Welcome to Something More with Chris Boyd. Chris Boyd is a certified financial planner, practitioner, and senior vice president and financial advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it Something More because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter.
Here he is, your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Welcome to the program, everybody. Thanks for being here. I'm joined by Jeff Perry and Russ Fahl. All of us are with the AMR team at Wealth Enhancement. We'd love for you to reach out with any comments or questions. You can find our show on YouTube and on our webpage, which you can find somethingmorewithchrisboyd
.com, or you can find us wherever you like to listen to podcasts. Glad you found us today and hope you'll share and rate our program. Let's jump right in, guys. Our topic today is don't assume, and we've got a couple of things in mind, but we're going to start with don't assume you might be contributing as much as you can in your retirement plan because at times there are catch-up contributions. You can do a little bit more.
Russ, do you want to start us off talking about some of the circumstances where people should be mindful of some of these various additional amounts they can consider? As of 2025, there's a new rule part of Secure Act 2.0 where employees in a specific age range, and that's 60 to 63, people that are in that age range can contribute an additional amount on top of their standard catch-up contribution.
A little bit confusing with all the numbers, but this year for 2025, it's going to be an additional $11,250 in what's being called the super catch-up contributions. That leads to a total contribution limit of $34,750 for 2025. That is going to be changing each year, most likely, but again, that's for people who turned 60 in 2025 and for ages 60, 61, 62, and 63 by the end of the year.
Within that window, there's that extra contribution limit, and that can definitely help for people that are trying to avoid some of those hefty taxes if they're in higher tax brackets and put the money into your retirement accounts and really save for the retirement you're looking for. That's ideal for people who are in an employer-provided plan like a 401k or a 403b or similar large company plan, plans that are designed for larger contributions.
Instead of a $7,500 extra catch-up contribution, which just to review, in 2025, if you are an employee of any age, you can contribute $23,500 as the maximum contribution. However, if you're 50 and over, you can contribute another $7,500. However, that would be around $31,000 if you were 50 and over and were trying to do the catch-up contributions. But in these unique years, and it's funny because it's 60, 61, 62, and 63, but not 64, not 65.
It's just those particular years, and it's judged by what age will you be on December 31st. If your birthday is December 31st and you turn 64, and even though most of the year, you would have been eligible. Unfortunately, you're not eligible. It's deemed by the age of the December 31st. In any case, in those circumstances, you could do instead of the $7,500, you could do $1,150 extra. The $7,500 catch-up contribution that's been there for a while, that goes beyond the 63. That's right.
If that person who is 64, 65, et cetera, they could continue to use that $7 ,500 figure as their catch-up contribution. It's a little bit of an oddity. I think this was from Secure Act 2 .0 that we saw this enter the details. For people who are in a simple IRA, the numbers are different, but they too have not only a catch-up contribution, but an extra one for those in that 60, 61, 62, 63 age range. In this instance, the base contribution you could do if your employer has a simple IRA is $16,500.
For anyone 50 and over, they can do $3,500 more. That brings you to $20,000 for your maximum you could do when you're in that older age range until you get into this same deal with a 60, 61, 62, 63. It's not muddied enough. In this case, instead of $3,500, you could add $5,250 to that number. If you thought that wasn't confusing enough, there's one more wrinkle to make it even more confusing. Oh, good. Let me see. What were the circumstances for this?
If your employer plan has 25 or fewer employees, instead of the $3,500 figure, you might be able to use the $3,850. There's a little bit of an extra that's able to be increased. Just an oddity. Who came up with this stuff? Congress, of course. Does that explain it? Enough said. It sounds like it was a negotiation and they just said, let's meet in the middle and go home. Throw you a bone. Let's be done already.
Yeah. Anyway, if you need help finding out where you fit into these details, don't hesitate to reach out to us. We can help you navigate some of these things. It is a challenging time sometimes to be clear on where do you fit? That one was driving me crazy because I was looking at someone I know who is 64 at the end of the year. Last year, they didn't have the option to participate in these extras. I was like, oh, I got to tell them.
Oh, they can't do it because they're going to be 64 by the end of the year. In any case, you got to navigate these rules a little bit more carefully. Don't assume that you don't have the ability to do more. You may have this window with different, depending on your age, you may have the window where you can contribute considerable amounts to your retirement plan and always appealing to try to do the maximum your budget will allow or the plan will allow.
Well, we come across plenty of individuals that we talk to, clients or just folks that we come across who are in that age like, oh, I'm 60. I don't think I saved enough for retirement. What should I do? This is a great option to really maximize those 60, 61, 62, 63 years. Yeah. I think you guys talked about a mailbag situation where someone didn't, and thanks for doing that. That was a good episode. I enjoyed that with the circumstance where someone was late getting started.
Well, if that's the case, I know it's never easy if you haven't started to suddenly do a very dramatic amount, but as I say, maximize what your budget will allow or whatever your plan will allow. If you can do as much as that, sooner is better. You can't look back. You only can look ahead. You got to do what you can, as much as you can, as soon as you can. These amounts do not include the match from your employer. Good point. Yeah, that's a great point.
With employer plans, it can work in different ways, how much your employer matches. With a simple IRA, it's really two options. They either give a 2% which is just a base contribution or a 3% match. Those can vary from year to year with some disruption, but generally that's what it works out to be. Then that sits on top of what you put in.
As we've said in the past, when there's an employer contribution, a matching contribution, you have to at least do what gets you the full match because otherwise you're choosing to get paid less than your employer is offering you as a salary. So take advantage of it. Anything else to add, do you think? There's plenty of complexities to this.
When it comes to contribution amounts, when it comes to IRAs, when it comes to other types of plans, there can be various things, but I'm inclined to think this is enough confusion for today. What do you think? It's enough on that subject, but just one quick don't assume when it comes to employer plans. We see individuals come in who sadly don't know what their investments are in inside of their employer plan.
Sometimes we see people who have been working for a long time and it's all on some capital preservation cash type setting. They may be young and have plenty of runway to take some risk and have the benefit of some strong gains over time. So I guess in that category of retirement plans, don't assume that you're invested in the right place for your retirement goals just because you signed up for your 401k. Absolutely.
What you did the day you got hired isn't necessarily what you wanted to be forever. I think a lot of times to your point, Jeff, people just pick something when they're getting started and don't really, just because they're bombarded with all kinds of benefits, decisions, and all kinds of challenges. That's a good thing to review from time to time. Certainly good to get input from your advisor in the process. While we're on it, don't assume your beneficiaries are current. Or that you have one.
Or that you have one. Sometimes plans change. Your employer made an employer plan originally and then they switched it to another provider. Don't assume that all your beneficiary information came over the way it should. These are things you have to really check periodically. It's surprising how often people have the wrong, either not have, they might have an estate as their beneficiary, which kind of kills a lot.
We talked about this in a prior episode, but it's not the ideal way to plan for maximizing your beneficiary structure benefits, the design of this stuff, the way it can have a longer time to take it out of the IRA. It's just problematic. It may not go to who you want it to go to. It may be your ex-spouse.
Yeah. For people who've been divorced or even lived with someone, you got to update this stuff because sometimes who you put 10 years ago, you may just assume it was someone else and it may not be who you want it to be. I've seen a number of stories like that. That Ed Slott program we were talking about in the prior conversation, Jeff, they routinely talk about these circumstances where the wrong person was not who they intended to be the recipient of the retirement plan or the IRA.
These are contracts. When you fill out these forms, these are contracts. Just because you get married or you get divorced does not per se change the contract. Don't think it's automatic. Right. Exactly. Good point. The old boyfriend or girlfriend may be getting instead of your spouse or whatever, right? See who gets the last laugh on that one. Well, anyway, those are a couple of good things. We've got some other things not to assume.
Jeff, you had some interesting stories more related to social security. Let's talk about that too. Over the past couple of months, I've had two similar client experiences which have the same don't assume. I'll tell them as one story because they're so similar in stories. These individuals worked in Massachusetts in the public sector. One worked in law enforcement and one worked in town administration, we'll call it. They both had long careers. One is retired. One is about to retire.
Both of them told me the same thing when we were doing a review. They both said, well, I have my pension, but I don't have social security. At first blush, knowing both of these gentlemen for decades said that's probably right to myself, but I said, well, let's get your earnings and benefits statement from social security just to see because did you work in high school? Yes. Did you work through college? Yes. Did you have a summer job? Maybe.
Did you have a brief separation from public service between jobs and all these things? Did you have a small business? Both of these gentlemen assumed that they were going to get their earnings and benefits statement and it was going to show maybe they had 10 or 20 quarters. To the listeners who don't know, you need 40 quarters of qualifying income to be eligible to collect social security. It's roughly 10 years, but it doesn't have to be all together.
The income level for those given quarters is still relatively low. Back 30 years ago, it was really low. Your part-time summer job can qualify for quarters when you were a teenager and so on. Maybe that craft business you had while a stay-at-home mom or I don't know. There's all these different things. Summer camp counselor, working in college at the local coffee shop. Let me tell the end of the story. One gentleman, the first gentleman in sequence, he's 67 and he had never pulled his benefits.
He pulled it and he's entitled to social security. Perfect. He's getting an extra $800 a month that he didn't even think was possible. That's meaningful bonus, little income that's coming through. $800 a month is not nothing. That's some good bills. He is thrilled to get it. I should be on a commission. That's going to help. You get a piece of the action. Like in my lawyer days, a third of it or something. He was very thrilled and thankful and that's all good.
The other gentleman who just got it, this is probably a week or so ago, is two quarters short. He's at 38 quarters. He has a clear vision. It went from, I think I may work when I retire, which he's planning on retiring later this year. I think I might get a part-time job to I'm getting a part-time job and I know how much I need to make. Yeah. Yeah. That's awesome. Under this theme this week is don't assume.
Both of these gentlemen had worked decades consistently, straight through in public service and have not been contributing to social security. Therefore, they assumed that they did not have a benefit. Jeff, I'm sorry. It's probably worth reiterating a little about the Social Security Fairness Act as part of what you're talking about. Just maybe share a little bit more about it.
Yeah. Prior to this Social Security Fairness Act that passed during the Biden administration, it was signed by President Biden a few months before he left office. Many public employees assumed that they would not get social security, not because they didn't work 40 quarters, but because they were going to have a government pension. They said, oh, I have a government pension. I heard you don't get social security. That was a wrong assumption because there used to be an offset. But not to go back.
Let's look forward. Since the Social Security Fairness Act, there is no offset any longer for public employees who have a pension that they earned. They still have access to social security. Now they have access to the full social security benefit that they received because of the private sector work that they earned over the years. So hopefully people who work in public service know that part of it.
But I still think that there's many who believe that they're not eligible because they haven't worked enough. And in fact, they may have, or they may be so close, like the second example, they just need to work part time for months or maybe a year or two to be able to collect social security. And also, there's just no harm in checking. It's very easy to set it up. It's just ssa.gov. And I had the same situation with a family member of mine.
And she's like, there's no way I qualify for social security. I didn't work enough. There's no way. And when you log in, it shows your earnings every year for your whole life. And she's like, oh, yeah, this one was this, and it turns out she is eligible for social security. So easy to check and definitely worth doing. Because, you know, you might not remember, but there are probably some jobs you had that you're paying into social security. Absolutely. And on the flip side of that, don't assume.
Don't assume social security has attributed your income correctly. So for everyone who's listening, if you don't get it once a year as part of your regular routine of doing a review with your financial advisor, as Russ said, log on to social security, ssa.gov, create an account. You're looking for your earning and benefits statement. And you'll see how many quarters you have. You'll see your estimated benefit at 62, 66, or 67, 70, and so forth.
And then the back page lists all of your income for every given year. Now, you might not remember if you earned 1700 or 17,000 in 1982. But look at it. Does it seem right? Is there a series of zeros there that you know you're working? Or maybe the last few years that doesn't make sense. Maybe it wasn't attributed correctly. Just review it. It's like anything. Check your credit report. Check your net worth statement. Check your budgets. Check social security statement.
Don't assume that it's correct. A good point. I think it's really important to spend some time on this. And, you know, as much as we talk about it a lot, that opens up other decisions as well as to questioning the timing of when you decide to turn on your benefits. If you should log into the social security website, you do have calculators that can be a resource. There are tools.
Your financial plan with your financial advisor can be really important context to help you navigate some of these decisions. Now, much of it is determined by how long you're going to be receiving social security. And, of course, none of us know the answer to that question. But if you said, well, I think health is impaired, well, that might lead you down one path. If you say, no, I think, you know, I'm in good health. I hope to have longevity. That's another path.
Keep in mind, it's not just about you as the recipient. If whoever is the larger income earner who would benefit from social, the larger social security benefit in a married couple, that's the benefit that continues for as long as whichever of you lives longer. So, you know, that's another variable to, you know, add to the complexity of these decisions.
But, you know, don't assume that, you know, just because you might not think you're going to live as long that you shouldn't think in terms of a delayed benefit because it might maximize how much you get for the whoever lives the longest of the two of you. Anyway, it can be complicated. Whenever you bring this subject up, Chris, I have these visions of certain clients floating through my head that I needed now. Well, I was going to say we have that, too.
But of clients who said, I'm not going to live that long. And they weren't doing it to get their social security early. That's that they fundamentally believe that whether it's family. No, no man in my family has lived past 72 or whatever. Right. Right. You know. Yeah. I've heard that many times. I know what you mean. And, you know, last time we heard him say it was that his 85th birthday.
Yeah. Yeah. Yeah. I've had that happen many, many times where someone, you know, in their 60s says, yeah, no way. Right. And then they do live into their 80s. And now how long? You know, who knows? None of us. None of us knows how long we're going to live. You're making a best guess. It's not there's no, you know, crystal ball on these things. But I think you're making a probability kind of thought process of, well, between the two of us, you know, how will this play out?
And I think you also have to put it in the context of everything else that's going on in your plan. Because sometimes I get it. You know, people say, well, gee, I really want to start this sooner because, you know, I need the cash flow. And if it doesn't have a huge impact on the financial plan, well, fine, then, you know, that that's comforting.
On the other hand, sometimes it really does have a significant impact that you're I've said this before, but sometimes you're better off to spend your own money sooner because you spend less of your money over a lifetime. You know, when you get that Social Security coming in later on on a larger figure. So these are things to consider in any case, whenever we talk about Social Security. It can get complicated, but I think, you know, what you said, Jeff, is don't assume.
Make an effort to get that statement and maybe to your surprise, particularly those government employees, you may have a nice benefit coming your way or just a little bit of part time work before you start to dismiss that possibility and maybe as you semi-retire or something, you can generate a nice, healthy income stream from Social Security that you can claim now without having to worry about offsets and all the rest of it. Windfall elimination provision or any of that stuff all gone away.
So definitely talk to your financial advisor. That's, I think, you know, the bottom line of these various topics of don't assume. Go through the process of a financial plan, review your details of beneficiaries and taxes and Social Security decisions and so on. Take some time to go through that with your financial advisor. And if you need help in that process, don't hesitate to reach out to us. We're here to help.
With that in mind, you can connect with us by reaching out to our phone number is probably the easiest way. 508-771-8900. Or you can connect with us by email and we'll give that information as we wrap up the show. And thank you for being with us. And until next time, keep striving for something more. Thank you for listening to Something More with Chris Boyd.
Call us for help, whether it's for financial planning or portfolio management, insurance concerns, or those quality of life issues that make the money matters matter. Whatever's on your mind, visit us at somethingmorewithchrisboyd .com or call us toll free at 866 -771-8901. Or send us your questions to amr-info at wealthenhancement.com.
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