According to Darcy Bergen, who has been a financial planner for over two decades, Social Security benefits always bring some confusion in his clients. For those approaching retirement age who have recently lost a spouse, the confusion and uncertainty can be even greater. Even though every month, 59 million people receive Social Security Benefits, there is still a lot of information Americans don’t know. What happens when a surviving spouse wants to claim the Social Security benefits of their deceased spouse? Darcy Bergen offers an overview of how to use the Social Security benefits of a deceased spouse.
In order to qualify for Social Security benefits of their deceased spouse, the surviving spouse has to show evidence the marriage was at least nine months long. According to Darcy Bergen, the deceased spouse should have had also worked long enough to accumulate Social Security benefits. Those who meet these basic requirements can collect widower/widow Social Security benefits.
When Can Surviving Spouses Start Collecting?
Surviving spouses have to wait until they’re at least 60 years old to receive their Social Security survivor benefits. According to Darcy Bergen, they will only get 70% of the benefit at this age. They will have to wait until they reach full retirement age to receive the full benefit. The retirement age is 66 for those born between 1945-1956. It’s expected to increase to age 67 for those born in 1962 and later.
However, Darcy Bergen explains there are a few age exemptions. For example, those who are disabled can start collecting the survivor benefit as early as age 50. Those surviving spouses who care for the child of their deceased spouse who is under the age of 16, can collect the benefits at any age.
How Much Do Surviving Spouses Get?
According to Darcy Bergen, the exact monthly dollar amount surviving spouses can collect will depend on how much their deceased spouse collected over their lifetime. If the deceased spouse never collected any Social Security benefits, then they will be eligible for the full amount once they reach retirement age.
Social Security Benefit Exceptions
Darcy Bergen advises the surviving spouse that some exceptions could prevent them from collecting the benefits. For example, if a spouse remarries before turning 60 or 50 if disabled, they will lose their eligibility. Also, if the deceased spouse had any dependent children, there might be a limit on the amount disbursed per family.
Darcy Bergen recommends everyone learn about Social Security benefits as early as possible. For more information on Social Security and other retirement benefits, check out darcybergen.co.
Financial planner, Darcy Bergen has over 20 years of experience helping clients plan for retirement. As the owner of Bergen Financial Group, Darcy Bergen has encountered several clients who are seriously concerned they haven’t saved enough money for retirement. Other people wonder how their life insurance policy can help them in retirement once their children are grown up and the house is fully or almost paid for. Because it’s important for Darcy to address these concerns, he talks about how to use a life insurance policy to fund retirement.
Life Insurance Can Equal Retirement Income
For those who obtain a whole life or permanent life insurance policy early on in life, they have accumulated a cash value that has grown over time. However, Darcy Bergen warns his clients that term life insurance doesn’t accumulate any cash value. With most whole life insurance plans, you can withdraw the cash value and use it as income during retirement. The amount policyholders can withdraw tax free is equal to the amount of premiums they have paid in over time.
According to Darcy Bergen, many people don’t know that when they purchase a permanent life insurance policy, a portion of their premiums will accrue as cash value. A portion of their payment will go towards insurance and maintenance costs, and the rest will accumulate cash value.
Borrow From Your Life Insurance Policy
During retirement, if an unexpected expense happens, Darcy Bergen explains clients can often borrow money from their life insurance policy. Amounts borrowed are not taxable, therefore it is a great way to use the cash without paying tax on interest earned. Those who borrow from their life insurance policy are basically borrowing money from their death benefit. Darcy Bergen explains that although they’re not required to pay it back, any unpaid balance will accumulate interest, and it will get deducted from their death benefit.
Making Your Policy Payments With Your Policy
According to Darcy Bergen, if, at any point during retirement clients need to move around their budget, they can pay for their monthly life insurance payment using their cash value. By using their cash value to pay for their policy, it will allow them to keep their death benefit without defaulting on the payments. Once their life gets back on track, they can resume paying for their premiums. Universal life insurance policies are more flexible in this regard than traditional whole life insurance policies.
Before making decisions when it comes to planning for retirement, Darcy Bergen recommends everyone to meet with a financial advisor. Although using life insurance to fund retirement is a possibility, Darcy Bergen will explore all other options with their clients.
Will I Have Other Sources of Income During Retirement?
If you’re approaching retirement age, Darcy Bergen recommends you take a look at what your sources of income will be once you transition into your golden years. For starters, once you’re in your 60s, you will receive some income from your Social Security. Also, some people rely on their tax-advantage retirement accounts such as 401(k) or IRAs.
Unfortunately, for some people, that’s not enough money to carry them through retirement. Darcy Bergen recommends people start planning early and look into other ways to generate revenue after they retire. Some people try to diversify their income by starting a business or investing in rental properties.
How Can I Pay for Healthcare Expenses Once I Retire?
With over 20 years of experience as a financial advisor, Darcy Bergen knows the healthcare after retirement question is the least asked among his clients.
Although people can start collecting Medicare after the age of 65, their healthcare-related expenses are likely to increase over time. Medicare only covers about 50% of medical expenses, and you will still be responsible for co-pays and other out of pocket expenses.
Darcy Bergen recommends you look into the possibility of contributing to a Health Savings Account (HSA). With a HAS, all of the contributions are tax-deductible and tax-free when you use it to pay for medical expenses.
How Much Money Do I Have in My Retirement Accounts?
According to Darcy Bergen, not everyone who approaches retirement age knows how much they actually have saved in their retirement accounts. If people don’t know how much combined retirement savings they have, how can they know where they need to be?
Darcy recommends meeting with a retirement planning advisor to review their current accounts and come up with a plan.
How Do I Plan on Spending My Retirement?
Well before retirement, Darcy Bergen advises people to visualize how they want to spend their retirement. Are you planning on traveling, moving to the beach, or downsizing? Your answers will affect how you plan and look at retirement. Once you figure out what your dream retirement looks like, you will be able to modify your retirement contributions.
Financial advisors like Darcy Bergen help clients answer these and other tough questions to ensure their clients have the life they deserve once they reach retirement.
As the owner of the Bergen Financial Group, Darcy Bergen has over 20 years of experience helping clients in various aspects of financial planning. Although many people don’t want to think about retirement in their 20s and 30s and don’t have a clue what an IRA is, Darcy Bergen advises people in all stages of life to stay informed. “Whether you are just entering the workforce, in mid-career, or approaching retirement age, it is important to begin planning for retirement now,” advises Darcy Bergen. Here’s Darcy’s list of quick rules to remember when considering opening an IRA in 2019.
The Maximum Contribution
In 2019, individuals can contribute $6,000 a year and $7,000 if they’re 50 or older. This is a jump from the 2018 numbers of $5,500 and $6,500.
It’s Possible for Individuals to Contribute to Roth and Traditional IRAs the Same Year
Individuals who qualify for both types of IRA accounts can make contributions to both in the same year. However, they need to ensure their combined contributions don’t exceed the annual limit
After 70 You Can’t Contribute to a Traditional IRA
While a Roth IRA allows individuals to continue making contributions to their accounts for as long as they can, a traditional IRA doesn’t work the same way. Once a person turns 70½ the IRS prohibits them from continuing making contributions to their traditional IRA.
Individuals Can Contribute to Their 401(k) and a Traditional IRA the Same Year
Those who are enrolled in a 401(k) plan with their employer can also make contributions to their IRA account. However, Darcy Bergen wants to make sure individuals know the contribution cannot exceed the annual limit.
No Minimum is Required When Opening an IRA
Some individuals don’t open an IRA account because they don’t believe they have the funds necessary to do so. However, there are no specific rules that specify a minimum amount to open an IRA. Brokers often set the minimum amount to open an account.
Roth and Traditional IRAs are Not Created Equal but Serve a Similar Purpose
Darcy Bergen also sees a lot of confusion when it comes to traditional and Roth IRAs. For starters, in a traditional IRA, an individual can make deductions on the income when filing their federal and state taxes. The money will be subject to taxes once the individual retires. Roth IRAs, on the other hand, don’t qualify for deductions but the money is tax-free upon withdrawal.
For more of Darcy Bergen’s financial tips and IRA information, check out darcybergen.co.
An Individual Retirement Account, or IRA, is one of the best ways to plan for retirement, Darcy Bergen explains, especially because of the tax advantages offered to account holders. Many types of IRAs are available – Traditional IRAs, Roth IRAs, Stretch IRAs, SEP IRAs, and more – but your income, age and marital status will help dictate which type of IRA is best for you.
Unlike 401k plans, which must be established by an employer, anyone can open an IRA. Darcy Bergen details the rules of IRA contributions and withdrawals below.
Unmarried individuals who file a tax return as a single earner and who have a modified adjusted gross income of less than $122,000 may make the full annual contribution to an IRA, which is $6,000 per year ($7,000 if you’re 50 or older). People with incomes over $122,000 but less than $137,000 can make a partial contribution to an IRA.
Married couples who file a joint tax return and have a modified adjusted gross income of less than $193,000 combined may also make a full contribution, while couples earning more than $193,000, but less than $203,000, can make a partial contribution.
Traditional IRA vs. Roth IRA
One of the major differences between Traditional IRAs and Roth IRAs is that with Traditional IRAs, federal and state tax deductions can be claimed, but once an individual retires, withdrawals from Traditional IRAs are taxed at ordinary rates.
Contributions to a Roth IRA are not tax-deductible; however, the earnings and withdrawals are typically tax-free, so if you can wait for your tax break, a Roth IRA is an appealing option.
“To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and distribution must take place after age 59½,” Bergen adds.
It’s also important to know that Roth IRA contributions cannot be made by taxpayers with high incomes. Other restrictions apply: “To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and distribution must take place after age 59½,” Bergen explains.
An inherited, or Stretch, IRA is allocated to a beneficiary by a parent, grandparent, spouse or others to hand down their IRA to a benefactor. The benefits of a Stretch IRA are numerous. Some advantages include avoiding sizable tax brackets, paying taxes on a deferred basis, and that the preliminary decisions can be altered if needed.
The “SEP” in SEP IRA stands for “simplified employee pension.” These accounts are a useful retirement savings tool for small-business owners and self-employed people. Like a Traditional IRA, a SEP IRA offers a tax deduction on contributions. Your savings grow tax-deferred, and withdrawals in retirement are taxed at regular income tax rates.
Complicated tax laws can leave even a savvy investor confused. As a longtime financial adviser, Darcy Bergen recognizes that many individuals are confused by the tax exemptions and tax penalties regarding the withdrawal of IRA contributions.
Since IRAs are meant to be used after retirement, tapping into them before retirement can incur penalties. Traditional IRA withdrawals before age 59½ will require a 10% penalty on the distribution, in addition to federal and state taxes. At age 59½, an individual can withdraw funds from an IRA without penalty.
In most cases, once you reach age 70½, you must begin taking required minimum distributions. The original owner of a Roth IRA is not required to take minimum annual withdrawals.
Tax-free and penalty-free withdrawals also can be taken under certain other circumstances, such as in the result of the owner’s death.
To devise a strategy that works for your specific situation, a seasoned tax advisor or financial planner like Darcy Bergen can help you chart the best course for your future.
For more information about IRAs, go to Darcy Bergen Financial at darcybergen.co.
When retirement is approaching, many people wonder if they still need life insurance. It’s likely that the children are grown and the mortgage is mostly, if not fully paid off. Perhaps there is also a nice lump sum of savings that has been collected throughout your life. With all of these affairs in order, why would someone choose to keep their life insurance into retirement?
Darcy Bergen, Financial Planner and founder of Bergen Financial Group, explains valid reasons to maintain life insurance coverage throughout retirement as part of your financial plan.
1. Gifting Wealth to Heirs
Keeping life insurance is one of the easiest ways to pass on assets to future generations and establish a legacy. Darcy Bergen explains that if a life insurance policy is correctly set up, it can be free of income and estate taxes. This is also a great way to equalize estates among children, especially when illiquid assets are in play, such as a family business. With life insurance, it’s possible to have a cash amount equal to that of a business.
2. More Cash
If it’s determined that you no longer need the same high level of coverage, cash can be withdrawn from a permanent life insurance policy. Darcy Bergen explains that the money can then be added to the retirement fund. With this option, premiums are paid into the policy during the years of your career. However, it can turn into a source of retirement income along with other benefits like social security and a 401(k) plan.
3. Widow Support
Keeping a life insurance policy will provide a living spouse with support after one passes away. Financial planner Darcy Bergen notes that it can be used to pay for funeral arrangements or debt. Many people find that this provides ease of mind in retirement, knowing that life insurance benefits will help with any financial strain the family may encounter.
Depending on the life insurance contract, many policies allow people to access benefits before death. In the case of a chronic illness, such as Alzheimer’s, the policy may help cover additional expenses where the help of medical professionals is required part of the time. Darcy Bergen explains that people who are at higher risk of particular illness should look into maintaining their life insurance.
For those who are passionate about charitable giving, life insurance can make for an excellent retirement strategy. Financial planner Darcy Bergen explains that in the event of death, the life insurance amount can be transferred to a charity. With this option, all other assets can still be passed down to heirs. Darcy Bergen notes that this option is called a “wealth replacement.”
It is always encouraged to weigh the pros and cons of maintaining life insurance. In retirement, the cost of keeping a life insurance policy is substantially more expensive due to increased age. In addition, underlying health issues may affect your eligibility.
If you were born before 1954, a little-known Social Security law could earn you and your spouse thousands of extra dollars in retirement. But according to financial planner Darcy Bergen of Peoria, Arizona, you must act soon, or you could miss the chance to benefit from this strategy.
Darcy Bergen is a fiduciary who has two decades of financial planning experience in the Phoenix area, with an office north of downtown in Peoria, Arizona.
Get Extra Social Security Benefits While You Can
It’s all perfectly legal. Although the government is phasing out the “Restricted Application” program at the end of 2019, most people with a spouse who reach the government’s full retirement age of 66 by Dec. 31 are eligible to apply for a Restricted Application before the end of the year. Once the calendar flips to 2020, it will be too late.
Once approved, a Restricted Application allows the applicant to collect half a spouse’s full retirement age Social Security benefit without actually opening his or her own Social Security record. It’s complicated, but an older spouse could earn an 8 percent delayed credit on his or her own full retirement age benefit up until age 70. At age 70, the applicant could begin taking his or her own benefit, while realizing a 32 percent increase over the four-year period, Darcy Bergen explains.
The Restricted Application was eliminated in a 2015 bipartisan budget act, so unless you act now, you will lose the opportunity to take advantage of this phased-out government program.
How to File a Restricted Application
If you were born in 1953 or earlier and are considering filing a Restricted Application, there are four additional items of importance to be aware of:
- Your spouse must have already opened his or her own record and started claiming Social Security benefits.
- You must be at full retirement age (born on or before Jan. 1, 1954)
- This strategy is also available if you are divorced. Your marriage must have lasted at least 10 years and you cannot have remarried.
- You should consider speaking to a fiduciary about maximizing your retirement benefits if you will be filing a Restricted Application – before you file your Restricted Application.
If you meet the age criteria, it is imperative that you obtain full knowledge about this lucrative opportunity and learn what your options are to make your retirement more comfortable. Darcy Bergen can tailor a plan specific to your needs and help you from missing out on your maximum retirement benefits.
Since 2003, Darcy Bergen and his staff at Bergen Financial in Peoria, Arizona have helped clients find additional income for their households by planning properly and knowing their options.
Contact Darcy Bergen at Bergen Financial by calling 602-652-2665 to set up an appointment.
Parents are constantly working hard to make sure their child has everything they need before they move out or go off to college on their own. Countless hours are spent on studying and homework, playing sports, and learning lifelong lessons. While managing money is one of the most important aspects of our adult lives, many parents neglect teaching their children how to handle finances.
Learning financial responsibility at a young age can help children make wise decisions as a young adult, which in turn sets them up for a life of success. This can lead to a head start when planning for retirement and saving for large purchases like a home.
Darcy Bergen, founder of Bergen Financial Group, shares 6 tips for teaching children financial responsibility.
- Take your child grocery shopping. This is an opportunity to teach your kids how to balance a budget while shopping for your family’s weekly needs. Darcy Bergen suggests increasing their budget in increments to provide more opportunity for practice as they get older.
- Next, Darcy Bergen suggests giving them real money to manage. Start with small activities such as providing $5 to pick out a toy or snack. This not only helps them learn how to count change, but they will be more confident in the future. This will set them up to have a better idea of how far a dollar gets you.
- Teach the Save, Spend, Give model. For older kids, it is appropriate to do this in bank accounts and with budgets. With children, use three small jars with labels so the child can make decisions on how to allocate their money. Darcy Bergen recommends making them save for a goal that is far away to teach patience.
- Practice what you preach. If you lecture the importance of frugality and saving, but make purchases that are unnecessary and have very little savings, your children will more than likely not abide by what you preach. Children seek a role model and by showing them good financial habits, they will be more likely to pick up on those.
- Pay your children an appropriate rate for extra chores they do around the house. If your child offers to mow the lawn, pay them the amount that is fair for the job done. If the job was done poorly, teach them that unless the job is done correctly, they will not get paid. This increases the child’s exposure to how services should be performed in real life.
- For older kids, teach the importance of avoiding high interest debt. The average American has around $7,000 in credit card debt. The high interest debt takes a lot longer to get rid of and as a young adult, it is better to avoid it all together. Young adults do need to build credit, but they don’t need a high credit limit. Parents should help their children seek credit limits no higher than $500 and limit the number of cards to just one. Teaching good credit card practices is crucial for the young adult in this day and age.
Darcy Bergen explains how proper planning can help married couples make the most of their Social Security benefits.
Most people start saving for retirement at a reasonably young age and count on the benefits promised through Social Security. However, there are many different ways to claim those benefits. Using the wrong claiming strategy can cost thousands of dollars, which is why Darcy Bergen shares his insight on Social Security options for married couples.
To maximize Social Security benefits, Darcy Bergen suggests visiting the Social Security Administration (SSA) website. There, you can get an estimate of how much you’ll be able to start collecting at any age between 62 and 70. Click here to get your estimate now!
Identify the Higher Earner
It’s essential to compare the estimates between spouses very carefully. The individual with a higher income will be the one with the larger primary insurance amount (PIA). Darcy Bergen suggests having the lower earner collect first because the higher earner’s increases will be worth more!
In the instance where one spouse earns twice as much as the other, Darcy Bergen explains that it might be best for both to collect on the same spouse’s earning record. The longer the higher earner waits to collect, the higher the benefits will be for the couple. This will also reflect a higher survivor benefit, at the death of the first spouse.
Many factors can impact the payout of Social Security benefits. Darcy Bergen believes it’s important to have the help of a professional when navigating all the possibilities looking for the best strategy.
Many people don’t realize that working while collecting Social Security payments can reduce their benefits. In addition, government pensions, federal & state taxes, and Medicare premiums can decrease benefits.
62 by 2015?
An advanced Social Security claiming strategy may be available if you or your spouse became 62 years old by the end of 2015. Darcy Bergen explains how it works.
If one spouse is younger, and under the age of 62, they can claim benefits on their personal earnings record. The spouse who is 62 or older waits to reach full retirement age, and files an application intended only for spousal benefits. This allows the couple to temporarily claim benefits based on the younger spouses earning record. (*note, the younger spouse must have claimed their benefit, opened their record for the older spouse to be able to claim spousal benefits on their record).
Darcy Bergen notes that the real savings happen when the older spouse then turns 70. They can now claim benefits based on their earnings record, which will have increased by approximately 132% of what they would have been qualified for at FRA.
For more information on your retirement strategy, contact Darcy Bergen at Bergen Financial today!
The Social Security benefits act was established in 1935. Back then a lump sum was allocated to recipients until the law was changed in 1940. A lot of things have changed over the last 84 years, and many individuals are not as up to date on the basics of Social Security as they might need to be.
Darcy Bergen, the owner of Bergen Financial Group, offers conservative retirement planning strategies and products designed to provide guaranteed income for life while protecting their client’s principal from the fluctuations of the stock market with fixed annuity options. Did you know that every month, 59 million people receive a Social Security Benefit? More often than not, Darcy Bergen sees some confusion from his clients when it comes to Social Security, and he sheds light on the basics of the plan and benefits.
The Social Security trust fund reserves are 2.9 trillion. Most workers are eligible for Social Security benefits, but not all. For example, until 1984, federal government employees were part of the Civil Service Retirement System and were not covered by Social Security.² For a retiree, at their full retirement age, the maximum yearly benefit is upwards of $33,000, which is around $2,780 per month, but this depends on how much you made and contributed over the years of your employment.
Benefits are based on an individual’s average earnings during a lifetime of work under the Social Security system. The calculation is based on the 35 highest years of earnings. If an individual has years of low earnings or no earnings, Social Security may count those years to bring the total years to 35.⁴ Eligibility is contingent upon your work length and history. If you were born after 1929, you’d need to have worked for at least ten years to be eligible.
There haven’t always been cost-of-living adjustments (COLA) in Social Security benefits. Before 1975, increasing benefits required an act of Congress; now increases happen automatically, based on the Consumer Price Index. There was a COLA increase of 2.0% in 2018, but there was only an increase of 0.3% in 2017.⁵
Darcy Bergen helps people plan for retirement. He also offers courses for seniors, which provides sound advice on maximizing social security, life insurance, and retirement planning comprehensively.
For more information, you can check your Social Security earnings and see an estimate of your benefits on the website, www.ssa.gov.
Social Security Administration Sources:
2-5, 7-9. Social Security Administration, 2018
Darcy Bergen, CRFA
AZ License #: 7714485
The Bergen Financial Group Headquarters
20542 N. Lake Pleasant Rd. Suite 111
Peoria, AZ 85382