As you approach retirement, understanding your Social Security benefits becomes crucial for financial planning. Your benefit amount hinges on factors like earnings history and age at sign-up. With careful planning and strategic decision-making, you can maximize your Social Security benefits to ensure financial stability in your golden years. Here are proven strategies to help you make the most out of your Social Security benefits.
Delay Your Claim
One of the most effective ways to increase your Social Security payments is by delaying your claim beyond your full retirement age (FRA). For each year you delay claiming benefits, your payments could increase by up to 8%, until you reach the age of 70. After age 70, there is no additional benefit for waiting to claim benefits.
Stay in the Workforce Until FRA
You can begin collecting Social Security payments at age 62. However, opting for this early withdrawal results in reduced monthly payments, while waiting until FRA provides higher monthly payments.
FRA is age 66 for those born between 1943 and 1954, gradually increasing in two-month increments thereafter. Individuals born in 1960 or later reach FRA at age 67. Claiming benefits before you reach FRA results in a permanent deduction.
Maximize Earnings
Be strategic about when you earn your highest income. Since Social Security benefits are based on your highest 35 years of earnings, consider working overtime, asking for a raise, taking on side jobs, or seeking higher-paying jobs in the years leading up to retirement.
There is a maximum earnings threshold – adjusted each year for inflation – which is used to calculate Social Security benefits. In 2024, earnings up to $168,600 are used to calculate retirement benefits. However, any income beyond this threshold isn’t subject to Social Security tax and won’t influence future benefit payments in retirement.
Claim Spousal Benefits
Married individuals have the option to claim spousal benefits based on their spouse’s work record, which can be up to 50% of their spouse’s benefit amount. This can be particularly advantageous if one spouse has significantly higher earnings. The lower-earning or nonworking spouse needs to sign up for spousal payments at his or her FRA to get the 50% spousal payment. The percentage is reduced if this spouse starts benefits before their FRA.
Coordinate Spousal Benefits
Spouses can strategize to maximize their combined Social Security benefits by coordinating when each spouse claims their benefits. This may involve one spouse delaying their claim while the other claims benefits, allowing the delayed benefits to grow.
Know Retirement Earning Limits
If you claim Social Security before reaching FRA and continue to work, a portion of your benefit might be temporarily withheld.
In 2024, Social Security recipients under FRA earning over $22,320 will see $1 withheld for every $2 earned beyond this threshold. At full retirement age, the earnings limit rises to $59,520, with a penalty reduction to $1 withheld for every $3 earned above this limit.
Upon reaching full retirement age, you can work while receiving Social Security without penalty. Your benefit will be recalculated, accounting for any previously withheld payments and your ongoing earnings.
Minimize Social Security Taxes
Be aware of the tax implications of your Social Security benefits. Depending on your adjusted gross income, a portion of your benefits may be subject to federal income tax. Careful strategizing, like minimizing other sources of taxable income, can help reduce the taxation of your Social Security benefits.
Maximize Survivor’s Benefits
Surviving spouses are entitled to receive the higher of their own benefit or their deceased spouse’s benefit. If your spouse received the higher benefit, you might qualify to claim your spouse’s survivor benefit initially, letting your own benefit accrue, and then transitioning to your benefit later in life. By understanding the rules surrounding widow/widower benefits, you can ensure you receive the maximum amount possible.
Understanding how economic trends influence construction can provide valuable insights for businesses and professionals in the field. For instance, high interest rates and slower economic growth will put increasing pressure on construction and manufacturing this year. Here’s a comprehensive look at how the current economic landscape is likely to impact construction in 2024.
Inflation and Interest Rates
The economy is still experiencing inflation pressures from energy prices, wages, and consumer spending, which impacts project financing.
Additionally, with interest rates playing a pivotal role in construction financing, the Federal Reserve’s actions this year regarding cutting interest rates hold significant sway. Lower interest rates will stimulate borrowing for construction projects, reducing overall borrowing costs for businesses and clients. This creates incentives for investment in construction ventures, particularly in the residential sector.
Supply Chain
Late last year, construction companies were still facing supply chain issues, but construction firms can expect supply chain improvements as the year progresses, which will help reduce delays in construction projects. The pandemic changed communication methods between the construction industry and suppliers, with construction firms adopting communication technologies to streamline material ordering workflows. With access to more complete and speedy information, construction firms are empowered to keep projects on track.
Labor Market
The construction job sector experienced growth last year. However, construction job openings have decreased recently, even though wages have increased by 4.9%. This highlights the importance of competitive pay and innovative training programs to attract and retain employees.
Recession Worries
Higher employment and higher wages create more spending power and add to the supply and demand issues perpetuating a potential recession. With interest rates stalling and contributing to a decrease in project financing power, an economic recession is still top of mind for businesses. While signs at the moment are pointing to a soft landing, the construction industry should still be preparing for economic shifts.
Shifting Geopolitical Landscape
The Israel-Hamas conflict heightens concerns about the possibility of broader tensions in the Middle East, which could potentially impact energy and other raw material prices. U.S. sanctions on Iran might exacerbate these issues, while ongoing tensions between the U.S. and China could contribute to inflationary pressures.
Investing in a 529 plan – typically regarded as the best way to save for a child’s college education – has become a more attractive savings vehicle thanks to a new federal law going into effect this year. Read on to learn more about the change affecting 529 plans.
What is a 529 Plan?
A 529 college savings plan is a state-sponsored investment account that enables you to save money for a beneficiary and pay for education expenses. These plans offer tax-free earnings and withdrawals for tuition and other qualified higher education expenses (QHEEs) such as tuition, supplies, and room and board. Additionally, due to the 2017 Tax Cuts and Jobs Act, the funds in a 529 plan can also be used for elementary or high school tuition for private or religious schools (with QHEEs capped at $10,000 per year).
However, 529 plans have always had a limitation worth considering: the money in a 529 plan could only be used for education. Withdrawing the funds for other purposes would draw penalties, so if you set up a 529 plan and your child ends up not needing it – whether they attend public school, get a full scholarship to college, or decide against a college path – accessing the funds without accruing penalties typically necessitated changing the beneficiary on the plan to someone else, until now.
How are 529s Changing?
Previously, withdrawals from a 529 plan for non-QHEEs incurred a 10% federal tax on the earnings portion of the withdrawal, in addition to potential state taxes. However, as of January 1 of this year, unused funds from a 529 plan can be rolled over into a Roth IRA account tax-free.
Rules for Rollovers
There are still some rules and restrictions that are important to know.
Rollovers are not allowed until a 529 plan has been open for at least 15 years
Funds converted from a 529 plan to a Roth IRA must have been in the account for at least five years
A maximum amount of $35,000 can be rolled over from a 529 plan to a beneficiary’s Roth IRA
Annual Roth IRA contribution limits apply to rollovers (the contribution limit in 2024 is $7,000)
Conversions are limited to the beneficiary’s Roth IRA, meaning parents cannot convert the unused funds of a 529 plan in their child’s name back into their own retirement account
No Additional IRA Investments During Transfer Years
Because the annual contribution limit is restricted to $7,000, if you transfer the full $7,000 from a 529 plan to a Roth IRA, the account holder will be unable to contribute additional funds through another traditional IRA or Roth IRA within that year because the annual limits are already being monopolized by the 529 to Roth IRA conversions each year. Ideally, the beneficiary also has a tax-advantaged retirement account like a 401(k) through an employer.
Keep in mind that the 15-year minimum for an account means that you’ll need to think about the long game. If you’re interested in starting a 529 plan for your child, you might think about establishing it with a small amount even before you’re ready to begin contributing to it.
Business productivity extends beyond the mere appearance of busyness or ticking off tasks, which is why companies are shifting their focus away from optics and toward identifying efficient tools and strategies to achieve tangible outcomes. So, how can professional services firms enhance productivity? In this article, we’ll explore how firms are boosting improvements in productivity through strategic technological investments.
Strategic Investments for Optimizing Business Efficiency
Technology investments play a crucial role in bolstering the long-term objectives of organizations. They go beyond tools and gadgets. These investments are designed to empower businesses to anticipate future needs, pivot in response to unexpected challenges, and seamlessly adapt to the relentless pace of change.
Communication and Collaboration
Smart investments in communication tools, such as unified communication platforms and video conferencing solutions help to foster communication among professional services teams by breaking down geographical barriers and enabling real-time collaboration. This improves internal operations and strengthens client relationships within an environment of teamwork and innovation.
Cloud Solutions
Cloud computing is a game changer for professional services firms. By investing in cloud solutions, organizations gain the flexibility to access data and applications from anywhere, enabling remote collaboration and the possibility of teams to work coherently across geographies. In an era where remote work is increasingly becoming more prevalent, the flexibility provided by cloud solutions is particularly valuable.
Data Insights
Professional services firms can leverage data analytics with technology investments, allowing them to make informed decisions, identify trends, and adapt their strategies in real time. A data-driven approach not only strengthens decision-making but also provides a competitive edge by allowing firms to anticipate client needs and market trends.
Artificial Intelligence (AI)
It’s no secret that AI is transforming industries across the board, and the professional services industry is no different. AI-powered solutions can help organizations achieve smarter and more efficient operations. Whether it’s automating routine administrative tasks or utilizing AI-driven insights for client engagements, the integration of AI elevates the overall efficiency of professional service providers.
Security and Compliance Standards
Strategic technology investments can ensure that professional services firms are meeting rigorous security and compliance standards. Investing in robust cybersecurity measures, encryption technologies, and compliance management systems not only protects sensitive client information but also builds the trustworthiness of your organization.
Professional services firms that strategically embrace technology not only improve their current productivity but also position themselves as leaders prepared to navigate the challenges and opportunities of the evolving business landscape. For organizations that seek long-term success, it’s not a choice but a necessity.
There are two important filing changes that we want to make all our business owners aware of as we enter 2024. First, is the new Beneficial Ownership Information Report (BOI). Second, is the new Pass-Through Entity Tax (PTET) for the State of Indiana.
The Financial Crimes Enforcement Network (FinCen), an Agency of the US Government tasked with monitoring the offshore ownership of US companies, has developed a new reporting requirement starting January 1, 2024. This is called Beneficial Ownership Information Report (BOI). This is not an income tax-related filing, but actually a legal filing. As such, we are not able to assist in the filing of this report. Both the American Institute of Certified Public Accountants and Indiana CPA Society have stated that firms like ours should not prepare or assist in the filing of the BOI report as it is deemed the practice of law. You can file the report yourself online starting January 1, 2024, at www.fincen.gov/boi. If you are not comfortable filing yourself, please seek legal counsel.
Indiana has joined 31 other states in adopting a Pass-Through Entity Tax (PTET) for S-Corporations and Partnerships. This will include LLCs that file as either an S-Corp or a Partnership. It will allow the entity to pay the shareholder or partner’s Indiana income tax at the business level and take a deduction on the entity’s federal tax return. For business owners, currently, the Indiana tax you pay personally is limited to $10,000 per year and you must itemize to use the taxes paid as a deduction. So, many of our business owners have not received a tax benefit for taxes paid to Indiana. With PTET, it ensures all business owners will receive a tax benefit for the state taxes they owe. This means that if your business has a net profit for 2023, on the Indiana business tax return, there will be a balance due.
We wanted to give you this information now, so when you receive your copies of the tax returns you know to open the package right away. Please don’t file them away immediately, but instead, open them and follow the payment instructions that will be included. We will also be reminding you when we send the electronic filing forms but we wanted to give you a heads up early.
