I was recently asked this question by a couple I met. They have a long term relationship and are approaching retirement. This question came up when we started looking at their Social Security benefits. I found the question a bit funny because in the past I had advised couples not to get married as they would reduce their Social Security benefits.
My current couple is approaching full retirement age for Social Security purposes. Their incomes are not equal; the man makes quite a bit more than the woman does. The current rules state that you must be married for 1 year to receive spousal benefits through Social Security. In the case of this couple, getting married could make a major difference in their retirement income.
I hear wedding bells for the New Year!

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We all do things that are so rote to our lives we don’t even realize that there can be long term damage. Here are a few things I know many people do that will ruin your retirement.

Not putting time on your side:
It is so easy to focus on the upcoming holidays and gifts to buy vs. saving for your retirement. Plan out your spending to see where you can cut expenses and boost your retirement savings. The biggest gift we have is time. What you save during your early years of working will make a huge difference in how much you have decades from now.

Putting all of your eggs in one basket:
Do you chase the hottest fund each year? I have known investors that at the beginning of each year will find the previous years’ best perform and move all of the retirement money into that fund. Their hope is that the climb will continue. Because they are doing this every year tells you this is not a strategy that usually works. Diversification and re-balancing is a great approach to long term investing.

You own too many funds:
There are those investors that are so diversified – that they really are not. You may own 20 different mutual funds but if they are invested in predominately the same companies, you are not diversified. To have a truly diversified portfolio you need to be in different sectors.

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No, I am not talking about with your Spouse- I am talking about your IRA. Do you have a number of Non-Spousal beneficiaries listed as either primary or contingent on your IRA? Not all Non-spousal beneficiaries (commonly called our children) will want to take the required withdrawals the same way when they inherit your IRA account.
A common practice is to equally split the IRA account into smaller IRA’s with each child as beneficiary on an account. That way, many, many years from now when you pass on, they will not have to consult each other or worry about what one of their siblings wants to do about required withdrawals.

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I have worked with clients that used to look at their portfolios every day. During the recent downswing this past September – how many times did you look at your portfolio? Was it many times a day? If so, this is a sign of two things you need to change.
1. Maybe your portfolio is over weighted in equities. While we often say that you need to have stocks in your portfolio to keep ahead of inflation, you also need to have some balance between equities and income.
2. Maybe it is time to hire a Certified Financial Planner™ Professional to manage your accounts. Many clients will confess to not looking at their portfolios as often once they have hired a professional set of eyes.

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I am referring to your RMD (required minimum distribution) from your qualified retirement accounts. Many of my clients are fortunate in that they don’t need their RMD to maintain their lifestyle. That being said, the funds must be withdrawn, the tax must be paid – what do you do with this money?
Here are a few ideas:
You can gift your RMD to charity. Currently, you can transfer up to $100,000 directly from your IRA to charity. This law had expired but was extended to the end of 2015. This direct transfer can count as your RMD.
Many of my clients reinvest their RMD in a tax free mutual fund. The idea is to allow the money to keep working for you but not pay tax on the earnings again.
You can help your grandkids by funding their college. There are a number of college savings plan you can deposit your RMD into such as a 529 savings plan or an educational IRA. Believe me, your grandchildren will be grateful.

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In about 6 weeks, there will be a newly minted RN among us – my daughter. As she prepares to enter the workforce, I have been counseling her and her fellow graduates on what to do with their first ever adult pay. My first piece of advice to them is: put 10% directly into their 403(b) accounts. If they start now, they will become regular savers throughout their working lives. Because most of them are in their late 20’s or early 30’s, 10% is enough for them to be contributing to their retirement. For others, this may not be enough.
My daughter has some classmates that are changing careers or starting out in nursing after taking care of their families. These graduates are in their late 30’s and early 40’s. For these classmates, 10% savings into their retirement accounts may not be enough. Time may not be on their side due to the late start.
Financial planning is especially necessary for those who are finding their work passion late in life.

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First, some good news. The tax cap will not change for 2016. What does this mean? It means that there will be no change in the maximum amount of earnings subject to Social Security tax –it remains at $118,500.
But that means…. There is no increase in the earnings limit. If you are under age 65 for and make more than $15,720 but are collecting Social Security benefits, you will have $1 withheld for every $3 in excess of the earnings limit.
There will be no raises in 2016. Social Security payments are adjusted upward to keep pace with inflation. For the third time since 2010, there will be no cost-of-living increase. In fact, it is possible that some payments to those who first sign up for Social Security in 2016 may receive slightly less than they expected due to no cost-of-living adjustment.
Please log on to www.ssa.gov and check your benefits.

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Orlando Sentinel Ask the Expert Hotline.

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Q: I am getting ready to retire and may need some of the money from my company plan right away. Is there any way I can avoid the 20% automatic withholding if the proceeds are paid out to me?
A: You state that you “may” need some of the money right away. In that case I would open up a Rollover IRA, have the proceeds from your company plan sent directly to that account, but have all of the funds deposited into a cash account. If you need to withdraw some money, you will only pay your ordinary income tax on what you withdraw vs. 20% on the whole account balance. If you determine you do not need to take a withdrawal, or can allow the bulk of your account to grow, you can them invest the balance of your account.

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