Social Security Planning, Roth IRAs & Death of the Stretch IRA
First, I wanted to thank you for your comments and questions about my previous posts. It’s gratifying to know that my readers apparently care more about the financial future of their families than the latest wardrobe malfunction in Hollywood! And if you have any questions or comments, please feel free to send them over because I will do my best to address them.
I’ve had a number of people who wrote in to ask about a comment I made in a workshop, in which I said that, with the Death of the Stretch IRA likely being imminent, it’s more important than ever to “get Social Security right”. Those of you who have been subscribing to this blog for a while probably know the answer but, for the benefit of new readers, I want to back up and explain what I meant by “getting it right”.
Social Security Options Are Changing
There were major changes made to the Social Security rules last year – changes that could potentially mean hundreds of thousands of dollars of difference in your retirement income. When I learned that these changes were coming, I did everything I could possibly do to get the word out that if you did not get grandfathered under the old Social Security rules by April 26, 2016, you could lose out on a lot of money. Well, if you didn’t get grandfathered last year in time to take advantage of one excellent Social Security strategy called “Apply and Suspend”, it’s too late. It’s no longer an option, and people who apply for Social Security benefits after April 29, 2016 can’t do it. Another technique involving the filing of a Restricted Application for benefits will be going away in 2020. And while I’m not trying to rub salt in any wounds, the reason I’m reminding you about it is because the Social Security options for many people continue to disappear as Congress tries to fix the nation’s financial problems. The point that I want to make is that if you do not have the ability to take advantage of the same Social Security strategies as someone – maybe an older friend or family member – who was able to get grandfathered under the old rules, you will probably not be able to collect as much money from Social Security as they did – even if you have similar earnings records.
Social Security and Roth IRA Conversions Work Together
One idea that might benefit you is to consider a series of Roth IRA conversions. I’ve had people tell me that Roth IRA conversions won’t benefit them because they checked it out using an online calculator.
Well, online calculators are fine if your only source of income is from your IRA – but for most people, it isn’t. Most people collect Social Security, too. It’s important to understand that Social Security and Roth IRA conversions are complementary, not competing strategies.
The Death of the Stretch IRA Spells Changes Too
Getting Social Security right and using Roth IRA conversions effectively will be even more important if Congress finally does enact the Death of the Stretch IRA legislation.
Don’t think it’s that big a deal? This short video shows you just how much of a difference “getting Social Security right” and blowing it can make. The posts that follow this one will address some things that you can still do to maximize your own benefits even if you are not grandfathered under the old rules. Then I’ll show you how these ideas can be integrated with a series of Roth IRA conversions. With the possibility of the Death of the Stretch IRA hanging over our heads, it’s important to do what you can to defend your retirement savings!
Please stop back soon!
For more information on this topic, please visit our Death of the Stretch IRA resource.
P.S. Did you miss a video blog post? Here are the past video blog posts in this video series.