Dramatic Changes to Social Security Claiming Options

Two popular social security claiming options used by married couples when planning for retirement are changing dramatically after April 29, 2016 due to the Bipartisan Budget Act of 2015.  These strategies allowed spouses (and, under certain circumstances, other family members and ex-spouses) to receive payments in the form of a dependent benefit while still capturing delayed credits for their own social security benefits.


The Restricted Application. The first change concerns the Restricted Application for spousal benefits.  Prior to the new law, an individual who was eligible for both a spousal benefit based on the work record of their spouse and a retirement benefit based on their own work, could choose to elect only a spousal benefit at Full Retirement Age.  This allowed his or her own benefit to accumulate 8%-per-year Delayed Retirement Credits and then switch to his or her own larger benefit at any point in the future – up to and including age 70.


The new law phases out this option.  For people born January 1, 1954, or earlier, the option to file a Restricted Application for only spousal benefits will remain available.  But for people born January 2, 1954 or later, an application for retirement benefits or for spousal benefits will automatically trigger entitlement to the other benefit. What this means is they will, in effect, be filing for both their retirement benefit and spousal benefits.  They will receive the larger of the two benefits.  This eliminates the ability to hold off receipt of their retirement benefit, thereby losing the ability to have their retirement benefit continue to grow at 8%-per-year.  Further, if a participant is not eligible for spousal benefits (because his or her spouse had not yet elected) but later becomes eligible for a spousal benefit, entitlement is automatic and occurs on the first day of eligibility.


Voluntary Suspension.  The second change concerns voluntary suspensions.  Under the previous law, a lower-earning spouse is eligible for spousal benefits only after the primary wage earner under whose record she or he is filing has filed for benefits.  Spousal benefits do not earn Delayed Retirement Credits, so delaying a spouse’s benefit past Full Retirement Age represents lost checks, with no compensatory increase in the benefit amount.


An important planning consideration for couples has always been the understanding that the widow benefit that is available after death of the first spouse is based on the deceased’s benefit amount, including any 8% increase the deceased would have received due to delaying benefits. The combination of these two rules regularly creates tension between the claiming desires of the spouse and the primary claimant.  The spouse wants to receive the highest widow benefit possible, but does not want to forfeit spousal benefits in the short term, since there is no compensatory increase in the spousal benefit for delay.


The solution under prior laws was for the higher wage earner in the couple to file for benefits, then immediately request those benefits be suspended.  The checks to the higher wage earner would stop, allowing the higher wage earner’s benefit to grow by 8% per year, increasing not only the retirement benefit, but also the benefit payable to the spouse upon his death.  While the benefit was in suspense, the spouse was able to collect a spouse’s benefit.


The new law causes a Voluntary Suspension to stop all benefits payable under the earnings record of the person whose benefit was suspended.  In other words, the spouse will not be able to collect a spousal benefit during the time that the wage earner’s benefit is suspended.


The new law also eliminates the ability to request a retroactive lump sum for all benefits between the date of the request and the date of suspension, so the only reason to request a Voluntary Suspension under the new rules will be to accumulate Delayed Retirement Credits.


This portion of the law is phased in over a much shorter timeframe.  Only people who suspended benefits in the past or within the first 180 days after enactment will fall under the old rules, and will continue to fall under the old rules until they reach age 70 or unsuspend benefits.  People who request a suspension after 180 days of enactment will fall under the new rules.


Some Benefits Excluded. Notably, all of these changes concern the interaction between retirement and spousal benefits, and do not include widow benefits.  So, widows will continue to have the opportunity to restrict an application to only widow or only retirement benefits and later switch to the other benefit.


With these significant changes to Social Security, it pays to understand the potential impact on your retirement plan.  Feel free to contact Hyre Personal Wealth Advisors with any questions you might have regarding how best to maximize your benefits and those of your spouse under Social Security.





The information herein has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  This information is not a complete summary or statement of all available data necessary for making a decision and does not constitute a recommendation.  You should discuss any tax or legal matters with the appropriate professional.


The Trusteed IRA – A Powerful way to control your legacy

Everyone has heard of an IRA. Most people have one. And probably, most people haven’t given much thought as to what happens to their IRA after their death.


Most likely, if you have an IRA, you have named a primary (and perhaps) a contingent beneficiary. But, have you given any thought as to how your beneficiaries can withdraw funds after your death? What if you become incapacitated while you are still living? How can your IRA funds be accessed? What if you desire to leave your IRA to your children or grandchildren? Would you like to have some control over how they might spend their IRA inheritance? These are just a few of the concerns that a Trusteed IRA can answer.


What is a Trusteed IRA? Quite simply, a trusteed IRA is an IRA with a trust wrapped around it. This type of IRA gives you better control over how your IRA assets are passed on to heirs, while preserving the tax advantages of your IRA.


Trusteed IRAs are where retirement planning meets estate planning. Because of the significant role an IRA can play in saving for retirement, it’s critical to ensure that the assets accumulated will transfer to your heirs with minimal legal and tax implications. However, with a trusteed IRA, the beneficiaries you choose may be able to receive long-term distributions and tax deferral benefits.


Hyre Personal Wealth Advisors, through Raymond James, is among the few companies offering this seamless solution, allowing clients to have a significant impact on generations to come.


Why should you consider a Trusteed IRA? Compared with a regular retirement account, which can be drawn down immediately by an heir, the trusteed IRA allows you to govern how your assets are passed on. This can help your heirs get the most out of their inheritance, extending the tax deferral on your IRA to benefit generations to come.


On average, half of inherited wealth will be spent, lost or donated by heirs. For IRA owners hoping to provide long-term financial security for a spouse or a child, that can be an alarming statistic.


Consider the following situations to help decide if a trusteed IRA might be beneficial to you.


You’re concerned about incapacity. If you become incapacitated and don’t have a plan in place, a court must get involved for IRA assets to be accessed to pay your bills. There is no one to instruct the custodian of your IRA on investment decisions or making required minimum distributions (RMDs).


With a trusteed IRA, the process is much simpler. The trustee or contingent trustee of your trusteed IRA can fully act on your behalf.


You want to “stretch” your IRA assets. You can use a trusteed IRA to promote continued tax deferral by limiting beneficiaries to the minimum distributions required by the IRS and allowing the trustee discretion to distribute more in specified cases. These might include education, health issues, or emergencies.


With a sizable account, this can help preserve and pass on assets for generations. A traditional IRA doesn’t offer this type of preservation, and can usually be drawn down at any time, for any reason by an heir.


You want to provide for your current spouse and children from a previous marriage. Blended families are quite common and can complicate your estate planning. A trusteed IRA can be helpful in distributing the funds among family members in accordance with your wishes. The trusteed IRA can provide income for your current spouse during their lifetime. Upon your spouse’s death, the IRA can be portioned out to children and grandchildren as you have designated.


You wish to avoid the delay and expense of a guardianship or conservatorship. The assets in a trusteed IRA can transfer to beneficiaries without going through the probate process.


You are concerned about the financial sophistication and discipline of heirs. If your heirs aren’t ready for the responsibilities that come with inheriting your IRA, a trusteed IRA can be used to put limits on how much beneficiaries can withdraw.


You want to shield an inheritance from creditors. A trusteed IRA offers some of the same creditor protections as a see-through trust. This protection is an important provision for an heir whose profession exposes them to liability, such as a doctor.


You want to provide for a spouse who isn’t a U.S. citizen. Under current federal law, a spouse who isn’t a U.S. citizen is not eligible for the unlimited marital deduction and may have to pay estate taxes in the event of your death. However, a trusteed IRA can be set up to avoid estate taxes on assets transferred to a non-U.S. citizen spouse until the principal is distributed.


If any of these situations are part of your life, a trusteed IRA is worth considering. Feel free to contact Hyre Personal Wealth Advisors to explore further. Establishing a trusteed IRA is a simple process, and you’ll find that the cost of setup is below that of a traditional trust.




College Loan Confusion

College students have steep learning curves. In high school, they were tasked with doing well academically, participating in extracurricular activities, complying with the rules of their parents’ homes and, possibly, having a job. At college, they must decide what to study, how many credits to take, and other important decisions, while adapting to a new environment and learning to manage time, communicate with professors and administrators, network with peers, and manage finances.


Borrowing for college

A key aspect of finances for many college students is student loans. When scholarships, grants, income, and savings are not enough to cover the cost, students often borrow to pay for college. In fact, 70 percent of college graduates leave school with a loan, and the average amount owed is about $30,000, according to a survey by Lendedu.com.1 At graduation, accumulated debt may include:2


  • Direct subsidized loans (the government pays interest while students are in school)
  • Direct unsubsidized loans (students owe interest while in school)
  • Direct PLUS loans (for parents and graduate students)
  • Perkins loans
  • State and private loans (usually co-signed with an adult)


Different types of loans offer different interest rates and repayment schedules. The federal government finances some loans. Private lenders finance others. Some loans are need-based, while others are not.2 All in all, outstanding student loan debt in the United States totals about $1.2 trillion.1


Many students don’t know much about their loans

There are a lot of details to understand and track when students borrow. That’s one reason many colleges and universities require student borrowers to attend loan counseling sessions before receiving loans.3 Unfortunately, the survey found few students retain much of the information presented:1


  • 94 percent of students did not know their repayment terms
  • 93 percent were uncertain what type of loan they held
  • 92 percent did not know their current loan interest rates
  • 75 percent understood how interest rates work


A Brookings Institute study found about one-half of students underestimate the amount of debt they have and one-third cannot provide an accurate estimate of their debt. The survey concluded:4


“It is clear from the analysis presented here that enrolled college students do not have a firm grasp on their financial positions, including both the price they are paying for matriculation and the debt they are accruing. Without this information, it’s unlikely that students will be able to make savvy decisions regarding enrollment, major selection, persistence, and employment. Without knowledge of their financial circumstances, a student with a large sum of debt might be unprepared to compete for the jobs that would pay generously enough to allow them to repay their debt without having to enter an income-based repayment program.”


The confusion carries into repayment options

Unfortunately, student loan confusion doesn’t end with college. In large part, that’s because there a multitude of repayment options for college graduates. The Department of Education’s Federal Student Aid website offers an overview of the eight repayment options for Direct Loans and Federal Family Education Loans. These include:5


  • Standard repayment plan (fixed payments)
  • Graduated repayment plan (increasing payments)
  • Extended repayment plan (fixed payments over 25 years)
  • Income-based Repayment Plan (income-based repayment)
  • Income Contingent Repayment (income-based repayment)
  • Income Sensitive Repayment Plan (income-based repayment)
  • Pay As You Earn Repayment Plan (income-based repayment)
  • Revised Pay As You Earn Repayment Plan (revised income-based repayment)


Of course, the choices available for repaying private student loans are different and vary by lender. In addition, marketplace and peer-to-peer lending platforms make it possible to refinance and consolidate student loan debt, sometimes at lower interest rates.6


Tax implications may also play a role into loan repayment decisions. Interest paid on student loan debt may be tax deductible. Earlier this year, Forbes suggested it could reduce taxable income by as much as $2,500 for some Americans. However, this article cautioned monthly loan payments could limit the ability of many young Americans to save for financial goals like starting a business, buying a home, or retiring from work at a reasonable age.7


Is borrowing for college worth it?

A college degree is almost a necessity today. In 2014, Pew Research Center reported, “On virtually every measure of economic well-being and career attainment – from personal earnings to job satisfaction…young college graduates are outperforming their peers with less education.”8


When a degree confers so many benefits, borrowing to pay for college appears to be a reasonable choice as long as students make sound repayment choices. In a world where so many repayment options are available, graduates may want to work with financial professionals to accurately determine which repayment programs may be the most beneficial.




1 https://lendedu.com/blog/January-student-loan-survey

2 https://bigfuture.collegeboard.org/pay-for-college/loans/types-of-college-loans

3 https://studentloans.gov/myDirectLoan/index.action

4 http://www.brookings.edu/~/media/research/files/reports/2014/12/10-borrowing-blindly/are-college-students-borrowing-blindly_dec-2014.pdf (Pages 1 and 10)

5 https://studentaid.ed.gov/sa/repay-loans/understand/plans#direct-and-ffel

6 http://www.business.com/finance/finance-meet-your-new-match-fintech-trends-to-watch-in-2016/

7 http://www.forbes.com/sites/stephendash/2016/03/04/long-term-tax-strategies-for-student-loan-borrowers/#4360b54b443f (or go to

8 http://www.pewsocialtrends.org/2014/02/11/the-rising-cost-of-not-going-to-college/


Securities offered through Raymond James Financial Services, Member FINRA/SIPC.


This material was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.


10 Early Signs of Alzheimer’s

Research shows declining financial skills are among the first symptoms to appear in people with Alzheimer’s, the most common form of dementia. More than 5 million Americans — including 1 in 9 people over age 65 — are living with Alzheimer’s and someone in the U.S. develops the disease every 67 seconds (source: The Alzheimer’s Association®).

The Alzheimer’s Association® has created a list of 10 warning signs of the disease. For many people, symptoms may appear as a change in presentation or mannerisms. Each person is different and will not necessarily display all the following symptoms commonly associated with Alzheimer’s disease. These warning signs are not always a sign of Alzheimer’s; they could be the sign of a disease that is treatable. If you know a friend or family member experiencing any of the following, encourage that person to schedule an appointment with a doctor immediately:

  1. Memory loss that disrupts daily life
    Examples include forgetting recently learned information, important dates or events, or repeatedly asking for the same information.
  2. Challenges in planning or solving problems
    Some people may experience changes in their ability to follow a recipe or monitor monthly bills.
  3. Difficulty completing familiar tasks at home, at work, or at leisure
    People with Alzheimer’s may have trouble driving to a familiar location, managing a budget at work, or remembering rules to a favorite game.
  4. Confusion with time or place
    Examples include losing track of dates, seasons, and the passage of time. People with Alzheimer’s may, at times, forget where they are or how they got there.
  5. Trouble understanding visual images and spatial relationships
    Some people with Alzheimer’s may have trouble reading, judging distance, and determining color or contrast, potentially causing problems with driving.
  6. New problems with words in speaking or writing
    This involves problems with following or joining conversations. People with Alzheimer’s may stop in the middle of a conversation and have no idea how to continue. They may also have trouble remembering words to identify objects (e.g., calling a “watch” a “hand-clock.”)
  7. Misplacing things and losing the ability to retrace steps
    An example is placing things in unusual places and not remembering where the individual had been before losing them.
  8. Decreased or poor judgment
    This includes making extravagant purchases or giving large amounts of money to telemarketers. People with dementia may also pay less attention to personal hygiene.
  9. Withdrawal from work or social activities
    Some people with Alzheimer’s may begin to have trouble following their favorite sports team or remembering how to complete a project associated with a favorite hobby.
  10. Changes in mood and personality
    Mood changes can include confusion, depression, or the acts of being suspicious, fearful, or anxious. People with Alzheimer’s may also become easily upset at home, at work, or with friends.


Being a caregiver can be overwhelming, and the stress associated with this critical role can make it difficult to take action.  Work with your financial advisor before taking final action.