Vote for the Best in the Personal Finance Blogosphere

Vote for www.kathleensindell.com Vote for www.kathleensindell.com Now!  The Plutus Awards celebrates the best of the Personal Finance blogs.  Honor the best in the personal finance blogosphere! If you find this blog helpful, then vote for www.KathleenSindell.com at Plutus  Awards (http://www.plutusawards.com)

Cast your vote today! The Plutus Awards are now accepting nominations, and will do so until 11:59 p.m. Eastern on Monday, August 25, 2014.  You are encouraged to nominate www.KathleenSindell.com for three personal finance blogger categories (1) best kept secret, (2) best retirement blog, and (3) best blog of the year. Vote at www.plutusawards.com for www.kathleensindell.com for a Plutus Award for personal finance blogging.

Its easy to vote for www.kathleensindell.com You can nominate up to three blogs in each category. The top nomination recipients in each category will be finalists for that award, and winners will be chosen by a panel of blogging peers. It is easy to vote and there is no registration needed. Anyone can nominate their favorite blogs. Click www.plutusawards.com to vote for www.kathleensindell.com for a Plutus Award for personal finance blogging.

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The Social Security Administration (SSA) Launches the First National My Social Security Week

MP9004424321.jpgMan and woman shaking hands isolated on a white background.

Today the Social Security Administration (SSA) announced that they wanted to  honor the 79th Anniversary of the Social Security Act. Carolyn W. Colvin, Acting Commissioner of Social Security, invites everyone to celebrate the first National my Social Security Week. From August 17 through 23, 2014, Social Security will host numerous events to highlight the many benefits of a my Social Security account, a personalized online account people can establish at www.socialsecurity.gov/myaccount beginning in their working years and continuing throughout the time they receive Social Security benefits.

With a my Social Security account, individuals of all ages can take control of their future by accessing their online Social Security Statement, which is a great financial planning tool that provides workers age 18 and over with their complete earnings history and estimates for future retirement, disability and survivors benefits. The Statement allows workers to verify the accuracy of their earnings each year. This is important since earnings are the basis for determining future retirement benefits.

Individuals who currently receive benefits can sign up for a my Social Security account to get an instant benefit verification letter, change their address and phone number, and start or change direct deposit of their benefit payment.

To date, over 13 million people have established an account.  Events during my Social Security week include a Twitter chat on “my Social Security and Planning for Your Financial Future;” my Social Security sign-up events nationwide at local churches, libraries, federal government agencies, large employers, youth centers/organizations, senior centers, and colleges and universities; social media outreach including a Thunderclap campaign, and a National radio media tour.

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Applying Online for Social Security Spousal Benefits

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Apply Only for Spousal Benefits

Spouses have “dual entitlement”. This means that a spouse who has not worked, has low earnings, or plans continue working after Full Retirement Age (FRA) can can be entitled to as much as one-half of the spouse’s retired worker’s full benefit. If you are eligible for both your own retirement benefits and for benefits as a spouse, the Social Security Administration (SSA) will always pay your own benefits first. If your benefit as a spouse is higher than your retirement benefit, you will get a combination of benefits equaling the higher spouse benefit. For example, if your spousal benefit is $1,200 per month and the benefit on your own work record is $1,000 per month.  You will receive $1,200 per month ($1,000 per month in benefits from your own work record and $200 per month on your spouse’s work record.)

If you have reached your FRA, are eligible for a spouse’s or ex-spouse’s benefit and your own retirement benefit, you may choose to receive only spouse’s benefits and continue accruing delayed retirement credits (DRCs) on your own Social Security earnings record. You then may file for benefits later and receive a higher monthly benefit based on the effect of the DRCs. (Which are generally an 8 percent increase per year).

You should apply for Social Security retirement benefits three-months before your FRA birthday. Complete the online application form. State that you want benefits to start as soon as possible without any permanent reduction to your FRA benefit. In the section of the online application titled, “When to Start Retirement Benefits” answer Yes to this question, “If you are eligible for both retirement benefits and spouse’s benefits, you may choose to delay receiving your own retirement benefit and receive only the spouse’s benefit for now”.

If you make this selection, the SSA may contact you to verify details. You will receive a written confirmation of the SSA’s decision after your online Spousal Only Benefits application has been processed.

Note: If you are receiving a pension based on work where you did not pay Social Security taxes, your spouse’s benefit may be reduced.  For additional information on pensions from work not covered by Social Security see http://www.ssa.gov/pubs/EN-05-10035.pdf

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A New Social Security Benefit Strategy for Singles

kathleensindell.com

 

 

Filing and Suspending is a New Way to Maximize Benefits for Singles

 

When I present ways to maximize Social Security retirement benefits, I always feel badly for singles. It seems that the only maximization strategy for singles is to determine the optimum time to retire. Thanks to Kurt Czarnowski, a former Social Security Representative, there is a new maximization strategy for singles.

Let’s say that you are single with a full-retirement-age (FRA) of 66 and you plan on working until you are 70 years old. Kurt Czarnowski suggests that when you reach FRA you file for Social Security benefits and suspend your application. This will allow you to accrue delayed-retirement-credits (DRCs) until you actually retire at 70. (DRCs are about 8 percent per year.  If you work until 70, you can increase your FRA, you will increase your benefits by 32 percent.)

The advantage of filing and suspending at FRA is this. If for some reason you need to claim Social Security before 70 you can claim benefits all the way back to your FRA. In other words, you can claim up to four years of benefits. If you do not file and suspend, and claim benefits before 70 you can only claim benefits for the previous six-months after FRA.

Thank you Kurt Czarnowski for a great claiming strategy for singles!

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Early Social Security Retirement GAO Study Results

Retirement Road Sign with blue sky and clouds.

 

Applying for Social Security Benefits at the Right Time

Applying for Social Security benefits at the “right time” has always been an important personal finance strategy. Estimates indicate that many American do not apply for Social Security at the right time. Many people apply for early Social Security retirement benefits leaving about $120,000 of lifetime benefits on the table. Each year this adds up to $25 billion that could have been collected by retirees. This prompted the Government Accounting Office (www.gao.gov) to gain a better understanding of the circumstances faced by those who claim early Social Security retirement benefits.

The GAO Study provides several new insights about what makes people apply for early retirement Social Security benefits:

  1. Physically-demanding blue collar jobs may influence when someone claims Social Security benefits. According to the recent GAO study (http://www.gao.gov/products/GAO-14-311) individuals in physically-demanding blue collar jobs were 55 percent more likely to claim benefits prior to full retirement age (FRA) compared to those in all other occupations after controlling for other factors. See Figure 1.0 for details.
  2. Individuals who are out of the workforce for an extended time period of time or had longer work histories often take early Social Security retirement benefits. According to the GAO study (http://www.gao.gov/products/GAO-14-311) people who are out of the work force for a prolonged time, had long work histories or expected a shorter longevity (such as not living past age 75) are likely to claim Social Security benefits early.

The GAO study goes on to investigate what makes individuals apply late for Social Security retirement benefits

  1. Those who claim delayed retirement credits (DRCs). According to the GAO (http://www.gao.gov/products/GAO-14-311) people who wait to claim Social Security retirement benefits tend to have a higher income (about 45 percent after claiming benefits) than those who claimed early, and 33 percent higher at age 72. Additionally, for both early and delayed claimants, Social Security benefits accounted for an increasing share of total income as they aged.
  2. How the Affordable Care Act affects early retirees: According to the GAO study (http://www.gao.gov/products/GAO-14-311) “In 2014, some early claimers, especially those without access to health coverage, may benefit from certain provisions of the Patient Protection and Affordable Care Act (PPACA) intended to improve the availability and affordability of health coverage. GAO estimates that nearly a million early claimers did not have government or employer-sponsored health insurance before 2014. Of these, 14 percent may be newly eligible for Medicaid in 2014 due to expansion in 25 states and the District of Columbia and 58 percent could be eligible for tax credits that reduce the premiums for coverage purchased through the new health insurance exchanges. However, GAO estimates that 10 percent of these early claimers had incomes below the federal poverty level but lived in states that did not expand Medicaid and had incomes too low for federal exchange tax credits.”

To sum it up, those that take early Social Security retirement often need Social Security to supplement their income due being out of the work force for an extended period of time, physically unable to keep up the work tempo or faced with longevity issues. One a positive note, the Affordable Care Act allows individuals to take early retirement with greater health security. For those in good health and / in occupations that allow them to work until 70, they will gain a 32 percent increase in the amount they would have received if they had retired at FRA. (Compared to a 25 percent decrease in the FRA benefit, if the claimant takes early retirement at age 62.) There is one thing that is common to early, FRA and delayed Social Security retirees, as these individuals increase in age Social Security retirement benefits will account for an increasing share of their total income.

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Threat of Cutting Your Social Security Benefits is Eased

stock investment

 

 

The Danger of Using the “Chained” CPI to Calculate Benefits is Off the Table for Now

The debate to switch to a “Chained Consumer Price Index” (Chained CPI) to determine Social Security Cost-of-Living Adjustments (COLAs) has recently eased. According to the Center for Economic and Policy Research (www.cepr.net) using the Chained CPI will result in cuts to already modest Social Security benefits, not truly be an accurate measure of the inflation rate seen by seniors, and lead to income tax increases for working Americans.

Defining CPI-U (Chained CPI)

The Chained CPI is calculated by the Bureau of Labor Statistics (BLS) and is the Consumer Price Index (CPI) to gauge inflation by measuring changes in the prices of goods and services that Americans purchase each month (for more information please see www.bls.gov/cpi/cpisupqa.htm). The nickname for this CPI is CPI-U and it is often used for income tax calculations

Defining CPI-W

Social Security claimants receive annual cost-of-living increases based on the Consumer Price Index for Urban Wage Earners and Clerical Workers. COLAs ensure that benefits keep up with inflation. For more information see www.ssa.gov/OACT/STATS/cpiw.html. The nickname for this CPI is CPI-W and it is often used to determine the annual change in Social Security and veterans benefits. .

How Chained CPI will Reduce Your Monthly Social Security Benefit

The Social Security Administration (SSA) estimates that the average annual benefit in 2013 was $15,528 (www.ssa.gov/pressoffice/basicfact.htm ). This modest benefit will take a direct hit if the SSA changes to the Chained CPI.

The CEPR calculates that if the SSA were to use the Chained CPI (see www.socialsecurity.gov/retirementpolicy/projections/summary.html for details) over time this would result in substantial cuts in benefits and a three percent benefit reduction after 10-years. 

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Thank you for your Attendance

Sindell_Kathleen_WEB

 

Thank you for attending this event!

Kathleen Sindell, Ph.D. was featured in the DC Library Monthly Author Talks on Saturday, June 7, 2014, 10:00 to 12:00 AM ET at the West End Neighborhood Library, 1101 24th Street, NW. Washington, DC  20037 (202-724-8698).  Thank you for attending her presentation on “Social Security: Maximizing your Benefits”.

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Social Security Tax Season Reminders

Taxes

 

 

It’s Not Too Late for a Little Tax Planning

 

Tax season is right around the corner. Here are some Social Security tax tips from the Social Security Administration (SSA) that may help you.

  • If your total income, including Social Security, is $25,000 as an individual or $32,000 as a couple filing jointly, you’ll need to pay tax on some of your benefits.
  • If you get Social Security and don’t receive your 1099 from us by the end of January, request one at www. ssa. gov/1099.
  • Have children? Your child needs a Social Security Number to be claimed on your tax return. Learn more about getting one at www.ssa. gov/ssnumber.
  • You’ll want to let Social Security know if you changed your name in the past year, due to marriage, divorce, or any other reason.
  • Check your W-2s and tax paperwork to make sure your name and Social Security number are correct.
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You, Social Security, and the Affordable Care Act

The Affordable Care Act can have a major impact of when you retire and claim Social Security benefits. As you plan your retirement budget, you’ll need to consider medical insurance and health care costs. For many older Americans next to housing, healthcare related costs are the largest expense.

Many individuals will pay lower health insurance premiums due to the amount of their Modified Adjusted Gross Income (MAGI). This creates a new strategy for maximizing Social Security benefits. By not taking early Social Security retirement benefits you can often significantly lower your MAGI and qualify for lower health care premiums.

Here is an example of how this works for a Silver Plan:

Couple age 62, MAGI of $60,000, non-tobacco users:

  • Household income in 2014: 387 percent of the poverty level
  • Unsubsidized medical insurance premium in 2014: $14,567
  • Receives a government tax credit subsidy of up to: $8,867 (about 61 percent of the medical insurance premium)
  • Net amount of 2014 premium $5,700

Same couple, age 62 MAGI of $63,000, non-tobacco users:

  • Household income in 2014: 406 percent of the poverty level
  • Unsubsidized medical insurance premium in 2014: $14,567
  • Eligibility for subsidy: No
  • Net amount of 2014 premium $14,567

In other words, if this couple increases their income by just $3,000 annually they will lose the subsidy and pay $8,867 more per year (that’s $739 per month)  for medical insurance. This is a good reason to wait until you are eligible for Medicare, then take Social Security.

Calculating Where You Stand

The MAGI is generally your adjusted gross income plus any tax-exempt Social Security, Social Security Disability (but not SSI), interest or foreign income. Once you have determined your estimated 2014 household income and household size refer to the chart below from www.healthcare.gov.

Choose the column for your household size. The column on the left shows income levels that qualify for lower costs on premiums and out-of-pocket costs for private health insurance, and for low-cost health care through Medicaid. Additionally, there is an online calculator at the Kaiser Foundation Web site located at http://kff.org/interactive/subsidy-calculator/ .

health-care-savings-chart-large

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Access your Social Security Benefit Verification Letter Online

stacked mail
 
Need a Proof of Income Letter Quickly?
It has been my experience, that from time to time I need to provide proof of my husband’s Social Security benefits. The Social Security Administration (SSA) provides a Letter of Verification for Social Security benefits, supplemental Security income, and /or Medicare online by using my Social Security Account at https://secure.ssa.gov/RIL/SiView.do
  
New users must be able to verify some information about yourself and:
• Have a valid E-mail address,
• Have a Social Security number,
• Have a U.S. mailing address, and
• Be at least 18 years of age.
  
You can create an account only to gain access to your own personal information. You cannot use this online service to access the records of a person:
• With whom you have a business relationship;
• For whom you are a representative payee; or
• For whom you are an appointed representative.
Unauthorized use of this service may subject you to criminal or civil penalties, or both.
  
 To set up or use your account to get a benefit verification letter, go to Sign in or create an account at https://secure.ssa.gov/RIL/SiView.do. You can view, print, and save your benefit verification letter. The benefit verification letter is also called a budget letter, benefit letter, proof-of-income letter, or proof of award letter.
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