CBO Paints Grim Portrait of Obamacare Repeal

Jan 20, 2017 /

The Congressional Budget Office released a report this week estimating the budgetary effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015.

H.R. 3762, the brainchild of the incoming Secretary of Health and Human Services Tom Price, would repeal Obamacare’s mandate provisions and subsidy provisions but leave its market reforms in place.

The CBO estimates that these changes would cause the uninsured population to swell to 18 million in the first year following enactment, eventually hitting 32 million in 2026.

Furthermore, premiums for individual insurance policies would increase by 20 to 25 percent in the short-term and double by 2026.

The full CBO report in its proper context may be viewed here.

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Bridging the Retirement Gap

Jan 18, 2017 /

The Wall Street Journal recently ran an article by Timothy Martin about how many early proponents of 401(k) plans have expressed dissatisfaction in those plans were borne out.

Martin’s article proposes a series of actionable plans for American retirement reform; including state-run retirement savings options, mandatory savings plans, and Marco Rubio’s proposal to open the federal defined contribution system to non-government workers.

But as Slate’s Helaine Olen pointed out, Mr. Martin neglected one major possibility: expanding Social Security. Both Martin and Olen point out that 401(k) plans frequently fall through because of human error—the smartest and savviest investors find success with those plans, but others are not so fortunate. As a solution, the expansion of Social Security circumvents this problem.

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Savvy Social Security January 12 Newsletter Now Available Online

Jan 17, 2017 /

The full newsletter may be read here. In it, Elaine debunks some recent Social Security myths and shares her wisdom on how to successfully navigate the rumor mill in times of turbulence and transition.

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Two New Savvy Social Security Presentations Added in 2017

Jan 12, 2017

“Savvy Social Security: Basic Rules and Claiming Strategies” is a 30-minute presentation designed to tell the audience what they need to know make an informed claiming decision without going into the sorts of details you might reserve for face-to-face meetings.

“What’s New With Social Security: 7 Things to Watch in 2017” is a periodically-updated 30-minute presentation which tracks changes in Social Security under the new administration. It also explains Social Security and Medicare’s automatic annual changes—and what to watch for as the years progress.

Both presentations have been FINRA-reviewed and are available for download on the presentations page. Marketing materials for these presentations are not yet available, but will be posted when ready.

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Champions of the 401(k) Now Regret Implementation

Jan 11, 2017 /

Back in 1981, advocates of the 401(k) had hoped that the program would supplement then-prevalent corporate pensions. Instead, against everybody’s expectations, the 401(k) outright replaced corporate pensions—something several architects of the 401(k) program now acknowledge it’s ill-equipped to do.

Former American Society of Pension Actuaries Head Gerald Facciani, who repelled an attempt to gut the 401(k) in 1986, said the notion that the 401(k) could safely replace pensions was “a big lie” and that the program was “oversold.” Ted Benna, the former Johnson & Johnson benefits consultant credited with the development of the 401k plan, regrets having “held open the door for Wall Street to make even more money.”

Baby Boomers are feeling the ramifications of this shortfall as they enter retirement. According to the Boston College Center for Retirement Research, 52% of U.S. households at at-risk of going poor in retirement, up from 31% in 1983.

More analysis may be found at the Wall Street Journal.

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Savvy Social Security Article Reprints Updated for 2017

Jan 10, 2017

The calculations in the articles have been updated to account for Social Security’s automatic adjustments—the earnings test, COLA, and so on. They’ve also been upgraded to a new layout, pictured right.

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Democrats to Trump: Veto Changes to Medicare and Social Security

Dec 29, 2016 /

Prominent Democrats, including Sen. Sanders (D-VT), House Minority Leader Nancy Pelosi (D-CA) and incoming Senate Minority Leader Charles E. Schumer (D-NY) are planning rallies on Social Security and Medicare shortly before President Trump’s inauguration and calling on their colleagues to join in.

The rallies are intended to hold President Trump accountable for his campaign promise to leave Social Security and Medicare intact.

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President-Elect Trump Nominates Rep. Mick Mulvaney (R-S.C.) Budget Director

Dec 22, 2016

Rep. Mulvaney has a long history of voting against raising the debt ceiling—he expresses disappointment in how the debt has faded from the national conversation on his personal webpage. As budget chief, Mulvaney will be preparing the Trump Administration’s budget proposals to Congress.

Mulvaney has endorsed cuts to Social Security and Medicare in the past. It remains unclear how this departure from President-elect Trump’s promise not to cut Social Security benefits will be borne out in the new administration’s proposals.

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Savvy Social Security December 15 Newsletter Now Available Online

Dec 19, 2016

In Late-Career Wages Can Boost Benefits for Women, Elaine discusses how the nuances of the Social Security benefit calculation formula can work to the advantage of a non-working spouse who joins the workforce later in life.

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Rep. Sam Johnson (R-TX) Proposes Broad Social Security Reform

Dec 14, 2016

Rep. Johnson’s proposal would gradually increase the Social Security full retirement age to 69 and slow the growth of benefits for higher-income earners. The bill would also eliminate the retirement earnings test and phase out the taxes on Social Security benefits, measures Johnson argues discourage work.

Prominent Republicans such as Paul Ryan have not endorsed Johnson’s proposal, calling it “one of many” actionable ideas before the Republican-controlled Congress.

Johnson’s own explanation of his proposal may be read here, and the full text of the bill is available here. The SSA Chief Actuary’s assessment of the proposal can be found here.

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Rep. Tom Price (R-GA), M.D., Nominated Secretary of Health and Human Services

Dec 9, 2016

Rep. Price is a known critic of Obamacare with his own ideas for healthcare reform. His proposal, the Empowering Patients First Act, would modify the provisions of the law prohibiting insurers from denying coverage on the basis of preexisting health conditions, eliminate the tax penalty for Americans without health insurance, and offer tax credits for the purchase of individual and family health insurance policies—among other reforms.

Rep. Price has also proposed a rewrite of the Congressional budget process. The new provisions would require automatic cuts to federal programs if the nation exceeds established limits on its long-term debt. Price’s brief argues these “enforceable long-term debt targets” are necessary to place the country on a sustainable path to eliminating the national debt.

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Savvy Social Security December 1 Newsletter Online

Dec 2, 2016

In Social Security Under a Trump Administration, Elaine discusses the Trump administration’s initial outlook on Social Security, contextualizing his recent appointments in the broader history of conservative reform efforts.

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Buyer Beware: Medicare Advantage Plans

Nov 28, 2016

A recent study by the Kaiser Family Foundation found a dearth of reliable information for those shopping for Medicare Advantage plans.

Specifically, plan directories often contain dated or misleading information about the size and scope of hospital networks—a huge potential problem, as going out of network can be very expensive for those insured under Medicare Advantage. Of the 409 plans studied by Kaiser, only 23% offered what the report called “broad” networks, or networks covering more than 70% of a county’s hospitals.

In other words, it’s quite possible for a misinformed patient to go out of network. More commentary from the Wall Street Journal may be read here.

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2017 Workshop Dates Announced

Nov 18, 2016

Our workshop dates are as follows:

  • Financial Educator Marketing Workshop, Two-Day Intensive, Feb. 8-9 in Atlanta.
  • Spring Social Security workshops: The Social Security-Medicare Connection, Two-Day Intensive, March 2-3 in Atlanta and March 23-24 in San Francisco.
  • Fall Social Security workshops: The Social Security-Medicare Connection, Two-Day Intensive, September 14-15 in New York and October 26-27 in San Francisco.
  • Women’s Issues in Social Security and Medicare, Two-Day Intensive, June 15-16 in Washington DC.
  • Savvy Medicare Two-Day Intensive, April 27-28 in Washington DC.

Elaine’s full announcement and the registration links may be found here.

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Savvy Social Security Presentations Updated for 2017

Nov 9, 2016

All four Savvy Social Security presentations have been updated for 2017. Notable updates include:

  • The maximum taxable wage base rose from $118,500 in 2016 to $127,200 in 2017.
  • The earnings test rose from $15,720 in 2016 to $16,920 in 2017.
  • The SSA lowered its intermediate inflation projections from 2.7% to 2.6%; the examples given in the presentations now reflect this change.

We encourage you to download the new versions right away to use for your presentations going forward.

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PROGRAM UPDATE: Disability Feature Added to Calculators

Nov 8, 2016

The Spousal, WEP/GPO and Survivor Planning Calculators have been upgraded to include a “disability” function. You may now use these calculators to model scenarios for your disabled clients.

Disability benefits are distinct from retirement benefits in that they may begin at any age, and they are always based on the recipient’s full PIA—there is no actuarial reduction before full retirement age.

Furthermore, the language in the calculators’ reports has been modified to be gender-neutral. Remember, with the landmark Obergefell v. Hodges case, married same-sex couples are eligible for spousal and survivor benefits.

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Journalists Debate Social Security Solvency

Nov 7, 2016

A recent dust-up between the LA Times and Time’s Money Magazine has illuminated some of the difficult solvency questions surrounding Social Security.

In a November piece contextualizing Social Security within the 2016 Presidential election, editor-at-large Penelope Wang remarked that “the program has been running at a deficit since 2010.” This is true if you look at Social Security’s finances purely in terms of benefits paid relative to taxes levied; however, as Michael Hiltzik commented in his column at the LA Times, taxes are not the Social Security system’s only source of income.

The program’s revenues also include the interest on Social Security’s treasury bonds. Accounting for this interest—as the Social Security Trustees do in their reports—leaves the program with a $23 billion dollar surplus for last year. Hiltzik believes Wang’s omission of this interest income in her analysis implies a lack of faith in Social Security’s treasury bonds, which critics frequently deride as “IOUs.”

Wang, Hiltzik, and the Social Security Trustees all acknowledge that the trust fund is set to exhaust in 2034, at which point benefits will fall to 79% of the promised payout. This worst-case-scenario assumes total inaction on the part of Congress.

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Social Security Under a New Administration

Nov 4, 2016

As we approach election day, it’s important to once again review the candidate stances on Social Security.

Hillary Clinton has expressed interest in defending Social Security from GOP cuts, as well as expanding benefits for people who took time from the workforce to raise children and care for family members. She’s proposed raising the ceiling on payroll taxes (already scheduled to rise to $127,200 in 2017) to fund this expansion.

Donald Trump has not expressed any direct plans for Social Security; he has said, however, that he believes his interrelated economic initiatives—tax reform, immigration reform, the renegotiation of trade deals, and so on—will stimulate the economy and secure Social Security for the future.

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Savvy Social Security November 3 Newsletter Now Available Online

Nov 4, 2016

In Parents as Representative Payees, Elaine covers the rare cases where a child might become entitled to Social Security benefits—and how their parents are expected to manage the money. The consequences for mismanaging this money may be serious.

Your clients may encounter this issue. You are free to copy and paste the entire article for your client communications. However, please understand that it has not been FINRA reviewed, and remember to give proper attribution (article by Elaine Floyd, CFP®, Director of Retirement and Life Planning, Horsesmouth). If you have any experiences to report about parents acting as representative payees, please pass them on to socialsecurity@horsesmouth.com.

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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.

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