Savvy Social Security September 14 Newsletter Now Available

Sep 20, 2017 /

In it, Elaine discusses dependent benefits. She covers who qualifies for dependent benefits, who handles the money, who pays taxes on the income, and how to apply. You can read the full discussion here.

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Savvy Social Security August 31 Newsletter Now Available Online

Aug 31, 2017 /

Here, Elaine discusses one of the trickiest and most critical Social Security planning strategies: survivor benefits for widows between the ages of 60 and 70. In this newsletter she goes over eligibility rules, how to use the Surviving Planning Calculator, how the earnings test works when it makes sense to take benefits before full retirement age, and the application process. You can read the full discussion here. You can read the full discussion here.

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Savvy Social Security August 3 Newsletter Now Available Online

Aug 22, 2017 /

In this edition, Elaine highlights how to file a restricted application. She discusses how it is possible for some individuals to receive a spousal benefit while their own benefits build delayed credits. While not everyone is able to do so, Elaine talks about grandfathered clients and goes through the process of how to receive a spousal benefit when a client’'s own benefit is higher. You can read the full discussion here.

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The Treasury Department Announces The End of myRA

Aug 1, 2017 /

The Treasury Department announced it would end myRA, a program similarly structured to Roth, but created under the Obama administration. It aimed to help low and middle-income workers who didn't have access to traditional retirement plans through employers.

“Unfortunately, there has been very little demand for the program, and the cost to taxpayers cannot be justified by the assets in the program,” said U.S. Treasurer Jovita Carranza in a statement.

According to a recent CNN report, around 30,000 people opened a myRA account in the span of three years and only 20,000 of those people had actually saved money in the account. The Treasury Department said it sent emails on Friday morning to all myRA participants notifying them of the change. Their accounts will remain open until further notice, but those with automatic contributions should stop future transfers, a spokeswoman said. The Treasury Department said it will be communicating frequently with participants to help them transfer their money into private investments.

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Savvy Social Security July 20 Newsletter Now Available Online

Jul 26, 2017 /

In it, Elaine discusses and analyzes the 2017 Social Security Trustees Report which was released last week. She highlights how the COLA may affect Medicare premiums and discusses reform proposals as well as national reactions to the report. You can read the full discussion here.

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Social Security Trustees Report Updated For 2017

Jul 14, 2017

The Social Security Board of Trustees on Thursday released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2034, the same as projected last year, with 77 percent of benefits payable at that time. The DI Trust Fund will become depleted in 2028, extended from last year's estimate of 2023, with 93 percent of benefits still payable.

In the 2017 Annual Report to Congress, the Trustees announced:

  • The asset reserves of the combined OASDI Trust Funds increased by $35 billion in 2016 to a total of $2.85 trillion.
  • The combined trust fund reserves are still growing and will continue to do so through 2021. Beginning in 2022, the total annual cost of the program is projected to exceed income.
  • The year when the combined trust fund reserves are projected to become depleted, if Congress does not act before then, is 2034, which is the same as projected last year. At that time, there will be sufficient income coming in to pay 77 percent of scheduled benefits.
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Important Things Same-Sex Couples Need To Know About Social Security Benefits

Jul 12, 2017 /

It has been two summers since the 5-4 landmark decision in the Supreme Court that legalized same-sex marriage for all fifty states in the United States. This decision made it possible for more married same-sex couples to take advantage of Social Security claiming strategies that were previously unavailable to them. The Social Security Administration currently recognizes same-sex couples’ marriages in all states and some non-marital legal relationships, such as some civil unions and domestic partnerships, to determine entitlement to Social Security and Medicare benefits. A single person only has to consider nine different scenarios when claiming retirement benefits. However, according to David Freitag, a financial planning consultant at the MassMutual Financial Group, for married couples, the available options for filing strategies grow to 81, he told CNBC in a recent report.

For spousal benefits, those who were married for at least 10 consecutive years can claim either their own benefits based on their earnings or half of the current or former spouse's benefits, whichever is higher, once they reach full retirement age. As for survivors benefits, it is based on the earnings of the person who died. A widow or widower can receive full benefits at their full retirement age or at any age if they take care of their children who are younger than age 16 or disabled. People can claim reduced survivor benefits at age 60.

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Savvy Social Security June 29 Newsletter Now Available Online

Jul 7, 2017 /

In it, Elaine highlights the two forms of disability benefits, SSI (Supplemental Security Income) and SSDI (Social Security Disability Insurance). She provides in-depth information about SSDI, which is for anyone who has worked in a Social Security-covered job at least 10 years and finds himself unable to work because of an illness or condition that meets Social Security’'s definition of disability.

She answers questions about who is eligible, why there is a five-month waiting period, what your client needs to apply, and much more. You can read the full discussion here.

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Survey Measures Financial Optimism and Concerns of Baby Boomers

Jul 6, 2017 /

A recent survey by Merrill Lynch polled currently employed Millennials, Gen Xers, and Baby Boomers about what they were optimistic about when it came to their financial future as well as their concerns.

When it came to overall optimism about their financial future, Baby Boomers came in last at 22 percent. The top reasons for financial optimism were living within their means, being in good health, and having a well-paying job. When it came to concerns, women particularly worried about having to work longer than hoped, becoming seriously ill and not being able to work, and not being able to pay for a child’s education. Financial stress is causing employees to spend their working hours worrying about their personal finance problems. Baby Boomers spend one hour on average while “on the clock” worrying about their financial problems. Fifty-four percent of Baby Boomers said they wanted help when it came to managing a range of financial matters, with healthcare costs mattering the most to them financially.

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Savvy Social Security June 15 Newsletter Now Available Online

Jun 20, 2017 /

In this edition, Elaine discusses how benefits will most likely not keep up with inflation. Because Social Security only provides for a portion of your clients' retirement income, you can advise them on how relying on their own resources later on could be more beneficial for them since inflation is increasingly cutting into Social Security's buying power.

She examines a recent study by the Senior Citizens League on how the biggest loss in buying power happened just within the last year, and how housing and medical expenses were among the most rapidly rising spending categories.

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Savvy Social Security May 25 Newsletter Now Available Online

Jun 19, 2017 /

In it, Elaine discusses the “grey divorce” phenomenon—the high divorce rates among baby boomers relative to prior generations. This divorce rate substantially impacts the Social Security claiming wisdom for the boomer demographic, as the rules for divorcees depart significantly from those for married couples. The full discussion may be read here.

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Andy Slavitt Criticizes GOP for Using "Sabotage, Speed and Secrecy" to Repeal ObamaCare

Jun 13, 2017 /

In a recently published Op Ed, former Acting Administrator of the Centers for Medicare and Medicaid Services (CMS) Andy Slavitt criticized Senate Majority Leader Mitch McConnell for employing “sabotage, speed and secrecy” to repeal the Affordable Care Act.

Slavitt says McConnell and the Senate could have worked with the Democrats to create new legislation that could benefit many people, but instead chose to work on passing a healthcare reform bill that was very close to the House bill which, according to the Congressional Budget Office (CBO), would cause an estimated 23 million people to lose their healthcare coverage.

In order to “sabotage” the ACA, McConnell is reportedly telling GOP members they have no choice but to pass a replacement. To “speed” up the process of passing the bill, McConnell deployed Rule XIV, a fast-track procedure that moves the bill directly to the floor instead of through the committee, beating the July 4th recess and giving no time for opponents and the public to catch up to the details. According to Slavitt, none of these tactics would work if the bill wasn’t kept a secret for as long as possible, with only a small group of Republicans amending the bill behind closed doors. He says McConnell’s “secrecy” is essential for him to be able to handle backroom deals with Republican state senators who might oppose the reform bill.

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BENES Act Introduced in Congress

Jun 8, 2017 /

A successful transition to Medicare requires a certain degree of communication between beneficiaries, the government, and employers. Unfortunately, existing procedures are often inadequate in informing incoming Medicare beneficiaries of their obligations.

A bipartisan bill has been reintroduced in the House of Representatives which, if passed, would mitigate the myriad communication problems facing citizens about to enroll in Medicare. The BENES Act would require three government agencies— the Department of Health and Human Services, the Social Security Administration, and the Internal Revenue Service—to work together to identify people approaching Medicare age and inform them of the enrollment rules.

The reintroduction of this bill coincides with a measure to waive penalties for some latecomers to the Medicare system. Like the BENES act, this temporary waiver was written in acknowledgement of the communication deficit facing citizens signing up for Medicare.

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Higher COLA Predicted for 2018

Jun 6, 2017 /

After several consecutive years of low cost-of-living adjustments, America’s seniors are now being given some cause for optimism.

The Senior Citizens League (TSCL) estimates next year’s cost-of-living adjustment will be 2.1%, a staggering improvement over last year’s paltry 0.3%. Indeed, the past few years of cost-of-living adjustments have averaged 1%, substantially below the Social Security Trustees’s intermediate projections of 2.6% per year.

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More Americans Waiting Later to Claim Social Security

May 31, 2017 /

Fidelity reports that only 28 percent of surveyed 61-year-olds plan to start claiming benefits at 62, compared to nearly 50% in 2008. On the surface, this is good news: delayed claiming is generally the better bet, especially in the case of high-earning workers expected to predecease their spouses.

However, Fidelity’s other findings indicate widespread confusion on the Social Security topic among the pre-retiree demographic. Some examples:

38% of surveyed pre-retirees erroneously believe Social Security’s actuarial reduction for early claiming to be a temporary penalty. In fact, the reduction is permanent unless you go back to work and have your checks withheld by the earnings test (if under full retirement age) or voluntarily suspend your benefits, removing the actuarial reduction for every month your benefit is in suspension (if full retirement age or older.)

Only 26% of surveyed pre-retirees know their own full retirement age. As one’s full retirement age is the starting point for the Social Security claiming decision, this is a fairly serious information gap.

50% of respondents believe their benefits will be reduced if their ex-spouse files a Social Security claim based on their record. This is untrue.

Fidelity cites a general improvement in the economy as a possible reason for the decreasing popularity of the early claiming decision. With fewer pre-retirees in urgent financial need, they argue, there’s less incentive to claim early.

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Trump Budget Proposal Spells Cuts to SSDI and Medicaid

May 23, 2017 /

The President’s budget proposal, which assumes the passage of the Medicaid savings portion of the AHCA, would make $800 billion in cuts to Medicaid over the next decade. Medicaid’s exact federal funding mechanism remains undecided—it may be either a per capita (per enrollee) grant or fixed funding in the form of a block grant—but either way, state responsibility will be emphasized. The Congressional Budget Office anticipates that states will choose to roll back the Obama-era Medicaid expansion.

President Trump’s budget director, Mick Mulvaney, earlier described Social Security Disability as “wasteful,” not because of fraud or overpayments—SSA’s definition of disability is actually very strict—but because of systemic issues with Social Security finance. Indeed, the DI fund is slated to exhaust in 2023, at which point there will be an automatic 11% drop in benefits. NBC reports that the Trump proposal would save about $72 billion through changes to disability programs over the next 10 years.

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Charles Schwab Proposes Tax Break for America’s Seniors

May 17, 2017 /

In a recent WSJ feature, veteran broker Charles Schwab advocates giving older Americans a break on their Social Security taxes.

When we’re discussing Social Security taxes, we’re talking about two distinct taxes:

  1. Social Security’s payroll taxes; presently 6.2% each for both employees and employers (totaling 12.4% for the self-employed).
  2. Social Security’s benefits surtax, a provision of the 1983 amendments indirectly taxing Social Security benefits for higher-income earners.

Mr. Schwab advocates the elimination of the Social Security and Medicare payroll taxes after age 65 on the first $50,000 of earned income—incentivizing continued earnings on the part of older Americans without giving the nation’s affleunt too much of a break. He’s proposing the benefits surtax be entirely removed in “the spirit of fairness.”

Of course, it’s important to remember that this surtax was part of an emergency measure effected to prevent Social Security’s Trust Fund from exhausting. But because the thresholds for this tax were set in 1983 and have not been adjusted for inflation, these taxes are beginning to affect Americans of more moderate means.

Mr. Schwab believes his proposal to eliminate the surtax should receive bipartisan support. And indeed, legislative proposals have shone a new light on the benefits surtax. A reform proposal authored by Rep. Sam Johnson (R-TX) would phase out the taxes on Social Security benefits, while a proposal across the aisle from Rep. John Larson (D-CT) adjust the thresholds for the benefits surtax for inflation— a measure which should theoretically reduce the population subject to the surtax to 1983 levels.

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Savvy Social Security May 11 Newsletter Now Available Online

May 17, 2017

Here, Elaine discusses the financial challenges confronted by women as they reach old age, and the ways your advice can help them better prepare for those challenges.

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SSA.GOV Accounts to Require Stronger Authentication

May 10, 2017 /

Starting June 10, 2017, holders of Social Security accounts will need another authentication step to log in. When they sign in using their username and password, they’ll receive a one-time security code to finish their login. The security code may be delivered through text message or email, depending on user preference.

The Social Security Administration attempted to put in place a similar measure in August of last year. Under last year’s measure, the one-time security code could only be sent through text message—posing a potential obstacle to senior citizens without cell phones, or who were otherwise uncomfortable providing the Social Security Administration with a phone number.

Cybersecurity expert Brian Krebs recommends everyone set up an online Social Security account—and soon. According to Krebs, identity thieves can use a retiree’s personal information to register them for an online Social Security account, then have the victim’s benefits diverted to prepaid debit cards. Because only one Social Security account may be created per SSN, this scam can be defeated by signing up for an account on your own.

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House Passes Obamacare Repeal Bill

May 4, 2017 /

The revised American Health Care Act passed the House in a narrow 217-213 vote, and faces an uncertain future before the Senate.

The bill repeals Obamacare’s insurance mandates and expansion of Medicaid, replacing these measures with a tax credit aimed at helping people buy new insurance. More analysis can be found at the Hill.

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