social security

What Women Should Know About Social Security

By | 2019, Money Matters, Newsletter | No Comments

Retirement is on everyone’s radar. Whether you are preparing for a future date or beginning retirement now, you need to know where your money will come from once the paychecks stop rolling in.

One retirement income source that is very confusing is Social Security. It is fraught with complicated options. From understanding how your benefit is calculated to determining the best time to begin receiving your benefit, the process can be painful. I want you to understand the nuances so you can be informed about your options and better prepared to make critical decisions.

To begin, almost everyone reading this article is eligible to receive Social Security benefits in some form. However, eligibility for retirement benefits is based on several factors. If you have worked at least 10 years, you are eligible for benefits based on your own earnings. If you are now or have been married, you may qualify for benefits based on a spouse’s earnings. The challenge is knowing which benefit to claim and how to maximize your income.

Something many women are surprised to know is that Social Security retirement benefits may be available even if you never worked outside of your home. If you are now or have been married, you can claim a benefit based on your spouse’s earnings record. This is in addition to what your spouse or ex-spouse will receive. At your full retirement age (FRA), you can receive 50% of your spouse’s benefit at their FRA. For example, if your spouse’s benefit at FRA is $1,800, you would receive $900 monthly. A spousal benefit does not increase beyond FRA. 

If you are divorced and have not remarried, you may be entitled to a spousal benefit. To receive this benefit, you must have been married for at least 10 years. You are entitled to the benefit even if your ex-spouse remarries.

Timing of benefits has a lifelong impact, and you should have a well thought out plan before signing up. For instance, beginning your benefits at the earliest age possible, age 62, will lock you into a reduced benefit for the rest of your life. To receive your full benefit, you must wait until you reach full retirement age. Stop thinking age 65 (that’s for Medicare). When it comes to Social Security, FRA is somewhere between age 66 and 67 – based on the year you were born. But it gets better, for every year you wait beyond your FRA up to age 70, your benefit will increase by 8% – locked in for the rest of your life.

The following chart shows a monthly benefit of $1,800 taken at a full retirement age of 66, and how it would change if taken earlier or later. For example, if taken at age 62, the benefit would be reduced to $1,350, and if taken at age 70, the benefit would increase to $2,376. That’s significant! A $1,026 difference each month – $12,312 annually.

There can be additional downfalls when taking Social Security early. If you take Social Security benefits before your FRA and you continue to work, you may be penalized. If you are under FRA for the entire year, $1 of your benefit will be withheld for every $2 you earn over the annual earnings limit ($17,640 in 2019). The earnings limit is higher in the year you reach FRA ($46,920 in 2019). The bottom line – you may not be getting as much as you think by taking your benefit early.

Understanding Social Security can be difficult and making the wrong decision can be costly. Don’t go it alone. Let us help you analyze your options so you can make the best possible choice regarding your benefit and future income.

If you have not started your Social Security benefit and are over age 55, watch for our Social Security seminar and webinar coming in the fall

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Forge a New & Powerful Financial Paradigm

By | 2017, Executive Message, Money Moxie | No Comments

Dear Friends and Financial Partners!

How can you improve your savings and investing before and during your retirement? Here are some nifty (some might say awesome) tips to immediately change your personal money paradigm.

Change Your Money Mind-set: Chris Reining, who lives in Madison, Wisconsin, became a millionaire at age 35 by doing one thing differently. Chris started working to save and invest, rather than working to spend. By going through a self-imposed paradigm shift, your life can also transform from a working-to-spend environment to a savings-and-investing world. The outcome speaks for itself. This is one powerful idea.

Get Professional Financial Help: Ours, of course. When you are accumulating assets in your 401(k) or 403(b), you are in an automatic investment mode. If you don’t know what the sequence-of-returns risk is or how dollar-cost averaging works against you during your withdrawal years, you are already behind and need our help. Social Security has over 2,700 rules and hundreds of exceptions to these rules. Medicare is filled with land mines. Distributing assets during the decumulation phase is exponentially more complex than adding assets.

Take Charge of Your Emotions: Don’t let your emotions take charge and dictate your actions. Specifically, when the stock market is dropping or has dropped, don’t lock in your losses! Remember: Stock market drops are temporary. Locking in losses is permanent. Locking in losses by selling at or near the bottom of a market may be a mistake you and your loved ones will pay for the rest of your lives.

Ignore the Media: Call us. We know your specific financial goals. We manage money and segment your accounts by time to avoid the sequence-of-returns risk. Even when the media is all doom and gloom, there’s a good chance your accounts will be doing just fine with respect to your own financial goals. “The Sky is Falling” mentality illustrated by Henny Penny, more commonly known in the U.S. as Chicken Little, may cause you to want to lock in your losses. Don’t do it. Even well-meaning friends and family members can push you away from financial goals.

Remember: Contrary to many, investing is not about beating the market. Financial planning and investment management are about meeting your goals, including having a sustainable income stream during retirement. At Smedley we strive to help you forge a powerful, yet personal financial paradigm. As always, we are on your side.

Bullish Best Wishes,

Roger M. Smedley, CFP®

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Make 2016 Pay off Big!

By | 2016, Newsletter | No Comments

Make 2016 Pay off Big

Social Security – Beginning April 30, 2016, the “File and Suspend” and “lump sum payment of suspended benefits” will no longer be available. If you are married, age 66 or older, and have not started taking Social Security, now may be the time to talk about maximizing your benefits before time runs out.

Currently a filer who is at or past full retirement age can file for individual benefits but suspend receiving them, allowing a spouse or dependent to collect based on the filer’s record. In doing this, the filer can capture the delayed benefit increases of 8 percent each year that benefits are delayed, beginning at full retirement age and available up to age 70.

After April 30, 2016, in order for a spouse or dependent to collect benefits based on the filer’s record, the filer must begin to collect his or her own benefits, thus forgoing the delay benefit increases. Furthermore, filers who have suspended benefits will no longer have the option to request a lump-sum payment of all suspended benefits. This strategy can be complex. We suggest that you start the process immediately to take advantage of this opportunity before time runs out.

Make up for lost time – Boost your retirement contributions. Living comfortably in retirement is largely determined by what you are willing to save today. Make the years before you retire really count by increasing your 401(k) or other retirement account contributions. This chart to the right illustrates the difference that setting aside 6, 10, or 15 percent of income can make. Even better, maximize your contributions, and make a significant difference.

The unseen result is what these contributions can do to supplement income at retirement. Using a 4 percent distribution rate, the difference in this illustration is $1,120 each month.

Decide today to make living comfortably in retirement a priority.

big in 2016 graph

Financial diary – This is not a typical diary. Keeping track of your spending goals and checking in on your finances regularly will keep you focused on your real financial goals.

Use the diary to list items you want or need and keep track of spending, investing, and savings. This will help you prioritize your spending. The result–focused spending and saving. Monitoring your diary will give you the emotional boost to keep you on track. When you see that you’ve accomplished a goal, you feel satisfied with your financial decisions. If you see that you are getting off track, this will be the silent kick to get you back on track.

Keeping a financial diary will help prevent emotional spending–a compulsion to buy something right now. Retailers are excellent at getting us to buy things we didn’t know we needed by simply placing an item strategically in view and setting the mood with a little shopping music. Keeping track of your spending can help you outsmart the retailers.

Looking at the financial diary weekly, even if you think nothing has changed, can help keep you on track and out of trouble.

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Social Security Changes

By | 2015, Money Moxie, Newsletter | No Comments

With the stroke of a pen, a favorite Social Security filing strategy has been taken off the table. The Bipartisan Budget Act of 2015 was signed November 2nd and eliminated most of the “File and Suspend” options after April 30, 2016. Below is a summary of the recent changes.

File and Suspend
• Currently: A person who is at or past their full retirement age (FRA) can file for their benefits but suspend receiving them, allowing a spouse to collect off of their record.

• Through April 30, 2016: Anyone age 66 or older can still file and suspend to allow an eligible spouse to collect a benefit off their record.

• After April 30 2016: “File and Suspend” will no longer allow a spouse to collect benefits off of the filer’s record unless the filer takes a benefit. For a spouse to collect a benefit, filers must collect their own benefit and forgo delayed retirement credits. If an individual suspends benefits, all spousal and dependent benefits will be suspended.

Restricted Application for Spousal Benefits
• Currently: A spouse who is at or past FRA, and who has not received any benefits, can choose either a spousal benefit only (referred to as a Restricted Application) or his or her own individual benefit.

• Anyone 62+ by the end of 2015 is grandfathered and retains the ability to restrict their claim to spousal benefits only if they wait to collect until they reach their FRA.

Individuals who are younger than 62 will not have the choice of which benefit they collect when they reach FRA. Regardless of their age, they will be “deemed” to have filed for the highest benefit. They will no longer have the option to restrict their benefit to their spousal benefit only.


Smedley Financial and its advisors do not provide personal tax advice. It is important to coordinate with your tax advisor regarding your situation.

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