FAQ

Deciding when to start taking Social Security benefits is an important and often complicated decision that depends on various factors such as your financial situation, health, life expectancy, and personal preferences. One option is to begin taking Social Security as early as age 62, but this will result in a reduced monthly benefit compared to waiting until your full retirement age, which varies depending on your year of birth but generally falls between ages 65 and 67. Waiting until after your full retirement age to start collecting can increase your monthly benefits even more, up to a certain point—specifically, age 70, after which there's no additional increase for delaying.

Another factor to consider is your current financial needs and other income sources. If you're still working, have substantial savings, or other forms of income that can sustain your lifestyle, you may benefit from delaying Social Security to maximize your monthly payments later on. However, if you're no longer working, have limited savings, or have immediate financial needs, taking Social Security earlier may be more practical. Also, consider the impact of taxes and how your benefits might be affected by other income you receive.

Health and life expectancy are also crucial considerations. If you're in good health and have a family history of longevity, delaying benefits could make sense as you'll likely receive payments for a longer period. However, if you're in poor health or have a shorter life expectancy, taking benefits earlier might be advantageous. The decision is highly personal, talk to your Advisor who can discuss in further detail, and can help you look at your unique situation holistically.

The timeline for planning your retirement can vary based on your individual circumstances, financial goals, and life ambitions, generally speaking, the earlier you start, the better. Starting in your 20s or 30s can offer you the advantage of compound interest, giving your savings more time to grow. Even small contributions to a retirement account like a 401(k) or an IRA during these early years can amount to a significant sum over decades. If you didn't start that early, don't despair. Beginning your planning in your 40s or even 50s still provides you with ample opportunities to save, invest, and prepare for your later years.

In your planning, consider not just financial preparation but also what kind of lifestyle you envision for yourself. Are you planning to travel, take up new hobbies, or maybe even start a second career? All these considerations will affect how much you need to save. Additionally, you should consider possible unexpected costs, such as medical expenses, and consider safety nets like insurance and emergency funds. When calculating how much you'll need, be realistic about your life expectancy, inflation, and potential investment returns. Use online retirement calculators as initial guidance but consider consulting with a financial advisor for a tailored plan.

Retirement planning isn't just a set-it-and-forget-it endeavor; it's an ongoing process that may require adjustments based on changes in your life circumstances, such as marriage, children, career changes, or unexpected windfalls and setbacks. Periodically reviewing and adjusting your retirement strategy, especially during significant life changes, can help you stay on track to achieve your goals. Various life stages may also present opportunities for maximizing retirement benefits, such as catching up on contributions in your 50s or determining the optimal time to start taking Social Security benefits. Therefore, continual assessment and adaptation are key components of effective retirement planning.

Efficiently passing on wealth to your family involves a range of strategies with a goal towards optimization tax benefits, mitigating risk on assets, and helping to ensure that your financial legacy is distributed according to your wishes. One of the most straightforward tools for this is a Will. But, relying solely on a will can subject your estate to probate, which can be a lengthy and public process. A more private and sometimes more efficient vehicle for wealth transfer is a Trust. There are various types of Trusts, each with its benefits and limitations, that can help you avoid probate, reduce estate taxes, and specify conditions on how and when your assets are distributed. Revocable Living Trusts, for instance, allow you a great deal of control over your assets during your lifetime, while Irrevocable Trusts can offer tax benefits and asset protection but generally require you to relinquish control over the assets placed in them.

Tax planning is another crucial aspect of passing on your wealth efficiently. You can make use of the annual gift tax exclusion, which allows you to give a certain amount of money ($17,000 in 2023) to any number of individuals each year without incurring gift tax. This is a way to gradually reduce the size of your taxable estate. Also it may be worth considering the benefits of Roth IRAs or other tax-free accounts when planning for inheritance; these can be passed on to heirs without incurring income taxes. On the larger scale, estate tax exemptions and the strategic use of charitable donations can also mitigate tax burdens.

Professional guidance can be invaluable when planning to pass on your wealth. Estate Planning Attorneys can help you navigate the legal complexities of Wills, Trusts, and other instruments for asset protection and transfer. At Amerity we can provide tailored investment strategies that work to align with your long-term legacy goals. We can introduce you to legal and tax professionals who can help you devise methods to minimize estate and gift taxes. By taking a multidisciplinary approach and consulting experts, you can establish a comprehensive estate plan that efficiently transfers your wealth to the next generation, aligning with your values and wishes.

Strategic Estate Planning for Wealth Preservation Passing on your wealth to your family in an efficient manner involves a comprehensive estate planning strategy. Effective estate planning goes beyond writing a will; it often incorporates trusts, gift strategies, and tax planning to ensure that the maximum amount of your wealth reaches your intended beneficiaries. Working closely with legal and financial advisors can help you navigate the complexities of estate tax laws, capital gains taxes, and other regulations that could otherwise significantly erode the value of your estate.

Optimize Tax Strategies to Maximize Inheritance One of the biggest challenges in transferring wealth is minimizing the tax burden. Different types of assets are subject to different tax treatments, both for you and for your heirs. For example, assets held in Roth IRAs can typically be passed on tax-free, whereas other retirement accounts may be subject to income tax when withdrawn. Gifting strategies, such as annual exclusion gifts and tax-free educational or medical gifts, can also serve to reduce the size of your taxable estate while benefiting your family immediately. Some individuals also use life insurance as a tool to provide their heirs with tax-free income that can be used to pay estate taxes and other expenses.

Involve Family in Financial Conversations for Smooth Transition Efficient wealth transfer is not just about legal and financial mechanisms; it's also about clear communication with your family. Open and candid discussions can set the stage for a smooth transition and prevent misunderstandings or conflicts among heirs. When your family understands the structure of your estate plan, the reasoning behind it, and the responsibilities that come with inheriting assets, it can significantly ease the emotional and administrative burdens associated with wealth transfer. Sharing your values and intentions can be just as important as sharing your assets when it comes to passing on your legacy in a meaningful way.

Diversification: The Cornerstone of Risk Management We believe one of the most effective ways to reduce market volatility in your portfolio is through diversification. Holding a mix of different asset classes such as stocks, bonds, and real estate, and commodities can help spread risk. Different assets often perform differently under various market conditions; when one asset is down, another might be up, helping to balance out your portfolio’s overall performance. It's not just about diversifying across asset classes, but also within them. For example, if you're invested in stocks, consider a blend of sectors, market capitalizations, and geographic regions. Proper diversification can help mitigate the impact of market swings, providing a smoother investment journey. Your Amerity advisor will discuss this in more detail.

Asset Allocation Aligned with Risk Tolerance Asset allocation is another critical factor in reducing volatility. Your investment objectives, time horizon, and risk tolerance should guide how you allocate your investments among various asset classes. Generally, equities are more volatile but offer higher growth potential, while bonds are less volatile and provide steady income. Younger investors or those with a higher risk tolerance might opt for a portfolio weighted toward equities, while those nearing retirement or with a lower risk tolerance may prefer a more conservative allocation with more bonds. Reviewing and rebalancing your portfolio periodically helps maintain your desired asset allocation, which can drift over time due to differing returns from various assets.

Utilizing Volatility-Reducing Investment Tools There are specific financial instruments and strategies designed to potentially help reduce portfolio volatility. For example, you can include assets that have a low correlation with equities, such as certain alternative investments or real estate, to potentially provide stability when stock markets are turbulent. Some investors also use options strategies to hedge against potential losses, though these can be complex and not suitable for everyone. Additionally, funds like low-volatility ETFs and mutual funds aim to offer market exposure but with reduced risk. These strategies may have their own sets of costs and trade-offs, so it's essential to consult with your advisor to tailor a volatility reduction plan that fits your specific needs.

Using Non-Securities Products Incorporating annuities into your financial plan may serve as an effective strategy for reducing market volatility and ensuring a stable income stream. Unlike direct investments in the stock market, certain types of annuities offer a guaranteed rate of return and periodic payments, providing predictability and peace of mind. Annuities, particularly indexed annuities, are complex products and are typically regulated by the state insurance Commissions. Fixed index annuities are not an security but are an insurance products offered and sold through licensed insurance agents. Fixed annuity products can be particularly useful for retirees or those nearing retirement, as it helps to shield a portion of your assets from the market's ups and downs. By allocating a part of your portfolio to annuities, you can create a more balanced asset mix that aims for growth while providing the safety of guaranteed income, thereby reducing your portfolio's overall exposure to market volatility.

Important information Indexed annuities are a complex product and complicated vehicles and methods used to credit interest vary widely and are complicated. It is important to understand you may not receive the entire return of the market index they are tied to. The products have surrender charges and can have different layers of fees and are not easily liquid without incurring surrender fees. Additional information about indexed annuities can be found at link a-complex-choice. Insurance products are offered and sold through Amerity Financial, LLC and licensed insurance agents. No Guarantees are offered that you will attain your financial goals and objectives. Investing involves risk including the loss of initial principle.

Understanding Medicare: Medicare is a federal health insurance program in the United States designed primarily to serve people aged 65 and older, as well as certain younger people with disabilities or specific medical conditions like end-stage Renal Disease or Amyotrophic Lateral Sclerosis (ALS). The program is divided into several parts, with Part A covering hospital care, Part B covering outpatient services, Part C (also known as Medicare Advantage) offering an alternative way to receive Parts A and B through private insurance, and Part D covering prescription drugs. Medicare is intended to help alleviate the healthcare costs associated with aging, but it's important to note that it doesn't cover everything, such as long-term care, and usually involves co-payments, premiums, and deductibles.

Eligibility Criteria: The most common eligibility requirement for Medicare is reaching the age of 65. However, age is not the sole determining factor. Generally, you or your spouse should also have worked long enough in a job where Medicare taxes were paid; typically, this amounts to a minimum of 10 years (or 40 quarters). People under 65 may also qualify if they have been receiving Social Security Disability Insurance (SSDI) for more than 24 months or have a qualifying medical condition. Non-citizens may be eligible if they are permanent residents and have lived in the United States for at least five continuous years before applying for Medicare.

Enrollment Periods and Next Steps It's crucial to be aware of the enrollment periods for Medicare to avoid late enrollment penalties. The Initial Enrollment Period is a seven-month window around your 65th birthday. There are also specific periods annually when you can modify your coverage. If you're still working at 65 and have coverage through your employer, you may qualify for a Special Enrollment Period. If you miss these times, the General Enrollment Period typically occurs from January 1 to March 31 each year, with coverage starting on July 1. To determine your specific eligibility and the best time to enroll, you can visit the official Medicare website or consult with a licensed agent who specializes in Medicare and senior healthcare issues.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. This is not a solicitation for services or a sale of any service or product.

Important information Indexed annuities are a complex product and complicated vehicles and methods used to credit interest vary widely and are complicated. It is important to understand you may not receive the entire return of the market index they are tied to. The products have surrender charges and can have different layers of fees and are not easily liquid without incurring surrender fees. Additional information about indexed annuities can be found at link a-complex-choice. Insurance products are offered and sold through Amerity Financial, LLC and licensed insurance agents.