(01:04):
Hello and welcome to this week’s episode of the Her Retirement Podcast. I’m excited to have you here listening to this episode. Go ahead and throw on some headphones, go for a walk, and take a listen because, as I always say, it’s about knowing more and having more, and of course, it’s about being healthier, happier, and wealthier now and in retirement. I’m also recording this episode as a video, so you can go over and check it out on my YouTube channel. This week, I’m going to be talking about seven important milestones after the age of 50 because I talk to so many women and they’re like, I don’t even know the things that I need to do after age 50, what kind of decisions I need to make. And so what I’m going to do is I’m going to highlight some of these milestones, and then I’m going to be talking about ten tips to help empower women financially.
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One of the things I want to note about these milestones is that I have actually programmed these milestones into my Her Retirement Readiness software platform. So that means when you subscribe to the software platform, amongst all the other benefits of it, there’s going to be a milestone functionality, which means that once you put your birth date into the software, the software is going to monitor your ages. When you hit a certain milestone or actually a year out from when you hit a milestone, the software is going to automatically send you an email and say, Hey there, Beth, you’re about to become 59 and a half. What should you be doing before you turn 59 and a half? And what is the opportunity, the retirement planning opportunity you have at 59 and a half or 62 or 65? So it’s one of the more powerful features of the software because it is going to remind us and nudge us to take action.
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In addition, it will educate us on what that milestone is, what the opportunity is, and how we can best take advantage of that milestone and opportunity. So, congratulations on being over 50. Now, the real adventure starts, and maybe you’ve already started thinking about retirement, but you definitely need to make sure that you take note of some of these significant dates in your calendar. Of course, when you subscribe to the software, it’s going to be your little reminder, but once you get beyond the age of 50, there are multiple birthdays, even half birthdays, that you need to pay attention to as the decisions you make around those milestones can significantly affect your retirement income. So, let’s talk about the big five. Oh, once you attain age 50, individuals with specific qualified retirement plans have the opportunity to make extra catch-up contributions on top of their regular contributions.
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This is such a missed opportunity for so many people because they don’t know about it. So in 2023, if you are under 50 years old, you can contribute a maximum of $6,500 to an IRA, or an individual retirement account, and if you are 50 or older, you can add an additional $1,000 to that amount. Likewise, if you are 50 and older, you can contribute a total of $30,000 to your 401(k), your 403B, a thrift savings plan, and a 457B in 2023. And for those who are 50 or older and participate in a simple 401(k) IRA, your contribution limit for 2023 is $19,000. And I’m going to add one more, which is a Roth IRA. Again, you have that thousand dollars catch-up contribution, but it’s between the IRA traditional IRA and a Roth IRA.
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You have that max of $7,500, so you can’t do 7,500 for both; it’s one or the other. Now, let’s talk about five years later. At age 55, a significant number of individuals are really not aware that they may have the option to make withdrawals from their 401(k) or similar retirement plans beginning at the age of 55. So let’s say you happen to leave your job regardless of the reason in the year you turn 55 or thereafter, you are eligible to withdraw funds from the retirement plan associated with that specific job without incurring any penalties. It’s really important, however, to note that this provision does not apply to funds rolled over into an IRA. All right, so 59 and a half. A lot of people are familiar with this age because it is the age that you can begin withdrawing from your IRA or 401(k)s, typically previous 401(k)s, if you’re still working without facing any penalties.
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So yes, ladies, getting older definitely has some perks. So once you reach the age of 59 and a half, you can enjoy the benefits of withdrawing from those deferred retirement savings accounts without penalties. If you have retired or left your employment and still have funds in your 401(k) plan, you can access them at 59 and a half without incurring any early withdrawal penalty tax. The same rules apply if you have rolled your 401(k) funds into an IRA. When you reach 59 and a half, you have the earliest opportunity to withdraw funds from an IRA count without being subjected to a 10% early withdrawal penalty. However, even if you are still employed, many of us are accessing funds from an old 401(k) plan at age 59 and a half may have some restrictions depending upon the company’s policy. So you definitely need to check those policies.
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You need to consult a 401(k) plan administrator with your employer or previous employer to determine if your plan allows what’s called an in-service distribution at age 59 and a half. This option varies among the various 401(k) plans, and one of the opportunities that you have is so many people leave 401(k) monies at previous employers, and maybe you’ve gone to a few different employers. Sometimes people have more than that, and they kind of leave these little pebbles, I call ’em. You drop these little piles of money and you leave them scattered about with different employers. Well, what you can do, and a lot of people don’t realize this, is that you can gather all those piles and make one bigger pile. So you don’t necessarily have to leave these monies with different employers. You can combine them all together into one traditional IRA and manage it from one place.
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Sometimes it’s easier. There’s less fees, less complexity, and sometimes more choice. So, with employers, your choices can be somewhat limited depending upon your employer’s plan. But when you have your own traditional self-directed IRA, you have the choice with whatever company you have those monies with. So let’s say the company that I co-own your retirement advisor, let’s say they were going to help you roll all those monies into one IRA, they would have a lot more choices from the perspective of investment choices. So, choice with your money and your investments is typically a good thing. Okay? So definitely reach out if you want to go find those monies if you’re not sure where they all are and if you want to consolidate them into one account. I did this quite a number of years ago because I didn’t know I had probably three different 401(k)s, and I didn’t really know what was going on with each of them.
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And now I have one invested. I can look at one dashboard and see what I got and how it’s doing, and I am paying less fees, and it’s less complicated, and I have a lot more investment choices. Alright, so let’s talk about age 62. A lot of people know that age because it is the first time you become eligible to claim social security benefits. However, you need to note that if you choose to claim benefits before reaching your full retirement age, which is not 62, it’s later, it’s probably typically 66 to 67. Your benefit amount if you choose to claim it 62 versus your full retirement age will be permanently reduced. On the other hand, if you delay claiming benefits to full retirement age or beyond, your benefit will increase by approximately 8% for each year. You defer until you reach the age of 70.
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So it’s like your money sitting in social security is going up 8%, which isn’t a bad return for each year that you wait. If you’re considering working while receiving social security benefits, it’s important to note that your benefit may be subject to reduction. Social security beneficiaries who are below their full retirement age and have earned income exceeding $21,240 in 2023 will have $1 withheld for every $2 earned above this limit. Once recipients reach their full retirement age, the earnings limit increases to 56,540 and the penalty decreases to $1 withheld for every $3 earned above the limit. However, once people reach their full retirement age, no benefits are withheld if they continue working. So let me unpack this for you. If you intend to keep working after 62, sometimes it doesn’t make a lot of sense to start collecting your social security benefit because of that $1 for every $2 earned reduction.
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In addition, once you start claiming you’re going to miss out on that 8% increase every year, okay? And that’s just what the government gives you as an incentive for waiting. They say, okay, your benefit’s going to go up 8%, 8%, 8%, so the year you reach your full retirement age, it’s that $1 for $3. But after your full retirement age, you can work and continue to collect a hundred percent of your social security. So what a lot of people do is they wait. They wait until that full retirement age because they can work and they can get their social security benefit and their income from their work. Makes sense. One thing to note here also is that the cost of living increase is not part of that 80%. So you’ve heard about Colas last year it was like 8.7%. I think it was the biggest in the history of social security.
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On average, colas over time have been about 3%. So if you start claiming is social security, the only way it’s going to go up is that 3% cost of living increase. So if you lock in at 62, you’re going to get the cost of living increase, but you won’t get that 8% because you took it, you didn’t wait. Alright, 65, if you’re nearing 65, retiring soon or newcomer to Medicare, it’s important to make informed decisions about your healthcare. So not at 65, but say four months before you turn 65, you need to make your decisions about Medicare. Oftentimes I get people approaching me at 62, 63, even younger, 50 55. They really want to be prepared and they want to understand what this whole Medicare thing is about. Because one of the issues is if you take your social security at 62 and you stop working, you don’t get Medicare until 65.
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So you’re going to have to cover that gap between 62 and 65, your healthcare gap. Alright, important to note that if you delay enrolling in Medicare beyond 65, you may face a penalty and a gap in coverage. So your initial enrollment period for Medicare is the first time you can enroll. If you’re eligible for Medicare when you turn 65, you can enroll within a seven month period. That includes the three months before you turn 65, the month you turn 65 and the three months after your birthday. So that’s how they get the seven month enrollment period that they give you two enroll in Medicare, you can even sign up for part A, which is hospital insurance if you have employer-based health insurance when you turn 65, so let’s you’re working, you can sign up for part A. It’s really important to consider that for the majority of individuals who have paid Medicare taxes during their employment, there won’t be a monthly premium for Part A.
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Now, if you’re familiar with Medicare, there are a lot of parts. If you are currently receiving social security benefits, you’ll be enrolled automatically in Medicare Part A and Part B while you have the option to decline Part B, which is medical insurance coverage. It does involve an additional premium payment. If you don’t have coverage through an employer’s health plan and choose to enroll at a later time, you may be subject to a penalty for the duration of your enrollment. If this all sounds confusing, I get it, you might have to rewind and listen to this again, but I have a better option. You can go check out hermedicareclass.com. Again, that’s hermedicareclass.com. I put together a 20-minute on-demand class that you can watch at any time and learn some of the basics of Medicare. And then after you watch that basics class, you can reach out to me and watch my full Medicare class, which happens to be part of my Her Retirement Roadmap Masterclass, which is an eight-module 10-hour class, and one of those hours is on Medicare.
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So if you go to hermedicareclass.com, you can definitely check out that Medicare class. If you want to check out the full Her Retirement Roadmap masterclass, which covers everything from investments to income planning to Medicare to long-term care to estate planning, you go to her retirement class.com. All right, and I’ll definitely have this in the notes of this episode. So this is a little fun fact. According to a study conducted by United Income, an average household misses out on approximately $111,000 worth of social security benefits over their lifetime. I think a lot of this is due to the fact that if you’re divorced, widowed, or even marital benefits, a lot of times, people in those situations miss out on the proper timing and claim some people don’t even understand that they can claim on an ex-spouse and if the ex-spouse’s benefit is greater than your own, you can get the ex-spouses.
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And so there are all these different rules depending upon not only marital status but timing and taking into consideration those 8% increases each year, the Colas. So if you want to know more about Social Security and really understand it, then what are the best choices for you? I have a social security class also it’s her social security.com. You can go check out that class, and there’s a whole bunch of resources, and decision trees to help you make the best social security decision. And we also do social security analysis. It’s like $125 and you can get a social security analysis to help you determine what is the best social security strategy for you. Alright, let’s talk about the ages. 65 to 67. This period is when individuals are eligible to receive their full Social Security benefit, in most cases. In 2023, social security benefits received a cost of living increase, and it was a record increase, I was correct, of 8.7%.
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This is the highest in almost four decades, which increased the maximum monthly benefit for retirees who claim at their full retirement age to 36 27. So $3,627 was the maximum. So there isn’t an unlimited amount of monthly benefit. If you’re a multimillionaire, you’ll be capped at this $3,627. While it’s unlikely that everyone will qualify for this much in Social Security benefits, everyone and I believe everyone can develop a strategy to maximize their benefit. So many times, I hear, “I’m just going to claim it at 62.” I think that’s an emotional decision. It might be the right practical decision. I’m not saying it isn’t, but never assume, especially regarding retirement planning. Don’t assume, don’t listen to your neighbor, don’t just listen to something you read, which is generic advice. It’s personal finance for a reason. You need to have an analysis done to make the best decision for you.
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Now, of course, if you aren’t able to work and you have no other income sources, then yes, by all means, 62 is a no-brainer decision claim at 62, be done with it. Stop working, protect your health, get that guaranteed income every month, and you’ll probably be happier. One way to maximize your social security is regularly reviewing your benefit statements to ensure you receive credit for the taxes you have paid into the system and determine when you should claim benefits. So here’s another assumption. People think, oh, social security, they know what they’re doing; they have it, right? They have all of my credits. Well, oftentimes, people never check, and they take what they get. You should check the credits for the taxes you’ve paid into the system. We all pay into it. If we are working for a system that takes money out, if we’re working for an employer that takes money out, social security, you’re paying in.
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So check your statements, check your record, make sure it’s accurate, and don’t wait until just before retirement to check it. It’s actually something on my to-do list. I just turned 58 3 days ago, and yes, I can hear you all singing Happy Birthday to me. But anyway, I turned 58, and it’s on my to-do list because I actually have never checked. I didn’t know until a few years ago that this was a thing, so go do it. It’s worth noting that only Americans age 60 and above who have not claimed their benefits and have not set up an online account will receive their statements by mail. So to create an online account, look for a letter with an activation code or visit the Social Security Administration’s website. Okay? Alright, so I want to give you some quick numbers. If you are at age 62 and you claim social security, you’ll get, let’s say in this case you get $2,364.
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Just as an example, let’s say you wait until your full retirement age, depending upon what that is, your benefit could be 32 40 to 36 27. Let’s say you waited until age 70, your maximum benefit would be $4,555. The difference between the 2364 and the 45 55 should be around 128%. I can’t do that math in my head, but they do say that if you wait until full, excuse me, if you wait until your maximum age of 70, which is the latest, that’s when social security basically stops getting bigger. You could go from 2364 a month to 45, 55. So some people say, you know what, I’m going to wait till age 70. I’m healthy, I have longevity in my family. Again, these are all questions that you need to ask yourself as you’re making these decisions. And in her social security class@hersocialsecurity.com, there is a decision tree gives you a bunch of questions to answer and helps lead you through this decision tree to making the best social security decision for you.
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Alright, age 73. With the implementation of the Secure Act 2.0 at the end of 2022, there have been changes to the age at which required minimum distributions or RMDs begin starting in 2023. RMDs will now begin at the age of 73, and it used to be like 78 and a half, and then it went to 72, but now RMDs begin at the age of 73, and this age will further increase to 75 after the year 2032. These mandatory distributions apply to various qualified retirement plans, including 401(k)s, 403bs, profit-sharing plans, money purchase pensions, IRAs, simple IRAs, and SEP IRAs. As a result, retirees now have more time to allow their retirement savings to grow tax-free. Tax-free is for me, people. If you’ve listened to any of my podcasts, you know that tax planning is relevant for many people. RMDs represent the minimum amount you must withdraw each year, but you always have the option to withdraw more if desired.
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However, in some cases, some retirees may prefer to withdraw less than the required amount. Taking additional withdrawals from a traditional retirement account leads to a higher tax burden and the loss of tax-free growth for the withdrawn funds. This is why it’s so important to do careful retirement income planning. It’s just, again, it’s not like, oh, let’s take our money, let’s take it out. It has to be a very concerted, organized, structured drawdown of those accounts, and doing some tax planning prior to retirement is so important because, basically, when you open a 401(k), you’re in a relationship with the government. They’re saying you can get the tax benefit upfront, but in retirement, when you are 73 or after 20 32 75, we want our taxes. So they’re going to force you to take those withdrawals, and you’re going to have to pay the taxes. So understanding what impact your income will have after you’ve paid those taxes is really important, and that’s why we talk about having some tax-free buckets in retirement like a Roth IRA where you can take that money, and you don’t have to pay any taxes.
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Alright? It’s important to remember that failing to take an RMD does result in penalties in 2023. There is a 25% penalty based on the RMD amount that should have been taken. RMDs are calculated based on the total balance of all your IRAs, 401(k)s, and other traditional retirement plans as of December 31st of the previous year. To ensure compliance and develop a long-term plan for minimizing taxes, it’s important to consult with a retirement advisor who has knowledge of these important birthdays. These milestones can assist you in adequately planning for specific retirement income benefits. These all impact your retirement income, and you must project what these milestones will do to your income situation. Alright, so the right retirement advisor will be very well-versed and familiar with these milestones. They will be projecting and running what I call several experiments to see how various decisions at these various birthdate milestones will affect you, your money, your family, your health, and your happiness, right?
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They’re all very, very much intertwined. Being aware of these birthdays and these milestones definitely can prevent you from incurring penalties in case you overlook them. So this is one of the things my software is designed to do – remind you one year out, it will remind you if you’re working with a retirement advisor, they will remind you, okay? So you know what? If you’ve got questions, of course, you want to talk to a retirement planner, advisor, or coach. After years of committed savings, every woman deserves to smoothly and confidently move into the life that you’ve worked so hard for, and that’s what her retirement is here to help you with. Regrettably, taking action becomes challenging when you lack complete clarity regarding answers to your questions, and this is the precise reason why her retirement is available. So, I want you to make the most of your plans, and you can get a complimentary assessment with her retirement at any time.
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Okay? I will have the full transcript of these seven important milestones after 50. It’s actually a nice little designed handout that we will link to so that you can print it out and certainly share these milestones. Share this podcast with your friends because these dates are so very important. Now, I want to go over 10 tips to help empower women investors, and I will go through these fairly quickly. Again, this is another nicely designed document that you can print out, and the next time you go to the beach, you can take this for your beach reading instead of that juicy romantic fiction novel. But seriously, I will go over these ten tips to empower women to investers. Alright? So every woman needs her own financial plan. That’s because her financial strategies often need to be different from a man’s for a variety of reasons.
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Women continue to earn less, women live longer, women are more likely to be single later in life. Women are time starved. Women are paying the price for going back to school because oftentimes we do that. Americans now hold over 1.7 trillion in outstanding loan debt with women holding almost two thirds of that debt. So for many women, financial independence is our number one concern, but what steps can we women take to achieve this throughout our life? So here’s a few key action items that I would like you and any younger woman in your life, I’d like you to share this with them because as older women is our responsibility to help our younger generations be healthier, happier, and wealthier. All right, number one, keep money in your name. Every woman needs a pot of money to call her own. This means that in addition to joint financial accounts, you may have with your significant other, with your spouse partner, you should consider keeping some financial accounts in your name only and make sure you maintain your individual credit history.
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And you can do this by holding a credit card or a personal loan issued just to you. Number two, confront your fears. Are you controlling your money or is it controlling you? Are your ideas about money and money management keeping you from becoming financially competent? As women increase education levels and continue to take on expanded roles in the workforce, they control more wealth and as a result, traditional views about finances need to be redefined and women need to face financial decisions head on. Number three, share decisions. If you share finances with someone else, you need to start talking this way. You’ll know if you share the same goals and dreams for the future as well as whether you’re on track to meet those schools. And oftentimes, people go into retirement as a couple and they don’t really talk about retirement. I mean, maybe the husband is the manager of the finances, and there’s not a real discussion with the woman.
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In other cases, there might be a lot of financial discussion, but there’s no discussion about the non-financial parts of retirement. Those non-financial discussions and things that happen can significantly impact the financial part. If you don’t talk about where you want to live, that could have a huge impact. Your housing is one of your biggest expenses in retirement, and not having that discussion not communicating is a disaster in any relationship, no matter the topic, but you need to have those retirement discussions to avoid any potential disasters. Also, remember that disagreements are bound to happen, right? Good communication is key to working through these disagreements and getting you back on track financially and non-financially. As a couple, four, maintain access to all finances. Keep your financial records accessible and easy to gather when you need them. This could include brokerage accounts, insurance policies, retirement plan statements, tax returns, and other important documents.
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If you don’t have access to those because maybe your spouse, partner, or husband keeps them somewhere, make sure you know where they are and you have access to them. Making copies is a really good idea. Keep a record of who owns each account. Be sure to notify the person responsible for handling your state where all your documents are and whom to contact in the event of your passing. And this is why I created her personal info and emergency planner. If you haven’t seen it, you can go to her emergency planner.com. If you go to that URL, you can access my 130-page PDF that you can fill out online, or you can print it out and fill it out with a pen and then keep it someplace special that you remember. Maybe give access to someone who’s going to be responsible for your financial affairs if you become incapacitated or when you pass away.
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This document is so important because it keeps track of all those things I just mentioned and more. There’s even a section on writing notes to people who are special to you or making a list of those special trinkets and treasures that you want to leave to special people in your life. It literally covers everything you can imagine, and it documents it all in one place. So definitely go check that out. Number five, pay yourself First. Fund your I R A, your 4 0 1 k, or your other accounts to the maximum. If you’re over 50, make sure to make those catch-up contributions when you leave your job. Consider rolling your 4 0 1 K funds into your own self-directed IRA. It can continue to grow tax-deferred, and you’ll gain the ability to choose from a broader array of investments, which I discussed earlier. Number six, choose a financial or retirement advisor wisely.
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It’s important to have trust, ask for referrals, and interview several to find one that you have rapport with. And don’t be shy about asking tough questions. Check their credentials. An experienced advisor can help you look for the right solutions at every stage of your life and help you build competence in your ability to take control of your finances. And I do have a guide to finding the right financial advisor/retirement advisor, which includes the questions that I want you to ask that person. You can get access to that in my masterclass. Number seven, put your plan in writing. Ask your advisor to help you create a formal, written, long-term financial plan. A written plan will provide the framework for defining your goals and shaping your decisions. It will also help you set sites on those goals in the long term and help keep you on track regardless of market conditions or unexpected life events.
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The right advisor and the right plan help you avoid those blind spots. And when you work with her retirement in a coaching capacity, we help you identify those blind spots. We help you get educated about those blind spots because sometimes the financial advisor or the insurance person you’re working with really isn’t in it to educate you. And so if you’re working with that type of person, it doesn’t mean you need to stop. It means maybe you look to her retirement to help educate you on all of this retirement stuff. Number eight, have a backup plan. Speaking of life events, don’t let a critical life change, such as marriage, divorce, widowhood, or illness, derail your goals. Always have a plan, and of course, an advisor or a planner can work with you to create a plan that addresses the unexpected and helps keep you moving forward, right?
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If you’re going through that kind of transition, you lose your job, you lose your spouse, however it happens. You lose your capacity to work. You really need to make sure that you have a plan that can address those issues and be better prepared for them. There’s so much mental stress in those situations that if you can reduce the financial stress because you know you have a plan B, you will be so much better off. It’s about being happier, healthier, and wealthier regardless of what life throws at you. Number nine, understand what you own. Although working with an advisor is vital, in my opinion, you must also know and make sense of the investments you hold. Not only should you be investing too many women hold their money in cash because they’re afraid of investing. My masterclass has an investment module so that you can learn more about investing and feel more confident in it, but you need to educate yourself on these basic investing principles.
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Course by taking classes like mine, reading books like mine, or there are so many valuable resources out there to help you get educated about investments and understanding what is in your 4 0 1 k. I mean, you don’t need to become a D I Y investor. You don’t need to be picking stocks and pouring over financial statements. I used to get the booklets from the companies I was invested in, and I was like, recycle, recycle. But you need to understand how investing works, why it’s so important to invest, and how it’s not as potentially scary for some of us as it needs to be. Number 10, finally, number 10, plan your family’s. When planning your estate, you can create a strategy designed to take care of your heirs while optimizing your retirement income. Work with a qualified estate planner in concert with your financial or retirement advisor to design an integrated strategy for passing on wealth to your loved ones while you enjoy the fruits of what you’ve worked so hard to earn throughout your lifetime.
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And we actually have a referral to an online estate planning company. They do a trust in a will for significantly less than a traditional estate planning attorney that might be in your community. So if you want access to that, you go to get her will done.com. Again, get her will done.com, and you will get to this company that can do a trust and a will, and they’ll help educate you on what you need. And believe me, it is the most affordable trust and will, and you get access through it or access to it through your relationship with her retirement. So yes, you’re welcome. But I do highly encourage every woman to have at least a will. And for sure, you have to ensure you have beneficiaries named on all of your accounts if you don’t have a will. Beneficiaries are a must. Ladies, financial independence starts with determining your financial goals and putting in place a plan designed to help you reach them.
(40:09):
By implementing these steps that I’ve briefly outlined here, you can well be on your way to creating financial confidence for yourself and your family, both now and in your retirement years. As I always say, you, too, can be happier, healthier, and wealthier. It’s all about knowing more having more as a result, and getting her done. So, definitely reach out to me for help with any of the topics I discussed in this episode of the Her Retirement Podcast. I know I covered a lot. There are going to be two documents that you can link to the milestones document and the ten tips to help empower women financially to help empower women to invest who, right, invest hers. Very, very important. So ladies, here’s to being an investor, and here’s to getting super, super prepared for retirement, and I’m here to help you do it. Let’s get her done.
