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Wednesday, October 16, 2019

Understanding How Retirement Benefits Impacts Estate Planning

Q: How do my Social Security benefits impact my estate planning?

Life has a way of creeping up on us. One day we’re just starting out in our 20s and before we know it, retirement is upon us. Are you physically, mentally, and financially prepared for it?

Ideally, people create an initial estate plan when they are young and modify it throughout their lives as their circumstances change – whether it be a marriage or divorce, a birth, an adoption, or a death, the formation of business relationships, and/or the accumulation of significant wealth. 

Whatever phase you are at in your life, if you do not have one in place, you should consult a skilled New York and New Jersey estate planning attorney to secure the financial future of yourself and your loved ones. 

Accomplishing Your Estate Planning Goals

In the course of preparing an estate plan, an attorney will review all of your income and assets as well as your debts and liabilities to determine the best way to accomplish your most important estate planning goals. They will also help with planning for incapacity in the event you become disabled and unable to handle your own medical or financial affairs prior to dying.

Another plus is that your attorney can also help clear up misconceptions about Social Security benefits and how they may be impacted by such things as the age you claim them, your spouse’s death, and other factors. 

A Massachusetts Mutual Life Insurance Company survey found that nearly half of people aged 50 or older “failed a basic true-false quiz” about their Social Security retirement benefits. The five (5) questions and their answers are as follows: 

  1. “Under current Social Security law, my benefits will not be reduced if I claim them at age 65.” False. (Social Security benefits are less if taken at an age earlier than full retirement age, which is currently 66 or 67 depending on your birth year.)
  2. “My spouse is eligible to receive Social Security retirement benefits, even if he/she has no individual earnings history.” True 
  3. “If my spouse dies, I will continue to receive both my own benefit and my deceased spouse’s benefit; the total Social Security benefits I receive will not change.” False. (The surviving spouse gets one, not both, benefits. This can have a major impact on the surviving spouse’s ability to pay their bills after the first spouse dies.)
  4. “I’ll receive the same monthly benefit amount whether I start collecting before or after my full retirement age.” False. (If you start collecting your benefits prior to your full retirement age, they will be reduced based on the number of months you received benefits before your full retirement age. So, if you wait until full retirement age, you will collect more than if you retire early.)
  5. “If I am still working when I claim my Social Security, my benefit might be reduced, depending on my earnings and my age.” True. 

Understanding your Social Security retirement asset is a critical part of not only retirement planning but also estate planning. 

Contact Merlino & Gonzalez Today

If you need assistance with an initial estate plan, or would like to modify an existing one, the estate planning experts at Merlino & Gonzalez can help you. Contact us today to schedule a consultation. 

From our offices in Staten Island, New York and East Brunswick, New Jersey, we help clients in both states in all aspects of estate planning and estate administration. 


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