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Are We Having Fun Yet?

Updated: Jul 20, 2023

In this hellspawn year of 2020, financial planning fundamentals have proven to be more valuable than ever, and we’ve been having conversations with clients that go a long way beyond just this stock or that stock. While RG’s claim to fame is certainly equity portfolio management and laser focus on every single asset in your portfolio, we’ve been bringing our same nimble and dynamic approach to traditional financial planning. In a year when people are experiencing such drastic change, we’re finding a lot of sizzle in typically mundane subjects ranging from insurance to mortgage financing to Social Security to retirement account structures.

Zzzzzzzz.

…I know, but seriously.

  • For instance, a really basic one is life insurance. Most carriers are currently offering underwriting for policies under $5 million or so without any medical exam. They’re still reviewing medical records and family history, of course, but this newfound ease to the application process seems to be spurring interest in whole life policies.


  • A little more nuanced phenomenon recently has to do with Social Security. Many folks are being forced into early retirements, so there’s an increased interest in taking Social Security in one’s early 60’s as opposed to later.

For baby-boomer couples, that may not be a bad thing. If both spouses have worked, and one is at least of full retirement age and the other at least 62, they may be able to use a little-known strategy known as a “restricted application” for Social Security. It allows for a couple to get two Social Security checks every month early on in retirement while getting an even bigger Social Security check to start after the higher-paid spouse turns 70.


The higher-paid spouse must have been born before Jan. 2, 1954, which means almost age 67 or older now. The lower-paid spouse could be as young as 62 (the earliest age for people to take Social Security benefits). With this restricted-application strategy, the spouse who earned the least during his or her career files for Social Security as early as age 62 (though it might pay to wait). The other spouse must be of at least full retirement age—currently approaching age 67 or older—and still waiting to file for Social Security.


The wife often is the lowest paid (which is a matter worthy of a million other blogs) and consequently the first of the two spouses to file. Once she does, her husband, if about 67 or older, uses a restricted application—telling the Social Security Administration that he doesn’t want to start collecting his own Social Security until perhaps 70-- but immediately wants to start getting monthly checks as his wife’s spouse.


With two Social Security checks coming into the household as early as possible, the couple can cover bills immediately while taking advantage later of even-bigger monthly checks at age 70 and throughout the rest of retirement. At 70, the husband will tell the Social Security Administration that he wants to stop getting paid as a spouse and requests his own benefit. Boom.


  • Mortgages. Boring, but critical to the financial wellbeing of most households. Rates are at record lows and will probably remain so for the foreseeable future. Refinancing, cashing out, locking in an ultra-low interest rate; borrowers have had the opportunity to do this three times in less than two years as home prices have soared and rates plummeted.

  • Roth conversions continue to present fantastic opportunity for high net worth investors. High wage earners and retirees have historically foregone these dream savings accounts because they have income limits for participating, but in reality, Roth conversions are an effective, alternative way to save money in a Roth IRA while not being subject to those limits.


Roth conversions essentially allow you to pay taxes now instead of later, so, if you anticipate that your income-tax rate will be greater in future years than it is today, converting funds to a Roth may save you money on taxes in the long run.


Most investors who are unable to contribute to a Roth IRA typically can’t deduct traditional IRA contributions anyway because those deductions would also go far above similar income limits. And even without the deductibility of IRA contributions, Roth conversions are valuable because they’re such savvy estate-planning tools-- they don’t have required minimum distributions (RMD’s)!


Back to basics. Insurance, mortgages, Social Security, Roth IRA conversions. Are we having fun yet?



For disclosure information please visit: https://www.rgbarinvestmentgroup.com/terms-and-conditions

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