The Changing Horizon of Retirement

Did you decide upon a plan for retirement years ago? Have you thought about it since then? If not, it’s a common mistake. Many people assume that their retirement plan is set in stone, and they don’t need to revisit their decisions.

Unfortunately, the horizon of retirement is changing all the time. Policy makers continue to adjust regulation pertaining to Social Security, taxes, retirement plans, and more. Add in inflation, the rising cost of health care, and your changing standard of living, and you can see how important it is to re-evaluate your plan every few years. When the world changes, we must change with it!

The following are just some of the recent changes we’ve seen in the retirement planning world.

The income threshold for the Saver’s Credit increased this year. This valuable tax credit helps low- and middle-income workers save for retirement. The income limit is subject to change periodically, so some people could miss out if they mistakenly believe they aren’t eligible for the credit. For 2016, the income threshold has increased to $30,750 for singles and $61,500 for those filing a joint return.

Social Security rules have changed. In the past, many couples took advantage of restricted applications, which allowed the lower-earning spouse to take spousal benefits while allowing their own suspended benefit to grow larger. New laws passed by Congress in 2015 did away with this common provision. If you already filed for restricted benefits, you won’t be affected by the change. But those who were counting on filing for benefits this way will have to create a new plan.

The cost of health care tends to rise each year. Health insurance premiums rose for nearly everyone this year, and out of pocket expenses might also increase. If you’re preparing for retirement, you probably can’t count on your health care costs remaining flat. Make sure your budget has room for growing expenses.

Cost of living increases for Social Security beneficiaries are never guaranteed. In most years, Social Security releases a cost of living increase (COLA). But for 2016, there won’t be a COLA because the rate of inflation remained flat this year. It’s a good reminder to never count upon these increases in benefits.

Max benefits for Social Security are not set in stone. Contrary to popular belief, estimated Social Security benefits can decrease. If you’re expecting to receive a certain amount once you retire, this can come as an unpleasant surprise. In 2016, the maximum benefit is down 24 dollars to $2,639. Granted, 24 dollars isn’t a lot of money, but every cent counts when you’re living on a fixed income.

Retirement plans offer automatic enrollment. Auto enrollment and auto increase are two retirement plan benefits that help workers save for retirement without too much hassle. During the first half of 2015, there was a 40 percent increase in these types of plans. Hopefully, this trend will continue.

We will do our best to keep you updated on changes that could affect your retirement. But the best way to craft a solid financial plan is to call us and schedule an appointment. We can discuss the above issues, and any others that might affect you in the future.

This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

15306 – 2016/2/1