Vol. 30, Issue 7 July 2019 Retirement WatchBOB CARLSON’S

BOB CARLSON'S

Retirement Watch

Vol. 30, Issue 7 July 2019 Strategies for a Secure Future

Dear Reader: What are the biases in your portfolio? Every portfolio is biased and that

isn't necessarily a bad thing. You should know your portfolio's biases and be sure they are what you intend.

By bias, I mean the economic and investment environments that are most favorable for your portfolio.

Most portfolios consist primarily of U.S. stocks and bonds with a majority of the portfolio in stocks. That portfolio is biased toward continued growth in the U.S. economy and assumes the U.S. economy and stock indexes will outperform most of the world.

Another bias in the portfolio is low

inflation that will be stable or declining. Most portfolios have few investments that do well when inflation is rising.

A stock and bond portfolio also has few protections against rising interest rates, as investors learned in the last quarter of 2018.

As I said, having biases in your portfolio isn't bad, as long as they are intentional.

Too many investors have unintended biases in their portfolios and don't realize it until the investment environment changes.

It also is important to decide in advance what, if anything, you'll do when we enter an economic environment

that doesn't match the biases of your portfolio. Will you hold on and wait for the environment to change? Or will you adjust the portfolio?

I prefer to always have some balance and diversification in a portfolio, especially in these volatile times when markets can turn on a headline or a tweet. I don't want to bet on one economic environment or trend. I always want investments that have margins of safety. I don't want to rely on the central bank or some other factor to be supporting prices.

Be sure you know the biases in your portfolio and that they're what you intend.

The Rich and Famous Have Important Estate Planning Tips For You

Celebrities and the very wealthy frequently make headlines with estate planning problems that provide important lessons for the rest of us. Their lifestyles might be different, but the rich and famous deal with as many estate planning issues as the rest of us. Here are some celebrities whose

estates made headlines and what you can learn from them.

Prince. The singer/songwriter left an estate estimated to be worth $300 million and is considered one of the top-earning deceased celebrities. The already-valuable estate continues to increase with the new earnings.

Unfortunately, Prince neglected the most basic step. He didn't have a will.

With no will, Prince had no say in deciding who would inherit his estate

and the future income from his songs, recordings and other assets. State law, in his case Minnesota's, decides who receives the assets and income, as well as the percentage of each.

Of course, once it was known there was no will, many people claimed to be related to Prince. Everyone with a claim took a DNA test. The DNA tests determined Prince had one full sister and five half-siblings who qualified

(Continued on page 2)

In This Issue

Congress Plans to Kill the Stretch IRA. . . . . . . . . . . . . . . . . . . . . 4 Interest Rate Trends Changed the Annuity Market . . . . . . . . 6 Valuable Social Security Strategy Isn't Closed Down Yet. . . . 8

College Football Star Has Lessons for Your Grandkids. . . 9 Why Portfolios Need More Diversification Now. . . . . . . . 10 How to Invest With Higher Volatility, Uncertainty . . . . . 11 A Good Thing Taken Too Far. . . . . . . . . . . . . . . . . . . . . . . . . 16

2 July 2019

Actions to Create the Retirement You Desire

as relatives under Minnesota law. The Naturally, the wills are being chal-

Tom Petty. Some estate plans

estate would be divided among them lenged by some family members who smooth over or work around family

in the proportions set under the law. could inherit more if Franklin is ruled conflicts. Others make them worse.

That likely will create other problems to have died without a will and state law Petty was somewhat unique among

in the future, because these relatives determines how the estate is distributed. celebrities in that the singer/songwriter

have to work together to manage the

had a full estate plan in place and it had

assets and income. Prince didn't put a

Preparing a will

been updated shortly before his death.

structure in place to manage the assets, which we'll discuss shortly.

Also, there still are other potential heirs. There's a man Prince's father referred to as his brother and treated as a brother, though the two had

yourself, especially a handwritten one, eventually can cost a lot more money than it

saves.

Unfortunately, the plan tried to skirt around the potential tension between his widow and two children from a previous marriage.

Most of Petty's assets were in a living trust with his widow as sole trustee.

no genetic or legal relationship. That

That appears to give her full discre-

man's descendants claim they qualify Franklin's estate is in for a long court tion and decision-making authority.

as relatives. The probate court judge process to determine if the hand-

But the trust also said the widow and

ruled against them, but they're appeal- writing was Franklin's, if she was of daughters "shall be entitled to partici-

ing. The estate could be tied up in the sound mind when they were written, pate equally in the management" of the

courts for a while.

and if the latest one revokes or merely property.

That's all because Prince didn't pre- amends the earlier wills.

Petty's widow took the position that

pare even a basic will.

If the court accepts a will, it must means the three should share equal-

Aretha Franklin. Almost as bad as interpret the handwriting, which ap- ly in the income and cash flow. The

not having a will is having multiple, parently includes cross outs.

daughters believe it means that all

contradictory and poorly prepared

major decisions are decided by a vote

wills. Initially, lawyers and family mem-

bers said the "Queen of Soul" didn't have a will.

After a few months, three wills were

In blended families and others in which conflicts are likely, details need

to be spelled out.

of the three. That, of course, means the daughters could outvote the widow all the time.

The three don't agree on how to manage the estate assets, so they are

found. One will was found tucked in a

mired in litigation and no actions

spiral notebook that was under some Preparing a will yourself, especial- can be taken to create new sources of

furniture cushions. Two others were ly a handwritten one, eventually can income.

found in a locked cabinet; it took a

cost a lot more money than it saves.

In blended families and others in

while to locate the key to the lock.

Franklin's estate is going to spend more which conflicts are likely, details need

Also, all the wills were handwritten. money sorting out the issues than it to be spelled out. Petty could have

Only 26 states consider handwritten would have cost her to work with an required that professionals be hired to

wills to be valid. One of them is Frank- estate planner. In addition, it's likely to manage the assets or spelled out how

lin's home state of Michigan.

be years before the issues are decided. his family was to "participate equally"

Bob Carlson's Retirement WatchTM (ISSN 1077-3924) is edited by Robert C. Carlson and published monthly by Eagle Products, L.L.C., 300 New Jersey Ave, NW, Suite 500, Washington, D.C. 20001, Customer service: 800-552-1152. E-mail: info@. Website: . Subscription cost is $99 annually. Copyright 2019 by Eagle Products, L.L.C. POSTMASTER: Please send address changes to Bob Carlson's Retirement Watch, Subscriber Services Department, P..O. Box 1901, Williamsport, PA 17701. Postage paid at periodical rates at Centreville, VA and additional mailing offices. The information in this newsletter is from sources believed reliable, but no guarantee or warranty is made as to its accuracy. The editor, owners, and publisher, as well as their clients, employees, associates and/or family may have positions in securities and instruments recommended or reviewed in this newsletter. The editor and publisher assume no liability for the reader's use of the information contained herein. Letters and e-mail from readers are encouraged. Editor: Robert C. Carlson; Editorial Director: Paul Dykewicz; Group Publisher: Roger Michalski.



July 2019 3

so no one could offer a different inter- estates provide positive lessons of

That's why we know so little about

pretation.

what to do.

Taylor's net worth and how it was

Petty also could have emulated

Sinatra knew there was potential distributed. It also is why we don't

Frank Sinatra and others. Sinatra gave for conflict between his children from hear about any acrimony regarding

each heir separate assets in his or her his first marriage and his widow (his Taylor's estate.

own name, so the group didn't have to fourth wife).

When you create a living trust, be

agree on how to manage the assets.

sure to transfer legal title to your assets

Stan Lee, Casey Kasem, Peter Max, Brook Astor and others. Elder financial exploitation and abuse might be the pre-eminent estate planning problem today. Being wealthy doesn't protect you, unless you made solid

Elder financial exploitation and abuse

might be the preeminent estate planning

problem today.

to the trust. Don't be like the many people who had lawyers draft trust agreements and then failed to follow through and be sure the trusts were legal owners of their assets. The trust is useless if it doesn't have legal title to

plans for the possibility you might be-

assets.

come frail or have diminished capacity. To deal with the conflict, Sinatra's

Luke Perry. This is another positive

That's what happened to each of will first provided significant details of case. The actor died unexpectedly of a

these famous people. In most cases, how assets were to be distributed. The stroke. Despite being relatively young

one or two people isolate the person will also included a no-contest, or in and apparently healthy, Perry had a

and gain control of the income and terrorem, clause. The clause provides solid estate plan in place.

assets.

that if anyone challenges the will, that Perry was on life support in the hos-

The best protection against this is person is disinherited. Sinatra's was a pital. After five days, his family decided

to have a team of people ready to act detailed clause, citing 13 specific legal to remove the life support. They were

on your behalf instead of waiting until actions that would cause an heir to be able to do this without a court order,

it's too late and you become reliant on disinherited. No one challenged the because Perry had an advance medical

one person.

distribution of the estate.

directive that enabled family members

You can move assets to a living trust Elizabeth Taylor. You don't hear (or others) to make decisions when

and have several co-trustees take over much about Taylor's wealth or estate. he wasn't able to do so. Otherwise,

management of the assets when that's There's a good reason for that.

the family would have had to ask for a

appropriate. You also can have a power Taylor was a sharp business person court order. That would have opened

of attorney naming agents to handle who was married multiple times and the possibility that one or more family

your assets that aren't in the trust. An had a complicated family situation. members could challenge the request,

advance medical directive that names She knew there were potential conflicts as has happened in many families, and

people who will make your medical over her estate and liked her privacy. required him to be left on life support

decisions also is key.

Taylor created one or more living indefinitely.

Carefully select the people who will trusts and transferred most of her

Perry also reportedly had a will and

take these roles. You want people who assets to them. Even rights to her name living trust in place that divided his

are qualified to make the decisions and and likeness and publicity rights were assets among his loved ones. Because

who will put your interests first. It's in trust. A living trust avoids probate, Perry had a cancer scare a few years

often a good idea to have at least one so there's no public record of the value earlier, he realized he wasn't too young

professional, such as an attorney or of the assets, who received them and to prepare an estate plan and put one in

accountant, involved.

other matters. The trusts also are hard- place to protect him and his family.

Frank Sinatra. Some celebrity

er to challenge than a will.

4 July 2019

Actions to Create the Retirement You Desire

Congress Plans to Kill the Stretch IRA, But You Can Do An End-Around

We're nearing There would be no taxes on the Roth after-tax money, preferably in tax-ad-

a critical time for IRA distributions. The Senate version vantaged ways.

many Individual wouldn't apply the 10-year distribution To protect the money from mistakes

Retirement

requirement when the deceased's IRAs and waste by your heirs, you can put

Account (IRA) were worth less than $450,000.

it in one or more trusts. The trust

owners. Ad-

Both versions would apply to any agreement and the trustee determine

vance IRA planning will be imperative IRAs inherited after 2019.

how the money is invested and when it

if you want to maximize the after-tax

is paid to the beneficiaries.

value of your IRA for heirs and avoid the new tax burden Congress has in mind.

As I explained last month, despite the deadlock and division in Washington, the Setting Every Community Up for Retirement Enhancement (SECURE) act moved through the House of Representatives by a vote of 417 to 3 in May.

Under the SECURE Act, beneficiaries (other

than minor children and a few other exceptions) would have to distribute

and pay taxes on an inherited IRA within 10 years, even Roth IRAs.

Convert to a Roth IRA. We discussed many times how to determine when converting a traditional IRA to a Roth IRA makes sense. In effect, you're paying taxes for your heirs and setting them up for a stream of tax-free income.

Unfortunately, the proposed limits on Stretch IRAs would apply to Roth IRAs as well as traditional IRAs. Your

A version of it is likely to pass the Senate

heirs still would have to distribute an

and become law later this year.

Fortunately, there are strategies that inherited Roth IRA within 10 years

The SECURE Act and its Senate

will provide the advantages of a Stretch under the SECURE Act.

counterpart have a number of provisions IRA even if Congress passes a version IRA Leverage Strategy. You can

designed to expand retirement savings of these bills. These strategies also help guarantee your heirs will receive the

opportunities and would delay required you avoid the dreaded RMDs during current after-tax value of your IRA,

minimum distributions (RMDs).

your lifetime. Some of the strategies and perhaps more. The guarantee

To make up for the lost tax revenue, are best for people who have enough holds regardless of what happens in

the SECURE Act and the Senate ver- assets and income outside the IRA

the investment markets or with the

sion would end the Stretch IRA.

that they consider the IRAs to be for IRA rules.

The Stretch IRA is a strategy in

emergencies or something to leave

Suppose Max and Rosie Profits are

which children who inherit an IRA their heirs.

age 71. Max has a $1 million tradition-

make maximum use of the tax code

To increase your family's after-tax al IRA. He'll soon have to take RMDs

to minimize distributions for years. In wealth, plan early and find the strategies though he doesn't need the income.

many cases, the RMDs are less than that best fit your goals and situation.

Max and Rosie form a trust and

the investment return of the IRA, so

Empty IRAs early. This is the

name their two children as beneficia-

the IRA not only lasts for decades but simplest strategy and provides a lot of ries. They transfer the annual RMDs to

increases in value.

variations. This is what I recommend- the trust. There are no gift and estate

Under the SECURE Act, beneficia- ed years ago before the other strategies taxes because of the annual gift tax

ries (other than minor children and a were available.

exclusion, which is $15,000 in 2019.

few other exceptions) would have to

You can empty the IRA in one lump The trust takes out a joint and survi-

distribute and pay taxes on an inherited sum or in installments over the years. vor life insurance policy on Max and

IRA within 10 years, even Roth IRAs. You pay income taxes and invest the Rosie, naming the trust as beneficiary.



July 2019 5

Because of their ages and good health, 10 years.

account. Then, he transfers $105,732

the policy benefit is more than $1.4

The Profits could have the life insur- from the IRA into a Max-Funded

million.

ance payable to their estate, to the ben- Indexed Universal Life Policy with a

Max and Rosie use the RMDs to

eficiaries, or to a trust. When paid to benefit of more than $1.2 million. He

make gifts to the trust that are used to a trust, the insurance benefit becomes transfers the same amount each of the

pay the annual premiums on the policy. a family bank. The trustee distributes following four years.

After Max and Rosie pass away, no money to beneficiaries or pays expens- The transfers are IRA distributions

matter when that is, the insurance com- es for their benefit as directed in the and taxes are due by April 15 of the

pany will pay more than $1.4 million to trust agreement. It also could make next year. At the end of the first year,

the trust, and the trust will use it for the loans, such as to buy homes or start Max is able to borrow from the in-

beneficiaries or distribute it to them as businesses. As the loans are repaid, surer about $30,000 to pay the taxes.

called for in the trust agreement.

the family bank is replenished and can He does this each year. The loans are

The insurance benefit will be tax-free benefit generations.

secured by the cash value of the policy

to the trust and the beneficiaries. The Note: The examples in the last two and remain outstanding until Max

beneficiaries will receive the face value strategies assume the IRA owners are passes away. They will be subtracted

of the insurance tax free. If they were taking RMDs and use those to pay the from the life insurance benefits paid on

to inherit a traditional IRA, they'd

insurance premiums. But there's no the policy.

receive only the after-tax value of the reason to wait. Younger IRA owners

The result is Max converted the IRA

IRA. Of course, if the Profits pass away can begin the strategies and take annu- to a life insurance policy without using

before the IRA is depleted, the benefi- al distributions from the IRAs to pay any of his cash to pay taxes on the con-

ciaries also will inherit what remains in the premiums. In fact, the strategies version. The after-tax amount his heirs

the IRA.

provide more benefits the younger you receive, after paying the outstanding

The Family Bank strategy. This is a are when they are initiated.

loans, will be higher than the original

variation of the IRA Leverage strate- IRA Reboot. The IRA Reboot is

value of the IRA and will be tax free.

gy. The main differences are the Prof- an alternative to converting to a Roth Also, the insurance policy has a cash

its don't use a trust and buy a different IRA. Unlike a conversion, you have value account. Max can take money

type of permanent life insurance that no out-of-pocket cost. Instead, you from the cash account to pay expenses

would have a benefit of more than use several tax code provisions and a or convert it into a guaranteed lifetime

$1.5 million.

special type of life insurance policy to tax-free income stream. In fact, his net

The Profits hold the life insurance in avoid paying the taxes out-of-pocket. cash account will top $318,000 in 10

their own names and continue to take The IRA Reboot is best explained years and $608,000 in 20 years, all net

the RMDs and use them to pay premi- through an example with Max

of the loans he used to pay the conver-

ums on the life insurance.

Profits. Max is 65, in average health sion taxes in years two through six.

A potential advantage of this strat- and in the 28% tax bracket. He has

Max also can add a long-term care

egy is the life insurance policy builds a $500,000 traditional IRA that he's benefit to the insurance policy if

up a cash value over the years. The considering converting to a Roth

he's qualified. The benefit will either

Profits could tap into this account tax- IRA in stages over the next five years, increase the premium or reduce the

free when needed to pay for their own which he thinks will keep him in the insurance benefit.

expenses, family emergency expenses, same tax bracket.

The charitable trust bailout. When

or any other cash need that arises. If Instead, Max opts to do the IRA Re- you want to benefit one or more charities

the cash value earns 6.98% annually, it boot over five years. In the first year, he in addition to your loved ones, consider

would be worth almost $264,000 after transfers the IRA to a special qualified converting your traditional IRA into a

6 July 2019

Actions to Create the Retirement You Desire

charitable remainder trust (CRT).

the remainder in the CRT paid to charity. charity to receive.

Under one strategy, your estate plan- To ensure their heirs have an inheritance, After you pass, the charity takes a dis-

ner drafts the CRT as part of your will or they purchase a permanent life insur- tribution of its share of the IRA. Since the

estate plan, and you name the CRT as the ance policy when the CRT is created and charity is tax-exempt, it doesn't owe any

beneficiary on the beneficiary designa- name their children as the beneficiaries. income taxes and receives the full benefit

tion form.

You include the IRA distribution in of the distribution.

After you pass, the entire IRA is dis- gross income. If you itemize expenses on When your children or other loved

tributed to the CRT.

your tax return, you receive a charitable ones inherit an IRA, they include the

The CRT pays income to a beneficiary contribution of part of the amount con- distributions in gross income and owe

or beneficiaries you named in the trust. tributed to the trust. The deduction is the income taxes on them. They really inher-

Typically, a CRT pays a percentage of present value of the amount the charity is it only the after-tax value. But when they

the trust assets to the beneficiary for life. expected to receive in the future. Current inherit non-IRA assets, they increase

The annual payouts rise and fall with the interest rates and tables issued by the IRS the tax basis to the current fair market

value of the trust. An alternative is for are used to determine the deduction. The value. They can sell the assets right away

the trust to pay a fixed annual amount older you are, the larger the percentage and won't owe any capital gains taxes on

to the beneficiary. IRS regulations limit of the contribution you can deduct.

the appreciation that occurred while you

the amount of income that can be paid There are other ways to structure the owned the property.

to the beneficiary. After the beneficiary conversion of an IRA to a CRT. These

If you're going to make a straightfor-

passes away, the remainder of the trust is are the most frequently used strategies. If ward charitable contribution through

donated to the charity.

any sound appealing, discuss the alterna- your estate, it's better to make them

If your estate planner runs the num- tives with your estate planner.

through an IRA than the rest of the

bers, they should show that your benefi- Most large charities have offices that estate.

ciary receives more after-tax money un- will manage and administer a CRT for

Most of these are not do-it-yourself

der the CRT than if the IRA is liquidated little or no money when they are named strategies. You need to work with a

within the time frame required by the as a beneficiary.

financial advisor who knows the strate-

SECURE Act. You've provided for your Charity as IRA beneficiary. The sim- gies, especially those involving life insur-

loved ones, protected the assets, and also plest strategy is to make post-mortem ance. There is more information, along

provided for charity.

charitable gifts through an IRA.

with detailed examples of several of these

The conversion to a CRT also can be

You can set up a separate IRA that has strategies, in the report The Bombshell

done during your lifetime. You can take roughly the amount you want the charity Battle Plan: How to Defend Against the

a distribution of all or a large portion of to receive and name the charity as the IRS' Secret Weapon by David Phillips and

the IRA and immediately transfer the af- beneficiary. Or you can name the charity Todd Phillips. You can receive it for only

ter-tax amount to a CRT. The CRT pays as one of several beneficiaries for an

$5.95 by calling 888-892-1102 and iden-

annual income to you (or you and your IRA, noting either the dollar amount or tifying yourself as a Retirement Watch

spouse) for life. Many people then have the percentage of the IRA you want the reader.

Interest Rate Trends Changed the Annuity Market and Created an Opportunity

Interest rates changed dramatically in little more than six months, and

that's changed the landscape for annuity shoppers.

Payouts on immediate annuities, deferred income annuities (also known as longevity annuities) and fixed

deferred annuities usually change with the interest rate on the 10-year treasury bond. Late in 2018, those annuities were offering their most attractive payouts in years. That's no longer the case.



July 2019 7

Last Nov. 8, the 10-year treasury yield long-term interest rates, which is the example, your account would have been

was 3.24%. Recently, it plummeted to reverse of the normal situation and

credited with 13.57% in 2017 when the

close to 2%. Annuity payouts usually known as an inverted yield curve.

Vanguard Index 500 returned 21.67%.

lag market interest rates by about six

Insurers are mirroring the inverted

Your principal is guaranteed not to

months. So, insurers have been drop- yield curve. They're offering better deals decline, even if the stock index loses

ping their payouts lately, and those

on indexed annuities with shorter lock- value.

decreases will continue.

up periods.

The annuity has no fees. The insurer

That makes this a good time for

makes its money from any account

annuity shoppers, whether they're savers or looking to generate income, to consider an indexed annuity, as long as they buy the right indexed annuity.

Many indexed annuities aren't worth your consideration. They are marketed with less than 100% candor and sold

An indexed annuity usually guarantees your principal is 100% safe while giving you the opportunity to earn a higher yield than is

holders who pay the surrender charge by withdrawing early and on a spread between the interest credited to your account and what the insurer earns.

The gains earned on your contract anniversary date each year are locked in. With some indexed annuities, future

to individuals for whom they aren't

available from CDs, negative returns can wipe out or reduce

appropriate. They also have high fees

money market funds, earnings from previous years. In the

and don't give investors the returns they bondsandfixeddeferred OptiBlend 5, interest is credited annu-

were led to expect. But that's not the

annuities.

ally, so returns during the contract year

case with all indexed annuities.

could be given up if the index declines

An indexed annuity usually guaran-

by the end of your contract anniversary.

tees your principal is 100% safe while

You can take out an indexed annuity But your account's value will never be

giving you the opportunity to earn a now when interest rates are hitting lows. less than the previous year's value, no

higher yield than is available from CDs, You'll capture a higher yield if stocks matter how much the market declines.

money market funds, bonds and fixed keep rising. You can exit the indexed

There's a surrender charge if you

deferred annuities.

annuity and move to a different invest- withdraw from the annuity during the

The interest credited to your account ment or an immediate annuity in a few first five years of your contract. After

usually is tied to published investment years after your surrender period when that, you can withdraw the value of your

returns, such as those of a major stock interest rates might be higher.

account for any reason without penalty.

market index. Typically, you don't

To identify the best way to take

Also, you can withdraw up to 10% of

receive the index's total return. You

advantage of this situation, I conferred your account's value penalty-free each

receive a percentage of it, known as a with my annuity expert, Todd Phil-

year during the first five years. And

participation rate. There's also a limit to lips, of Phillips Financial Services. He there's no withdrawal penalty if you

the annual interest rate credit, known as recommends the Lincoln National

are admitted to a nursing home, are

a cap rate.

OptiBlend 5 Indexed Annuity.

diagnosed with a terminal illness, or

For more details about indexed annu- In the OptiBlend 5, your account

pass away.

ities in general, see my April 2014 issue. earns interest equal to the return of a

Lincoln National is considered a

Indexed annuities have surrender stock index. You can choose from sev- strong insurer. It's been doing busi-

fees, requiring that you to lock up most eral indexes. If you choose the S&P 500 ness since 1905 and has an A+ rating

of your money for a period of time. But Daily Risk Control Index (Ticker sym- with A.M. Best, an insurance industry

there's an anomaly today. Short-term bol: SPXT5UT), there's no cap on the rating agency.

interest rates have been higher than

interest credited to your account. For

You can invest in the annuity through

8 July 2019

Actions to Create the Retirement You Desire

a traditional IRA, Roth IRA and most brokerage and non-brokerage accounts.

Most indexed annuities allow only a one-time lump sum investment, but the OptiBlend 5 lets you add money when you want.

The OptiBlend 5 doesn't have the additional fees, complicated riders, confusing bonus interest and tricky investment return calculations of most indexed annuities.

Indexed annuities such as the OptiBlend 5 are for someone looking

for a chance to earn more than is

Indexed annuities such as the OptiBlend 5 are for someone looking for a chance to earn more than is available from traditional conservative

investments while keeping principal safe.

available from traditional conservative

investments while keeping principal safe.

For more details about the Lincoln National OptiBlend 5 or other annuities, contact Todd Phillips at Phillips Financial Services 888-892-1102 and tell him you're a Retirement Watch reader. Todd will learn about your financial situation, determine if the OptiBlend or another annuity is right for you, and send you a personalized example of returns.

This Valuable Social Security Strategy Isn't Closed Down Yet

A few million people still are eligible to use a Social Security benefits strategy that's so valuable Congress banned it. But time is running out for them. The strategy is known as filing a restricted claim for benefits. It is available to married couples and some divorced people. Normally, when you file to claim Social Security retirement benefits, you automatically receive the higher of your earned benefits and 50% of the benefits your spouse is entitled to at full retirement age, also known as the spousal benefit. Under the restricted claim strategy, however, you don't file to claim your own Social Security benefits. Instead, you claim only the spousal benefit. The restricted claim allows you to receive a check from Social Security while your earned benefits continue to increase thanks to the delayed credits

earned for postponing your benefits. Your earned benefits increase 8% each year you delay, even when you're receiving spousal benefits.

The strategy was so attractive that Congress eliminated it in a 2015 law. But a grandfather clause keeps the strategy available to anyone who was born on or before January 1, 1954. That means 2019 is the year when the last group of people eligible for the restricted claim strategy are reaching full retirement age.

A few million people still are eligible to

use a Social Security benefits strategy that's so valuable Congress

banned it.

If you're in that age group and married or divorced, consider the restricted claim strategy.

There are a couple of details to the strategy.

The first detail is that you must be at least full retirement age to file a restricted claim for spousal benefits. The last of the grandfathered group are reaching their full retirement age by turning 66 in 2019

The second detail is that to claim spousal benefits, your spouse must already have filed to receive his or her own retirement benefits.

Let's look at a couple of examples. Suppose you're turning 66 in 2019 but your spouse won't turn 66 and reach full retirement age until 2020. You fall under the grandfather clause and are eligible to file a restricted claim for spousal benefits. Your spouse missed the grandfather cut off by one year. You can't file that restricted claim until your spouse claims his or her own benefits. Fortunately, you don't have to file the restricted claim right at age 66. You can file the claim any time between ages 66 and 70 and receive the spousal benefits until claiming your own benefits, presumably at age 70. If your spouse chooses to maximize

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