Category: Industry Updates

How to Invest an Inheritance for a Comfortable Retirement

Inheriting a large sum of money can be a blessing or a curse, depending on how you approach it. When your net worth takes a significant leap overnight, that creates new opportunities, financially speaking. If you’ve recently inherited a windfall or you’re set to in the near future, here are the most important things to keep in mind when you have your eye on a comfortable retirement. Read More

Governor Cuomo Signs New Minimum Wage Law

The New York State Governor Andrew Cuomo reached a deal with the State legislature to increase the State minimum wage over a gradual process, which is outlined as follows:

  • For workers in Nassau, Suffolk and Westchester Counties, the minimum wage will increase to $10 at the end of 2016. It will then increase by $1 each subsequent year, ultimately reaching $15 on December 31, 2021.
  • For workers in New York City employed by large businesses (those with at least 11 employees), the minimum wage will increase to $11 at the end of 2016. It will then increase by $2 each subsequent year, ultimately reaching $15 on December 31, 2018.
  • For workers in New York City employed by small businesses (those with 10 employees or fewer), the minimum wage will increase to $10.50 at the end of 2016. It will then increase by $1.50 each subsequent year, ultimately reaching $15 on December 31, 2019.
  • For workers in greater New York, the minimum wage will increase to $9.70 at the end of 2016. It will then increase by $0.70 each subsequent year, ultimately reaching $12.50 on December 31, 2020. After that time, the statewide minimum will continue to increase on an indexed schedule to be set by the Director of the Division of Budget in consultation with the Department of Labor, before it ultimately reaches $15 per hour.
  • In all areas, the minimum wage for restaurant employees has increased to $7.50 per hour.

Click for full details regarding Governor Cuomo’s new Minimum Wage and Family Leave Law.

2016 Social Security Revisions to Take Effect May 1

The Bipartisan Budget Act of 2015 was passed by Congress in October of 2015 and the modifications it proposes will officially take effect on May 1. These latest changes were put in place to prevent people from taking advantage of many of the optimization strategies.

This new law will eliminate the “file and suspend” strategy and will alter many beneficiary benefits. These revisions were put into place in order to stop higher earners from using certain strategies, but it also affects lower-income people. With the new law, lower-earning spouses may be forced to take reduced spousal benefits. The sooner a spousal benefit is claimed before full retirement age, the smaller the benefit will be.

Another change to the Social Security laws is that a beneficiary will no longer be able to restrict an application. Beneficiaries will be required to take the highest benefit to which he or she is entitled. Someone who earns more money than their spouse and applies for Social Security at full retirement age will no longer be entitled to receive the spousal benefit if their own benefit is higher.

Additionally, as part of these revisions, the Social Security Administration will automatically award the beneficiary the highest benefit. They will have to receive their own retirement benefit or opt to hold off on the benefits. In order to use the restricted application strategy, a person must be at least 62 or older as of January 1, 2016 and only those who are between 62 and 66 over the next four years will be able to use the strategy.

Changes have also be implemented to prevent people from suspending benefits, then later reversing that decision and ultimately claiming retroactive benefits back to the day of the original application.

These revisions were put into place in order to stop higher earners from using certain strategies, but it also affects lower-income people. With the new law, lower-earning spouses may be forced to take reduced spousal benefits. The sooner a spousal benefit is claimed before full retirement age, the smaller the benefit will be. If you think about it, women who were not part of the workforce because they chose to care for their families instead, would now be penalized with a smaller benefit.

Singles are also affected as they will no longer be able to use the ‘file and suspend’ strategy in order to receive a larger retroactive amount. Beneficiaries cannot file for dependent benefits for a child while putting off their own benefits and divorced couples cannot use the restricted application strategy to take spousal benefits while they let their own benefits increase. But, a person divorced for more than two years will be able to claim a spousal benefit if the ex-spouse files and suspends or delays his or her benefit.

Unchanged is the survivor benefit, whereas a survivor is eligible for 100% of the deceased spouse’s benefit. Beneficiaries will still able to claim a survivor benefit first while letting his or her own benefit increase until 70 years old. Or, he or she is allowed to claim their own benefit early and then later on claim a survivor benefit at full retirement age.

Two big strategies are eliminated but beneficiaries can still receive delayed retirement credits up until the age of 70. Plus, whether it be full retirement age or later, a beneficiary is still allowed to end his or her own retirement benefit.

If you have any questions or issues, Katz Viola Lebenhart & Mauro has a team of professionals available to help. For more information, call (516) 938-5219.

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