Author: Kathy Williams

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How Has the Pandemic Affected Divorce?

CREDIT: Ilia Burdun | Dreamstime.com

How tired are we of the COVID virus and the ensuing lockdowns, employment loss, and total disruption of our way of life? Luckily, humans are very adaptable (Zoom, masks, six feet apart, online shopping), and the rollout of vaccines (though slow) gives us a glimmer of hope that the “end” is coming this year. We will certainly be a different country at some levels, but many of the problems from the past are still there and will surely resurrect as some level of normalcy returns.

As a Certified Divorce Financial Analyst, I tend to look at trends in divorce and found conflicting information on the surge or diminishment of divorce during the pandemic: New York Post: “Divorce rates skyrocket in U.S. amid COVID-19 pandemic”; Institute for Family Studies: “Divorce is down during COVID”; Web MD: “Pandemic Drives Couples to Divorce or to Seek Help”; Bloomberg.com: “Divorces and Marriages Tumbled in U.S. during COVID, Study Shows.”

Ilia Burdun | Dreamstime.com

At first glance, it would seem that divorces would spike during such a stressful time, given that money (or lack of) is a top conflict behind many marriage dissolutions. However, as with the Great Recession in 2008/2009, it might be a money issue that actually keeps a couple tied together until a recession — or pandemic — ends. Additionally, the shutdown of courthouses and law offices this spring most surely slowed many in-progress filings, so I have to believe that any trends that emerged in 2020 might be short-lived.

If you are happily married, I congratulate you! You can finish reading this article and keep it in mind when you converse with friends who might not be so happy. If you are contemplating a separation or divorce, I wanted to give you some ideas on important topics you should consider as you work through this process.

Know about your money. Know what you have (assets), know what you earn (income), and know what you need (budget). If you don’t know anything about your money, you must learn. Get copies of bank account statements, 401ks, pension benefits, etc. and become familiar with them. This allows you to begin to understand the effects of a divorce prior to actually starting the process and helps put you in a position of strength for negotiation. Knowledge is key.

Hire experts to help you. A good family law attorney can advise you on the divorce process and potential issues that might arise. A good financial advisor (CDFA) can take your information and project success or pitfalls in your current or future living objectives. Knowledge is key.

Deciding to divorce should be the most emotional part of the process for you. Once you have made the choice to pull the trigger, remember to keep your emotions in check. Anger, fear, resentment, and hostility are all valid feelings, and I encourage you to work through these issues with a trusted friend or counselor. But if you let these feelings drive your process, you will be miserable and potentially make costly mistakes. Calm is key.

Protect your children and yourself at all costs. If you are in an abusive relationship or fear for your life, leave. If you are not, be watchful during the process to make sure it doesn’t become abusive. And whatever you do, never talk bad about the other spouse to the kids that you have with that spouse. No matter the age, children will feel some sense of responsibility to protect their love for that parent. This is a position you should never put them in. Love is key.

I hope that divorce isn’t in your future, but if it is, remember to be knowledgeable, calm and protective.

Kathy Williams, CFP, CDFA, is Principal and Senior Wealth Strategist at Waddell & Associates.

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Hello There! I Have a Date For You

CREDIT: Zimmytws | Dreamstime.comS

You might have read the above headlines and thought “Oh, fun! A date!” It’s a trap, but I make no apologies, as I needed to say something other than “Medicare” to get your attention. Now that I have you, I hope I can keep you a little longer.

With all things governmental, there are special dates that must be observed. April 15th for taxes. December 31st for year-end. Turn 18 and you can vote. Medicare also has dates, but luckily there are ranges that give windows of opportunities to add or make changes to Medicare choices. Since we are now at the beginning of one of those windows, I thought it would be helpful to understand what they mean and why you might be interested in the opportunities afforded.

Zimmytws | Dreamstime.comS

What are those letters again? Here is a quick primer of Medicare parts:

Part A covers hospitalization and is generally available to you at no charge.

Part B covers doctors and has a monthly premium that can be increased/decreased each year based on your modified adjusted gross income.

Part C is Medicare Advantage, which includes Parts A and B and sometimes Part D, but plans are limited to your local area and resemble HMOs or PPOs. There is a premium that is based upon the plan options you choose. Part C is provided through a Medicare-approved private company and might also offer vision and dental coverage.

Part D covers prescriptions and has a monthly premium.

As a rule, you will file for Medicare Part A at age 65 since there is no cost to you if you are a covered worker. Also as a rule, you will file for Medicare Part B and Part D at age 65 or when you lose creditable employer coverage, whichever comes last. Why the difference? While you are covered at work, there is no need to additionally pay the Medicare premium for Part B and D. This applies if your company has 20 or more employees, so check with your HR department to verify before you delay.

So, what are the special dates for Medicare?

Initial enrollment period (for all parts): seven-month period of first eligibility, which includes the three months prior, the month of, and the three months after your 65th birthday.

Special enrollment period (for all parts): eight-month period starting the month after your employment ends or your current employment group insurance ends. Note this does not include COBRA coverage or retiree health plans, as these are not considered current employee coverage.

General enrollment period (if you didn’t sign up during the initial or special enrollment periods): January 1st through March 31st each year. Coverage will start July 1st, and premiums could be higher if you didn’t sign up when you were first eligible.

Open enrollment period (Parts C and D): October 15th through December 7th each year. This period allows you to add Part D if you didn’t when you first enrolled in Medicare (there could be a higher premium), switch from Original Medicare (Parts A and B) to Medicare Advantage (Part C) or back if you started with Part C, switch from one Part D plan to another Part D plan, or drop your Part D coverage completely.

As you can imagine, there are plenty of “if this, then that” scenarios involved with Medicare. If you fail to obtain coverage in a timely manner, premiums can be permanently increased and you might find yourself without coverage for a period of time. But if you are observant of the important deadlines and are timely in your actions (this is where your wealth strategist can help), you can successfully navigate your dates.

Kathy Williams, CFP, CDFA, is Principal and Senior Wealth Strategist at Waddell & Associates.

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When Should You Take Social Security?

As we head into the last stretch of summer, my thoughts go to my favorite part of August — my birthday! This year, I will be one year away from my ability to start drawing my Social Security benefit, albeit reduced since I would be starting at the earliest age of 62. And so I will begin the decision-making process: Should I draw, or do I wait?

Let’s start with a quick synopsis of Social Security. If you have earned income, you pay a percentage of that income into the Social Security system. The amount that you contribute over time will dictate what your monthly benefit will be when you begin receiving payments. Your primary insurance amount (PIA) is the benefit you will receive if you begin benefits at your normal retirement date (also known as your full retirement age, or FRA).

Kathy Williams

Let’s pretend I was born in 1960. Currently, if you were born in 1960 or later, your FRA is 67. What if I want to start receiving my benefits as early as possible, which is at the age of 62? Since this is five years prior to my FRA, Social Security will reduce my benefits a little for each month that I begin receiving benefits before age 67. Why? Because they will be paying me a benefit for a longer period of time than if I waited until my full retirement age of 67. A five-year (60-month) reduction is 30 percent of FRA. If my age 67 benefit is $1,000 per month, my age 62 benefit will drop by 30 percent to $700 per month. Except for certain circumstances, this is a permanent reduction in my benefit. Yikes!

What if I want to get a bigger Social Security benefit? Maybe my handsome husband is rich and I don’t need to begin taking benefits until later. Well, Social Security has a plan for that, too. For each year that I defer taking my benefit past my FRA of 67 up to age 70, I will get an 8 percent increase in my monthly check, guaranteed! This would amount to a 24 percent bump, which is a fun benefit … if I live that long. Of course, I can start any time during that three-year period and still get the raise for the months I defer.

Here is the easy math: If I begin my benefit at FRA of 67, I will get $1,000 per month. If I begin my benefit at age 62, I will get $700 per month. And if I begin my benefit at age 70, I will get $1,240 per month. How do I know which door I should choose? The only way I can give you a definitive answer is if I know exactly when I am going to die. That makes the math very easy. Other than that, my life and lifestyle will hopefully give me enough clues to make an educated decision. Here are some things I will consider:

How much money do I have saved?

How much money do I spend?

How much money should I spend?

What other income will I have during retirement?

Am I married?

Am I divorced?

Am I still working?

How’s my health?

The answers to these questions will help steer me to the optimal option available for my circumstances. I shouldn’t assume that starting at age 62 always makes the most sense “before Social Security runs out of money.” Nor should I assume that waiting to the age of 70 will always make the most sense. I would recommend consulting with my personal wealth strategist (me) to help devise my plan, and would advise you to do the same.

Kathy Williams, CFP, CDFA, is Principal and Senior Wealth Strategist at Waddell & Associates. She can be reached at kathy@waddellandassociates.com.