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Try It NOWCategory: Financial and taxes in retirement
September 8, 2021 — The latest Trustees report for Social Security shows that the COVID-19 pandemic and the 2020 recession are affecting the future of this popular program, but no one is certain exactly how that will play out. One thing the report does lay out is that the Trust…
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Category: Financial and taxes in retirement
April 5, 2021 - Naturally enough, most people concentrate their focus on their own Social Security retirement benefits. If they are careful, they compare the advantages of taking it early (as soon as age 62), waiting to Full Retirement Age (FRA, which is 67 for those born 1960 or later), or hanging in to get the maximum benefit at age 70. While it is great to know your own situation, most people overlook the importance of the benefits that might apply to their spouses. For some couples, particularly where one member earns much more than the other and Social Security will be the major source of income in old age, a bad decision can be disastrous down the road. This article will lay out the issues involved, so people can decide the best strategy for maximizing their Social Security spousal benefits.
There are two different scenarios to consider: spousal benefits while you are both alive, and survivor benefits when you depart this world. Let us take them one at a time.
Spousal benefits while you are both alive.
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Category: Financial and taxes in retirement
January 9, 2020 - Most of the people who took the new version of our popular Social Security IQ Quiz were able to get a passing score of 60%. But there were 3 questions that many people had a lot of difficulty answering correctly. That lack of knowledge, unfortunately, could cost them significant amounts of money over their lifetimes.
Underestimating your Social Security benefits will cost you money
These were the Social Security questions that most people missed, along with the correct answers and more detailed explanations:
How many earning years are used to calculate your Social Security retirement benefit.
Only 49% of quiz takers got this answer correct. The choices were 25, 30, or 35 years - the correct answer was 35 years. While that might not seem that important a detail, it is.
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Category: Financial and taxes in retirement
October 28, 2020 -- Thank you for taking our 2020 Social Security IQ Test. We hope you found it useful. (If you haven't taken it yet, here is the link). Please find below a detailed summary of all the questions and answers, along with an explanation of each correct response to this Social Security text. So far 500 people have taken the latest version; over 10,000 people have taken previous versions. We hope even more take it to advance their Social Security education.
Note: most of the links provided in these explanations about Social Security questions go to excellent advice on the SSA.gov website. The correct answer in each case is indicated in bold either by a ? or a check mark.
Conclusions - Underestimation most frequent kind of incorrect Social Security answer
Of the 500 people taking the Social Security IQ test so far the average score is 64% (we set 60% as the passing score). There were 3 questions that 80% or more folks got right: Full Retirement Age (#1), collecting on the benefits of a divorced spouse (#10), and withdrawing your application within 12 months (#11). There were 4 questions which most people could not answer correctly. Unfortunately, these were mostly questions that are important for Social Security recipients to know.
Underestimating your Social Security benefits will cost you money
The Social Security questions that most people missed had to do with:
-How many years are used to calculate your benefit
-How much your benefit will increase if you wait to claim past your Full Retirement Age (FRA) and the difference between claiming at age 62 vs. 70
-And when a spouse can collect their full spousal benefit.
Unfortunately, underestimating how much they could get by delaying their benefits instead of taking them at the first opportunity could cost them and their spouses a lot of money down the road.
Assuming you were born in 1960 or later, what is considered your Full Retirement Age for Social Security benefit purposes? (The rest of the questions in this quiz assume you were born in 1960 or later, unless otherwise specified).
62
65
66
67?
Comment: “Full Retirement Age” is when you are eligible for your full Social Security benefits without penalty. For those born between 1943 and and 1954, it was age 66. For those born in 1955 and later the FRE increased 2 months per year, until for those born in 1960 and later, it became age 67. But you can actually qualify for “more than full” and get a larger benefit at any age up to 70. (See Full Retirement Age Chart). 80% got this correct.
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Category: Financial and taxes in retirement
July 4, 2020 -- Our friend Robert Powell at TheStreet.com just wrote a very helpful article for people who worked for governments or non profits and did not pay into Social Security for much of their work lives. They are usually concerned that they won't get Social Security retirement payments. In "Did You Work for a Government and Not Pay Social Security", Powell writes to straighten out some misconceptions.
The Windfall Elimination Provision (WEP) reduces your Eligibility Year (ELY) benefit amount before it is reduced or increased by early retirement, delayed retirement credits, cost of living adjustments (COLA), or other factors. If applied, your Social Security retirement payments will be lowered.
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Category: Social Security
May 4, 2020 -- When the coronavirus pandemic first arrived on our shores one of the first thing many people added to their list of worries was its potential effect on the viability of Social Security. Those of a negative mindset were drawn to two main concerns about its funding: shortfalls caused by the vast number of newly unemployed not making FICA payments, and new distributions made to people forced to take their Social Security retirement early at 62. The effect, they hypothesized, might be that the Social Security Trust Fund would become exhausted earlier than expected, and promised payments to retirees would have to be either trimmed or subsidized by the federal budget.
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Category: Social Security
April 21, 2019 -- Deciding when to take Social Security retirement benefits is always a complex question. Now the devastating impact of Coronavirus is making it even harder. Here are some thoughts that might help on a question that always has many possible answers.
The New York Times reports in "Taking Social Security During the Pandemic" that workers in the past decade have shown a steady trend of postponing when they take Social Security, as a way to increase their potential lifetime retirement benefits. Whereas most workers still take Social Security the first chance they get at age 62, to get higher benefits more and more have been waiting to their Full Retirement Age (66-67), or even to age 70. With the arrival of the coronavirus pandemic experts are wondering if that trend will stop, or even reverse itself.
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Category: Financial and taxes in retirement
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December 28 , 2019 — Social Security is the single most important source of retirement income for most people. So it is crucial that you understand how the rules apply to your situation. Here are three important things you need to understand about how Social Security works.
1. Know when to claim
The earliest you can claim is age 62. Your Full Retirement Age (FRA) is somewhere between 66 and 67, depending on your birth year (if born before 1954 it is 66 and increases one month per year after that up to 67). Your benefit maxes out at age 70; there is no advantage in waiting past that. if you file at age 62 you will only get 75% of what you would get if you wait to your FRA. If you claim between your FRA and 70 your benefit will increase by 8% a year. You can file for your benefits online or in person.
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Category: Social Security
December 11, 2019 -- You can always expect a lively debate on this subject: should you wait to claim Social Security, or take it as early as age 62? No matter your opinion, it is indisputable that claiming later than your Full Retirement Age (66 or later) provides an attractive 8% increase per year yield (plus COLA). Now a new study suggests that the 8% per year reward for waiting is too high, and the penalty for claiming early is too severe. Note: Shoutout to Maimi for bringing this study to our attention!
The study, "Are Social Security's Actuarial Adjustments Still Correct", comes from the Center for Retirement Research at Boston College. When Social Security started to allow beneficiaries to claim early or delay to age 70 it used actuarial adjustments designed to keep lifetime benefits constant for an individual with average life expectancy. In other words, no matter when you take your Social Security benefits, the odds are that you will receive the same amount of money.
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Category: Social Security
November 18, 2019 -- Late last month it was announced that Social Security and Supplemental Security Income (SSI) benefits for nearly 69 million Americans will increase 1.6 percent in 2020. This follows increases of 2.8 percent in 2019, 2% in 2018 and .3% in 2016.
The 1.6 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 63 million Social Security beneficiaries in January 2020.
The maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $137,700, up from $132,900. Separately, Medicare.gov announced that Part B premiums in 2019 will increase by $9.10 a month to $144.60 for most recipients.
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