President Obama Suggests Expanding Social Security Retirement Benefits

Expand Social Security Benefits
On June 8, 2016 President Obama suggested that Social Security retirement benefits should be increased, “It’s time we finally made Social Security more generous and increased its benefits so that today’s retirees and future generations get the dignified retirement that they’ve earned.” Additionally, Obama stated that “And we can start paying for it by asking the wealthiest Americans to contribute a little bit more. They can afford it. I can afford it.”

In 2009 President Obama promised the American people to ask those making over $250,000 to contribute a “bit more to Social Security” to keep it sound. He considered plans that would ask those making over $250,000 to pay in the range of 2 to 4 percent more in total (combined employer and employee).”(for details see http://change.gov/agenda/seniors_and_social_security_agenda/)

According to the Center on Budget and Policies Priorities (CBPP)(located at http://www.cbpp.org/topics/social-security ) Social Security retirement benefits are already modest. The average benefit for retired workers is around $1,350 per month ($16,200 per year). The CBPP states that the, “The United States ranks 31st among 34 developed countries in the percentage of a median worker’s earnings that the public-pension system replaces.”

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NEW AUTHOR TALK: Social Security It Pays to Plan!

Social Security: Maximize Your Benefits (2nd Edition)
The Association of Accountants and Finance Professionals in Business (IMA) announces that Kathleen Sindell, Ph.D. will be the speaker for the September 21, 2016 Dinner Meeting at the Holiday Inn in Rosslyn, VA.

Topic: Uncover how to adapt to the new Social Security rules. Social Security rules have changed, and it’s urgent for you to determine how to maximize your benefits, now. In this Second Edition of “Social Security: Maximize Your Benefits (2nd Edition)” acclaimed financial literacy expert, Kathleen Sindell, Ph.D. brings together the information every holder of a Social Security card needs to know to create a strategy for attaining maximum benefits. What’s the best way for you to adapt to the new rules? Discover seven strategies, purchase the book and have it signed.

Meet the author: Kathleen Sindell, Ph.D., CEO, GCSRi Publishing, CFP Chair and Adjunct Full-Professor teaching Wealth Building, Insurance, Investments, Retirement and Estate Planning, and Financial Plan Development.

Author Background: Kathleen Sindell, Ph.D. is the author of numerous academic, popular, and professional finance articles, Web sites, blogs, proposals, and books, including the bestselling reference book, “Investing Online for Dummies, Eds. 1-5″ (listed for two consecutive years on the Wall Street Journal’s Bestselling Business Book List). Sindell is a University of Maryland, UMUC Program Course Chair II and Adjunct Full-Professor. Dr. Sindell has held FINRA Series 7, 63 and 65 licenses. Dr. Sindell is certified to teach Business and Industrial Management, Banking and Finance by the California Board of Governors, Certificate #19507 (Valid for life). Kathleen Sindell, Ph.D. is a FPA NCA Board Member and Pro Bono Co-Chair for over five years and Co-Chair of Metro Washington Financial Planning Day (2011, 2014, 2015 and 2016). She is on the Editorial Advisory Board for the Journal of Financial Planning (2015 and 2016). In April 2016 Dr. Sindell released her 13th finance/reference book titled, “Social Security: Maximize Your Benefits (2nd Edition)”. Kathleen Sindell presented her paper, “The Reality of Retirement Readiness” at the 2013 Academy of Behavioral Finance Conference, Chicago, IL.

Where:
Holiday Inn Rosslyn
1900 Fort Myer Drive
Arlington, VA 22209

Metro: 1 block downhill from Rosslyn orange/blue line
Parking is Free (in lot or garage)

$30 IMA members and Guests
$15 for students
$35 late RSVP/pay at the door

When:
Wednesday, September 21, 2016
5:00 pm Table Topics**
6:00 pm Registration
6:30 pm Dinner
7:00 pm Program
8:15 pm Adjourn
** Optional 2 CPE

Guests are welcome and encouraged to attend

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Kathleen Sindell, Ph.D. Provides Author Talk about Social Security Strategies

Social Security: Maximize Your Benefits (2nd Edition)
Wall Street Journal Bestselling author Kathleen Sindell, Ph.D. provides an Author Talk about her new book, “Social Security: Maximize Your Benefits (2nd Edition)” at the Beatley Central Library, 5005 Duke Street, Alexandria, VA 22304, 703-746-1702 on Thursday, June 23, 2016, 7:00-8:30 PM.

The Bipartisan Budget Act changed the rules of Social security. What’s the best way for you to adapt? Discover seven strategies, purchase the book and have it signed.

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Want to File-and-Suspend and Can’t Contact the Social Security Administration?

File-and-Suspend Deadline

Today is the last day for baby boomers who are at least 66 years old to submit a File-and-Suspend application using the “Old Rules”. The Old Rules File-and-Suspend application allows the Social Security number holder to delay collecting their own benefits but permits their spouse (if he or she is at least 62 before January 2, 2016) or young or disabled children to collect benefits on that person’s work record while their own benefit is in suspension.

To take advantage of the File-and-Suspend strategy eligible couples (and singles) must file today. Here are the steps to file an online application according to Larry Kotlikoff, a professor of economics at Boston University and a Social Security expert:
1. File online at the Social Security Web site located at www.ssa.gov
2. Fill out the application as if you will immediately claim benefits
3. The application asks “What date should benefits start?” Enter April 2016.
4. Next the online form will ask if you want to delay receipt of retirement benefits and take spousal benefits only. Answer “no”. (You are claiming and suspending benefits for yourself.)
5. In the box labeled “Remarks”. Enter the following statement, “I want to file for my retirement benefits effective April 2016 and I want to suspend all my retirement benefits effective April 2016”.

If you are not the type of person to complete an online form there two alternatives for you. You can apply via telephone or submit a Form 795. According to Mary Beth Franklin of Investment News, telephone waits for the Social Security Administration (800-772-1213) can be an hour or more.

According to Mary Beth Franklin, individuals can file a “Protective Filing Statement using Form 795”. Click here to download the form
http://www.compassioninaction.us/product_links/Statement%20of%20Claimant%20SSA-795.pdf

In the space provided write the following, “I intend to File-and-Suspend on my own record by the April 29th deadline. However, I have been having difficulty obtaining an appointment. I would like to file and suspend as soon as an appointment is available.” According to Mary Beth Franklin’s source this should at least buy you an extra six months to get the actual filing done because you are making you intentions clear prior to the deadline.

What happens if you don’t make the deadline? If you voluntarily suspend after the April 29, 2016 deadline and have “auxiliaries” (a spouse, minor dependent children or disabled children) they will not be able to receive benefits during the time period that you have suspended benefits. However, a divorced spouse is an exception and can continue to receive benefits.

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GCSRi Publishing Releases a New Social Security Book about the New Rules and How to Maximize Benefits

Social Security: Maximize Your Benefits (2nd Edition)

Over the next 20 years, each day 10,000 people in the US will be turning 65 years-old. Many of these folks are unaware of the Social Security retirement benefits to which they are entitled. For example, April 29, 2016, is the last day for qualified couples to submit a File-and-Suspend application for benefits. If you were at least 62 as of December 31, 2015, you are eligible to file a Restricted Application if you file before December 31, 2019. Are you unfamiliar with these types of Social Security applications? Get all the details you need in “Social Security: Maximize Your Benefits (2nd Edition)”.

The Social Security Handbook has over 2,700 rules governing benefits. The Program Operating System (POMs) has thousands more. It is no wonder that many people do not have a good understanding of their Social Security benefits. Frequently, because of a lack of insights these individuals will not receive all the benefits they could receive. Knowing the right questions to ask is critical to maximizing Social Security benefits. Bestselling Wall Street Journal author Kathleen Sindell, Ph.D. has taught and written about financial management for the last 20 years. Sindell’s latest book “Social Security: Maximize Your Benefits, 2nd Edition” is easy-to-understand and provides “just the facts” about getting the highest retirement benefits possible.

You’ll discover how same-sex, married and unmarried couples can coordinate claiming strategies to gain the maximum benefits. Find out how delaying Social Security benefits can have a direct effect on the financial well-being of a surviving spouse. Understand what divorced spouses need to do to receive the highest amount of lifetime benefits and how to choose between claiming their own or their ex-spouses benefits. Get a hold of how singles need to decide the true value of not claiming until 70. Become aware of how families with minor dependent children (or disabled children) should investigate the start-stop-start strategy to decide if it is best for boosting income when it is needed most. Grasp how survivors can optimize benefits by being flexible when determining the order in which they claim benefits.

Social Security: Maximize Your Benefits (2nd Edition)” by Kathleen Sindell, Ph.D., a bestselling Wall Street Journal author, shows how to select the optimal claiming strategy that apply to your personal financial circumstance. Follow step-by-step instructions to maximizing your Social Security benefits. You can quickly select what works best for you from dozens of examples, figures, tables, and graphs.
Take advantage of “Social Security: Maximize Your Benefits (2nd Edition)”, GCSRi Publishing (April 2016) ISBN10: 0692685316, ISBN-13:978-0692685310, Paperback: $9.75, Kindle: $2.99. Available at Amazon.com and through local bookstores.

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Exciting News! The Second Edition is Here!

Social Security: Maximize Your Benefits (2nd Edition)

Social Security: Maximize Your Benefits (2nd Edition) is here! The second edition has been thoroughly revised and includes over 100 more pages. Some of the Social Security deadlines are quickly approaching. You may be eligible to receive more than you think. Additionally, there are many benefit maximum strategies that are still available.

REMEMBER THESE DATES

April 29, 2016 is the last day for qualified couples to submit a File-and-Suspend application for benefits. If you were at least 62 as of December 31, 2015 you are eligible to file a Restricted Application if you file before December 31, 2019. You will find all the details in Social Security: Maximize Your Benefits (2nd Edition).

Click on the link and get the book today! Social Security: Maximize Your Benefits

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Clarification About the New Social Security Rules

New Social Security Rules The new rules for Social Security were passed in Section 831 of the Bipartisan Budget Act of 2015. At that point Congress effectively eradicated the File-and-Suspend and Restricted Application claiming strategies for optimizing Social Security benefits. Individuals under age 62 in 2015 (born January 2, 1954 or later) are not eligible for the File-and-Suspend and Restricted Application claiming strategies.

The new rules do not take effect immediately. Also, the new rules do not impact those that already receive benefits. For example, I have a friend who receives Social Security benefits on a restricted application, her benefits will not change. Individuals who are at full retirement age (FRA) or will reach FRA by April 29, 2016 will have an opportunity to File-and-Suspend before the shutdown. (If you are eligible, you must file by April 29, 2016 or lose your benefits forever.) Moreover, anyone who was born in 1953 or earlier (or January 1, 1954) will still be able to apply for benefits on a Restricted Application for spousal (or divorced ex-spousal) benefits, even if the claimant does not file until years from today.

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Social Security Claiming Strategies for Non-Married Couples

Non-Married couples

Non-Married Opposite-Sex and Same Sex-Couples are Eligible for Spousal and Survivor Benefits

The Social Security Administration (SSA) in 2014 updated its rules about eligibility for both opposite-sex and same-sex spousal and survivor benefits for non-married couples. The SSA looks at each state to see if inheritance rights exist for the relationship, such as a domestic partnership or civil union. If the state recognizes the individual in the relationship and treats that person as a spouse when the other partner dies with no will in place, then the SSA will recognize that person as a spouse. This means that individuals in a domestic partnership or civil union may not have to get married to be entitled to Social Security spousal and survivor benefits. At the end of this post is an image of the SSA’s listing of states that recognize spousal inheritance rights. Click on this image for an enlarged view. For details see https://secure.ssa.gov/poms.nsf/lnx/0200210004.

The SSA provides the following two examples of how non-married same-sex applications for spousal benefits can be granted or denied.

Example for determining that the non-marital legal relationship is recognized for benefit purposes
Nicole, the “number holder” or worker and Penny (claimant) established a civil union in Colorado. Colorado appears in the chart below. In this section, which shows “Civil Unions” as a “Relationship Type.” Penny indicates that the relationship establishment date was after the “Effective Date” shown in the chart. Colorado’s civil union law would allow Nicole and Penny to inherit as each other’s spouse, according to the information under “Inheritance Rights” in the chart. When Penny applied for aged spouse benefits, Nicole was still domiciled in Colorado. The SSA will treat Penny and Nicole as spouses for purposes of determining entitlement.

Example for determining that the non-marital legal relationship is not recognized for benefit purposes
Tony, the “number holder” or worker and Tim (claimant) entered a domestic partnership in Rhode Island. Rhode Island appears on the chart below. In this section; however, the only type of relationship listed on the chart for Rhode Island is a “Civil Union.” Therefore the SSA will treat the claimant as unmarried for benefit purposes. Tony and Tim’s application will be denied.

Note: The Supreme Court’s June 2015 ruling states that married same-sex couples are eligible for Social Security benefits regardless of which state they reside. To be eligible for spousal benefits, the claimant must be continuously married for a least one year and currently married to the wage earner when the spousal benefit application is filed.

Click on this image to enlarge

States with Non-Married Inheritance

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Do I have to Pay State Income Taxes on My Social Security Benefits?

Income Taxes on Social Security Benefits

Some Retirees pay both Federal and State Taxes on Social Security Benefits

According to the Social Security Administration (www.ssa.gov) some claimants have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

Federal Income Taxes on Social Security Benefits
If your Social Security retirement benefits are your only source of income. You will likely not have to pay Federal or State income taxes. Additionally, no one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

• file a federal tax return as an “individual” and your combined income* is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. If your income is more than $34,000, up to 85 percent of your benefits may be taxable.

• file a joint return, and you and your spouse have a combined income* that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits. If your income is more than $44,000, up to 85 percent of your benefits may be taxable. If you are married and file a separate tax return, you probably will pay taxes on your benefits.

*Note:
Your adjusted gross income + Nontaxable interest + ½ of your Social Security benefits
= Your “combined income”

Each January you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received in the previous year. You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax. If you do not receive From SSA-1099, you can order a replacement form online at SSA Form 1099 Replacement

State Taxes on your Social Security Benefits
There are three primary categories of state Social Security taxation:

1. SOCIAL SECURITY BENEFTS ARE STATE TAX EXEMPT: According to the Kiplinger Personal Finance Magazine (www.kiplinger.com) there are 36 states exclude benefits from state taxes (or have no income tax). Seven states that do not tax individual income are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two other states (New Hampshire and Tennessee)only tax dividends and interest (5 percent for New Hampshire and 6 percent for Tennessee for 2014 and remain the same in 2015)

2. STATES THAT TAX SOCIAL SECURITY BENEFITS: According to Kiplinger Personal Finance (www.Kiplinger.com) there are five states that tax Social Security benefits in the same way the Federal government taxes benefits. These states are Minnesota, North Dakota, Rhode Island, Vermont and West Virginia. Like the federal government, up to 85% of Social Security benefits can be taxed. (See above for details.)

3. STATE TAXATION OF SOCIAL SECURITY BENEFTIS USING AN ASSORTMENT OF ELEMENTS: According to The Tax Foundation (www.taxfoundation.org) some states determine Social Security benefit exemptions based on a variety of factors, such as income, age, or as a certain percentage of Social Security income. States that use categories of exemptions include Connecticut, Kansas, Missouri, Colorado, Utah, Montana, New Mexico, and Nebraska. The following are a few of the details:
Connecticut allows taxpayers to fully exempt Social Security income from state income tax if income is less than $60,000 (for joint filers).
Kansas exempts Social Security benefits from state income tax if federal adjusted gross income is if $75,000 or under.
Missouri allows taxpayers with adjusted gross income of less than $100,000 (for joint filers) to deduct all of taxable Social Security benefits from income.
• If a Colorado household meets certain age requirements, qualifying retirement income can be excluded from income if it is taxable under the federal income tax (it’s called the “pension exclusion” and is subject to a maximum amount).
• A similar program exists in Utah, but it is administered as a credit and is phased-out once income exceeds a certain level.
• In Montana, some Social Security benefits may be taxable, and the state advises taxpayers to fill out a worksheet to determine how the state taxable amount differs from the federally taxable amount. In general, if total income is below $32,000 for joint-filers, benefits will not be subject to tax.
• In New Mexico, benefits are taxable but a person can qualify for an exemption if he or she is 65 years or older, which is based on income level.
Nebraska taxes Social Security benefits for taxpayers with an adjusted gross income of $58,000 or less for married persons filing jointly, and $43,000 or less for all others are exempt from Nebraska’s personal income tax beginning in 2015.

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CFPB Releases “Planning for Retirement” Tool to Help Consumers Decide When to Claim Social Security

CFPB Report Shows Many Consumers Base Critical Claiming Decision on Limited Information
CFPB Report Shows Many Consumers Base Critical Claiming Decision on Limited Information

Recently the Consumer Financial Protection Bureau (CFPB) released “Planning for Retirement,” an interactive, online tool designed to help older Americans decide when is the optimum time to claim Social Security retirement benefits. According to a report released by the CFPB, greater numbers of individuals are relying on Social Security for more of their income for longer periods of time, but end up receiving lower monthly benefits by claiming early. Often, the claiming-age decision is based on limited information about the financial impact of that choice. The new CFPB tool allows consumers to estimate how much money they can expect to receive at different ages and provides tips to help consumers evaluate the trade-offs.
“Millions of Americans are likely to face financial insecurity in their retirement years,” said CFPB Director Richard Cordray. “Deciding when to start claiming Social Security benefits is one of the most important financial choices a consumer will make. The CFPB’s ‘Planning for Retirement’ tool can help consumers clearly see their options.”

The “Planning for Retirement” Tool
Americans are eligible to claim Social Security retirement benefits without any reduction at their “full retirement age (FRA),” according to the Social Security Administration (SSA). For people born after 1942, full retirement age ranges from 66 to 67, depending on the year the person was born. Consumers can also claim their benefits several years before, agreeing to take less money each month. Or they can claim several years after, and get bigger monthly checks. Generally, the amount a consumer receives from Social Security is a one-time choice. This means if a worker claims the reduced or increased benefit, they receive that amount for the rest of their life, with annual cost-of-living adjustments (COLA). This decision also impacts the benefits an older consumer’s surviving spouse will receive after their death.

The “Planning for Retirement” Tool can be found at: http://www.consumerfinance.gov/retirement/

CFPB Report Shows Many Consumers Base Critical Claiming Decision on Limited Information
Today, the CFPB released a report indicating that many consumers may not be taking advantage of their option to receive higher Social Security income and a more secure retirement. Specifically, the report highlights:
1. Many Americans collect early despite living longer: Studies show that many retirees start collecting their benefits at their earliest eligibility age. In 2013, nearly 46 percent of claims were submitted at age 62. But, on average, Americans reaching age 65 today will live to age 85. This means consumers will likely need sufficient income and savings to cover 20 years or more in retirement.
2. Millions of Americans face financial insecurity in retirement: Many consumers at and near retirement are unprepared financially. For example, four in 10 late boomers – currently ages 51-59 – are reaching retirement with limited or no savings, and are projected to face a savings shortfall.
3. Retirees rely on Social Security for income: With the decline in coverage from traditional pension plans, Social Security is the only guaranteed monthly income for a majority of older consumers. Approximately two thirds of the nearly 40 million Americans aged 65 and older who receive Social Security benefits depend on it for 50 percent or more of their retirement income. Social Security is particularly important for the growing number of beneficiaries aged 80 and older for whom it accounts for 70 percent or more of their income.
4. Consumers lack awareness and information about the claiming-age choice: Studies have shown that people claiming Social Security before their full retirement age have less knowledge about their benefits than those who claim at or after their full retirement age. Several recent surveys show that a significant portion of pre-retirees are confused about or lack basic knowledge of information about Social Security benefits. For example, one study found that only 22 percent of pre-retirees surveyed knew their full retirement age. Only 12 percent knew how their benefits would change if they claimed before, at, or after their full retirement age. And only about 5 percent of those surveyed said that they knew how their benefits are calculated.

The CFPB report about Social Security can be found at: http://files.consumerfinance.gov/f/201511_cfpb_issue-brief-social-security-claiming-age-and-retirement-security.pdf

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