What If I Can’t Wait Until 70 to Get My Social Security?

Delaying the claiming of your Social Security benefits only makes sense for some people—particularly those who are claiming based on their own work records and who expect to live a long time in retirement. You have probably also heard that 70 is the best age for claiming Social Security benefits. That’s because you’ve already reached your full retirement age (age 66 or 67 for most) and you’ll get 100% of the benefits to which you’re entitled. In addition, for every year you delay beyond your full retirement age, you can increase your benefits by 8%. The exact amount is calculated based on the year of your birth and the number of months you delay. However, this ends at age 70.

CNBC’s recent article, “Can’t wait until 70? This is the next best age to claim Social Security benefits” explains that there’s a next best age to claim. Single Social Security claimants who want to wait until age 70, but can’t should select age 69. That trade-off can be as little as a few thousand extra dollars in additional lifetime benefits, if you start a year earlier.

If you’re single, wait until 70, but it’s as critical as it is going from 66 to 67, or 67 to 68. In a low interest rate environment, it’s hard to beat the potential increases for every year you wait in claiming your benefits. That’s a guaranteed real rate of return backed by the federal government. You can’t get these types of real rates of return in the marketplace.

If you are married and the higher wage earner, it typically makes sense for you to delay as long as possible to claim. That’s because Social Security payments are based on mortality tables that have not been updated since 1983. Life expectancies have increased since then, because people are living longer than they would have been expected to back in 1983. As a result, the credits that you receive for delaying Social Security are worth more to you, than they would be if they were actuarially fair.

Waiting until age 70 makes sense, especially for the higher earner of a married couple, because their benefits will determine the spousal and survivor benefits for their spouse. However, for the lower-earning spouse, it usually doesn’t pay to delay claiming beyond full retirement age, because they have a choice between their own benefits or spousal or survivor benefits based on their spouse’s record, whichever is higher. Frequently, the benefits they’re eligible to receive through their spouse will be more than what they’d get, if they wait until age 70.

For singles, it is preferable to wait until age 70 for the highest monthly checks. However, those people have more flexibility and now, a second-best option.

Reference: CNBC (August 20, 2019) “Can’t wait until 70? This is the next best age to claim Social Security benefits”


Can I Keep a Loved One’s Inheritance From Their Spouse?

A recent nj.com article asks, “How do I protect my niece’s inheritance from her husband?” The article says that in a scenario where someone plans to leave most of her estate to her niece but doesn’t want her estranged husband to get his hands on the money, she must be proactive to make sure the funds go where she intends them to go.

One option is for the aunt to leave the assets to the niece outright or in trust.    If the property is distributed to the niece outright and she then gets divorced, in Massachusetts, the inheritance would be subject to equitable distribution in the subsequent divorce proceeding.  If left in trust, however, the issue of whether trust assets would be subject to the divorce proceeding is determined on a number of factors, such as access to assets, co-mingling of trust assets with marital assets, and recent case law.    In short, an outright bequest may not be the best way to leave property to the niece, even though it’s probably the most economical, straightforward method for the aunt.    While the cost of creating a trust-based plan is more expensive than a will-based plan, the use of a trust may be more advantageous depending upon your unique objectives.

When your estate plan designates someone, whether a child, niece, or close friend, to inherit your assets and that someone has creditor problems, marital problems, and maybe even substance abuse problems, it is best to discuss how to design your estate planning documents  so that you plan for certainty and not destiny, with unforeseen outcomes and beneficiaries.

Reference: nj.com (August 21, 2019) “How do I protect my niece’s inheritance from her husband?”


How Should I Title My Property in My Estate Plan?

Pauls Valley Democrat’s recent article, “Considerations in how to title your property,” says that there are several types of “automatic” transfer of property methods that don’t require probate.

The first is Joint Tenancy with Right of Survivorship. This form of ownership passes title to the survivor immediately upon death and avoids probate. The transfer to the survivor happens automatically at the death of one of the joint owners.

To complete the transfer, one must confirm the death in the county records and effectively give notice that one joint tenant has died, and that the ownership is now in the survivor(s) name. This is usually accomplished, by having the survivor complete an Affidavit of Surviving Joint Tenant. The affidavit affirms the death of one party (in many cases a spouse), and the survivorship to title of the other party. This affidavit and a certified copy of the death certificate are filed with the county.

The survivor now owns the property as an individual. He or she can now sell or deed the property to others, including children, without a probate action to clear the title.

Next is Tenancy in Common. Ownership as a tenant in common gives an undivided interest in the whole property (like a third), which stands on its own and can be bought and sold. Tenancy in Common is used when two or more people want to keep their title separate from the other at death. Therefore, an undivided one-half owner has the right to use the entire property, including the right to benefit from one-half of the rent, lease or crop share. However, if several people own an undivided interest, control, usage and management can become complicated.

If, for some reason, a husband and wife own their property as tenants in common, and one spouse dies, his undivided interest remains as a part of his estate. In that case, his estate must be probated to provide a clear transfer of title to the surviving spouse or to other heirs.

It’s an added expense for the survivor that can be avoided, if another form of ownership is used.

Thinking through these factors is a critical component of successful estate planning. Plan in advance with the help of a seasoned estate planning attorney. Don’t create bigger problems for yourself or your heirs, by trying to avoid upfront costs.

Reference: Pauls Valley (OK) Democrat (August 21, 2019) “Considerations in how to title your property”