Once I read Ed Mahaffy’s book titled “How To Select A Financial Advisor: The Least You Should Know”, interviewed him, reviewed his video library, I knew we had the right person for this special financial planning series. On Fridays, TaxConnections presents questions often asked of a Financial Planner.

Dear Ed: Financial Planning Questions  

Question: How much cash reserve should I maintain in the post-Covid environment?

Answer: Obviously, the answer varies depending upon the circumstances, but generally 1.5- 3.0 years of expenses.

Question: What is the best way to access these funds?

Answer: Working longer is the best solution but jobs are not necessarily easy to find-especially for those nearing retirement. A home equity line of credit is another option should the market face more challenges. The line could be accessed in increments as needed.

Also, for those under age 59 1/2,  the CARES Act allows withdrawal of up to $100,000 In retirement assets in 2020 without incurring the 10% penalty

Question: What if I planned to work to age 67 or age 70 to receive full social security benefits but lost my job and cannot find work?

Answer: Taking SS sooner may  be a solution. There are strategies to mitigate the impact to long-term benefits.  If you are single, you could file at Age 62, receive benefits until your income is restored then stop the mo they checks, repay the months of income received if possible and work until 67 or 70. If desired.

For baby boomer married couples, there is a restricted -application whereby the spouse who earned the least during their career files for SS at age 62. The other spouse must be 67 or older and has not filed for SS. The older spouse instructs SS that no benefits are required until age 70 and that they want to start receiving monthly checks as a spouse of the younger SS recipient.

This strategy provides income now. The older spouse waits until age 70 and instructs the SS Administration that they want to stop receiving benefits as a spouse and start receiving their own benefit.

Also, if the older slide predecessors the younger spouse, This strategy enlarged the surviving spouse’s benefit.

There is however a cutoff for those born after January 1954.

Have Financial Planning Questions? Contact Ed Mahaffy.

(How To Select A Financial Advisor – Ed Mahaffy)

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