Dec 14, 2022
Many listeners have submitted questions for the podcast. On this week’s episode, I’m going to answer a few! We’ll dive into the logistics of collecting Social Security survivor benefits and the best ways to maximize your benefits in the event of a spouse's passing. I’ll also discuss how to change financial advisors without selling funds and the benefits of tax-loss harvesting.
You will want to hear this episode if you are interested in...
- Collecting Social Security survivor benefits [1:07]
- Switching to a different financial planner without having to sell funds [4:42]
- More on tax-loss harvesting and Roth conversions [6:54]
Navigating the unexpected
The unexpected passing of a spouse is heartbreaking. If you haven’t reached full retirement age yet, knowing what to do with your Social Security benefits can ease the financial burden during such a difficult time. First, it’s important to know that any benefits (whether you’re collecting them or not) will receive cost of living adjustments. Next year, that will be an adjustment of 8.7%. There may be an urge to immediately start collecting your own Social Security benefits to account for the loss of income. This is definitely an option, but if you collect your benefits early, there's a limit to how much you can earn before your full retirement age. If you wait until full retirement age to collect your own benefit, you'll receive an additional 8% increase per year for doing so.
Another option would be to collect your late spouse's Social Security survivor benefit. Let's just say your Social Security survivor benefit was $1,500 a month, and you were going to earn under $56,520 that year. You could receive the whole benefit without any reduction. Even if you haven’t reached full retirement age! This is because of a special provision in place for Social Security survivor benefits.
Changing it up
It’s been a trying year for the stock and bond market. Many investors are underwhelmed with the results. However, if you feel like your financial advisor could have handled 2022 better, you may be in the market for a new one. Therefore you may be asking yourself (like one of our listeners), “Can I switch to a different financial planner without having to sell the funds and take a big loss?” The answer is YES! You can make the change without having to sell your funds. Most financial planners use a custodian like TD Ameritrade Institutional, Fidelity, Charles Schwab, or other broker-dealers. Most firms will allow you to change companies without selling your funds because they use the Automated Customer Account Transfer Service (ACATS) to make those transfers.
Once you have an idea about who you’d like to hire as your new financial planner, you need to check with them to find out where they plan to hold your money. Give them your account statement and show them the funds that you have. You shouldn’t have any issues if it's a traditional mutual fund. This may also be a good time to assess what you’re investing in. You want to look at the performance of your funds versus the different benchmarks. If it's a large-cap fund, you want to compare how it’s doing against other large-cap funds. Same thing for smaller cap funds. You also want to understand the ongoing costs to manage active funds and evaluate if the investment is worth it.
Resources Mentioned
- Social Security And Medicare 2023 Cost Of Living Adjustment, #120
- How To Lower Your Income Taxes With Tax-Loss Harvesting, #117