Expect a 1.7 percent Increase in 2015 Social Security Benefits


social security benefitsSocial Security Claimants get a Bigger Check in 2015

Monthly Social Security benefits and Supplemental Security Income (SSI) for nearly 64 million Americans will increase 1.7 percent in 2015, the Social Security Administration announced today.

The 1.7 percent cost-of-living adjustment (COLA) will begin with benefits that more than 58 million Social Security beneficiaries receive in January 2015.  Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2014. The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

The Social Security Act provides for how the COLA is calculated.  To read more, please visit www.socialsecurity.gov/cola.

Some Individuals will Pay More Social Security Taxes in 2015

Some other changes that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $118,500 from $117,000.  Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum.

Medicare Costs Will Basically Remain the Same in 2015 

Details about 2015 Medicare are available at www.medicare.gov . The following is an overview of Medicare costs for 2014 and 2015:

A Comparison of 2014 and 2015 Medicare Costs
Part B premium Most people pay $104.90 each month.(This amount won’t change in 2015.)
Part B deductible $147 per year. (This amount won’t change in 2015.)
Part A premium Most people don’t pay a monthly premium for Part A. If you buy Part A, you’ll pay up to $426 each month. (Reduced to $407 in 2015.)
Part A hospital inpatient deductible  You pay:

  • $1,216 deductible for each benefit period ($1,260 in 2015)
  • Days 1-60: $0 coinsurance for each benefit period ($0 in 2015)
  • Days 61-90: $304 coinsurance per day of each benefit period ($315 in 2015)
  • Days 91 and beyond: $608 coinsurance per each “lifetime reserve day” after day 90 for each benefit period (up to 60 days over your lifetime) ($630 in 2015)
  • Beyond lifetime reserve days: all costs


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Get Free Financial Help from the Experts!

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5th Annual Metro Washington Financial Planning Day

In today’s uncertain economy, planning for you financial future is more important than ever.  If you have financial questions or concerns, or would like to learn how to better manage your finances, District of Columbia and Mayor Vincent C. Gray invite you to attend the 5th Annual Metro Washington Financial Planning Day, where you’ll have an opportunity to receive free, personalized, confidential answers from professional financial planners.  The event will be held on Saturday, October 25, 2014 from 11:00 am to 4:00 pm at Columbia Heights Educational Campus in Washington, DC.

Metro Washington Financial Planning Day is organized by the District of Columbia in partnership with the Financial Planning Association of the National Capital Area and is part of Financial Planning Days – a first-of-its-kind national initiative to provide free financial education and programming to people across the country.  Financial Planning Days was created by four national non-profit organizations – Certified Financial Planner Board of Standards, Financial Planning Association, Foundation for Financial Planning, and the U.S. Conference of Mayors.

At the event, highly qualified Certified Financial Planner™ professionals will be stationed at tables and will meet with you one-on-one to offer free personalized advice on a variety of financial topics, including – getting out of debt, retirement planning, investment strategies, tax issues, insurance, and estate planning, among many others.

There are no strings attached! All financial planners are participating as volunteers and they will not be selling products or services, or giving out business cards.  Come as you are, or come prepared with any financial paperwork related to your questions.  And, you can consult with as many different financial planners as you need.

The event will also feature a series of free classroom-style workshop presentations addressing key areas of personal finance, including Financial Planning for Women, Real World Retirement Planning, and Investing Basics: Be a Smart Investor.

Walk-ins are welcome, but admission will be granted first to those who have registered online at www.FinancialPlanningDays.org/DC or by calling toll free at 877-861-7826.  We expect a large crowd, so we encourage you to register early.

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Can Student Loan Debt Reduce Your Social Security Benefits?



Social Security Benefits can be Garnished

Banks and other creditors can’t touch your Social Security benefits. However, if you owe money to the U.S. government (for federal income taxes, federal student loans, child support and alimony, non-tax debt owed to other federal agencies, defaulted federal home loans and certain civil penalties) the federal government can garnish your Social Security benefits.

Today there are an estimated two million Americans aged 60 and older who are in debt from unpaid student loans according to the Federal Reserve Bank of New York. In the August 2014 “Household Debt and Credit Report” by the Federal Reserve Bank of New York the number of older Americans with outstanding student loans had increased from $8 billion in loans in 2005 to $43 Billion in August 2014.

The Federal Reserve Bank of New York goes on to state that at this time about 140,000 individuals have their Social Security benefits garnished to pay down student loans that are in default. In 2004 there were only 38,000 people who had their Social Security benefits garnished for student loan debt.

The average Social Security claimant receives $1,200 per month. This amount can be reduced by 15 percent ($180) to pay student loans. The most that can be garnished from your Social Security benefits is 15 percent, and your benefits should never be garnished below $750 per month. For example, let’s say your monthly benefit is $800, 15 percent won’t be taken— you’ll see just enough taken to reduce your check down to the $750 floor (the amount set by Congress in 1998). Also, only your net monthly benefit gets garnished, after deductions for things like Medicare.  According to government data the total amount garnished from Social Security benefits was $150 million last year.

What Can You Do About It?

The Web site Tuition located at  www.tuition.io/blog/ has several suggestions about what to do if your Social Security benefits are garnished:

  1. As soon as you get a notice that your student loans will result in a garnishment of your Social Security benefits, you have 20-days to request a review.
  2. Apply for a hardship exemption for the garnishment. Explain why the garnishment creates a hardship. For example, if the garnishment goes forward you can’t afford necessary medication or other necessary costs.
  3. Contact the Department of Education and discover how to get your student loan out of default. Try to get access to an income based repayment plan.
  4. See if you can consolidate your loans, then apply for an income based repayment plan.

Note: Supplemental Security Income (SSI) cannot be garnished under any circumstances.

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What Divorced Women Should Know About Social Security


Tips and Strategies for Divorced Women

According to the Social Security Administration (SSA) if you are divorced, but your marriage lasted 10 years or longer, you can receive benefits on your ex-spouse’s record (even if he or she has remarried) if (1) you are unmarried, (2) you are age 62 or older, (3) your ex-spouse is entitled to Social Security retirement or disability benefits, and (4) the benefit you are entitled to receive based on your own work is less than the benefit you would receive based on your ex-spouse’s work.

Your benefit as a divorced spouse is equal to one-half of your ex-spouse’s full retirement amount (or disability benefit) if you start receiving benefits at your full retirement age (FRA) if:

  • You remarry, you generally cannot collect benefits on your former spouse’s record unless your later marriage ends (whether by death, divorce or annulment).
  • Your ex-spouse has not applied for retirement benefits, but can qualify for them, you can receive benefits on his or her record if you have been divorced for at least two years.

Some women sign divorce decrees relinquishing their rights to Social Security on their ex-husband’s work record. If you were married at least 10 years, those clauses in divorce decrees are worthless and are never enforced.

If you meet the requirements listed above, were married more than once and each marriage lasted ten years or longer, and you have been divorced for at least two years, you may receive benefits from the spouse you select if you are not now married again. (Make sure to inform the SSA of all your marriages that qualify you for ex-spousal benefits.) Larry Kotlikoff of Boston University provides this example, let’s say that the low-earner ex-spouse is over 62 and the high-earner ex-spouse will be 62 in several years. You could claim ex-spousal benefits on the low-earner ex-spouses work record, then when the higher earner ex-spouse turns 62 switch to the higher earner ex-spousal benefits and increase the amount of monthly benefits you receive.

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Need a New Social Security Card?



All you Need is to Know Your Social Security Number

Have you lost your Social Security card? Do you need a new Social Security card? You probably don’t—as long as you know your number. For all intents and purposes, your number is your card. Usually providing your number and identifying information is enough. In the event that you really do want or need a replacement card, for yourself or for a child, you can find all the details you need at the “Social Security Number and Card” page at www.socialsecurity.gov/ssnumber. This page provides information on how to obtain a replacement card and what specific documents you need to provide. Check it out if you really need a new card. But keep in mind: You may just need to know your number. Your card is already in your head. Note: Some businesses offer Social Security name changes or cards for a fee. The Social Security Administration (SSA)  provides those services for free. Do not pay for something the SSA  will give you free of charge. 

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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



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




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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