If you’re unfamiliar with myRA plan and the retirement changes in 2016, don’t worry we’ll explain it.
The government’s new sponsored plan called myRa has the ability to boost retirement savings. This plan will allow retirees the option to participate. It’s a type of Roth retirement account that offers no fees and is guaranteed to not lose its value.
It only offers one investment option, in the form of a Treasury savings bond with an interest rate that averages 3.19{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439}, with having to pay interest while in the account or if you leave the account before the age of 59 ½ . If you are an individual who earns less than $131,000 or a couple that earned less than a combined $139,000. You will be eligible to contribute up to $5,500 annually to the account. Once you are over 50 you can contribute up to $6,500.
Once the balance of your myRA account grows to $15,000 your money will be transferred to a private Roth IRA.
The point of this savings option is to remove common barriers to retirement saving. Also, it is going to provide an easy way to jump start your retirement savings. The idea is you can contribute via direct deposit or by setting up a payment from your checking or savings account. This way, it makes your savings options a virtual no-brainer.
So what does this mean for the future of retirement and myRA?
Your Social Security Claiming Will Change.
Namely, you won’t be able to claim it twice. If you are a married individual over the age of 66 you may have been aware that you could claim your spouse’s Social Security and hold off on yours until you reach retirement age – by which time it will have matured.
In 2016, if you are 62 or older you will not be able to claim your spouse’s payment and yours; instead, you will need to collect one or the other. This could be a problem for those who are relying heavily on Social Security to supplement their incomes. If you are one of these individuals, you may need to take proactive measures to boost your retirement savings to make up for the financial loss of double-claiming benefits. .
The rules surrounding your suspended Social Security will also get stricter. In the American Stock Transfer, while you delayed payments for retirement credits, your spouse and children were allowed to collect payments based on your work record while your payments continued to grow. In 2016, suspending your payments will suspend the payments for anyone else who is eligible to receive your benefits.
Medicare might increase.
Particularly your Medicare Part B premiums. These premiums legally prohibit from rising faster than Social Security payments. This is because there is no cost-of-living Social Security adjustment on 2016, you may end up paying the same amount ($104.90) in Medicare premiums.
If you are newly enrolled in Medicare, your premiums will rise to $121.80/month. This adjustment was done to circumvent an even higher premium cost of $159.30 for new beneficiaries.
Your saver’s credit threshold will increase.
And it will be slightly easier to qualify for in 2016. The saver’s credit is a tax credit for individuals who are low-to-moderate savers and is worth anywhere from 10{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} to 50{bc669dfb3651bb8509a96034cbe7494d3a811fc0eedf0ddccb239fb9cb737439} or the amount these savers contribute to a retirement account (such as a 401(k) or an IRA). The saver’s credit threshold requires an adjusted gross income limit of $30,750 for single individuals and $61,500 for married couples. Which may have increased by $250 and $500 respectively.
Are you prepared for these changes?
People normally confuse how this will impact their retirement plan. You should go ahead and speak to a financial adviser. Certain changes such as increased Medicare contributions and the adjustment to Social Security claims, may impact your wallet. They don’t have to throw a wrench in your retirement savings plans.
Ultimately, these changes shouldn’t mean too much for your individual retirement savings. We have always advocated saving enough so that you do not have to rely on Social Security too heavily. You should also have a nest egg stashed away for things like increases in premiums and medical emergencies not covered by Medicare.
If you have been saving smartly, you should be frequently checking your retirement account. If you have been on track, slight bumps in when and how your dependents, spouses and you can claim Social Security and the increases in Medicare premiums shouldn’t derail your retirement plan. You may be worry on how this changes might affect you plan. A financial adviser can provide you the best help to get back on track and to answer all doubts.