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Many of our clients and friends have been expressing their desire to retire “early” or before age 65.  As I mentioned in our last blog, working until 65 is what we always just “did.” Well, pressures from COVID and general workforce stress have caused many to begin rethinking their options.  We’ve been fortunate to help bring this vision forward for many families and have learned much during the journey. As you think about the possibility of retiring early—before age 65—there are many factors to consider, both in terms of planning and the exciting opportunities it can bring. Here's a beginning framework to help you consider this big transition: Key Issues to Address: Healthcare Coverage:  Without access to Medicare until age 65, securing affordable health insurance is a critical step. We can explore COBRA, private insurance, or marketplace options to ensure continuous coverage. Income Strategy:  You will need a clear plan [...]

Many of our readers, clients and friends are either retired, contemplating retirement or plotting a future that will eventually include retirement.  The rare bird in our mix will decide to never retire or indefinitely remain engaged at work similar to Warren Buffett.  My choice of profession has allowed me the rare privilege of being able to help hundreds of families plot and execute their retirement planning. I’ve seen it done well and I’ve seen it turn into disaster.   While the second outcome is less prevalent, it does happen occasionally. For our next series I’m going to focus on rethinking retirement inside the following framework: ·      Retirement mentality – merging emotional and financial planning considerations ·       Retiring early –considerations, cautions and steps to make it happen ·       Retiring from work but not life ·       Making the most of your tax [...]

To date we have looked at the status of the Social Security system and some potential fixes to keep the system functioning. Today, I’d like to help answer – what, if anything, should we be doing to prepare for an unknown Social Security future? “According to a 2023 Gallup poll, 43% of current retirees expect to eventually experience a cut in Social Security benefits.” – Kitces.com. While this is possible, it remains unlikely given that the system would still be 83% funded if the trust fund itself was to be liquidated by 2035. As we discussed earlier, current benefits are paid by current workers. We are also seeing states get into the act by reducing retirement income taxes. In Iowa, for many taxpayers, taxes are not collected on any retirement income. One way we can model a potential cut in benefits is to eliminate the cost of living increases we [...]

“The economist John Maynard Keyes said that in the long run, we are all dead. If he were around today, he might say that, in the long run, we are all on Social Security and Medicare.” – Ben Bernanke, Former Federal Reserve Chairman Last week we discussed the solvency and current framework for the Social Security system.  While there are definitely cracks in the Trust Fund we also learned that payroll taxes are the primary funding source in today’s system.  The next question we need to answer then, is what options do we have if the payroll tax system becomes ineffective?  What options are there to extend and/or improve the social security system for current and future generations? Demographics (an aging population) play a large role in the current decline of the trust fund.  “While there were 3.3 covered workers per OASDI beneficiary in 1985, there were only 2.7 workers [...]

“While the state of Social Security’s trust fund reserves often receive significant media attention, in reality, the bulk of funding for paying out Social Security benefits comes from Federal Insurance Contributions Act (FICA) taxes, more commonly know as payroll taxes.” – Adam Van Densen, Kitces.com Standup comedians tend to take normal life circumstances like parking the car or airport bathrooms and turn them into something comical.  The results are mixed – Seinfeld built a whole show around essentially “nothing.”  To date, I’ve never heard one use Social Security as a topic du jour if they are looking for laughs.  “A guy walks into a bar with a poodle under one arm and a Social Security Check under the other.”  Definitely not funny.. The funny/irony/interesting thing about Social Security is the confusion about its overall status as a benefit, how it is funded and the benefits runway that awaits younger generations.  [...]