Category: Financial and taxes in retirement
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Overall results
It is clear this was a hard quiz - Social Security is complicated. The average score after more than 2,000 people took it is 50%. Of the 13 questions, more people in aggregate got the correct answer than not. There were, however, 2 questions that most people missed (by a narrow margin). See Question 3 (how Social Security calculates your benefit -
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Published on April 20, 2018
Comments 14
Category: Financial and taxes in retirement
March 14, 2018 -- A crisis will affect Social Security just 16 short years from now, and it has some experts rethinking their strategies for when to start taking Social Security. Instead of urging people to wait until age 70, some are recommending beginning at age 66.
The crisis
In 2034 the Social Security reserves are expected to be exhausted. With no reserves available, the only money available to pay benefits is what comes in from current worker and employer contributions into the program. Sadly, that won't be enough; starting in 2034 there will only be enough coming in to pay 77% of scheduled benefits.
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A new recommendation to think about
Mark Hulbert of Market Watch reported on the argument posed by Richard Band, editor of the Profitable Investing advisory service, in "Why it might be better to take Social Security at age 66 instead of 70". To Band, the question of when to start taking the benefit hinges on your confidence in the federal government. The advisor, who is 66, facetiously wonders if anyone really
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Published on March 14, 2018
Comments 150
Category: Financial and taxes in retirement
December 19, 2017 — The imminent passage of the Republican tax bill makes us wonder how our audience - retirees and people about to retire - will be affected by it. We will attempt to answer that question here, recognizing that everyone’s situation is unique and might be affected differently. We are not tax experts, but have tried to digest various media reports to provide this overview.
The bill will have direct effects on retirees in 2018, as well as some possible indirect effects down the road. Let's look at each of those in turn.
Direct effects on retirees
1. Lower tax payments. With the exception of the people described in #4 below, almost everyone will pay lower federal taxes in 2018 than they do now. However, those cuts will expire in 2025.
Effect: Good news for retirees who pay taxes, except in those who live in high tax states. Who wouldn't want to pay lower taxes!
2. The standard deduction is now much higher, at $12,000 per person vs. the current $6500. This means that far fewer people will have enough deductions to itemize, and filing will be simplified. On the other hand the current personal deduction of $4500 has been eliminated, so the net effect in the increase in the standard exemption
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Published on December 18, 2017
Comments 65
Category: Financial and taxes in retirement
November 28, 2017 — As if there wasn’t enough bad news to go around, your Social Security retirement check is in trouble. If Congress doesn’t act soon, retirement benefits will probably have to be cut by 23% in 2034 – when someone who is 66 years old now will be…
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Published on November 27, 2017
Comments 29
Category: Financial and taxes in retirement
Update Dec 2, 2017: The Senate passed their tax proposal early this morning. It is anticipated that the reconciliation between the Senate and House versions of the bill will go smoothly and it will be signed by the President soon. As soon as the final details emerge we will either update this article or create a new one, so that you can see how tax reform might affect your retirement.
November 23, 2017 -- Recently we had some Comments made to other posts that touched on how the proposed tax bills approved by the House and being considered by the Senate might affect retirees. While the bills and different how they might be reconciled in the end is very fluid, it is worth considering how they impact your retirement. Just about everyone agrees that the concept of simplifying our overly complex tax code is a good thing in principle. But it also certain that any tax reform always produces winners and losers. In this article we will give our opinions on how different groups of retirees would fare on tax reform. Let us hope for your sake you are among the winners!
Tax Reform and Roth Conversions
Here is the Comment by Peder: "If the tax reform/cut/whatever gets through and they raise the 25% bracket all the way to $200K, I’m seriously going to consider converting
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Published on November 23, 2017
Comments 37
Category: Financial and taxes in retirement
November 20, 2017 — Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 66 million Americans will increase 2.0 percent in 2018. The 2.0 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 61 million Social Security beneficiaries in January 2018. Increased payments to…
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Published on November 20, 2017
Comments 12
Category: Financial and taxes in retirement
September 19, 2017 -- Last week we found out that one of the nation's largest credit monitoring services, Equifax, had been hacked. The credit records of 143 million Americans were compromised, including in most cases their social security numbers, addresses, birth dates, credit ratings and sometimes a lot more - basically the keys to the scamming kingdom. Since then the company is being investigated because there was an earlier hack not disclosed, and corporate insiders might have traded ahead of the public release of information.
If you have been wondering if you were one of those whose credit info is now available to the highest underworld bidder - yes you probably were. After all the U.S. population is 323 million, so statistically you have just under a 1 in 2 chance of being affected. This
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Published on September 18, 2017
Comments 19
Category: Financial and taxes in retirement
August 28, 2017 -- From June to mid-August 15, nearly 107,000 payments for more than $100 million were attempted by people trying to use the latest financial scam. Unfortunately for those who tried, all of the payments were nullified. In this "too good to be true" flim flam people are being told there are secret accounts at the Federal Reserve that ordinary people can tap into to pay bills, if they learn how. All you need to do is add your Social Security number to
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Published on August 28, 2017
Comments 0
Category: Financial and taxes in retirement
August 15, 2017 -- If you are receiving Social Security or you plan on relying on it for your retirement, this news is important. If no action is taken, your benefits will take a big haircut in just 17 years.
Every year the Social Security Trustees prepare an annual report. The one for 2016 was just published, and once again it predicts trouble ahead for the nation's system of Federal Old Age and Survivors Insurance and Federal Disability Insurance Trust Funds (OASDI), otherwise known as Social Security. Every year the Trustees warn Congress that something must be done, and every year Congress kicks it down the road. Fixing the system will be painful, but in our opinion, something must be done. The longer it takes to correct the system, the worse the problem gets.
Income still higher than expenditures - for now
Total expenditures in 2016 were $922 billion, while total income was $957 billion: the surplus for the year was $35 billion. Asset reserves held in special issue U.S. Treasury securities continued to grow. Social Security’s total income is projected to exceed its total cost through 2021, as it has for every year since 1982.
Interest income not enough to cover program cost deficit
The Trustees project that interest income, which was $88 billion in 2016, is shrinking every year. Up to this point it has helped cover the deficit of expenses over contributions paid in. As interest income declines, however, the total surpluses will turn to
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Published on August 15, 2017
Comments 81
Category: Financial and taxes in retirement
June 26, 2017 -- This is Part 2 of our "Social Security 2017 Update". Here we will cover the changes to two popular SS claiming strategies that went into effect last year, and what you might do in response.
In Part 1 we explained how the Full Retirement Age (FRA) is gradually increasing for those born in 1955, eventually reaching age 67 for those born in 1960 or later. We also provided some strategies on how to make up for this delay and the slightly smaller benefits that come with it. Here is the link to Part 1, "What You Need to Know About Social Security in 2017".
2 big changes to SS in 2016
Two Social Security claiming strategies went into effect on April 30, 2016 that changed
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Published on June 26, 2017
Comments 30
