Maine Senator Urges Congress to Act on Low COLA

Oct 25, 2016

The announcement of the low cost-of-living adjustment for 2017 (0.3%) has led to demands for Congress to step in and manually issue America’s senior citizens a pay raise.

Senator Susan Collins (R-Maine) has said this $5 raise is not enough, especially given the possibility of a substantial rise in Medicare premiums. She has also advocated changing cost-of-living adjustments to more accurately reflect the spending patterns of senior citizens.

Medicare’s hold harmless provision protects most, but not all, 2016 beneficiaries from the hike. More details on who qualifies as held harmless may be found in last week’s newsletter.

Read more ...

Savvy Social Security October 20 Newsletter Now Available Online

Oct 21, 2016

In 2017 COLA: 0.3%, Elaine goes into detail about how the paltry COLA amount was calculated, related Medicare issues, the role of the wage index, and individual inflation

The full newsletter may be read here.

Read more ...

Maximum PIA for a Maximum Earner Born in 1955: $2,888

Oct 19, 2016

A baby boomer born in 1955 who earned the Social Security maximum from 1975-2016 (age 22 to 61) has a PIA of $2,888.

Total indexed earnings for this earner comes out to $4,109,280. When we divide this by 420 to figure the AIME, we get a maximum AIME of $9,784. Applying the 2017 bend points of $885 and $5,336 (up from the 2016 bend points of $856 and $5,157) produces a PIA of $2,888 (up from $2,788 for the 1954 cohort).

The PIA is the amount the 1955-born baby boomer will receive if he applies for his benefit in 2021 at full retirement age (in this case, 66 and 2 months). If he applies next year at age 62, then he’ll receive approximately 74% of that, or $2,137. If he applies at age 70, he’ll receive approximately 131%, or $3,783. These amounts may be increased by annual COLAs.

Read more ...

0.3% COLA Adjustment Announced for 2017

Oct 18, 2016

This is a marginal improvement over the 0.2% projected last week, and the 0% COLA from last year. For the average retiree, this constitutes a five dollar increase in benefits.

This 0.3% increase follows several years of low COLAs. The COLA has consistently been under 2.0% since 2012, stoking a debate regarding whether or not the current formula adequately reflects the spending needs of senior citizens.

The SSA’s COLA announcement may be read here. More analysis can be found from the Wall Street Journal here.

Read more ...

Lower COLA Expected, Again

Oct 13, 2016

The Social Security Trustees are projecting another low cost-of-living adjustment this year. The number, which will be finalized next Tuesday, is currently projected to be 0.2%.

Under Medicare’s “hold harmless” provision, individuals receiving both Medicare and Social Security will not experience a rise in premiums if the Social Security COLA is not enough to cover the increase in premiums. To qualify as “held harmless” in 2017, beneficiaries must receive Social Security in November and December this year and have their Medicare premiums deducted from their Social Security check. They also must not earn enough money to qualify for Medicare’s income-related monthly adjustment amount, or IRMAA.

Given these restrictions, Medicare beneficiaries may be tempted to claim their Social Security now, to avoid a spike in premiums. Generally speaking, this is not a good idea. Social Security’s delayed retirement credits are more valuable than the lower Medicare premiums, and high-net-worth earners—the ones with the most to gain by delaying their benefits—do not qualify for the hold-harmless provision in any case.

Mary Beth Franklin supplies more analysis here: Social Security timing can affect Medicare premiums.

Read more ...

Savvy Social Security October 6 Newsletter Now Available Online

Oct 12, 2016

In Trust Fund Solvency: Trustees vs. CBO, Elaine takes a look at the different assumptions and methods used to project Social Security’s finances, and how the outcome can be quite different depending on those assumptions.

The full newsletter may be read here.

Read more ...

SSA Cracks Down on ‘Graveyard Benefits’

Oct 5, 2016

According to an audit by the Office of the Inspector General the SSA has identified $165 million in benefits erroneously paid to deceased OASDI beneficiaries and another $12.4 million paid to deceased SSI recipients.

The SSA uncovered this information by partnering with the Centers for Medicare and Medicaid Services (CMS) to identify beneficiaries over 90 who have not used Medicare Part A or B in 3 years or longer. Now, the OIG is recommending the SSA take this approach one step further by using both Medicare and Medicaid claim data to identify potentially deceased recipients.

Read more ...

Ways and Means Committee Convenes Meeting on Social Security Solvency

Sep 28, 2016

Last week, Rep. Sam Johnson (R-TX) held a hearing on the financial health of Social Security.

The specific impetus for the meeting was the discrepancy between the long-term projections of two trusted groups of Social Security experts: the Congressional Budget Office and Social Security’s own Trustees. While both agencies agree the program spends more than it takes in, they differ on when the program’s funds will exhaust. The CBO puts the exhaustion date at 2029, while the Trustees have it at 2034.

Naturally, it is more difficult for Congress to devise a workable solution when they’re unsure of their deadline. Experts from both agencies sat down with Rep. Johnson in an effort to account for the discrepancy. The full hearing may be viewed here.

Read more ...

Savvy Social Security September 22 Newsletter Now Available Online

Sep 27, 2016

In it, Elaine discusses the recent GAO critique of SSA claims processes.

The full newsletter may be read here.

Read more ...

IRS Fails to Notify Over 1M Victims of Identity Theft

Sep 20, 2016

The IRS identified about 1.1 million taxpayers who were victims of employment-related identity theft between 2011 and 2015, but informed almost none of them.

Employment-related identity theft occurs when someone uses another individual’s Social Security number to get a job.

Read more ...

Americans Remain Ignorant About Retirement Benefits

Sep 16, 2016

According to the Government Accountability Office, the continued popularity of 62 as a Social Security claiming age may be attributed to a misunderstanding on the part of pre-retirees.

Representatives of the GAO observed 30 in-person claims at SSA offices and found that, more often than not, frontline SSA employees will not discuss delayed claiming with beneficiares. The issue only came up in 8 of the 26 interviews in which it was relevant. Similarly, the earnings test was pertinent to 18 cases, but only discussed 7 times.

Furthermore, the GAO review of several academic surveys exploring pre-retiree knowledge of Social Security reveals a consistent pattern of ignorance. For example, a phone survey given by the Financial Literacy Center found that 36% of respondents did not understand the relationship between claiming age and the monthly benefit amount.

The full GAO report, including proposals to bridge this knowledge gap, may be read here.

Read more ...

Effects of SSA Cutbacks by State

Sep 12, 2016

Congress has cut the Social Security Administration’s operating budget by 10% since 2010, a move the Center on Budget and Policy Priorities argues has had an averse effect on communities across the nation. Their full report can be found here.

The CBPP graphic shown left depicts the percent change in Social Security Administration staff between 2010 and 2015. The full-size graphic may be viewed here.

Read more ...

Savvy Social Security September 1 Newsletter Now Available Online

Sep 6, 2016

In it, Elaine discusses the feasibility of claiming Social Security benefits early and reinvesting them, in response to a recent analysis of the issue by Eva L. Levine. The full newsletter may be read here.

Read more ...

Yale Professor Proposes Radical Reform to Retirement Age

Sep 1, 2016 3 Comments

Yale Law School professor Anne L. Alstott recently recommended that the Social Security retirement age be raised as high as age 76. Her proposal for raising the retirement age differs from other similar proposals in that it draws a distinction between high-income earners and low-income earners; subjecting high-income earners to a later retirement age and allowing low-income earners to leave the workforce in their 60s.

The reason: low-income earners often work in physically demanding jobs, and cannot reasonably be expected to work into their later years.

Alstott also proposed the gradual phaseout of spousal benefits, which she judges will be less relevant to future generations of earners, even though they remain very relevant to Baby Boomers. More commentary on Alstott’s proposals may be found at FA Magazine.

Read more ...

New FINRA Letter for SSSP Couples Presentation Now Available

Aug 31, 2016

We’ve received a new FINRA letter for the updated Savvy Social Security for Couples Presentation.

The presentation covers the ins-and-outs of spousal planning, which changed considerably with the passage of the 2015 Budget Act. The presentation and all associated FINRA letters and marketing materials are available for download on our Presentations page.

Read more ...

Three New Article Reprints Available

Aug 30, 2016

Savvy Social Security’s reprints suite now includes three new articles:

  • Social Security for Divorced Individuals
  • Social Security for Minor Children
  • Social Security for Widows

These client-facing articles cover niche Social Security planning topics. They may be customized with your branding and distributed to clients and prospects. They also work well as part of a drip-marketing campaign.

Our article reprints are available on the Marketing page under “Client reprints.”

Read more ...

Low Socioeconomic Status Leads to Premature Retirement

Aug 25, 2016

A recent Boston College CRR Study says lower-income workers are retiring too early to maintain their standard of living.

54% of studied households in the lowest-income bracket are facing a retirement gap, compared to 36% of high-income earners.

Though the obvious solution may seem to encourage these workers to remain in the workforce longer, health complications and poor job prospects may make this advice untenable.

Read more ...

Savvy Social Security August 18 Newsletter Now Available Online

Aug 23, 2016

In it, Elaine discusses the relationship between immigration and Social Security, as well as the conversation surrounding it in the 2016 presidential election.

The full newsletter may be viewed here.

Read more ...

2016 ‘Save Our Social Security Act’ Contains Surprising Conservative Concessions

Aug 19, 2016

The “S.O.S Act” introduced by Rep. Reid Ribble (R-WI), includes many forms of benefit cuts, including a higher retirement age and a less generous inflation adjustment.

However, it also includes proposals more often favored by Democrats: The bill would raise the cap on the payroll tax from $118,500 to $308,750, raise benefits for the oldest Americans, and create a minimum benefit for beneficiaries at or near the povery level.

Advocates of Social Security expansion have construed this move as an evolution in the national Social Security conversation, and a net shift towards the left.

Read more ...

SSA Backs Down on New Online Security Measures

Aug 16, 2016

Last month, the SSA announced a two-factor authentication system for online “my Social Security” accounts. The plan was for new and existing account holders to provide the SSA with a cell phone number; upon signing into their account, they would be texted a PIN number for completing their login.

Initially, this change was mandatory for all users—people uncomfortable providing the SSA with a phone number would have to forgo conducting their Social Security-related business online.

The SSA recently rescinded this rule. This text message feature is still offered optionally for the security-conscious.

Computer security expert Brian Krebs offers further analysis here.

Read more ...