The impact of good and robust IT infrastructure cannot be over emphasized as the world has become a global village, issues of customer services are brought to bare on the social networks like Twitter, Facebook etc. you can’t imagined how far that can impact on the fortune of the organization.

It can also trend, go viral and impact negatively on the organization. Just yesterday, the CEO of Facebook noted that its network has hit the first 1 billion within 24 hours. He went on say that it was the first; I billion people are online at the same time though the network is about 1.5 billion monthly. Analyzing Mark expresses his gratitude for the Facebook community. What is the implication of this? Its implication is that imagine if an organization has issues with its network that impact negatively on customer service, and that particular customer has  large follower and likes in Facebook,  and Twitter and decide to post , will it be good for the organization.

The need for this becomes important as pension fund administrators awaits the National Pension Commission window on transfer, the defining determinant will be the level of customer service rendered to the Retirement Savings Account holders.

The world has become a global village and we are in the period of hyper globalization, technology therefore becomes an essential ingredient in driving the scheme to a profitable base even as the pension assets hit 4.6 Trillion Naira.

Odunze Reginald is the Lead Consultant, Chareg Consulting, a management and marketing consultant a social media and social marketing consultant, you can visit our twitter anchor @regydunze, find us on Facebook @ Reginald odunze and reginaldodunze.com, at google+ @ Reginald Odunze and on LinkedIn @ Reginald odunze.