4 Hazards of Raising the Retirement Age

Dec 6, 2019 /

According to a CNBC report, although Congress has done nothing substantive to address the need to secure better future funding for Social Security, there is the possibility that politicians may seek a familiar remedy: raising the retirement age. After all, lifespans have lengthened and health care, however inaccessible it may be to many, has improved in lots of ways. It might seem logical to compel workers to stay on the job longer before they can retire and start drawing on the Social Security benefits they’ve already spent many years paying into.

If the age is raised to 69, as is talked about currently, there will be consequences—and not just the ones politicians may be aiming for. Since the law of unintended consequences will undoubtedly weigh in on any such action, according to the report, here are four potential effects such a “solution” may have.

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Democratic Candidate Buttigieg Unveils Plans for Long-Term Care and Social Security

Dec 3, 2019 /

Last week, Democratic presidential candidate Pete Buttigieg released plans for long-term care, Social Security, and “public option” 401(k) plans. Buttigieg, the mayor of South Bend, Indiana, released the plan shortly before a roundtable with people affected by long-term care. He described his own experience as his father neared the end of his life—Buttigieg and his mother sat down with a social worker, who encouraged them to consider spending all the money they could until his parents qualified for low-income benefits under Medicaid.

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Thank You, Social Security

Nov 29, 2019 /

In this holiday week, it’s only right to stop and take a moment to be thankful for Social Security (and its cousin, Medicare). It provides the foundation for retirement income for most Americans, and support for widows, families, and people with disabilities.

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SSA Launches Online Form to Report Scams

Nov 26, 2019 /

The Inspector General for the Social Security Administration and Commissioner of Social Security announced last week the launch of a dedicated online form at https://oig.ssa.gov to receive reports from the public of Social Security-related scams. These scams—in which fraudulent callers mislead victims into making cash or gift card payments to avoid arrest for purported Social Security number problems—skyrocketed over the past year to become the #1 type of fraud reported to the Federal Trade Commission and the Social Security Administration.

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Does the Bridge Strategy Really Work?

Nov 22, 2019 /

Unless you can get a guaranteed annual return of 8% on your retirement savings, employing a Social Security “bridge” with 401(k) and other savings until age 70 is the right move for almost all Americans who can afford to forgo the income. This bridge strategy, laid out in a white paper by the Center for Retirement Research at Boston College (see the last blog post), works for most people because retirees’ monthly Social Security checks increase 7% to 8% for every year they delay claiming up to age 70, when Social Security benefits max out. Following a Barron’s article last week on the strategy, skeptical readers had a number of questions regarding specific scenarios. Here, some answers:

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How Best to Annuitize Defined Contribution Assets?

Nov 19, 2019 /

Unlike defined benefit pensions that provide participants with steady benefits for as long as they live, 401(k) plans and Individual Retirement Accounts (IRAs) provide little guidance on how to turn accumulated assets into income. As a result, retirees have to decide how much to withdraw each year and face the risk of either spending too quickly and outliving their resources or spending too conservatively and consuming too little. Surveys of individuals’ plans and several recent studies suggest that people will not draw down their accumulations for fear that they will exhaust their money and be unable to cover end-of-life health care costs. They also must consider how to invest their savings after retirement. These are difficult decisions.

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Why Do Estimates of the 2100 Act’s Impact Differ?

Nov 15, 2019 /

The Congressional Budget Office (CBO) and the Social Security Administration’s Office of the Chief Actuary (OCACT) show the Social Security 2100 Act prposal having very different impacts on the financing of the program. OCACT says thelegislation would completely eliminate the shortfall and keep the program solvent for 75 years, while the latest from CBO has the trust fund hitting zero in 2036. How could it be that the same provisions produced such different outcomes?

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CMS Announces 2020 Medicare Premiums

Nov 12, 2019 /

On November 8, 2019, the Centers for Medicare & Medicaid Services (CMS) released the 2020 premiums, deductibles, and coinsurance amounts for the Medicare Part A and Part B programs. Each year the Medicare rates are adjusted according to the Social Security Act. For 2020, the Medicare Part B monthly premiums and the annual deductible are higher than the 2019 amounts. The standard monthly premium for Medicare Part B enrollees will be $144.60 for 2020, an increase of $9.10 from $135.50 in 2019. The annual deductible for all Medicare Part B beneficiaries is $198 in 2020, an increase of $13 from the annual deductible of $185 in 2019.

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Can An Ex Bar Former Spouse From Retirement Benefits?

Nov 8, 2019 /

From time to time we get some questions about divorced-spouse benefits and whether or not an ex can keep his former spouse from getting benefits, usually by signing something in the divorce papers. The short answer is that a former spouse can always receive divorced-spouse benefits if she qualifies. However, there are a few other issues that dirty the waters. Here, PBS News Hour takes on the question.

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Stark Differences Between Current Retirees and Younger Generations

Nov 5, 2019 /

Today’s retirees are the last generation in the United States to live a retirement shaped by the forces of the prior century, standing in stark contrast to baby boomers, Generation X, millennials and even Generation Z, according to the 2019 Wells Fargo Retirement study, which examines the attitudes and savings of working adults and retirees. “Our survey clearly shows stark differences between current retirees and younger generations and how they will fund retirement,” said Fredrik Axsater, head of the Institutional Client Group for Wells Fargo Asset Management.

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Improving the Retirement Risk Index

Nov 4, 2019 /

The National Retirement Risk Index (NRRI) shows that half of today’s working families are at risk of not being able to maintain their standard of living once they retire. This result is not surprising since at any given point about half of private sector workers do not have an employer-sponsored retirement plan, and many who do have a plan end up saving relatively little. The question is how would additional saving affect the NRRI?

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71% of Americans Are Afraid Social Security Won’t Be There

Oct 29, 2019 /

Today’s retirees are the last generation in the United States to live a retirement shaped by the forces of the prior century, standing in stark contrast to baby boomers, Generation X, Millennials and even Generation Z, according to the 2019 Wells Fargo Retirement study, which examines the attitudes and savings of working adults and retirees. Now in its 10th year, the survey spotlights the importance of a planning mindset as people in their working years must shoulder the burden of funding their own retirement.

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How to Care for Aging Parents Without Sacrificing Your Career

Oct 25, 2019 /

The typical caregiver spends 24 hours a week on eldercare, which leads many to make alternative work arrangements. Sixteen percent of women take a less demanding job, 12% leave the workforce entirely, and 7% lose job-related benefits. The cost in lost wages, pension, and Social Security benefits to these caregivers is staggering. For the 10 million caregivers who are over age 50 themselves, the aggregate lost wages, pension, and Social Security benefits equal nearly $3 trillion. On an individual basis, the total financial loss due to caregiving was estimated in 2011 to be $324,044 for women and $283,716 for men, so those totals would be higher today.

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Millennials Will Save Social Security

Oct 22, 2019 /

Smead Capital Management CEO Bill Smead thinks millennials will solve the coming Social Security crisis, as he told CNBC last week. He said, “Just do the math, there’s 89 million millennials in a 330 million population of the United States of America. And then the group behind them—this is crazy—is just as big. In 20 years, there is going to be way more payers into the Social Security system and there is going to be way fewer taker-outers—and that problem will solve itself through demographics.”

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The Social Security Debate Shifts Left

Oct 18, 2019 /

The Social Security debate has moved left, according to The Wall Street Journal. That shift, evidenced by presidential candidates’ plans and a bill backed by nearly 90% of House Democrats, departs from years of conversations about an elusive bipartisan compromise where Democrats agree to lower promised benefits and Republicans accept higher taxes. Instead, President Trump has ruled out cuts to future benefits. Democrats have lined up behind larger benefits and higher taxes.

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2020 COLA Announced

Oct 15, 2019 /

The big day has finally arrived! Oct. 10 was the release date for the U.S. Bureau of Labor Statistics’ September inflation data, which contains the last puzzle piece needed to calculate Social Security’s cost-of-living adjustment (COLA) for 2020. The official number is a 1.6% “raise.” But how do they get to that number?

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Survey Reveals Why Seniors Are Putting Off Retirement

Oct 11, 2019 /

After years of long work, retirement is the ultimate reward. It represents more time to spend with family, travel, discover new hobbies and to relax. However, according to the Social Security Administration, the current age to receive full benefits is 66 years old (for those born in 1955) and many cities across the country have at least 20% or more of their senior population still in the workforce. Provision Living surveyed 1,000 seniors age 65 and older to ask them why they are putting off retirement.

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Social Security Fraud Costs Taxpayers Hundreds of Millions

Oct 7, 2019 /

A growing number of targets who have come under the government’s radar in recent years for what prosecutors describe as a pervasive and costly crime: the theft of dead people’s benefits. These scammers have cost taxpayers hundreds of millions of dollars. Last year alone, inspector general audits found that the Social Security Administration paid out more than $40 million to 500 dead people in just three states: Texas, Maryland and Michigan.

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Curious Behaviors

Oct 4, 2019 /

We all know that humans are not always rational, even (especially?) when it comes to money. But not everyone knows how to put the pieces together, to realize that they need to understand emotional biases and reality. This can lead to unfounded optimism about retirement and a lack of planning. The Center for Retirement Research at Boston College has put together an interactive video tool that you can use with clients to help them learn more about money behaviors and how that relates to retirement.

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Advisors and Future Retirees Not Discussing Health Care Costs

Oct 1, 2019 /

Talking about health care can be uncomfortable for financial advisors and their clients. But having this very important conversation may help reduce the stress for clients, especially those nearing retirement. A recent Nationwide Retirement Institute survey highlighted concerns about health care costs and the reasons for not discussing those concerns, as well as client gaps in understanding and miscalculations about health care costs in retirement.

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