Social Security Misconceptions that Could Derail Your Retirement

Social Security Misconceptions that Could Derail Your Retirement

Social Security is more than just a government program; it’s a critical income source for countless retirees. As of July 2023, the Social Security Administration reported an average monthly payout of around $1,800 to retirees. Especially for those with inadequate savings, these funds are invaluable during retirement.

Nevertheless, the complexities of Social Security often lead to misunderstandings that might cause you to miss out on receiving the full benefits you are entitled to. Here, we address three misconceptions that could adversely affect your retirement income.

Opt for Early Benefits, and They’ll Increase Later

For individuals born in 1960 or later, the age for full entitlement to Social Security benefits, known as the Full Retirement Age (FRA), is 67. Opt to start drawing your benefits before this age, and you’ll face a monthly reduction of up to 30%. A prevalent but mistaken idea, subscribed to by nearly half of American workers according to a 2022 study, is that this reduced amount will increase once you hit your FRA. The truth is far from it: the decision to claim early may have lasting effects, reducing your benefits for the rest of your life.

Claim Benefits Now Because Social Security is Running Out of Funds

The narrative of Social Security’s looming bankruptcy has led some to claim their benefits hastily. While there may be concerns about the long-term sustainability of Social Security, it’s not on the brink of dissolution. Primarily funded through payroll taxes, the system will continue to pay out as long as people work and pay into it.

If no legislative updates occur, current estimates indicate that by 2037, Social Security should still be able to provide about 76% of scheduled benefits from ongoing tax contributions. Therefore, claiming benefits early out of fear could prove counterproductive. A more prudent approach might be deferring your benefits to accrue higher payments, which could offset potential.

No Employment History, No Social Security

A common belief is that you must have a 10-year work history to be eligible for Social Security. While valid for the standard retirement benefits, there are exceptions:

  • Spousal Benefits: If your spouse qualifies for Social Security, you could be entitled to as much as half of their full benefits when they reach their FRA, regardless of your work history.
  • Divorce Benefits: If you’ve been married for a decade or longer and are not remarried, you could collect up to half of your ex-spouse’s full benefits.
  • Survivor Benefits: These are accessible to widows and widowers and, under specific conditions, to other family members like children or divorced spouses. Eligibility and the benefit amount are based on several factors.

Understanding Social Security can be daunting, but clearing up these widespread myths is crucial for optimizing your benefits and securing your financial well-being during retirement. Stay ahead by staying informed. If you have questions about how to use social security in your retirement planning, please contact us. We welcome the opportunity to help you make informed decisions about your financial future.

All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Quantum Strategies, LLC does not offer tax planning or legal services but may provide references to tax services or legal providers. Quantum Strategies, LLC may also work with your attorney or independent tax or legal counsel. Please consult a qualified professional for assistance with these matters. You should always consult with a qualified professional before making any tax or legal decisions.


Retirement Savings and SECURE Act 2.0: Update

Retirement Savings and SECURE Act 2.0: Update

Here’s the latest update on SECURE Act 2.0. If you’ve been diligently saving for retirement over the years, you may be on the right track or wish you had started earlier or saved more aggressively. On the other hand, you most likely know people in their thirties who haven’t started saving for retirement yet due to financial constraints.

However, thanks to the new SECURE Act 2.0, recent graduates and career starters will experience automatic enrollment in a 401(k) when hired. In this blog post, we shed light on the changes brought about by this new law and how it can shape retirement savings for individuals at different stages of their careers.

What Changes Can We Expect from SECURE Act 2.0?

SECURE 2.0 provides enhanced incentives for employers, especially small businesses, to establish retirement plans. Employers can receive tax credits covering up to 100% of plan-startup costs, subject to certain limits. In some cases, it could be virtually free for employers to set up a retirement plan, depending on the number of employees.

Employers in states with retirement plan mandates, like Connecticut, may consider offering an IRA or a 401(k). A 401(k) is a more comprehensive option for employers, and the tax credit for employer contributions makes it appealing. While the tax credit for employer matches is not permanent, it eases the process for employers during the initial setup period.

Under SECURE 2.0, employers can match student loan payments as if they were elective contributions to a 401(k). If a recent graduate chooses to pay off student loans, the employer can match those payments as 401(k) contributions. This is significant, and many individuals are expected to take advantage of it. Regulatory guidance is still awaited.

Any Changes for Existing Retirement Plan Holders?

SECURE 2.0 increases the minimum distribution age to start drawing down their retirement plan once they reached certain retirement age. SECURE 2.0 increases this age to 73, allowing individuals to keep their funds invested for a longer period. This change may impact those looking to build generational wealth.

Looking Ahead

Over time, there has been an ongoing debate about the purpose and regulation of 401(k) plans. Originally designed to supplement pensions, 401(k) plans have become many Americans’ primary retirement savings vehicle. It is often the second-largest asset after a home. The question of who should be responsible for managing 401(k) plans and whether they should be more highly regulated continues to be a topic of discussion in the industry.

Navigating these changes and understanding how they impact your retirement savings can be complex. If you have questions or need assistance, consider consulting with a financial advisor or wealth management professional who can provide guidance tailored to your specific situation.

At Quantum Strategies Wealth Advisory, we are here to help you make informed decisions about your retirement planning and ensure that you maximize the benefits of SECURE Act 2.0. Contact us today to discuss your financial goals and explore the right strategies for you.

Impact of Inflation on Retirement: 7 Strategies to Help Protect Your Savings

Impact of Inflation on Retirement: 7 Strategies to Help Protect Your Savings

Retirement can be a time to relax and enjoy the fruits of your labor. However, it’s important to consider the impact of inflation on retirement savings. Inflation can erode the value of your savings over time and make it challenging to maintain your standard of living.

7 Strategies to Minimize the Impact of Inflation on Retirement Savings


1. Diversify Your Portfolio

Diversification is key to managing risk in any investment portfolio, especially regarding inflation. Consider diversifying your portfolio across different asset classes, such as stocks, bonds, and real estate. This can help reduce the impact of inflation on any one investment.

2. Consider Delaying Social Security

Delaying your Social Security benefits can significantly boost your retirement income, especially if you can wait until your full retirement age or beyond. This is because your Social Security benefit is adjusted for inflation each year, so delaying can help increase the amount you receive.

3. Monitor Your Spending

It’s important to monitor your spending during retirement to ensure you’re spending your money wisely. This can help stretch your retirement income further and reduce the impact of inflation on your savings.

4. Work with a Financial Advisor

Working with a financial advisor can help you develop a comprehensive retirement plan that takes inflation into account. An advisor can help you identify strategies to protect your savings from inflation and provide ongoing guidance as your needs and circumstances change.

5. Consider Retirement Income Products

Retirement income products, such as annuities, can provide a steady income stream immune to market volatility and inflation. An annuity is a contract with an insurance company where you make a lump-sum payment, and in return, you receive a guaranteed income stream for a specified period of life. This can help provide a stable source of income during retirement, regardless of market fluctuations and inflation.

6. Keep an Eye on Inflation

It’s important to keep an eye on inflation rates, as they can affect your retirement income and savings. The Federal Reserve closely monitors inflation rates and adjusts interest rates accordingly. By staying informed about inflation rates, you can make adjustments to your retirement plan if necessary.

7. Plan for Healthcare Costs

Healthcare costs can be a significant expense during retirement and can rise with inflation. Planning for these costs and factoring them into your retirement plan is important. Consider investing in a Health Savings Account (HSA) or long-term care insurance to help cover these expenses.

In conclusion, if you are looking to protect your retirement savings from inflation, we feel that you should take a proactive approach. By diversifying your portfolio, delaying Social Security, monitoring your spending, working with a financial advisor, considering retirement income products, keeping an eye on inflation, and planning for healthcare costs, you can help prepare for a more comfortable retirement.

If you have questions about inflation and its potential on your retirement, please contact us today. Our team at Quantum Strategies Wealth Advisory team looks forward to speaking with you soon.

Advisory services are offered through Quantum Strategies, LLC dba Quantum Strategies, a Registered Investment Advisor in the State of Pennsylvania. Insurance products and services are offered through William Rizzo, Sole Proprietor.

Benefits of an Employer-Sponsored Retirement Plan

Benefits of an Employer-Sponsored Retirement Plan

An employer-sponsored retirement plan is a type of retirement plan established by an employer to provide retirement benefits to its employees. These plans are typically offered as a part of an employee benefits package and are designed to help employees save for retirement.

Employer-sponsored retirement plans can take many forms, including 401(k), 403(b), and pension plans. In these plans, employees typically contribute to the plan from their pre-tax income, and the employer may also contribute to the plan on behalf of the employee.

The contributions made to these plans are invested in various assets, such as stocks, bonds, and mutual funds, to help grow the employee’s retirement savings over time. Employees can begin withdrawing funds from the plan to support their retirement lifestyle when they reach retirement age.

Why Participate in an Employer-Sponsored Retirement Plan?

There are several benefits to participating in an employer-sponsored retirement plan, including:

Tax advantages: Contributions to an employer-sponsored retirement plan are typically made on a pre-tax basis, which means that the contributions reduce the employee’s taxable income. This can lower the employee’s current tax bill and help them save more for retirement.

Employer contributions: Many employers will contribute to an employee’s retirement plan on their behalf, which can help boost the employee’s retirement savings.

Investment options: Employer-sponsored retirement plans often offer a range of investment options, including mutual funds and other professionally managed investment options, which can help employees build a diversified portfolio.

Automatic contributions: Many employer-sponsored retirement plans allow employees to set up automatic contributions, making saving for retirement easier and more convenient.

Portability: Some employer-sponsored retirement plans allow employees to take their retirement savings with them if they change jobs, which can help them avoid losing their retirement savings if they switch employers.

Financial security: Participating in an employer-sponsored retirement plan can help employees build a nest egg for their retirement years and provide them with financial security in their later years.

Overall, an employer-sponsored retirement plan can be a valuable benefit to help employees save for retirement and achieve their long-term financial goals.

If you have questions about an employer-sponsored retirement plan, please contact us today. Our team at Quantum Strategies Wealth Advisory team looks forward to speaking with you soon.

Advisory services are offered through Quantum Strategies, LLC dba Quantum Strategies, a Registered Investment Advisor in the State of Pennsylvania. Insurance products and services are offered through William Rizzo, Sole Proprietor.

How Could SECURE 2.0 Impact Retirement?

How Could SECURE 2.0 Impact Retirement?

Many business owners are eager to see how SECURE 2.0 will increase retirement security for millions of workers now that it has become official law.

In their studies, “Emerging From the COVID-19 Pandemic: Four Generations Prepare for Retirement” and “Emerging From the Pandemic: The Employer’s Perspective,” Transamerica Institute and TCRS created a list of eight ways the new law advances retirement security.

1. Introducing a government match for retirees who qualify based on their income.

51% of workers believe they don’t make enough money to put money away for retirement. A tax credit known as the “Saver’s Credit” is currently available to low- to moderate-income workers who invest in 401(k) plans or other retirement accounts (IRA). It hasn’t done as well as it could because people don’t understand it and because it can’t be returned. SECURE 2.0 reimagines and replaces the Saver’s Credit with the Saver’s Match, a matching contribution from the government for retirement savers who fulfill income qualifying standards, starting in 2027. The worker’s employer will match 50% of the first $2,000 they put into a retirement plan or IRA, up to a maximum of $1,000. According to the new regulation, the Saver’s Match must also be promoted.

2. Increasing the coverage of occupational retirement plans.

Only 46% of businesses with fewer than 100 employees have a 401(k) or comparable plan, compared to 89% of businesses with 100 to 499 employees (89%) and 92% of businesses with 500 or more employees (92%). Employers’ top excuses for not offering a plan and not likely to do so in the next two years are that their business needs to be bigger (79%) and cost-related concerns (31%). By making it simpler and more economical for small businesses to implement a qualifying retirement plan, whether a stand-alone 401k or comparable plan or by joining a multiple employer plan (MEP) or pooled employer plan, SECURE 2.0 begins addressing these challenges in 2023. (PEP).

3. Allowing part-time workers to participate in retirement plans.

Few firms make part-time workers eligible for retirement benefits, compared to how many do for full-time employees. Compared to 77% of full-time employees, only 51% of part-time employees receive an employer-sponsored 401(k) or comparable plan. SECURE 2.0 introduces stricter criteria for companies to provide long-term part-time employees retirement plan eligibility beginning in 2025.

4. Improving the convenience of saving in relation to automated enrollment and escalation.

Together, these plan elements raise employees’ contributions to their retirement savings and plan participation. 75% of employers use automatic escalation, but only 23% of plan sponsors use automated enrollment. Automatic enrollment and automatic escalation will be required of firms implementing new 401(k)k) plans to start in 2025 under SECURE 2.0.

5. Reducing the effects of monetary emergencies to cover the cost of an unforeseen big financial setback.

Workers have only saved $5,000 (median), while 14% have no emergency savings. Also, 26% of workers have taken money out of a retirement plan early or in a hard way, usually because of an emergency. In order to lessen the need for employees to withdraw funds from their retirement accounts, SECURE 2.0 will add an emergency savings account as a new plan feature for defined contribution retirement plans, such as 401k plans, starting in 2024. The 10% early distribution tax, which typically applies to persons under the age of 59 1/2, will not be applied to emergency withdrawals from retirement accounts under the new law.

6. Matching contributions for the repayment of school loans.

Younger generations are leaving college with student debt, which hinders their capacity to save for retirement at a time when they would be able to take advantage of investment growth and compounding over a long period of saving. Paying off student loans is listed as a current financial priority by more than one in five Generation Z employees (22%) and 17% of Millennial employees, who are between the ages of 18 and 24. Employers will be able to match employee-eligible student loan payments made to 401(k) or comparable plans starting in 2024, thanks to SECURE 2.0. Therefore, even if employees are struggling to pay off student loans and prepare for retirement, their company will still make a matching contribution to their retirement plan account.

7. Increasing Catch-Up Contributions.

Many workers don’t save enough for retirement, and as they age, they will need to significantly increase their savings before retiring. For instance, Baby Boomer employees have saved $162,000 in household retirement accounts, compared to just $87,000 for Generation X employees (estimated medians). SECURE 2.0 permits employees 50 and older to raise catch-up contributions to an IRA or retirement plan account starting in 2024, enabling them to save more as they approach closer to retirement. The new law includes provisions that mandate that higher-income workers make catch-up contributions on a Roth or after-tax basis. Starting in 2025, SECURE 2.0 permits employees ages 60 to 63 to make catch-up payments, allowing them to save even more.

8. Recognizing longevity and establishing necessary minimum distributions (RMDs).

People today anticipate working past the usual retirement age because they believe that people will live longer than they ever have. Nearly 40% of workers (39%) either do not plan to retire or expect to retire at age 70 or beyond. According to 38% of workers, one of the biggest retirement worries is outliving their investments and savings.As of now, the IRS usually requires that people take the RMD from their retirement funds every year at age 72. 50% excise tax on the amount of the RMD.If you don’t follow the rules, you will have to pay a harsh penalty of a 50% excise tax on the amount of the RMD. SECURE 2.0 gives workers extra time to develop their savings by raising the RMD age from 72 to 73 in 2023 and up to 75 in 2033. The new law now cuts the excise tax for failing to take an RMD to 25%, and if the RMD is promptly repaired, the fee is further decreased to 10%.

If you have questions regarding SECURE 2.0, we would be happy to help answer them. Contact us today.

Advisory services are offered through Quantum Strategies, LLC dba Quantum Strategies, a Registered Investment Advisor in the State of Pennsylvania. Insurance products and services are offered through William Rizzo, Sole Proprietor.


3 Financial Resolutions For The New Year

3 Financial Resolutions For The New Year

In this article, we will take a closer look at three financial resolutions you should consider making for 2023.

Even when your financial health is something you feel satisfied with, as the new year approaches, it is important to review your finances to ensure that everything remains on track. After retirement, your want to make sure you have enough money to live the life you want, so make it a habit to look at your financial plan at least annually.

1. Financial Resolutions to Prepare for the Unexpected

When it comes to managing your finances effectively, you don’t only need to cover the expected expenses you have throughout the year. Unexpected things happen and can cause a significant setback if you are not fully prepared.

This is why you should consider preparing for the unexpected as one of the financial resolutions you make for 2023. Many professionals suggest opening a savings account and putting money into this account to ensure you have money set aside should you need it. It’s easy to open a savings account, and at this time, you should decide how much money you will put into the account every month.

2. Improve Your Portfolio

Your financial portfolio is something you are proud of, as you have spent years building it to the point it is now. As you are making your New Year Financial Resolutions, consider how you can improve your portfolio.

It’s a good idea to look at your savings and any existing investments that are part of your portfolio. If you have excess funds available, consider strengthening your portfolio by investing the excess funds.

If you notice that some of your investments are not performing as well as you expect them to, consider moving the funds to a different investment opportunity. Our wealth advisory services can help you along the way.

3. Manage Debt You Have

Studies show that Americans 65 years old have an average amount of $66,000 in debt that they still need to pay off. Thus, you likely still have some debt you need to pay off.

As you make your financial resolutions, consider any debt you have in your name. Now is a good time to consider how to manage the debt and pay it off faster. When you pay off your debt faster, you’ll usually have less interest and other fees that continue to accumulate on the account.

Take a look at your budget and consider whether there are any areas where you can save some extra cash. Perhaps you are spending too much on eating out or vacations. Cut back and use the funds to pay your debt.

Financial resolutions are important for everyone, regardless of their finances, age, and position they find themselves in. By making these resolutions, you can set goals for yourself, which can help to keep your motivation levels up. Start with the three financial resolutions discussed above as a foundation for the coming year. If you’d like help accomplishing your financial resolutions for 2023, please get in touch with the professionals at Quantum Strategies Wealth Advisory.

Advisory services are offered through Quantum Strategies, LLC dba Quantum Strategies, a Registered Investment Advisor in the State of Pennsylvania. Insurance products and services are offered through William Rizzo, Sole Proprietor.