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When you are filling out an application for a IRA or signing up for your employer’s 401(k), one of the most important sections is completing the beneficiary section. If you are married, it is common to list your spouse as your primary beneficiary. And, if you have children, most of us list our kids as contingent beneficiaries. However, if you are approaching retirement and your children are working young adults, leaving your pre-tax retirement accounts to them might create an inheritance tax bomb.

Early retirement can sound quite appealing. But sometimes it happens unexpectedly when you are NOT ready to retire - due to illness, disability, caretaking responsibilities or a sudden job loss. With a job loss, many struggle to find new employment and may face the prospect of an unexpected early retirement, especially if they are over 50. What can you do if you face an unplanned early retirement?

Before taking on new debt, refinancing old debt, or anything else that is a major financial decision, it is always best to speak with a Certified Financial Planner™ practitioner.

Q: “Is there any truth to making money in the stock market, or is it all luck and scams?”

The maximum ex-spousal benefit is up to 50% of the higher earner’s benefit and capped at the ex-spouse’s full retirement age (FRA) amount, also known as the Primary Insurance Amount (PIA). While most will get a higher SS benefit based on their own earnings record, some will qualify for a higher benefit using their ex-spousal benefit. With a significant increase in “gray divorce” over the past 30+ years, divorced individuals belong to a generation where many women left or remained out of the workforce to care for children or elderly family members. If you are the lower-earning spouse due to a limited work history or a significant income gap compared to your ex-spouse, collecting benefits based on your ex’s record could raise the amount of your monthly Social Security benefit.

Lizzie inherits an IRA from her dad in 2024. Her dad was 78 years old. Since her dad was over his Required Minimum Distribution (RMD) age, Lizzie is required to take her first RMD in 2025 and do so under the 10-year rule and then empty the account by the 10th year from the date of death (if money is left) Billy inherits an IRA from his aunt who died in 2022 at the age of 66. Since his aunt wasn’t at their RMD age, Billy is not required to take an RMD each year however, the account must be emptied by the 10th year after she died. Mary inherits a Roth IRA from her mom in 2024. Since Roth IRA’s do not have a required minimum distribution (RMD), Mary does not have to withdraw anything until the 10th year after her mom died. Mary can let this account grow over this time period and when money is withdrawn (whether during the 10-year period or all at once in year 10) the money is all tax free to Mary. Joanne’s husband died in 2024 and left his IRA to Joanne. Under the Spouse Rule, Joanne is not required to withdraw money from her husband’s IRA until she reaches her required minimum distribution (RMD) date. Since she was born in 1961, her first RMD must begin in the year she turns 75.