New Social Security Rule Will Hurt Women by Eliminating Benefits Options

James Lange, CPA/Attorney, Advises Married Couples Ages 62-70 to Apply and Suspend NOW. After April 29, 2016, it will be too late!

In early November, President Obama signed the Bipartisan Budget Act of 2015 into law and the repercussions are devastating to the married women of our country.

Pittsburgh – December 16, 2015Lange Financial Group, James Lange, Pittsburgh, Social SecurityMarried women, statistically the widows of the future, will pay a high price due to the changes that the Bipartisan Budget Act of 2015 has made to Social Security. Pittsburgh attorney and CPA James Lange takes action by releasing audio and video presentations as well as transcripts and a report that will help couples ages 62-70 navigate this new rule and protect their benefits while they still can!

SOCIAL SECURITY SURVIVOR BENEFITS ARE CRITICAL TO WOMEN

The financial well-being of widows is often dependent upon the choices that are made while their spouses are still alive. Spousal and survivor Social Security benefit choices can mean the difference between living comfortably in retirement and falling under the poverty line for women whose spouses leave them behind. Widows are commonly younger than their deceased husbands and the Social Security benefits they have earned, especially in the Boomer generation, are commonly less than that of their deceased husbands. This means that a widow will depend on collecting survivor benefits, often for many years, based on the benefits to which their deceased spouses were entitled.

“One of the best things a husband can do to protect his wife in widowhood is to maximize his own Social Security benefits. One technique that we use with our clients is apply & suspend.” James Lange of Pittsburgh-based, Lange Financial Group, LLC comments. “The law prior to the Bipartisan Act allowed the husband to apply for, and then suspend collection of his benefits, while allowing his wife to collect a spousal benefit. It was a win-win for our clients!”

This technique was used strategically to maximize the husband’s and wife’s long-term benefits. That, unfortunately, is coming to an end, with the exception of certain couples who take the appropriate action between now and April 29, 2016. For many couples, the income stream from spousal benefits in the previously allowed apply and suspend technique made it possible (or at least more palatable) for the husband to wait until age 70 to collect Social Security, thus maximizing their benefits.

“This new law cuts off that income stream, making it if not impossible, at least more difficult, for husbands to choose to delay collection of their benefits.” Lange warns, “Unfortunately, it is the widows of these husbands who cannot maximize their Social Security benefits who will be left in reduced circumstances for the rest of their lives.”

JIM LANGE’S ADVICE

DO NOT WAIT. Congress has eliminated one of the best Social Security maximization strategies. Fortunately, some recipients may be grandfathered already and others could be grandfathered if they act between now and April 29, 2016. Others will have to make do with the new laws. In either case, now is the time to review your options. We have posted a one hour audio with a written transcript explaining the old law, the new law and the transition rules. Readers can go to www.paytaxeslater.com to access this audio and transcript.

ABOUT JAMES LANGE Jim Lange, Social Security, Pittsburgh

James Lange, CPA/Attorney is a nationally-known Roth IRA and retirement plan distribution expert. He’s also the best-selling author of three editions of Retire Secure! and The Roth Revolution: Pay Taxes Once and Never Again. He hosts a bi-weekly financial radio show, The Lange Money Hour, where he has welcomed numerous guests over the years including top experts in the fields of Social Security, IRAs, and investments.

With over 30 years of experience, Jim and his team have drafted over 2,000 wills and trusts with a focus on flexibility and meeting the unique needs of each client.

Jim’s recommendations have appeared 35 times in The Wall Street Journal, 23 times in the Pittsburgh Post-Gazette, The New York Times, Newsweek, Money magazine, Smart Money and Reader’s Digest. His articles have appeared in The Journal of Retirement Planning, Financial Planning, The Tax Adviser (AICPA), and other top publications. Most recently he has had two peer-reviewed articles published on Social Security maximization in the prestigious Trusts & Estates magazine.

To learn more, or sign up for their newsletter, visit www.paytaxeslater.com.

Live Gay, Retire Rich is Now Available on Amazon!

Live Gay Retire Rich by James Lange

I’m excited to inform you that my latest edition of Live Gay, Retire Rich, endorsed by the top IRA, Social Security, and legal experts in the country, is now available on Amazon. http://amzn.to/1LAIbAY

Live Gay, Retire Rich! is the Second Edition of Retire Secure! for Same-Sex Couples, now updated to include the positive holding of the Supreme Court Case Obergefell v. Hodges and its implications.

For example:

There were two gay couples with identical financial resources.  They each had the same amount of money, identical investments, identical taxes, and identical earnings history for Social Security purposes.   The first couple didn’t do any planning. The second couple followed the advice offered in Live Gay, Retire Rich! Using reasonable assumptions, the first couple runs out of money in 28 years while the second couple has $1.4 million and their portfolio continues to grow.

What was the difference? The first couple didn’t follow our advice; the second couple did. The first couple never got married, started receiving Social Security benefits at 62, didn’t make any Roth IRA conversions, and didn’t use key IRA and retirement plan estate planning strategies recommended in Live Gay, Retire Rich!  The second couple did get married, used our recommended apply and suspend technique for Social Security, did a series of Roth IRA conversions, and used the key IRA and retirement plan estate planning strategies we recommend.

I strongly urge you to pick up my new book on Amazon. http://amzn.to/1LAIbAY.
Regards,

LANGE1_Blue

James Lange
CPA/Attorney

P.S. Our assumptions include a Social Security technique, apply and suspend, that may not be available for much longer. Get your copy today and find out if this strategy could work for you, before it’s too late!

____________________________________________________________________________

Praise for Live Gay, Retire Rich!:

This is an exciting time to be part of the LGBTQ community in America and it also is an important moment to take advantage of the financial opportunities that are now available to us. Jim Lange’s book Live Gay, Retire Rich! is an easy-to-understand and valuable tool that will help us navigate the financial waters and successfully plan for our future.
Billie Jean King, Founder, Billie Jean King Leadership Initiative

Jim has generously pledged the proceeds from this book to Freedom to Marry and naturally, I appreciate that. But what I really appreciate is his bringing his expertise to bear on helping the couples for whom we have already won the freedom to marry.
Evan Wolfson (from the foreword), Founder and President, Freedom to Marry, A national campaign dedicated to marriage equality for same-sex couples

Jim provides a comprehensive road map to all the new retirement and estate planning strategies that were not previously available to same-sex couples. But they are now, and couples who wish to take advantage of them to enhance their options, increase their wealth, cut their taxes and live with financial security should dive into this gem.
Ed Slott, CPA, America s IRA Expert

Jim Lange has written a wonderful book for all committed couples same-sex or opposite sex who are considering marriage. Once you reach retirement age, marriage becomes the best way of preserving income and wealth for the partner who survives.
Jane Bryant Quinn, Columnist, AARP and Editorial Director, Daily Voice Author, Making the Most of Your Money NOW

Additional testimonials from Burton Malkiel, Kaye Thomas, Jan Cullinane, Mel Lindauer, Brian Tracy, and Sidney Kess and more information about Live Gay, Retire Rich available at www.outestateplanning.com. ____________________________________________________________________________

About Jim Lange

James Lange, CPA/Attorney has been helping same-sex couples since 2002.  He is a nationally recognized Roth IRA and retirement plan distribution expert and understands the best techniques for married couples to get the most out of Social Security.  The combination of his financial expertise as well as an understanding of the changing legal status of same-sex marriage makes Jim the logical person to write Live Gay, Retire Rich which can now be purchased at http://amzn.to/1LAIbAY

He’s also the best-selling author of the first and second edition of Retire Secure! with dozens of testimonials from the nation’s top IRA, investment, and estate planning experts and The Roth Revolution: Pay Taxes Once and Never Again.

Jim’s recommendations have appeared 35 times in The Wall Street Journal, 23 times in the Pittsburgh Post-Gazette, The New York Times, Newsweek, Money magazine, Smart Money and Reader’s Digest. His articles have appeared in The Journal of Retirement Planning, Financial Planning, The Tax Adviser (AICPA), and other top publications.  His article, Optimizing Social Security Benefits for Unmarried Couples, was just published in Trusts & Estates magazine.

 

LGBT Couples Need New Financial Advice!

James Lange, CPA/Attorney, highlights potential financial benefits available to LGBT couples who marry

Pittsburgh – April 28, 2015 –The United States Supreme Court is hearing arguments today on the issue of marriage equality. This historic case should be decided by June.

The two likely possibilities of the decision are:

  1. Supreme Court says all states have to offer same-sex couples the right to marry.
  2. Supreme Court says all states have to recognize marriages performed outside their state.

In either case, all states will likely have to recognize same-sex marriage, even if the couple has to travel to get married in a state that does recognize same-sex couples and then return home.

WHAT ARE THE FINANCIAL BENEFITS OF MARRIAGE?

Retire Secure! For Same-Sex Couples Cover 7x10-2According to James Lange, a best-selling author, Certified Public Accountant, attorney and president of Pittsburgh-based Lange Financial Group, there are potential benefits that many people know about including the “marriage bonus” when preparing tax returns and health benefits being extended to new spouses. But what many people do not consider are 2 enormous financial benefits of marriage for couples who are 60 and over:

1. Marriage can increase your Social Security benefits: There are options to increase your total household Social Security benefits when you are married. Spousal benefit rules impact a couple while both are alive, and the survivor benefit available is impactful after one spouse passes. Over time, the difference can be hundreds of thousands of dollars or even millions of dollars. This could be even more important if one spouse has a strong earnings record and the other spouse does not.

The graph below shows the difference between a couple not getting married and taking their Social Security benefits at age 62, versus getting married and utilizing a technique called Apply & Suspend for their Social Security. The difference is going broke in your 90s versus having more than $2 million. Image1

 

2. For purpose of inheriting money, most states and the federal government impose less inheritance and income taxes on assets left to a spouse than on assets left to a non-spouse. After Windsor (a previous case), however, the IRS will recognize same-sex marriages for federal income and estate tax purposes as long as the couple was married in a state that recognizes same-sex marriages. This makes transfer of assets between a married LGBT couple much easier than between a non-married couple.

Lange warns, however, that there could be some drawbacks including the potential health care liability of getting married, and the so called “marriage penalty” that may affect some taxpayers. He encourages same-sex couples that are currently marriage or weighing the benefits of marriage to read his book, Retire Secure for Same-Sex Couples: Live Gay, Retire Rich, in which he details recommendations for the issues mentioned herein and so many more.

Lange’s book lays recommendations in a convincingly detailed yet surprisingly easy-to-follow fashion and is available to purchase through www.outestateplanning.com.

About James Lange

James LangeJames Lange, CPA/Attorney started the first exclusive LGBT estate planning website in Pittsburgh, in 2002. Jim is a nationally-known Roth IRA and retirement plan distribution expert. He’s also the best-selling author of the first and second edition of Retire Secure! and Retire Secure! for Same-Sex Couples. With over 30 years of experience, Jim and his team have drafted over 1,995 wills and trusts with a focus on flexibility and meeting the unique needs of each client.

Jim’s recommendations have appeared 35 times in The Wall Street Journal, as well as the Pittsburgh Post-Gazette, The New York Times, Newsweek, Money magazine, Smart Money and Reader’s Digest. His articles have appeared in Trusts and Estates magazine, The Journal of Retirement Planning, Financial Planning, The Tax Adviser (AICPA), and other top publications.

To learn more, or sign up for their newsletter, visit www.outestateplanning.com

The Essence of Retire Secure For Same-Sex Couples – Part 5

This 9 part blog post series discusses along with graphs the essence of my book Retire Secure! For Same-Sex Couples: Live Gay, Retire Rich.

Retire Secure! for Same Sex Couples: Live Gay, Retire Rich quantitatively compares various courses of action. For those who don’t want to read through the explanation and detail, just looking at the 9 graphs could provide critical information with a minimum of reading effort. Please be aware that the recommendations beneath each figure will be advantageous in most situations, but not for everyone.

Starting Social Security Benefits At 62 Years Old vs. 70 Years Old

 

Graph5


Independent of getting married, it’s better to wait until 70 to take
Social Security than electing to take Social Security at 62.

The graph shows the total of all Social Security benefits received, plus interest, by two different people with identical earnings records. One begins collecting Social Security at age 62 and the other begins collecting at age 70.

Your benefit will be 76% plus the cost of living adjustment larger if you wait until age 70 to start collecting Social Security, as compared to starting at 62. The longer you live, the more you may need that larger benefit.

 

The Essence of Retire Secure For Same-Sex Couples – Part 4

This 9 part blog post series discusses along with graphs the essence of my book Retire Secure! For Same-Sex Couples: Live Gay, Retire Rich.

Retire Secure! for Same Sex Couples: Live Gay, Retire Rich quantitatively compares various courses of action. For those who don’t want to read through the explanation and detail, just looking at the 9 graphs could provide critical information with a minimum of reading effort. Please be aware that the recommendations beneath each figure will be advantageous in most situations, but not for everyone.

Inheriting a Second Generation IRA From a Married Parent vs. an Unmarried Parent

 

Graph4

 

Estate planning: Get married to provide maximum assets for your children or other heirs after both you and your partner die.

This graph shows the difference to the eventual heir depending on whether the person leaving him the IRA had married vs. had not gotten married. Tax laws favor the married couple when one of the spouses dies, allowing the surviving spouse to “pay taxes later.” In addition to this advantage, tax laws favor heirs of a married couple. When the surviving spouse dies, his heir is permitted to “stretch” the IRA and “pay taxes (much) later.”

Tax laws penalize the unmarried couple. The first time an IRA is inherited by a non-spouse, the unmarried partner is forced to “pay taxes sooner.” The rules are even less favorable for the surviving partner’s heir, forcing him to “pay taxes (much) sooner.” Don’t Pay Taxes Now, Pay Taxes Later—even after both you and your partner/spouse are gone.

The Essence of Retire Secure For Same-Sex Couples – Part 3

This 9 part blog post series discusses along with graphs the essence of my book Retire Secure! For Same-Sex Couples: Live Gay, Retire Rich.

Retire Secure! for Same Sex Couples: Live Gay, Retire Rich quantitatively compares various courses of action. For those who don’t want to read through the explanation and detail, just looking at the 9 graphs could provide critical information with a minimum of reading effort. Please be aware that the recommendations beneath each figure will be advantageous in most situations, but not for everyone.

Inheriting an IRA From a Spouse vs. an Unmarried Partner

 

Graph3

 

Estate planning: Get married to provide maximum IRA and retirement plan assets for your partner after your death.

This graph shows the total assets for two individuals who each inherit a $1,000,000 IRA at the age of 72—one inherits from his spouse and the other from his unmarried partner. The tax laws will allow a surviving spouse to keep the money growing tax-deferred much longer than they allow for a surviving partner. Under the projected law changes for Inherited IRAs, the scenario is even worse for the unmarried survivor. Getting married allows your surviving spouse to pay taxes later than if you stayed unmarried. Don’t Pay Taxes Now, Pay Taxes Later—even after you die.

Same-Sex Couples Nearing Retirement: Get Married

If you're a same-sex couple in a long term committed relationship and are nearing retirement, get married.

Yalman Onaran of Bloomberg News discussed this issue with James Lange of the Lange Financial Group, LLC and had this to say:

“That's the simple advice that emerges from a new book by James Lange, a certified public accountant and attorney who specializes in retirement and estate planning. Of course love and feelings should dictate your decision first, but if you're looking at the financial side of things, then the balance has shifted in favor of marriage since the Supreme Court decision a year ago abolishing the Defense of Marriage Act, Lange argues.”

The chart below shows why marriage would benefit an aging same-sex couple.  A gay or lesbian couple could have higher Social Security benefits, more room to shelter income in IRAs all while avoiding inheritance taxes. 

Same-Sex, Gay, Lesbian, LGBT Couples Nearing Retirement - Get Married

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In this article Yalman Onaran touches on some of the caveats to same-sex marriage for financial reasons including whether you live in a state that still doesn’t recognize gay marriage as well as how far you and your partner are from retirement.  He shares his own experience with marriage and the financial benefits that resulted from getting married and how the landscape has changed post the repeal of DOMA.

To read the rest of this article in Bloomberg News, please click on the link below.

Click this link to read the article

Source: Yalman Onaran, Bloomberg News

An Update For Our Pennsylvania Readers

PA Same-Sex Marriage, James Lange, Retirement, DOMAOn May 20, 2014, the gay marriage ban in Pennsylvania was overturned by U.S. District Judge John E. Jones III.  In addition, Pennsylvania will now recognize same-sex marriages performed in other states that recognize same-sex marriage.  Governor Tom Corbett has announced that he will not appeal the decision, and for the first time in the state’s history, same-sex couples are now permitted to marry.  This is wonderful news for the residents of our state who have been waiting for a long time to marry their same-sex partners, but it also means that some of the information in this book as it relates to Pennsylvania residents has become outdated (as, frankly, I hoped it would become).  Rather than rewrite the book, I thought it would be simpler to provide Pennsylvania residents with a summary of the areas in which their lives will be affected as a consequence of the Pennsylvania decision.

First, if you’re counting, there are now 32 states that do not recognize same-sex marriage – the original text references 33 states.  Chapter 1 states that there are 17 jurisdictions that allow same-sex couples to legally marry, but, as of May 20, 2014, that number has risen – Pennsylvania became the 18th state (plus the District of Columbia) to do so.

Next, there are several references in the book to the federal criteria of “The State of Celebration vs. the State of Domicile,” as well as recommendations that readers consider marrying in a state that does recognize same-sex marriage.  As of May 20, 2014, same-sex couples who reside in Pennsylvania no longer have to travel out of state to get married – unless, of course, they want to – in order to enjoy the same benefits as straight married couples.  Let’s examine some of those benefits in greater detail.

  • Chapters 1, 4 and 5 discuss some odd Pennsylvania conundrums that, I’m sure, legally married same-sex couples will be very happy to see go by the wayside.  In 2013, legally married (in another state) same-sex couples who lived in Pennsylvania were required to file their Federal tax returns as “Married,” but their State returns as “Single.”  Those taxpayers will finally be able to file both their 2014 Federal and Pennsylvania returns as “Married,” and they also have the option to file amended Federal returns for up to three years prior, if it makes financial sense for them to refile as “Married.” (Marital status does not affect the amount of state tax that Pennsylvania residents pay, so filing amended state returns will not be necessary.)  
  • Chapter 1 recommends that your wills and trusts be prepared based on current laws, but include special provisions in case same-sex marriage becomes legalized in Pennsylvania.  Now that the state recognizes same-sex marriage, such highly customized estate planning documents likely will not be necessary. 
  • The beneficiary of a deceased same-sex partner used to be subject to a 15% Pennsylvania inheritance tax whether they had been unmarried or legally married (in another state), and it was my recommendation that wealthier couples consider either making large financial gifts in order to avoid that tax, or purchase life insurance to pay the tax.  Going forward, those strategies will be irrelevant because those same couples will not pay Pennsylvania inheritance taxes on their spouse’s assets (the same as straight married couples).
  • Finally,  from the human perspective, the surviving spouse of a legally married same-sex couple now has, barring extenuating circumstances, sole authority in all matters pertaining to the disposition of their spouse’s remains in Pennsylvania – prior to this ruling, a same-sex spouse couldn’t even be named on a death certificate.
  • Chapter 2 discusses the benefits of marriage as it relates to IRA’s and retirement plans.  Indeed, the benefits are so significant that from the federal perspective, including both income taxes and estate taxes, I recommend that all committed same-sex couples consider the financial advantages of getting married.  (Please reread that chapter if you are on the fence about it.)  But now, there is no need to travel to another state to marry to receive the same favorable federal tax treatment that the survivor of a straight married couple would receive on their deceased spouse’s IRA or retirement plan.  Now if you marry in Pennsylvania, you will assure your surviving spouse of a much better standard of living in his or her retirement than if you had not married. 
  • Pennsylvania does not currently tax retirement income, so the change in the law will have no effect on your state income taxes.  There will be a significant change with respect to state inheritance taxes, though – an individual who inherited a retirement plan from a legally married same-sex spouse, used to have to pay the state’s highest inheritance tax rate of 15%.  In many cases, this amounted to a significant amount of money. Now, that same individual will pay nothing in state inheritance tax. 
  • Chapters 1 and 3 both show, if you are a Pennsylvania resident, the monthly benefit that you would have been eligible for from Social Security, was “in question.”  This was because, unlike the Internal Revenue Service, the Social Security Administration recognizes same-sex marriages in states that recognize same-sex marriages.  If you are legally married, but do not live in a state that recognizes same-sex marriage, you are not currently eligible for spousal Social Security benefits.  The Social Security Administration recognized the inconsistency in their position and encouraged same-sex couples in all states to apply, but asked you to be patient as they develop and begin to implement new policies on this subject.  Well, legally married same-sex couples who live in Pennsylvania don’t need to wait any longer – they can now receive Social Security benefits based on their own earnings record, or the earnings record of their spouse if it is higher.  Remember, though, that the decision about when and how to apply for Social Security benefits can have a far greater impact on your financial security than what the staff at your local Social Security office might lead you to believe. Decisions about timing Social Security benefits should not be done without first talking to a trusted advisor.
  • In the same context, please have a second look at the graph on page 80, which illustrates what happens if Dr. Dan had used the “Apply and Suspend” technique for his Social Security benefits, and subsequently died.  This graph takes in to consideration a 15% inheritance tax assessed on Dr. Dan’s retirement plan.    Since Pennsylvania now recognizes same-sex marriage, this tax will no longer be assessed at his death, which would make the difference between those two scenarios even more dramatic.

You should also have a look at the graph on Page 131, which illustrates the difference between taking my advice and ignoring it.  The steep decline in assets at Baker Bob’s age 80 was due to the 15% Pennsylvania inheritance tax he owed on Dr. Dan’s estate.  Now that Pennsylvania recognizes same-sex marriage and the inheritance tax no longer applies to the surviving spouse, the argument for marriage will be even stronger.

It has been a long time coming, but I am happy to see that Pennsylvania has finally made this change to their law.  Same-sex Pennsylvania couples who marry will finally be treated fairly, with the same dignity and respect as straight married couples.  Since this represents new territory for you, I encourage you to talk with a trusted advisor about the specifics of your own situation, so that you fully understand how these changes will affect you and your partner or possibly your spouse.

 

Married vs. Unmarried for Retirement Years

Introduction

There were two identically situated same-sex couples: they had the same amount of money, invested identically, and spent identically too.  There was only one big difference: the first couple did not read Retire Secure! For Same-Sex Couples and plan for their future using our advice, but the second couple did.


The first couple’s plan:

  1. don’t get married
  2. take Social Security at age 62
  3. don’t make Roth IRA conversions
  4. don’t use our IRA and estate planning strategies (they can’t without marrying)

The second couple’s plan

  1. get married (in a state that recognizes same-sex marriage)*
  2. use the “Apply and Suspend” strategy at age 66 for Social Security
  3. make a series of Roth IRA conversions
  4. use our recommended IRA and estate planning strategies for married couples

Here is the difference in their future finances using reasonable assumptions.**

 

Image1

 

Using the proactive strategies explained in this book, our legally married same-sex couple (the blue line) enjoys a comfortable retirement, and still has $1,427,275 at age 90. The unmarried same-sex couple, who didn’t take our advice, runs out of money at age 90.
 

There are fantastic opportunities for same-sex couples to increase their wealth, cut their taxes, and dramatically increase their financial security and the financial security of their surviving spouse/partner. These opportunities are only available because of the new laws on same-sex marriage that were passed in 2013. This is new territory for same-sex couples—finally, you can take advantage of some of the same long-term planning strategies that have always been available to straight couples.  But, this also means that you can now make the same mistakes that straight couples frequently make, and some of those mistakes could have disastrous consequences for your surviving partner/spouse.
 

Retire Secure! For Same-Sex Couples – James Lange, (pages 9-11) www.outestateplanning.com/contact-us 412-521-2732