Social Security

Social Security and Your Retirement

Social Security benefits can potentially make or break your retirement, particularly if your retirement fund isn’t as strong as you’d hoped it would be. Close to half of baby boomers have no retirement savings at all, according to a 2019 survey from the Insured Retirement Institute, and the coronavirus pandemic may have affected many workers’ retirement plans. In fact, the average 401(k) balance dropped by nearly 20% in the first quarter of 2020, a study from Fidelity Investments revealed, and the average IRA balance dipped around 14%. That means if you’re nearing retirement, Social Security benefits may be more important than ever. And this chart can help ensure you’re making the most of your monthly checks. One of the most important factors to understand about Social Security is how your full retirement age (FRA) affects how much you’ll receive in benefits. Depending on the year you were born, your FRA is either age 66, 67, or somewhere in between: Knowing your FRA is crucial because it will affect how much you collect in benefits every month for the rest of your life. To receive the full benefit amount you’re entitled to, you’ll need to wait until your FRA to begin claiming. By claiming before or after that age, you’ll receive smaller or larger checks. You can begin claiming benefits as early as age 62, but by doing so, your checks will be reduced by up to 30% if you have a FRA of 67 years old. A common misconception is that if you claim early, you’ll only receive smaller checks until you reach your FRA, at which point you’ll begin collecting your full benefit amount each month. However, your benefit reductions are permanent if you claim early, meaning you’ll be receiving smaller checks for the rest of your life. You can also wait until after you reach your FRA to file for benefits, and doing so will result in bigger monthly checks. If you have an FRA of 66, you can receive your full benefit amount plus an additional 32% by waiting until age 70 to claim. Those with a FRA of 67 can collect an extra 24% by delaying benefits until age 70. Keep in mind, though, that you won’t receive any extra money in benefits by waiting past age 70 to claim. So while you can wait longer than that, there’s no financial incentive to do so. The age you should begin claiming benefits will depend on your situation, so the answer will be different for everyone. But there are two factors, in particular, you should consider when determining what age to claim: how much you have in savings, and your life expectancy. The more you have in savings, the less you’ll need to depend on Social Security to make ends meet in retirement. So if you have a robust retirement fund and don’t necessarily need the extra cash from your benefits, you may choose to claim early. Your checks will be smaller, but you’ll also have a little extra spending money earlier in retirement. If you don’t have much in savings, though, you may choose to delay benefits. Those bigger checks can go a long way, especially if your savings run dry a few years into retirement. Next, try to estimate approximately how long you’ll live. When the Social Security Administration calculates benefits, it assumes beneficiaries will be living an average lifespan — or around 85 years. So in theory, regardless of whether you claim early or delay benefits, you should receive roughly the same amount over a lifetime; you’ll either receive smaller checks but more of them, or bigger checks but fewer of them. However, if you live a shorter- or longer-than-average lifespan, you may be better off claiming before or after your FRA. If you have health problems or other reason to believe you may not live into your mid-80s or beyond, claiming early might mean you’ll receive more over a lifetime compared to if you’d delayed benefits. On the other hand, if you are in the best shape of your life and most of your older relatives have lived into their 90s, it might be a good idea to delay benefits. Social Security benefits can have a significant impact on your retirement, so it’s wise to understand the program as much as you can. By knowing your FRA and choosing the right age to begin claiming benefits, you can set yourself up for retirement success. Click here to learn more:

IRS reversal: Social Security recipients can automatically get stimulus checks without filing returns

The IRS has reversed course to eliminate a controversial requirement on Social Security recipients seeking stimulus checks as part of the government’s coronavirus response package. After initially saying that Social Security recipients would have to file a “simple” tax return for 2019 — which they ordinarily would not do — the IRS now says the payment will be automatic without it. “Social Security recipients who are not typically required to file a tax return … will receive their payment directly to their bank account,” Treasury Secretary Steve Mnuchin announced Wednesday evening, noting that they will not have to take any action. The change follows pressure from lawmakers who urged the IRS to drop the condition. “This filing requirement would place a significant burden on retired seniors and individuals who experience disabilities, especially given the current unavailability of tax filing assistance from Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs during the COVID-19 crisis,” said a letter from more than three-dozen Democratic senators. House Ways and Means Committee Chairman Richard Neal, D-Mass., also pushed for the change. “My colleagues and I strongly urge Treasury Secretary Mnuchin and Social Security Administrator [Andrew] Saul to find a solution that will allow vulnerable groups to receive these funds automatically, without needing to file an additional return,” Neal said in a statement. The $2.2. trillion coronavirus response bill signed by President Trump last week sets aside recovery funds for workers and businesses squeezed by unprecedented restrictions to combat the virus. The bill will provide one-time payments of up to $1,200 to adults and $500 per child. The Treasury Department now says that Social Security recipients will have their information taken from SSA-1099 and RRB-1099 forms, which was outlined in the CARES Act that provided for the stimulus payments.

Social Security now running a deficit; Medicare to hit insolvency three years earlier than projected

Social Security this year will spend more than it takes in, the program’s trustees said in a new report Tuesday that signals the official beginning of the program’s slide into insolvency. Medicare’s main trust fund will also run out of money sooner than anticipated, with insolvency looming in 2026, or three years earlier than last year’s projection, the trustees said. The twin warnings come as Congress has cut revenue and boosted spending — moves that, analysts say, will leave the government’s finances struggling for years to come. The problems in the entitlement programs only add to those woes. For Social Security, the last time the program ran an annual deficit was in 1982, before President Reagan signed changes that set it on firmer footing for the next 30 years. But the aging population and shrinking percentage of people in the workforce has finally swamped those fixes, posing tough questions Congress and the White House have ignored for years. The combined Social Security trust funds are slated to run dry in 2034, and that will force benefits to be cut more than 20 percent. Medicare’s hospital insurance fund, meanwhile, will become insolvent by 2026, or three years sooner than projected last year. “As in past years, the trustees have determined that the fund is not adequately financed over the next 10 years,” the report said, citing in part lower payroll taxes collected on lowered wages in 2017 and rising hospital spending. The trustees report is considered an annual wake-up call for the beleaguered programs, though consensus around ways to secure their future remains elusive. President Trump pledged during the 2016 campaign to leave Social Security and Medicare benefits untouched, putting him on a crash course with Republicans on Capitol Hill who have said they wanted to tackle the programs’ problems by limiting future benefit increases. Many Democrats, meanwhile, argue the problem is that the programs aren’t generous enough. They have called for increasing spending, which they would pay for with major tax increases, particularly on higher-income Americans. Social Security covers 62 million people, split among retired workers and their dependents, survivors of workers who’ve died and disabled people. Medicare, a federal heath insurance program, covers nearly 60 million Americans, mostly seniors but some disabled Americans. Treasury Secretary Steven Mnuchin said the programs “remain secure” in the near term. “However, certain long-term issues persist,” he said. “Lackluster economic growth in previous years, coupled with an aging population, has contributed to the projected shortages for both Social Security and Medicare. The secretary bet that Mr. Trump’s program of deregulation and tax cuts will produce enough economic growth to place the programs on a more sustainable path. “Social Security and Medicare are the federal government’s two largest programs, and millions of Americans heavily rely on their benefits,” Mr. Mnuchin said. “Robust economic growth will help to ensure their lasting stability.”

Let’s hope so.  However, as those of us who have served in the military oftentimes say…”hope is NOT a plan.”  The problem is that the major political parties have historically kicked the can down the road with the Dems always arguing for more and more higher taxes  (FAIL!)…and Republicans arguing for cutting benefits for those who have been paying into the system under the impression of certain promises (mostly FAIL!).  There is a saying that the definition of insanity is doing the same thing over and over and expecting a different result.  Such is the case here.  One such thought is an idea floated by then Pres. George W. Bush to privatize SOME (not all) of the investment portfolios for person’s social security act.  At the time, the numbers were run and it made a ton of sense.  Unfortunately, the establishment “swamp” in DC wouldn’t even consider it.  Well, maybe NOW is the time to consider such an idea, and allow the OPTION for folks (especially younger tax payers) to put some of their social security acct dollars into a private fund where it could earn a higher interest rate, etc.  It’s time to think outside the box and consider such ideas.  Waiting for the these programs to become insolvent is criminal, and we should put our federally elected officials on notice to get off their collective butts and address this issue once and for all.

Social Security recipients to see 2 percent cost-of-living increase

Social Security beneficiaries will receive a 2 percent cost-of-living payment increase next year, the agency announced Friday. The increase is based on rising wages and prices, and is the highest since 2012. Benefits rose less than half a percent this year, and didn’t rise at all in 2016, because inflation was stagnant. The agency also said the threshold cap for paying Social Security taxes on income will rise, from $127,200 to $128,700. Because Social Security is supposed to be a pension-style program, with the maximum payout capped, the maximum amount of taxes paid is also limited. AARP, the lobby group for seniors, said the benefits hike was “some relief,” but complained that the increase wasn’t enough. “For the tens of millions of families who depend on Social Security for all or most of their retirement income, this cost of living increase may not adequately cover expenses that rise faster than inflation including prescription drug, utility and housing costs,” the organization said.

Probably not..

Social Security Not Keeping up With Seniors’ Rising Costs

For the fifth year in a row, the 60 million people who depend on Social Security have had to settle for historically low increases. For the average recipient the adjustment adds up to a monthly increase of less than $4 a month. Meanwhile, older Americans report that their household budgets jumped substantially last year, despite the lack of growth in their Social Security benefits, according to a new survey by The Senior Citizens League (TSCL). “The gap between benefit growth and retiree costs was particularly pronounced due to rising prices of the most essential items in retirees’ budgets, — medical and food costs,” says Mary Johnson, TSCL’s Social Security and Medicare policy analyst. TSCL sent a letter this month to Congressional leaders calling upon them to enact legislation that would provide a modest boost to Social Security benefits. Johnson discussed with FOX Business these additional findings from the survey, and what you need to know to adjust your household budget. To read that exchange, click here.

Seniors Brace For Smallest Social Security Increase on Record

Let’s start with the good news. For the more than 60 million people who receive Social Security benefits, they will get a cost-of-living increase in 2017. This is positive considering there was no increase in 2016. Here is the bad news. The increase is expected to be around 0.3 percent, the smallest increase on record. “For the average Social Security beneficiary, that equates to basically $2 to $6 a month, so it’s very small,” says Max Gulker, a senior research fellow at the American Institute for Economic Research. He expects the cost-of-living increase for 2017 to come in between 0.2 percent to 0.5 percent when the government releases its number on Tuesday. While Social Security benefits increase, Medicare Part B premiums will rise too. Medicare Part B covers doctor visits, lab tests and outpatient medical treatments. About 70 percent of people enrolled in Medicare are protected by the hold-harmless provision which prevents Medicare Part B premiums from rising more than the cost-of-living increase in Social Security benefits. For the majority of seniors, this means the hike in premiums will not be more than the cost-of-living increase but it could eat up any increase in benefits. In other words, most Social Security recipients will probably see the increase in their payment go towards Medicare costs so they are not likely to see a big change in their monthly checks. Medicare Part B premiums have been climbing as healthcare costs soar. Back in 1970, the monthly Part B premium was $5.30. This year, the standard monthly premium is $121.80. Meantime, average benefit costs per Part B beneficiary have shot up from about $8 per month in 1970 to more than $460 per month in 2016 according to the Congressional Research Service. The majority of people enrolled in Medicare are protected by the hold-harmless provision but some are not. One group that does not qualify for the provision are those seniors with higher-incomes, making more than $85,000 per person or $170,000 per couple. More than three million of these higher-income beneficiaries could face a big hike in Medicare premium costs next year. “For the three-quarters of people who are under hold-harmless, there is going to be very little increase possible in their Part B premiums so that often spells bad news for the folks who are not under hold-harmless because whatever sort of cost increase in the system has to be made up from that smaller group,” Gulker says. The Medicare Trustees estimate premiums for those not protected by the hold-harmless provision could rise 22 percent from $121.80 per month this year to $149 per month next year. The highest income group could see premiums rise from around $380 per month this year to $467 per month next year. In 2015, Congress stepped in and provided a $7.5 billion loan to the Medicare program which prevented a big spike in Medicare premiums for many higher-income seniors. Gulker says there could be calls from seniors and advocacy groups to get Congress to step in once again to limit the premium increases. He points out, however, Congress can only do this so many years and a longer-term solution is eventually needed.

Not good news…