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Try It NOWCategory: Financial and taxes in retirement
March 30, 2023 — It might come as an unpleasant surprise to many people that Social Security benefits can be taxed on both the federal and the state level. But which states tax social security income? While there is no escaping the federal tax if your income exceeds certain levels,…
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Category: Medicare
February 7, 2023 -- The debt ceiling is one of the big issues in the new Congress. How it plays out should be interesting, with Republicans narrowly controlling the House and the Democrats with a slight edge in the Senate. Some lawmakers think that Social Security and Medicare funding could become part of the debt ceiling solution, while others have a firm “hands off” posture. Both of these programs are crucially important to Topretirements Members, regardless of their politics, so here is a rundown on what we know about where things stand (most of which have to do with Social Security).
Social Security has somehow become part of the discussion on the debt ceiling, even though the program has no effect on the national debt (the opposite applies to Medicare). The larger issue for these two programs, which does not relate to the budget ceiling, is how to fix them long term. Social Security's Trust funds will run out in 2034 or thereabouts, and when that happens, only about 70% of promised benefits would be available to be paid to beneficiaries. Meanwhile, Medicare costs continue to rise.
Republican positions vary
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Category: Financial and taxes in retirement
January 28, 2023-- Myths, misunderstandings, and just plain faulty thinking occur in retirement, just like they do in every other phase of life. This "10 Myths That Could Sink Your Retirement" article explains that, unlike earlier stages in our careers, where there might be a second chance at recovery, a mistake in your retirement can be serious. That's why it is key to avoid these common retirement myths and mistakes. Many, but not all of them have to do with money. We welcome other people's insights on the best and worst decisions they made in retirement - please add them to the Comments section below.
Top 10 Retirement Myths and Mistakes
Assuming you will work 'til you drop. Asked when they think they will retire, most people say between 65 and 67 - and many much later, if ever. But in the actual world, a Gallup poll said the average retirement age is closer to 61. The reasons for this vary greatly, but common ones are being laid off unexpectedly, or getting injured or sick and unable to work. The ramifications of retiring earlier than expected are serious, because it usually means that expected retirement savings do not materialize.
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Category: Medicare
October 13, 2022 — It has been four decades since the Social Security COLA (Cost of Living Adjustment) was this high. The government announced the increase today, which came in as widely expected at 8.7%. The rate was calculated on a formula based on current rates of inflation. For a…
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Category: Financial and taxes in retirement
June 29, 2022 -- More than a few retirees on Social Security turn down work that they would like to do. The concern is that their benefits will be reduced, thus making the effort not worthwhile. To help people understand how work might affect your Social Security benefits, here are the facts to help you decide the best course of action. But the good news first - over the long term, working has no negative impact on your benefits, and might even help.
Reached Full Retirement Age - no problem!
If you have reached your Full Retirement Age (FRA) - 66 if you were born in 1954 or before, gradually reaching 67 for those born in 1960 or later - there is no impact. You can work and earn as much as you want and it will not affect your Social Security benefit in any way.
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Category: Social Security
June 6, 2022 -- Social Security Trust Funds are now projected to last one year longer, as outlined in the latest Trustees Report. High employment rates and lower disability claims, it seems, have increased contributions to the retirement fund (OASI).
Thanks to those, instead of the retirement trust fund (OASI) becoming exhausted in 2033, that event has been pushed back to 2034. The disability (DI) fund is now expected to last at least for 75 years, up from 2057. At this time, there is no consensus among experts on the lasting effects of the COVID-19 pandemic. The Trustees currently assume that the pandemic will have no net effect on their long-range projections. The assumptions for their report were determined in mid-February 2022, and they are uncertain regarding the path of the COVID-19 pandemic and the economy in the near-term.
Based on their best estimates, the 2022 reports determine:
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Category: Social Security
April 14, 2022 — As anyone who reads this Blog regularly knows, Topretirements is a big fan of waiting as long as you can before you start to collect Social Security. But that is not to say there aren’t many good reasons to take it early, or at least not…
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Category: Financial and taxes in retirement
March 23, 2022 - A worrying study by the University of Michigan’s Retirement and Disability Research Center found that many workers tend to overestimate how much they will receive in Social Security retirement benefits. That is concerning because that overconfidence has a negative impact on how much people save getting ready for retirement. About half of the survey takers noted that they wished they had done a better job of planning. Note that about half of Social Security recipients rely on it for at least half of their income. The average Social Security retirement benefit in 2022 is $1658 monthly. The maximum is $4194 (for someone who takes it at age 70).
Among the findings in the study:
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Category: Financial and taxes in retirement
February 15, 2022 -- Everybody knows some things about Social Security, the benefit that changed retirement for the good when it was signed into law in 1935. Unfortunately, some of the items many people think they know either aren't true, or are just plain wrong. This misinformation could have a serious and negative impact on the decisions they make, and their ultimate retirement well-being. One of the sources used in this article are the results from our 2020 Social Security IQ Quiz , where we looked at the answers that people tended to get wrong the most.
How many years you work doesn't really affect your Social Security benefit that much.
Only 49% of people who took our 2020 quiz got this answer correct. The choices for how many earning years are used to calculate your benefit were 25, 30, or 35 – and the correct answer is that Social Security calculates your benefit on your highest 35 earning years (adjusted for inflation). While that might not seem that important a detail, it is, because every year you had no earnings counts as a zero!
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Category: Financial and taxes in retirement
October 13, 2021 — Social Security and Supplemental Security Income (SSI) beneficiaries will receive a record 5.9 percent Cost of Living Adjustment (COLA) for 2022. It is the largest COLA since 1982. The increase is based on the Consumer Price Index (CPI-W) from the third quarter of 2020 through the…
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