Factoring Retirement Benefits In An Estate Plan For Your Spouse

2 May 2017
 Categories: Law, Blog

Do you want your spouse to live comfortably after you pass away, but you still want to give money to children or close family members? If so, it will bring up questions about how to handle your estate plan to ensure your spouse is taken care of. Part of a successful estate plan involves taking social security and retirement accounts into consideration, which can make it possible to ensure that everyone you want has financial security. Here are some tips to follow regarding how to factor retirement benefits in your estate plan.

Social Security

If you want to know how much you will receive in Social Security, you can use an online calculator or call for help at a local Social Security office. While the exact amount you receive will depend on when you take social security, it can give you a general idea of what to expect.

Two big factors that play into how much you will receive is when you were born and when you decide to take social security. If you wait until you are 62 years old, you can receive all the money that you are entitled to receive. Factors that can reduce how much you will receive include taking social security early or making additional income in retirement. Once you cross an income threshold, benefits are reduced by 50% of what you earned. For example, earning $1000 in additional income over the threshold can reduce your payments by $500.

If you delay taking Social Security in hope of getting the full amount, but pass away before you claim it, spouses can still receive Social Security benefits. They could start receiving benefits at 60 years old, with similar restrictions applying that will lower benefits if they are making too much additional income or claim it early.

Retirement Accounts

Your spouse will be eligible to receive access to your retirement accounts, even if you never used them. One thing to keep in mind is that taxes might need to be paid on any pensions that are withdrawn as a lump sum, so be sure to set money aside for this in your estate plan if this is what you want done. A Roth IRA is funded with income that was already taxed, so all earnings will be withdrawn tax free as long as it is done after your spouse is 59 years old.  If it is withdrawn early, penalties could be applied to the earnings.

By considering Social Security and retirement accounts, you can ensure that your spouse has they money they need after you pass away. For help creating your estate plan, work with a local lawyer, like Linn Schisel & DeMarco Attorneys At Law.