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Record Social Security COLA Coming

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 third quarter of 2021. It translates to a $92 monthly increases for the average Social Security recipient, which will be welcome news to people seeing consumer prices rising all around them because of the pandemic and worldwide shortages. According to the SSA, 37% of men and 42% of women get at least half their income from Social Security.

The maximum taxable earnings (OASI) for 2022 will increase from $142,800 to $147,000 in 2022. The retirement earnings exemption limit increases by $600 to $19,560 ($1 withheld for every $2 dollar over that until Full Retirement Age). In the year someone reaches Full Retirement Age the exemption limit increases by $1,440 to $51,960 ($1 deducted for every $3 over the limit). Here is a link to the Social Security Fact Sheet.

Comments? Do you think the COLA will be enough to offset what you are seeing happen to your budget? Please share your thoughts in the Comments section below.

For further reading:
Overlooking Spousal Benefit Could Leave Him Clipping Coupons

Posted by Admin on October 13th, 2021

Social Security Fund Runs Out of Money One Year Earlier

Category: 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 Fund will become exhausted in 2033, one year earlier than projected last year.

Given the unprecedented level of uncertainty, the Trustees say there is no consensus on what the lasting effects of the COVID-19 pandemic on the long-term experience might be, if any.

Based on best estimates, the 2021 reports show:

• The Old-Age and Survivors Insurance (OASI) Trust Fund, which pays retirement and survivors benefits, will be able to pay scheduled benefits on a timely basis until 2033, one year earlier than reported last year. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 76 percent of scheduled benefits.

• The Disability Insurance (DI) Trust Fund, which pays disability benefits, will be able to pay scheduled benefits until 2057, 8 years earlier than in last year’s report. At that time, the fund’s reserves will become depleted and continuing tax income will be sufficient to pay 91 percent of scheduled benefits.

So many conflicting currents

The Covid pandemic caused millions of people to lose their jobs, meaning they did not pay into the Social Security system. Many people became disabled, which increased payouts by the Disability Trust Fund. On the other hand, over 650,000 people have died from the virus, so those people will not be around to collect their Social Security (although any survivors will). Immigration numbers are down, which means fewer people are paying into the system. Fertility rates declined in this period of uncertainty, which will have long term effects on the size of the workforce supporting retirees. How all of these factors play out, no one is sure.

Bottom line for lawmakers – do something!

The Trustees report finishes with this stern warning: “Lawmakers have many policy options that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.” We couldn’t agree more – quit fighting silly political battles and do something about the ticking time bomb that is going to blow up Social Security!

For further reading:
Summary of the Trustees Report

Comments? If you were in charge, what would you do to save Social Security?

Posted by Admin on September 7th, 2021

Are You a Grandcarent and Need Help?

Category: Family and Retirement

August 24, 2021 — The assumption has always been that you would bring up your children and they would go on to raise their own families. Empty nesting and retirement would follow for you, bringing relaxation and less stress. But for the 2.3 million baby boomers who are raising an estimated 2.7 million children, the days of child care are not over yet. These “Grandcarents” are often in need of “Grandfamily” Housing, and the economic and other pressures are usually enormous. This article will discuss some sources of help if this is the situation for you or someone you know.

The ways that older adults become responsible for young children vary. Often it can be pinned on a drug epidemic like crack or opiods. Adult children get hooked, have children of their own, and the grandparents or uncles and aunts have to step in to avoid foster care and neglect. In other cases there might be psychological problems, the inability to hold a job, or incarceration. The pandemic has contributed to the problem too. Whatever the cause, assuming responsibility for young children when you are in your 60s and 70s is a forbidding challenge. We even know some people in their 80s who are raising their great-grandchildren.

Posted by Admin on August 24th, 2021

Will Your Children Be Able to Afford a Retirement As Good As Yours?

Category: Baby Boomer Retirement Issues

Note: This article has been updated to include vote totals as of August 10. However, you may still take the poll and the results will continue to change.

August 4, 2021 — There seems to be more than a good natured rivalry going on with the baby boomer generation vs. Gen X, Y, and millenials. Often expressed snarkily by the “OK Boomer” epithet, the feeling among the younger generations is that baby boomers got lucky economically, and that we weren’t quite as clever or hard working as we might think. Those of us with children tend to be more sympathetic to younger folks’ plight, particularly when we see how hard it is for them to purchase homes and save for their future retirements. But we wonder, what do Topretirements Members think – how will their children’s retirements compare financially to their own? Will the kids have enough money to retire with a lifestyle matching your own?

We have a new and cool feature that allows you to answer the question right here in this article. Then, as soon as you answer it you can see the poll results instantly! You can provide a different answer (Other) here, as well as provide additional comments at the bottom of this article. Do you provide financial or other assistance to your adult children? Have your kids been able to buy a house, with or without help from you? Do you think that baby boomers got lucky financially, or are the younger generations the lucky ones? We are eager to here your thoughts on this complicated issue!

Note: There is only 1 question on this poll. But we really hope you will fill in more of your thoughts on this issue in the Comments section. If enough people respond, we might develop a more comprehensive survey on the topic.

Here are how the results came out as of August 10. It seem that a significant majority thinks their children’s retirement will not be as good as their own. Only 22 out of 127 thought it will be better. Please take the poll if you haven’t already, as well as Comment below, so we can make this poll even more representative.

Posted by Admin on August 3rd, 2021

Before You Buy a Condo or Home in an Association: 4 Things You Need to Do

Category: Active adult communities

July 21, 2021 – So you managed to get lucky. It looks like you might win the bidding to buy that condo, or a home in an active adult community. But before you submit the winning offer and break out the champagne, here are 4 things you need to do first. Your new community’s financial picture deserves some extra looks, particularly in light of the collapse of the Champlain Towers South condo building in Surfside, FL. A community might look healthy, but until you have examined its financial reserves you really don’t know.

This week we listened to an insightful interview on NPR with Robert Nordlund, founder and CEO of Association Reserves. An expert on reserves and the financial health of communities, he lists four things things you need to do before you invest your hard-earned money in a condo or home in a community. We have added some of our own commentary to his questions.

Posted by Admin on July 21st, 2021

It’s Not Just Seniors That Fall for Scams – The Young Are Fleeced Even More Often

Category: Financial and taxes in retirement

June 29, 2021 — We baby boomers are constantly being warned that scammers are ready to take our last nickel, if we let down our guard for just one careless moment. An interesting pair of articles in the New York Times showed how that can happen to seniors, and surprisingly, that people in their 20s are twice as likely to lose big bucks to the internet’s artful dodgers than older people. Online Trickery Traps Seniors reported on how the elderly (and that increasingly means us) fell prey to unethical political fundraising ploys from both parties in the recent elections. The second article, The Young Fall for Scams More Than Seniors, found that scams involving job offers, paper checks, and student loan forgiveness snagged a surprising percentage of people aged 20-29.

Posted by Admin on June 29th, 2021

Is Maryland (Or Any Other State) a Good Place to Retire

Category: Best Retirement Towns and States

June 20, 2021 — Virginia’s recent Comment to our “25 Most Popular Active Communities in the Southeast” article really got things going. Many folks jumped in to help answer her question, which asked what people thought about retiring in Maryland. Since hers generated so many other Comments (and Maryland is not an active community nor is it in the Southeast) we thought we would pull everything together under a new post to keep everything in better focus.

Most of the Comments quickly got into taxes and cost of living, although just about everyone liked other aspects of the Free State. Regarding taxes, an estate lawyer once said something very wise to my mother and I. He said: “Don’t let the tax tail wag the dog”. In other words, if you want to do something for good reasons (like move to another state), do it. His mantra – enjoy your life; fear of taxes is not the way to live. Just as important as that thought though, you also have to act on the basis of the facts, not on what you think you know or heard from someone else.

Posted by Admin on June 19th, 2021

Retirement Confidence Hits All-Time High – Despite Covid

Category: Financial and taxes in retirement

May 24, 2021 — The Employee Benefits Research Institute (EBRI) has released the results from its annual retirement confidence survey – and they are pretty good! Back in 2014, 55% of all workers said they were “confident they would have enough money to retire confidently”. This year, 72% of all workers say they are that confident, and 80% of retirees agree (in 2014 only 67% were that confident). The survey also had some other extremely interesting findings that we have detailed below.

Source: EBRI

Covid and confidence

One would have thought that a year of being in the Covid pandemic would have negatively affected how retirees feel about their retirements. Instead, 72% feel about the same level of confidence, and only 19% feel “slightly less confident”. How much the heady stock market has had an effect on this confidence is unknown, although we would venture it has been positive.

About one third of overall workers say the pandemic has affected their ability to save for retirement. One in five workers saw their pay or working hours negatively affected by the pandemic.

Of the 23% of retirees who feel less confident in total, most of them seem to be those with major debt problems, savings under $10,000, never saved for retirement, and those with poor health. However when it comes to debt, only 8% of retirees think they have a serious problem with it, while 26% think they have a minor problem.

Financial advice

Where would you guess most workers go for retirement planning advice? Our guess wasn’t the right answer. About 35% of people rely on family and friends, 35% do their own research online or with other sources, and 27% use a financial planner. About 22% rely on their employer. Some 36% of retirees say they have a financial planner.

Retiring earlier than planned

One of the more startling findings in the study is in when people retire. About half of them say they retired earlier than planned (46% vs. 48% who retired about when they expected). This is a result we have seen in many surveys – workers on average think they will retire much later than they actually do. Often it is an unexpected health issue or layoff that triggers the retirement. These problems tend to come out of the blue, and when they do they have a negative effect on retirement finances. EBRI found that half of workers believe they will gradually transition into retirement. However, 7 in 10 retirees report they had a full-time stop. Although almost three quarters say they will work in retirement, less than half do any kind of paid work.

Retirement lifestyle – good news for most folks

Some 71% of retirees say their retirement is either about what they expected or slightly better. That represents a slight dip from the 2020 survey results. Fewer said it was much better (10%) than much worse (19%). Again, there was a slightly more positive experience in 2021 vs. 2020.

Even more figures

The full report makes for interesting reading. There are the results for spending expectations in retirement, use of retirement savings, confidence in Medicare and Social Security. You can see the full report here.

Comments? How is your confidence in a comfortable retirement? Are you spending about what you thought? Did you retire when you thought you would? Please share your experiences in the Comments section below.

For further reading:
You Are Retiring, the Kids Are in College – And You’re Broke

Posted by Admin on May 23rd, 2021

Trusts, Wills, and Estates: War Stories from a Career Trust Officer

Category: Estate Planning

April 12, 2021 — Today we are fortunate to have an interview with Jim, a retired vice president and trust officer  at a large Pennsylvania bank, who spent his entire career administering estates of all kinds and sizes. We think you will find his real life examples of what to do – and what not to do – in estate planning very useful.

The tips, advice, and experience that Jim brings to this important  topic is critical, since inevitably, everyone needs an estate plan. Jim believes that only about 50-75% of people of retirement age have an estate plan of some kind. Most of those folks have wills, while a much smaller percentage have trusts. As he pointed out early on in our interview,  even if you think you don’t have an estate plan, you actually do. That is because in the event of no will or trust, the government has rules about how your assets will be divided after your death. The problem is that it probably won’t be distributed the way you wanted it to be done.

Posted by Admin on April 12th, 2021

Overlooking Social Security Spousal Benefits Could Leave Him Clipping Coupons

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.

  1. Spousal benefits while you are both alive.
Posted by Admin on April 4th, 2021