Blue Ocean Global Wealth
Certified Financial Planner
Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. Prior to co-founding Blue Ocean Global Wealth, Marguerita was a Financial Advisor at Ameriprise Financial and an Analyst and Editor at Towa Securities in Tokyo, Japan. Marguerita is a spokesperson for the AARP Financial Freedom Campaign and a regular columnist for Kiplinger. She is a CFP® professional, a Chartered Retirement Planning CounselorSM, a Retirement Income Certified Professional® and a Certified Divorce Financial Analyst.
As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policy makers, and media about the benefits of competent, ethical financial planning. She serves as a Women’s Initiative (WIN) Advocate and subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination. Marguerita also volunteers for CFP Board Disciplinary and Ethics Commission (DEC) hearings. She served on the Financial Planning Association (FPA) National Board of Directors from 2013 – 2015 and is a past president of the Financial Planning Association of the National Capital Area (FPA NCA).
Marguerita studied at Keio University in Tokyo, Japan, and earned her B.S. in Finance and her B.A. in East Asian Language and Japanese Literature from the University of Maryland, College Park. She is a recipient of the Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship.
Marguerita’s mantra is “So many people spend their health to gain wealth, and then have to spend their wealth to regain their health” (A.J. Reb Materi).
BS, Finance, Keio University
BA, East Asian Language & Japanese Literature, University of Maryland
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Laura Virili Interviews Marguerita Cheng, CEO, Blue Ocean Global Wealth
I applaud you for thinking about ensuring that your wife can have a sustainable retirement income strategy as you age. I am not certain of your present age, but the timing and coordinating of Social Security benefits can increase guaranteed retirement income for the both of you. Second, while the 4% rule is a guideline and you want to ensure that you don't withdraw more than a certain amount each year, make sure that you neither invest too conservatively nor too aggressively in retirement. Think Goldilocks. You will need make sure that you address longevity risk, market risk, inflation risk and interest rate risk. Lastly, to ensure that you don't withdraw assets too rapidly, plan for increased medical expenses or a long-term care event in retirement. A downtown in the financial markets can cause your assets to decrease in value, but a long-term care event can have a devastating effect on your retirement portfolio.
Good luck to you and kudos to you for being proactive.
I am not certain of your state of residency. When you submit an application for unemployment benefits, you are required to disclose all sources of income, including pensions, annuities as well as other sources of periodic income and lump-sum pension benefits. Generally speaking, a lump-sum pension payment is not deducted from unemployment benefits unless you could select a monthly payout option.
Social Security only considers the income that you earn from your job or your net earnings if you're self-employed. Of course, this amount can also include bonuses, commissions, and vacation pay. The earned income limit does not apply to pensions, annuities, investment income, interest, veterans, or other government or military retirement benefits.
The Social Security earnings cap restriction apply to earned income before any deductions for retirement plan contributions.
First, I am sorry to hear of your loss. Without knowing more details of your situation, I will ask you a few questions to provide you some guidance and direction. Are you referring to Social Security survivor benefits or pension benefits? Alternatively, are you referring to inherited his IRA or other investments? Again, I not know the specifics of your situation, but just because your husband had dementia or another medical condition would not necessarily preclude you from being eligible to receive an inheritance
While IRA withdrawals prior to age 59 1/2 usually trigger a 10 percent penalty, there are exceptions, including the first-time homebuyer exemption. The homebuyer exception applies to first time home purchases, but it can also be used if either you or your spouse haven’t owned a principal residence during the past two years.
You can also qualify for the homebuyer exemption rule if you use the funds to help child, grandchild or parent purchase a home.
The maximum amount that you can withdraw from an IRA free of penalties under the homebuyer exemption is $10,000.
However, if you have maintained a Roth IRA for at least five years, you may have more flexibility. Because contributions to Roth IRAs are made on an after-tax basis, you can withdraw contributions to a Roth IRA without incurring any taxes or penalties. However, if you withdraw earnings from your Roth IRA, you must abide by the $10,000 limit.
Remember that the exemption for first-time homebuyer exemption is penalty-free, but not necessarily tax-free. Again, the rules are different for traditional and Roth IRAs.
With a traditional IRA, any dollars that you withdraw will be taxed ordinary income rates. For example, if you’re in the 25 percent tax bracket, if you withdraw $10,000 for a down payment, you’ll only have $7,500.
With a Roth IRA, any contributions that you withdraw will be tax-free because they represent after-tax dollars. If you withdraw more than $10,000 in earnings from your Roth IRA, you will be responsible for paying both ordinary income taxes and the 10 percent penalty.
Because there can be many moving parts, it’s important to consult with a qualified tax advisor prior to making any withdrawals.