The article I attached in post 7831 or 7832 above explains the different kind of beneficiaries.
Eligible designated beneficiaries are a special subset of beneficiaries (generally not an adult child who inherits a parent IRA).
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IDK if higher caps on SS is an answer when higher caps also would mean higher benefits later on. With any system like this, have to have income earners paying in and also have the actuarial data correct on payouts. I also think in past years, funds were shifted/borrowed and thus needing more funds for current things âflushâ.
Each generation has its own issues to deal with.
In our country, be it Unions, organizations such as AARP, it is a balance with things. Once retired, people can choose to potentially live where they believe they can live âbetterâ in retirement. If choosing to stay in current state or location, it may be due to having family there and wanting to remain close.
We are still waiting for DDs to put down more permanent ârootsâ where they live. Both are renters. DD1/SIL are looking at property close to where their kids go to private school (K4 - HS, their older two are in 4K and kindergarten). Since we have built a home (and my dad and granddad owned construction companies, and dad also was a trained mason), with DH being retired, he can assist them through the process, and also live some months with them to go and check on the building progress every day (like he did with our home). DH is very handy and has a very good workshop, enjoys working with wood. We had a great construction supervisor for our custom home, but the quality of a few of the subs were a problem, as they were âthe best that was available to himâ at the time - two things, but minor in overall scheme. We should have stood firm on a few things. Learned in the process.
DD2 is settled, but her BF of 4 years is working his way up to getting his âdream jobâ in her city. It will happen, but right now he is âpaying his duesâ.
Right now I am giving my âtimeâ to DD1/Grandkids as the Army SIL is away for 4 weeks on training. My âwork timeâ is similar to when DDs were growing up, before school, then after school until their bedtime; kept them busy in activities evenings/weekends, and summer things. Younger two in daycare (mom drops off and picks up those two). DH is keeping the home front going - since we have spring weather in N AL, he has been doing a lot of yard work.
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Not necessarily.
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Just because you remove the income cap doesnât mean you have to increase the benefit/payments. Medicare has no caps and it isnât like someone gets more care if they put in more.
But the real reason they wonât remove the income cap on SS isnât because of the employee, but rather the employer would have to kick in more also. Corporations are not going to let that happen when they own Congress.
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This is from September, so not sure if anything new has been published. We do not need to take an RMD for 2024 as my father did, so hoping for clarity for 2025 and beyond.
September 2023 Newsletter
The Internal Revenue Service (IRS) recently issued some short-term guidance on required minimum distributions (RMDs) for IRAs, especially inherited IRAs. The IRS isnât ready to issue final regulations on the changes the SECURE Act made to RMDs.
It issued proposed regulations on inherited IRAs in the spring of 2022 and still is considering the comments the public submitted on those proposals. RMDs were changed in significant ways the last few years. One major change is that the beginning age for RMDs was moved from 72 to 73 by the SECURE Act 2.0.
The beginning age is 72 for those born before 1951, 73 for those born from 1951 through 1959, and 75 for those born in 1960 or later. The IRS said the law was enacted so late in 2022 that many IRA custodians didnât have time to update their systems.
They sent account holders who turned 72 in 2023 (those born in 1951) incorrect notices that RMDs were due in 2023. Under the IRA rules, owners who took RMDs in 2023 they werenât required to take could return the money tax free within 60 days. After 60 days, the money couldnât be rolled back to an IRA and would be taxable for the year.
In the new guidance, the IRS indicated it will allow a tax-free return of the money through Sept. 30, regardless of when during 2023 the RMD was taken. That waiver of the 60-day deadline on rollovers applies only to IRA owners who turned 72 in 2023 and mistakenly believed they had to take an RMD in 2023. If they prefer the money to remain in their traditional IRAs, they can return it by Sept. 30 without a penalty and without having it included in their 2023 gross income.
The second part of the guidance applies to beneficiaries who inherited IRAs after 2019. The original SECURE Act created the 10-year rule, requiring those who inherited either traditional or Roth IRAs to fully distribute the IRAs within 10 years after inheriting them. In 2022, the IRS issued proposed regulations requiring annual RMDs during years one through nine for a beneficiary who inherited an IRA from someone who was taking RMDs at the time of death. If the IRA owner wasnât taking RMDs at the time of death, the beneficiary isnât required to take any distributions until year 10, under the proposed regulations.
But the IRS hasnât finalized the regulations, and many in the tax profession are pushing back against the rule requiring distributions for years one through nine. In the latest guidance, the IRS extended a waiver it previously granted. Beneficiaries who inherited IRAs after 2019 donât have to take the RMDs yet for years one through nine and wonât be hit with penalties for failing to take the RMDs in 2021, 2022 and 2023.
Unfortunately, for beneficiaries of inherited IRAs, the IRS didnât extend the 60-day deadline for returning the money to an IRA if the beneficiary took the distribution before the IRS issued the waiver. If less than 60 days have passed since the distribution was taken, the RMD can be returned. Otherwise, the beneficiary has to keep the RMD and report it in gross income.
The issuance of this waiver likely means the IRS believes it is unlikely to issue final regulations before the end of 2023, or it will issue them too late for many people to act on the regulations in 2023.
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Thank you for clarifying. I did word my reply poorly: I meant to say to be sure that the 2024 RMD is taken (by either your parent, or the beneficiary/ies.)
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I think thatâs true with many jobs. Itâs not the actual âjobâ you miss. Itâs the other 
you have to deal with.
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For me there were some things I missed from my tech job (especially the analysis - Iâm a data geek). But mostly I miss the coworkers. Interestingly in the last years the majority of them were in other locations, mostly international. But itâs amazing how you can form a close relationship⊠even more so for the ones where the was an in-person opportunity to meet onsite or at a worldwide team workshop.
The cool thing about our retirement is that we spend a lot of time socializing with my husbandâs former coworkers (mostly retired now) and their wives. Many years ago I worked same place so have known some of them for 30 years. Most Fridayâs we are doing happy hour and dinner with a core group plus a variety of drop-ins.
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My husband was just talking to a old co-worker. The guy took a $600K pension buyout and invested it so poorly he lost it all. UGH - he is a smart guy. Even in a money market account he would have at least kept the principle. This kind of stuff is so frustrating. People making poor decisions.
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I have to âstretchâ DH on socializing. At one time we worked for the same company (me a short time, while most of his professional career was at this location), so our quarterly retiree lunch gathering, we go together, but if I am out of town, he misses it. With certain subjects or certain individuals (fellow engineers) DH can light up like the most social of individuals. DDs are both pretty social, with one of them as an engineer.
I have my 50th HS reunion this year, and DH has only been to one reunion, the 25th. I told him it was required that he attend with me. It turns out that one of my classmates and his wife (also a friend of mine) lived in Singapore for a while, and DH was there twice - they met up one time for dinner out, and the other trip they had him come for dinner at their home. My friend had so much common things to talk about he called DH âa brother from another motherâ. So it is not like DH will have no one to talk to. DH will do a little travel with me, but I am OK with traveling with others. He had so much work travel nationally and internationally, and wants to be a home body.
When the grandkids are older, I might be able to take the older two on a special trip somewhere.
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That is so sad. A lot of people at Hâs company took pension buyouts. One of the things that the advisors in our area cautioned against was taking the lump sum without a sound financial plan. We donât know anyone who lost their lump sum, but the way a couple guys we know gamble, I sure hope that they are more conservative with their retirement investments.
I was offered a pension lump sum five years ago, and I didnât take it in part because I didnât know what to do with the money. And when I ran the numbers it felt like a bit of a wash, not a slam dunk to take it. Iâm glad that I waited as now the pension is growing at a good clip.
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My retirement benefits (much less than originally envisioned due to corporate plan change) were available in two flavors. 1) Lump sum, a little more than a yearâs salary 2) annuity for life - about 10% of salary. I went or the annuity because several FA said it was a decent deal AND because I liked the idea of a steady paycheck for life, starting before SS eligible. I would have been able to manage the lump sum responsibly, just didnât want to. Those brain cells can be dedicated to 401K strategy.
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We had enough other money saved that we felt comfortable taking the lump sum, which is managed by our FA. The pension was not inflation adjusted, it was greatly reduced if H chose a survivor benefit (which was a lot less than the pension amount without the survivor benefit), and it was reduced when he turned 62 (he retired at 59). We definitely wouldnât have done it without the help of a trusted advisor, though.
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The Social Security retirement benefit calculation has several parts. It is geared to provide a higher replacement income at lower tiers of income. Itâs NOT just a flat percentage of the high 35 years out of the 40 year beginning when you are age 22 (or earlier if you had SS-eligible earnings prior to age 22). Not shouting at you â Social Security doesnât get into the weeds on the formula in its public-facing communications, so most people donât know.
For example, using 2024 bend point numbers:
Primary Insurance Amount (PIA) payable at NRA is calculated as:
(a) 90 percent of the first $1,174 of his/her average indexed monthly earnings (AIME), plus
(b) 32 percent of his/her average indexed monthly earnings over $1,174 and through $7,078, plus
(c) 15 percent of his/her average indexed monthly earnings over $7,078. (subject to the annual SS maximum NRA benefit)
If you want to limit benefits to high earners while increasing the SS taxable wage base, you can cap the AIME or use a small replacement rate on a new 4th tier in the calculation.
Thereâs a good explanation on how this works at this link, and it also explains how the income levels in the bend points themselves are calculated. Primary Insurance Amount
I used to test SS calculations when I worked for a benefits consulting company to make sure earnings history data from my clients loaded correctly and that the right years/start dates were accurate.
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Fink said members of the boomer generation in positions of corporate leadership and politics have an obligation help fix the system, and he questioned whether age 65 should still be the conventional notion of when people retire. Individuals are eligible for Social Security benefits as early as age 62, and those born after 1960 are considered at full retirement age at 67. Medicare health insurance coverage starts at 65.
âNo one should have to work longer than they want to,â Fink wrote. âBut I do think itâs a bit crazy that our anchor idea for the right retirement age â 65 years old â originates from the time of the Ottoman Empire.â
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You canât have it both ways. You canât want Boomers to step down from working to make room for younger generations to be promoted and also say Boomers need to work past age 65 to keep more money pumped into SS.
What is supposed to be done to, âFix itâ?
I never understand the use of the word, âentitlements,â when it comes to SS.
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We are entitled to something we worked and paid for! 
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Good question. The reality is something needs to be done as in about 10 years the money coming in wonât be adequate to fund the payments.
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Why am I not feeling the suggested solutions from a person with a $1.2 bil net worth shouldnât frame/dominate the âfix-itâ conversationâŠ?
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