Ziese & Associates, Ltd.

Topics of Continuing Interest

May 2000

Good News for Seniors Collecting Social Security

On April 7, 2000, President Clinton signed into law the "Senior Citizens’ Freedom to Work Act of 2000". Some sources have incorrectly stated that at age 65 you can earn as much as you want without having to pay back your Social Security benefits.

In reality, the Act changes the "age 70" provisions for unlimited earnings to "retirement age". The keyword is "retirement age" which is defined as the age when a taxpayer can receive full Social Security benefits. For those who reach age 65 prior to January 1, 2003, this is age 65. For those who reach age 65 after 1/1/2003, the "retirement age" changes depending on when the taxpayer was born.

Don't Roll All of Your 401(k) into an IRA?

If you change jobs or take early retirement, you don't have to transfer all of your 401(k) savings into an individual IRA. The standard advice is to roll the 401(k) into an individual IRA. But, if your last company funded the 401(k) with their own stock, you may fare better by taking possession of the company stock. You will owe up-front tax on the cost basis of the employer shares, but the increased value isn't taxed until you or your heirs sell the stock. The math is tricky- don't do it if you have to use 401(k) assets to pay the tax or if your company stock is a loser.

Why Doesn't my Social Security Statement tell me how much I can expect to receive in spouse's benefits when my husband retires?

Social Security keeps only a record of individual's earnings as reported by their employer or by an individual if he or she is self-employed.  Because SS doesn't know whether you're married or to whom you're married, SS can't give you an estimate of how much you would receive as a spouse.  If you're married and will receive benefits based on your spouse's earnings record, at full retirement age, you would expect to receive an amount equal to half of what your spouse receives.  If you retire earlier than your full retirement age, your benefits would be reduced according to your age at the time you begin receiving them.

Retirement Planning Strategies

Business Week magazine's Annual Retirement Guide ----  Business Week annually publishes it's guide  retiring. The articles on the Web site have pointers to information on Asset Allocation, Reverse Mortgages, and other retirement topics.

Valuable Web Sites

Here are some of the Web sites we visit for uptodate information:

    US Internal Revenue Service Digital Daily

    New Jersey Division of Taxation

    Federal Reserve Bank of New York

     Social Security Administration

     FHA & HUD