Every week, Allworth Financial’s Steve Hruby, CFP, and Bob Sponseller, ChFC, answer your questions. If you, a friend, or someone in your family has a money issue or problem, feel free to send those questions to yourmoney@enquirer.com.
C.A. in Kenwood: I’m 60 and 8 years older than my wife. We’ve been married for 30 years. I’ve been the one to work during our marriage while she hasn’t (though she’s had some part-time work). I want to retire in a few years, so I’m just wondering when I should take Social Security and if our age difference plays into the decision.
Answer: Yes, your age difference definitely will play into this decision. As does the fact that it sounds like your Social Security benefit will be significantly higher than your wife’s benefit on her own work record.
As you think through your strategy, there are two different types of Social Security benefits for married couples to keep in mind. First is the “spousal” benefit. Once your wife reaches her full retirement age (FRA) of 67, she can receive up to 50% of however much your benefit is at your full retirement age (it doesn’t matter when you started claiming, but you must be claiming).
For example, if your full benefit at your FRA (also 67) is $1,000 a month, she can claim a spousal benefit at her FRA and receive $500 a month. If she claims before her FRA, that amount is permanently reduced; if she claims after her FRA, there’s no increase. So, when it comes to the spousal benefit, everything really depends on your wife’s age at which she’ll claim this benefit.
The second type of benefit is the “survivors” benefit. And this is where your age difference really matters. Because your wife’s survivors’ benefit will be 100% of the amount you’re claiming when you pass away if she claims this benefit at her FRA (she could claim as early as 60, but the amount would be reduced). So, generally speaking, it can make sense for you to wait as long as possible to claim your benefit. This is because you’ll get an 8% increase in your benefit every year you wait to claim past your FRA (up until age 70). With this approach, you’ll be setting your wife up to get the biggest benefit possible for the rest of her life.
Here’s the Allworth Advice: We suggest seeking guidance from a fiduciary financial advisor to take a more thorough look at your particular situation since there are additional factors to consider before you actually start claiming, including both of your life expectancies, other sources of retirement income, if you plan to work at all during retirement, etc. An advisor will be able to sort through all these details and provide a tailored strategy.
Steve in Terrace Park: What’s an acceptable 401(k) fee? How do I know if I’m paying too much?
Answer: Here’s the rub. It’s difficult to quote one number and tell you, “This is what you should be paying, and no more,” because there are many variables, including the size of the company you work for, the investment selections and the administration fees, just to name a few.
Likewise, it’s also difficult to compare plans since it’s not always apples-to-apples. Because it really comes down to what you’re getting for the fee. For instance, you may be paying a higher fee than, say, your neighbor is in her 401(k) plan. But if you’re getting additional services – such as on-going planning guidance – and she’s not, then your higher fee could be justified.
The Allworth Advice is that you should always stay aware of the 401(k) fees you’re paying, but don’t automatically assume a high number is bad. It’s all relative. To find what you’re paying, look for Form 404(a)(5) in your plan’s disclosures.
Responses are for informational purposes only and individuals should consider whether any general recommendation in these responses are suitable for their particular circumstances based on investment objectives, financial situation and needs. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing, including a tax advisor and/or attorney. Retirement planning services offered through Allworth Financial a SEC Registered Investment Advisor. Securities offered through AW Securities, a Registered Broker/Dealer, member FINRA/SIPC. Visit allworthfinancial.com or call (513) 469-7500.
This article originally appeared on Cincinnati Enquirer: Allworth Advice | I’m 8 years older than my wife. Does this matter for Social Security?
Reporting by Steve Hruby and Bob Sponseller / Cincinnati Enquirer
USA TODAY Network via Reuters Connect
