[00:00:01] Good morning guys just out taking the dog for a walk. Just thinking today about what I can give you to help you out. And I think the first thing is oh shoot there's a train coming. Let's get a shot of this train here. OK that was cool. So, I've been getting a lot of questions lately about about Social Security and when to take it. So a couple of big mistakes people make when taking Social Security. One is to take it as soon as they qualify you know take it to 62 can be a really bad idea. It could cost you hundreds of thousands of dollars long term. It can be good to take it at 62. If you have some health issues on the other hand because at the end of the day you may get more payments from Social Security but taking a 62 versus waiting until 70 can be probably about 45 percent difference in your overall payout. And that's for life. So that could hit six figures very easily. Usually the break even point is somewhere between 12 and 18 years on taking early versus delaying. So for example if you were going to live to or if you waited till 70 right so may take you until 82 to break even. But then if you live to 92 you're going to make a whole lot more money long term or have a lot more money that's coming in which means you draw less on your assets. 


[00:01:35] So what if you don't feel like you have enough money? So here's mistake number two. People take early Social Security because they don't want to touch their retirement investments. In all honesty it may actually be better to pull from your 401k or IRA instead of taking your retirement invest excuse me to take in Social Security because if you delay so security pass retirement age you're going to get 8 percent per year. And so that may even be a little bit higher before retirement age. So 8 percent per year is a very good return. And that's for life. So that's hard to get from your investments when you're in retirement especially since you want to take a little bit lower risk in those retirement years. Mistake number three is not taking the right strategy. The claiming strategy going to give you the best payoff. So say for example you're married. OK. A lot of times it makes more sense to take the spousal payout now or earlier and then wait until you're 70 or full retirement age to take the primary earners pay out. So these days sometimes it's the man sometimes as a woman. Things have changed in these recent years. But whoever is going to have the higher payout should wait and delay for as long as they can. Up until age 70 so those are three mistakes that I see people making a lot. So hopefully you're not going to do those and if you're thinking about taking that I helped you maybe delay if you want to get some exact numbers because you could actually program all these numbers and calculate them on. OK. What's it going to be if you take early pay out. What's it going to be if you wait. 


[00:03:07] And when is the best point to take that you don't want to just have it be a random decision. And you also don't want to rely on a Social Security office that can be mistake number four the social security administration gets things wrong all the time. So you want to make sure you do your own analysis. We can definitely help you out with so if you want help getting your Social Security situation mapped out. Let me know. Feel free to send me an e-mail Jason@kisplanning.com Or you can book a call with me at Jasonjhamilton.com/hello. And we'll spend 45 minutes figuring out where you're at and then we'll share it with the next best. We'll be OK. Talk to you soon. Have a great day. 

Understanding IRA Minimum Distribution Requirements

Many people who have been contributing to Individual Retirement Accounts (IRAs) for years have watched their account balances grow through tax-deferred accumulation. However, did you know the Tax Code mandates that contributions to traditional IRAs are no longer permitted after reaching age 70½ and required minimum distributions (RMDs) must commence no later than April 1 of the year after the year in which you reach age 70½?

Let’s take a look at the following example. Suppose Bob’s 70th birthday was July 15, 2017 and he attained age 70½ on January 15, 2018. Bob will have until April 1, 2019 (the year after reaching age 70½) to begin taking distributions.

It is important to note: The first RMD is actually for the year in which you attain age 70½; however, you are allowed to postpone it until April 1 of the following year. For every year after the first distribution, the RMD must be taken by December 31.

At first glance, postponing the first RMD may seem like a good idea because you can gain additional tax deferral. However, a second RMD would be due by December 31 of the same year (i.e., that year’s required distribution). Not only would this substantially increase your taxable income, but it could also limit some deductions based on adjusted gross income (AGI) and possibly subject your Social Security benefits to taxation.

Consequently, some people find that it makes sense to take the first RMD in the year when age 70½ is reached, rather than to postpone and “double up” the following year.     

Calculating the Distribution

Each year, the RMD amount is be calculated by dividing the IRA balance, as of December 31 of the previous year, by the applicable life expectancy factor from the appropriate IRS table. If an individual has more than one IRA account, the RMD amount must be calculated according to the total balance in all accounts. However, the amount can be taken out of any one (or more) IRA account. For each subsequent year, the RMD amount must be recalculated.

It is important to note: If you fail to withdraw the RMD amount for each year, you may be subject to a penalty tax. This tax is 50% of the difference between the amount actually withdrawn and the amount required to be withdrawn (i.e., the minimum distribution shortfall).

IRAs continue to be valuable vehicles for retirement planning. However, the time of reckoning (i.e., mandatory withdrawals) may be approaching for many IRA owners. Knowledge of the rules may help avoid potential tax problems. Be sure to consult a qualified tax professional for advice specific to your unique circumstances.