Jeffrey Levine
ABOUT Jeffrey

Jeffrey Levine, CPA/PFS, CFP®, CWS®, MSA is the Director of Advisor Education for Kitces.com, a leading online resource for financial planning professionals, and also serves as the CEO and Director of Financial Planning for BluePrint Wealth Alliance LLC. Jeffrey is a recipient of the Standing Ovation award, presented by the AICPA Financial Planning Division for [...]


Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

Published On
September 18, 2018
Jeffrey Levine

Jeffrey Levine (Forbes/Kitces.com/BluePrint Wealth Alliance) explains the retirement security opportunities and concerns presented by Donald Trump’s executive order on Multiple Employer Retirement Plans and required minimum distributions. Jeff also tells us how the IRS is throwing salt in the state and local tax deduction limit wound. Plus, will contributing to your retirement account lower your taxes and let you keep more take-home pay, and when should you file for Social Security or spousal benefits?

Show Notes


Joe and Big Al uncover Social Security Secrets on the latest episode of the Your Money, Your Wealth TV show – watch it online at YourMoneyYourWealth.com and download our FREE Social Security Handbook while you’re there!

Click here to download The Social Security Handbook

Now, today on the Your Money, Your Wealth® podcast, Forbes contributor, Kitces.com Director of Advisor Education and CEO of BluePrint Wealth Alliance, Jeffrey Levine explains the opportunities and concerns presented by President Donald Trump’s Executive Order relating to Multiple Employer Retirement Plans and required minimum distributions – now, what does this all mean for you? Jeff also tells us how the IRS is throwing salt in the state and local tax deduction limit wound. Plus, you asked and Joe and Big Al answered: will contributing to your retirement account lower your taxes and let you keep more take-home pay, and when should you file for Social Security or spousal benefits? Now, here are Joe Anderson, CFP® and Big Al Clopine, CPA.

:55 – Jeffrey Levine on Trump Retirement Security Executive Order: Small Business Opportunities and Concerns

JA: Alan, it’s that time of the show, bud.

AC: It is, it’s definitely my favorite time of the show – when we talk to somebody that knows more than us. In this case, it’s way more than us.

JA: You’re a CPA, Big Al, you’ve been a CPA for a long time.

AC: Yes, decades.

JA: And I guarantee you, our guest knows way more about taxes than you’ve ever learned in 30 some odd years.

AC: I don’t doubt that. (laughs)

JA: We’ve got Jeffrey Levine on, and I’ve been following Jeff for quite a while, and I’ve learned a lot. You think I’m a pretty good IRA guy.

AC: Yeah I do.

JA: And it’s all because of Jeff. I give all the credit to him.

AC: (laughs) Now I know your secrets.

JA: Yes. So without further ado, I want to welcome Jeffrey to the show.

JL: If you guys go on any longer  I’m going to have to ship a case of brandy over! This is quite the introduction!

JA: (laughs) We accept brandy, tequila, Pabst Blue Ribbon, I don’t care.

AC: (laughs) He’s partial to that.

JA: Jeff, we’ve got a lot of things we want to ask you. We want to pick your brain a little bit. President Trump just signed…

AC: An executive order.

JA: Thank you, Alan. I was going to say a bill, but it wasn’t even close to that. An executive order to try to maybe help with the retirement crisis that we hear about. Can you dive in a little bit of some of the changes that may or may not come down the pipe with some changes in the executive order there?

JL: Sure. So, the executive order really focuses on two things, after kind of going through what you’ve already talked about, the current retirement crisis, it talks about that we don’t have enough access to retirement plans today, citing a Pew Charitable Research study where roughly a quarter of workers today, full-time workers, are without access to a plan. And if you add in part-time workers that goes up to about a third. So many workers today, even though they’re employed, don’t have access to something like a 401(k) or 403(b) or some other type of plan where they would be able to save substantial amounts of money, more than let’s say just your typical IRA or a Roth IRA contribution of $5,500 per year or $6,500 if you’re 50 or over. So the two areas that are focused on are, one, an expansion of access to something called a M.E.P. which is short for multiple employer retirement plan, and we’ll talk about that in just a second. And the other is a change in the required minimum distribution rules. So we want to start with the first of those, the expansion of the MEP. MEP again is a multiple employer retirement plan, and in short, to simplify it, what it really is is a group of two or more unrelated employers that kind of pool their resources together and have one broad plan. And obviously the idea here is, like going to Costco or BJs or one of those big warehouses to buy stuff, you get it cheaper, typically, because you buy in bulk. Same thing here with retirement plans. If you bring together two participants and it’s a small business, or even five or ten, that’s a small amount of individuals to focus a plan for. If we can bring together, though, a hundred companies that each have five individuals, the idea is, with MEPs at least, that we can get economies of scale and drive down prices. Now, how much that will actually bear out in the future, we’ll see. There are MEPs today, but there are a couple of barriers to why they haven’t taken off, and one of the big ones is a Department of Labor position that was taken up a few years ago under the Obama administration that is referred to sometimes as the nexus rule or the connection rule. And what it says is, in order for the Department of Labor to treat a MEP as a single plan, which is the goal, here – we want it to be treated as a single plan – you have to have some connection amongst the businesses. So a shared trade group or something like that. And the executive order really looks to expand access, as well as some other bills that have been put forth, such as the Retirement Enhancement Savings Act earlier this year, the RESA bill – that was kind of proposed again this year, and it would eliminate a lot of that nexus rule. So you might have an employer that is a law firm pooling together resources with a contractor, with a doctor’s office, with completely unrelated professions. And again, the theory is that would allow groups to band together and create further economies of scale and drive down prices. So that’s the first element. And that would really change the 401(k) marketplace dramatically if that does come to pass. We could see all sorts of interesting changes happening there. The second aspect of that executive order was to revisit the distribution rules on the required minimum distribution rules that we have today. Now currently, beginning at 70 and a half, individuals need to begin taking money out of their IRAs and typically also their retirement plans, like 401(k)s, 403(b)s, etc. Though there are some exceptions on that side. And when they start to take the money out there’s a percentage that they have to take out each year. It generally starts at about 3.65% and goes up from there. And each year it’s a little bit more, it’s a little bit more, it’s a little bit more, and that’s based upon a life expectancy table that the IRS has been using since 2002. Now, over the last 15 years, people are living longer. So the idea here in the executive order is to say, “let’s take a look at this. Let’s revisit this, and if people are living longer, let’s require them – not force them to take out money faster – but let’s require them to take out less each year, potentially, so that they can continue to have those savings to go on for longer in life.” And again, whether or not we see that happen, that could be a matter of simple interpretation by the Treasury Department. They could just release new regulations – that would not necessarily take new legislation. So I think that’s much more likely to happen, although I would posture that I think it’s impact for a lot of people will be minimal. And the reason why is, most people end up using their retirement savings, or a substantial portion, to live off of. So they’re taking that money out anyway. The big benefit if that happens will be for the very wealthy and the really good savers, because they’ll be able to defer RMDs longer, and take out less, and see less of a tax bill on that retirement savings. So for your listeners out there that have done a great job saving, they’ve put away $500,000,  a million dollars in a portfolio, that could be substantially good news for you, because it could dramatically decrease your tax bill.

JA: Yeah that’s interesting. We look at studies of the average balance of someone’s overall retirement account. And when it comes to required distributions, it really only affects the people that have saved a lot of money, because Al and I’ve seen it, it will blow people up in a lot higher tax bracket because really good savers are terrible spenders, so they continue to accumulate these dollars. So this bill, basically,  80% of the population kind of blows through their overall retirement. They take out way more than probably the minimum, but I think it would really help the people that have saved a lot more.

JL: I totally agree. In fact, there’s a really good report out from the Employee Benefit Research Institute, just came out last month I think in the second week of August, on how required minimum distributions actually drive withdrawals from IRAs. In fact, I think that was the actual title of the of the paper: How Required Minimum Distribution Rules Drive IRA Withdrawals. And they talked about precisely that – how people are taking that money out, and how much of a role those minimum distribution rules we have today factor into that decision of how much to take out.

AC: So let’s go back to the multiple employer plan. I think the goal there is to reduce costs because you get economies of scale as you mentioned. Do you see that actually happening? Is this a good thing? Is it a major thing? Would it be a kind of minor change? How do you see it?

JL: So I think it really depends on how the administration would go about implementing that. I think there are some real opportunities, and I think I have some real concerns. So one of the concerns would be that we allow these MEP plans to have no common nexus and all of a sudden Fidelity, Schwab, Vanguard, T.D. Ameritrade, Pershing, your big players in the market, end up with 90% of the business there, and now, because they have so much control over the market, they have better pricing control. Because if you are a business and you start using a MEP, it’s not such an easy thing to just stop it. You can stop contributions if you want, or stop participating, rather, inside the MEP, but the termination, or the way to end that participation, is not the same as it is when you close down your own plan. Typically if you’re a small business and you start a 401(k), and you decide, “this plan just isn’t for us,” you terminate the plan. In general, it’s considered a distributable event. So you have a scenario now where the individuals inside the plan can take that money, roll it over to their own traditional IRAs or other accounts, etc. and you’re pretty much absolved of ongoing fiduciary obligation as the employer. You don’t have anything to watch anymore, there is no plan. But with a MEP, when you actually terminate your involvement in the MEP, the MEP itself does not necessarily terminate. And so there may not be that distributable event. Employees may still have the money that they put aside into that plan stuck in that plan if you will. And if that’s the case, the employer still has ongoing fiduciary obligation and oversight over that MEP. So it potentially diminishes the value. There are ways to get around that, or to take multiple steps to try and reduce that from happening, such as the business spinning off their assets into their own plan and then terminating that plan. But you can see here already, we’re talking about multiple steps which means time, which means money for businesses, so that could be the danger. On the bright side, we could see a scenario where individual advisors like yourselves are empowered to create their own plans. And now we just have the ABC company 401(k), or multiple employer retirement plans, that could be tremendous. We would have a scenario where you could have thousands of advisors throughout the country all having their own plan and creating their own investment lineup and own plan provisions and educating individuals in different ways. So that would just be phenomenal. I could see that really improving the retirement sector and driving down costs, and just like today, the increased competition amongst advisors has driven down costs for consumers, I could see that being further enhanced if we saw those type of multiple employer retirement plan arrangements created.

JA: I think this is way more important than extending RMDs, to be honest with you. If you take a look, all right, Jeff, you and I are in the same industry, and we have the same salary, and we each work for our same company for 30 years. But you work for a company across the street and you have a 401(k) plan and I do not. At the end of that 30 years and we’re both looking to retire, I guarantee you – and I know we can’t guarantee anything in this business, but I would guarantee you, you have way more money saved for retirement than I have. Because I’m stuck with an IRA that I have to go set up, find an advisor or go online or do some things that I’m not familiar with, versus you can check a box and put in $18,500 or $24,500, or whatever the case may be depending on the plan. And it’s automatic, easy savings. If I don’t have access to that, I’m not prepared because a lot of individuals are just not equipped to either save, or know how to do it, or go about doing it, because I guess we spend before we save for ourselves. So something has to be done, right?

JL: We’re creatures of inertia, right? If you look at some of the big advances that have been made in savings, a lot of it is due to things like auto-enrollment and auto-escalation of 401(k) contributions. We’re just – it sounds not really nice to say, but – we’re just lazy. That’s really what it comes down to. And so the easier we can make it for people to save, the more we can give them access to just say, “you don’t have to write a check or do anything. We’re just going to take it right out of your paycheck each month. You don’t have to do anything.” We’re likely to see more people save, and more people save in higher amounts. The easier we can make it for people, the more likely that they are to take advantage of those options. For sure.

Next week on Your Money, Your Wealth®, Joe and Big Al are talking all about rental real estate: Cubert from AbandonedCubicle.com shares the pros and cons of using vacation rentals on his path to FIRE – that is, financial independence, retire early – and the fellas answer your questions about real estate investing: like, can it help you reduce taxes in a high tax state, and how can you minimize capital gains when selling rental property? Then in October, Joe and Big Al will go in-depth on IRAs: contributions, mistakes, and more actionable advice to help you retire successfully! Listen and subscribe to the podcast on your smartphone, device or desktop computer for free at YourMoneyYourWealth.com, and enter your email address to subscribe to the podcast newsletter so you don’t miss a thing. Now, more with Forbes contributor and Kitces.com Director of Education Jeffrey Levine.

14:52 – Jeffrey Levine: IRS Throws Salt in the SALT-Deduction-Limit Wound

AC: Let me ask you about another change that just happened late last month. The state and local tax (SALT) deduction. So we know with the new tax law that now individuals are limited to deducting $10,000 between their state taxes and property taxes. And some of the high-cost states, like California where we live, are trying to look into a way to turn that into a different category, like charity, for example, to take the deduction. But the IRS came out with some new regulations recently.

JL: Yeah, yeah. I call this “the big middle finger to the blue states.” (laughs) It’s a $10,000 cap, and that is not sufficient for a lot of individuals in places like New York, California, New Jersey, Connecticut, a lot of high tax states. And it’s not just the income tax that high in those states, it’s property taxes as well. My property taxes – and I’ll be quite honest, I live in a modest home. Nothing special, it’s not a McMansion or anything like that, it’s just a regular home in a regular neighborhood in New York. And our property taxes are basically $1,000 a month. So that means that I can’t even deduct the full value of my property taxes before I even get to one dollar of my income taxes for the state. So it’s not a good situation, and you hear people in other places say “well, it’s not fair, why should the federal government subsidize these other states with the fact that they have high taxes,” and there is an argument to be made there, but then you also get into arguments where states like New York, for instance, and I’d have to look at California, off the top of my head, I’m not sure, but New York, for instance, ends up putting in much more, even with the SALT deduction at full – like last year New York ended up subsidizing the federal government far more than it got back, let’s say, in its proportionate share of resources. So there’s a good political debate there, but in terms of actionable information that your listeners need to know, it’s simply that that $10,000 cap is a hard cap. As you mentioned, there was some  thought amongst a number of states, in fact several states had actually created programs where individuals would be able to donate money into a state charity, and when that donation occurred it would be for federal tax purposes, a “charitable donation,” which is not subject to that $10,000 cap we have on the SALT deduction, but for state purposes, the state would grant those individuals a state income tax credit. So it would be like the best of both worlds: paying your taxes at the state level, and then getting a charitable contribution at the federal level. The IRS cracked down on that. And frankly, that was not really a surprise. It was something we expected, they had hinted at that earlier in the year, and we’ll continue to see other guidance. In fact just yesterday, the Wall Street Journal put out an article on some further guidance that the IRS had on this, clarifying that this limit on the $10,000 SALT deduction, and the fact that you cannot deduct amounts going to the charity as a charitable contribution if you’re getting a state tax credit for it on top, doesn’t apply to businesses. So business owners may have a little bit of wiggle room here and an out. And so we could see states like California, New York, etc. create opportunities for business owners to make that deduction. It would further create a dichotomy between individuals and business owners, so people who are not business owners and those who are, but that’s essentially where our tax code has been trending lately.

JA: A couple last questions for you, Jeff. With the new tax reform that was signed in last year, now that we have new rates and with the SALT and everything else, what are like maybe three or four key planning ideas that you would have in regards to retirement accounts? Do you think Roth conversions right now is probably more important than ever, given the low rates that we have? Or are there other strategies that you might want to share?

JL: Sure. I mean that would be a prime candidate, looking at Roth conversions. Now, interestingly enough, we’ve got lower rates for most people, even in high tax states like California, a lot of people are going to end up paying less in tax than they did last year. Depending upon what study you want to subscribe to, maybe 70 or 80% of people will have lower taxes this year. And so you want to see what your individual tax situation looks like. If it’s going to be lower for the next six or seven years, through 2025, these might be opportune years to make those Roth conversions. Now the flip side of that argument though is that one of the other changes made by the Tax Cuts and Jobs Act is that the Roth conversion is now a permanent thing. It used to be where you could go back and kind of change your mind after the fact up until October 15th of the year after you converted. That was eliminated. So now as soon as you make that Roth conversion, the income that’s added to your tax return as part of that conversion is there no matter what. So Roth conversions for a lot of people today make more sense than ever before because of those lower rates. But at the same time, if you get it wrong, the price you pay will be much more substantial because you can’t fix it like you could in previous years. So that’s the first thing. The second thing is also looking at – many clients work with advisors like yourself, who may manage assets for them and help them with that part of their financial planning. And under the Tax Cuts and Jobs Act, the miscellaneous itemized deductions are eliminated through 2025 as well. So one of the things that individuals might want to do is take a closer look at how they’re paying their investment advisory fees: are they having it deducted directly from their account, or are they paying it with outside funds? And then, of course, looking at how people can take advantage of the recent changes. So things like the new 199A deduction, or your listeners may have heard that referred to as the small business deduction, the 20% pass-through deduction, it’s going by a lot of names. But it’s one of the most powerful tax deductions I’ve seen in recent years. And any one of your listeners who’s got a schedule C, a schedule E, they’re a partner in a partnership, they own an S corporation, or they run a sole proprietorship, this is a tremendous opportunity for them – but there’s also, again, a tremendous cost of not understanding these rules, because, during the phase-out range, where this deduction can get eliminated for some people, it’s an unlimited amount for everybody, some people can see this deduction phased out and the federal taxes alone in that phase-out range, which is about $100,000 for married couples filing a joint return, people see their tax bill go up over $47,000 just at the federal level. So take a state like yours, California, where you may tack on another 10% on top of that? We’re talking about nearly $57,000 of taxes for making an extra $100,000. You’re giving 60% of it away. At that point, just about anything you can do to lower your tax bill is a good thing. I mean, I’d rather give $10 to charity than $6 to the IRS, wouldn’t you?

AC: (laughs) I would. Yeah, I think you’re right. And I think a lot of small business owners don’t understand with this phase-out periods, you have a temporary period where your effective rate is so much higher, so if you come up with more charity or self-employed retirement plans or things of that sort, you may save a lot of tax money.

JL: Absolutely. Any one of your listeners who has not yet reached out and talked to a financial planner or a tax advisor yet to see how they can take advantage of these changes is missing out on, potentially, a huge opportunity. It’s that old Spiderman quote, “with great power comes great responsibility.” It’s kind of like the tax equivalent of that. We’ve got unbelievable power now to take advantage of changes. But you’ve got to be responsible for it yourself. No one else is going to take this action for you. If you don’t reach out and contact a professional to help you, you’re going to miss something – there’s just too much going on. That’s why both of you are on this show together, right? Because it’s too much for any one person to know about everything. So your listeners, if I can impress upon them one thing, it would be contact someone today and make sure that you look at this because it is the most unprecedented changes to the tax code in 30 years. And you don’t want to be left holding the bag knowing that you could have done something to save yourself money. The IRS is not going to knock on your door in five years and say, “you missed out on this strategy, here’s some extra money back.” It’s just gone forever.

JA: We’re talking with Jeff Levine. Jeff, where can people get more information on you, read some of your stuff, and get educated?

JL: Yes sure. So I am the Director of Advisor Education over at Kitces.com, so they can go there and read articles that www.Kitces.com, I also am the CEO and Director of Financial Planning for Blueprint Wealth Alliance, a registered investment advisor out in New York, and they can simply go to our website, which is DesignMyRetirement.com. So that’s awesome, I appreciate that, guys. And again, to your listeners, just please, do me that favor – don’t waste that tax money. Don’t waste that tax money.

JA: (laughs) Alan, did you know that Jeff was 40 Under 40 by InvestmentNews?

AC: There you go.

JA: I was 40 Under 40 on the San Diego Business Journal. (laughs)

AC: It’s still decent. It’s not national. (laughs)

JA: Not even close. (laughs)

JL: Kindred spirits.

JA: Alright, we gotta take a break. Jeff, thanks so much for joining us.

If there is someone you’d like to hear on Your Money, Your Wealth, if you have any other suggestions that would make the podcast even more valuable to you, or if you’ve got money questions, we want to hear from you! Call (888) 994-6257 or email your comments, suggestions and money questions to info@purefinancial.com 

25:15 – Can I Increase 401(k) Contributions to Lower Taxes and Keep More Take-Home Pay?

JA: We got an email from Ian. He’s in San Diego. His question is, “if I increase my 401(k) contributions, will that enable me to have less taxes taken out and more take home, without having to owe more at the end of the year?” What say you, Alan?

AC: I think, Ian, you might be a little confused. So when you add more to your 401(k), you will have less taxes withheld, but then you have to have money withheld for the money you’re putting into the 401(k). So your take-home pay will go down even though your taxes are going down because you’re putting some of your otherwise salary into a 401(k).

JA: But here’s what I would look at, Ian. If you contribute $100 into your 401(k) plan per month, it’s not going to feel like $100. You know what I mean? Your take-home pay is going to be reduced, but it’s not a dollar for dollar reduction of what you’re going to put in the 401(k) plan.

AC: Yes, I completely agree with that. So let’s say you’re in a 25% tax bracket for example. So your taxes are going to go down $25. But you do have to put $100 into the 401(k), so your net pay is going to be $75 less because you’ve got money going to the 401(k). But it’s not the hundred. When you add the $100 to the 401(k) you get a tax break. So the idea here is, with a lower salary, because you’re deferring some of your salary to 401(k), your taxes will be lower. That’s why less taxes are withheld. So all things being equal, you should be in the same spot as you would have been, come April 15.

JA: So if you want to change your withholdings and say, “hey, now I’m contributing X to the 401(k) plan,” you potentially could change your withholdings a little bit and maybe you can increase your take-home, but it’s not going to be more than before you contribute to the plan.

AC: Yeah your net take-home pay is going to be less, because you’re saving money. You’re putting some of your salary into a 401(k), so in other words, you’re not receiving it currently. Your taxes will go down, but your net pay will go down as well.

JA: But yes, if he’s thinking about, “man, I’m going to owe quite a bit at the end of the year”… his question was “without owing more at the end of the year.” If he feels that he’s going to owe more at the end of the year, then yes, you want to contribute to the 401(k) plan because that’s going to reduce your overall taxable income. But that being said, just know that your take-home pay is going to be less.

AC: Yes. All I’m saying is with your withholding, they’re trying to match what your future tax is going to be. So the fact that you have lower taxes going in, you’re also going to have less income that you’re paying tax on. So it should work out. I will give one caution though to our listeners, and many experts are cautioning people that the withholding tables that changed in February may be not withholding enough, and some of us may be surprised on April 15th.

JA: A lot of you are going to owe a lot of taxes. (laughs)

AC: Potentially. I don’t know, “a lot,” but if you’re expecting a $500 refund, it may not be there.

JA: Nope. There goes your vacation, there goes Christmas.

28:28 – When Should I File For Social Security or Spousal Benefits?

JA: Email from Susan in Escondido, Alan. “I am currently 61 and my husband is 62. My husband is planning on waiting to take his Social Security at age 70. I have worked myself enough to receive a small amount of Social Security. I am trying to decide if it is worth turning on my Social Security at age 62 instead of waiting until I turn full retirement age. When my husband files at age 70, I believe I can then receive spousal benefits, which would be a combination of my current reduced amount plus the difference between my normal retirement age amount and the spousal amount. Is this correct? I know I will receive a reduction on my Social Security if I start at age 62, but will the spousal part of the Social Security be reduced also? Sorry, this is sounding confusing, but Social Security is so confusing.” Susan, great question. She’s been doing some homework here, Alan.

AC: She has.

JA: She must have been reading Kotlikoff’s book.

AC: Could be. So I will say, I’ll let you do the meat but I’ll do a couple of things, and that is: so you can take your spousal benefit, as long as your spouse is taking their benefit – so that’s the qualifying part. So I’m assuming that when you’re saying your husband is going to file at age 70, then you’ll be of the age where you can actually be taking Social Security. And so yeah, you can take it as early as 62, but you will receive reduced benefits.

JA: (laughs) Great answer. That was a really good answer.

AC: It was perfect. I didn’t say a thing that you could say would be wrong. I didn’t really answer the question but I set it up for you. (laughs)

JA: All right, Susan, let me help you out here. So she wants to take her benefit at age 62. Her husband’s pushing his benefit off to age 70, and I’m assuming that when he turns age 70, you’re going to be at full retirement age. So, you take your benefits at age 62, the system works like this. You have your own benefit on your record, and then there’s going to be a separate benefit which is called the spousal benefit. If your husband was already collecting his benefit, you could claim the spousal benefit. You could claim your benefit or the spousal benefit at age 62. It would be a deemed benefit. You wouldn’t be able to switch back and forth if you took it at 62. But I think where her caveat falls is that she can’t claim the spousal because her husband is pushing his benefit off until age 70. So she is deciding to take her benefit early at age 62, at a reduced benefit, then when her husband claims his benefit, the spousal will come on. Because I’m assuming the spousal benefit is higher than her own benefit.

JA: Yeah, which is what she said. With that being said, there are two benefits. Her benefit, plus the spousal benefit. The spousal benefit is an additional benefit that will go on top of her own benefit on her own record to shore her up, to make it a half of her husband’s benefit at his full retirement age. Does that make sense?

AC: Yes, I think so.

JA: OK. But, she’s claiming her benefit at age 62, so her benefit on her own record is going to be reduced. The spousal benefit will not be reduced, because she is claiming the spousal benefit at full retirement age, because she didn’t have a choice – she couldn’t do it because her husband hadn’t claimed yet, until his age 70. So yes, it will be a reduced benefit, but not as reduced if the husband was already claiming his benefit.

AC: Now what if the husband’s already 70 and claiming?

JA: And she’s 62? Then she would receive 33% of his full retirement age benefit.

AC: So, in that case, there would be a reduction of the spousal.

JA: Correct. Next week, Cubert from AbandonedCubicle.com! This is going to be awesome. He talks about how he’s using vacation rental and totally going to leverage himself up to the hilt and in three years he will be broke. Subscribe to our podcast and listen at YourMoneyYourWealth.com

AC: Wow. Is that an opinion or a fact?

JA: I don’t know. I would say an opinion.

AC: (laughs) Yeah I would say that’s an opinion.

JA: You know when you start seeing people flipping homes that have no experience flipping homes, and people retiring at age 46 with a bunch of leverage that doesn’t necessarily have an experience in real estate? You know what, it reminds me eerily of 2008.

AC: It can be risky.

JA: All right, we’ll see you next week folks, the show is called Your Money, Your Wealth®.


Special thanks to today’s guest, Jeffrey Levine. Find links to Jeff’s articles in the show notes for this episode at YourMoneyYourWealth.com

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