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Posted on June 10th, 2014
How to get Social Security’s biggest bonuses
For those of you on the verge of retirement, deciding when to take Social Security is a big decision that is ultimately tied to your individual circumstance. One rule applies across the board: taking benefits early means you stand to leave a lot of money on the table. In 2014, early claimers will see their monthly benefits reduced by 25 percent compared to what they would have received if they waited claiming until age 66, the current full retirement age. Waiting until claiming benefits until age 70, and you’ll receive 132% of the benefits paid.
The handy chart from Forbes contributor John Wasik following shows the percentage of benefits paid as it relates to age — an excellent tool to share.
For most retirees with adequate savings, the best strategy has always been to wait until either full retirement age or until age 70. Too many retire at the wrong time — leaving some $120,000 in lifetime benefits on the table. Those who retire at 62 leave a lot of money on the table. The government wants you to wait as long as you can before collecting Social Security.
Yet Social Security planning is not as simple as making one decision. If you have a spouse, you have to consider their benefit. There are also survivor benefits. You need a strategy. a good place to start is the Social Security Web site, which has several calculators. Or, you may contact us (AIM) for some guidance.
A Government Accountability Office (GAO) study released last month showed why far too many Americans take Social Security early and the costs of doing so.
*Those who retire at the earliest-possible age tend to need Social Security to supplement their income. Those who wait are less reliant upon the program. One solid way to maximiz Social Security is to save more and fully fund your retirement plans.
According to the GAO: “Our analysis shows that the median income for those who delay was 45 percent higher after claiming benefits than for those who claimed early, and 33 percent higher at age 72. Although delayed claimers have higher median Social Security benefits, those benefits make up a smaller portion of household income than for early claimes,”
*Those who retire early can do so with greater health security. You may now obtain policies to fill the gap between age 62 and 65. That might allow you to wait at least until age 65 to collect Social Security. We can assist you in obtaining the best coverage for you.
Below is the chart showing the % of full benefits paid at different ages.
Age You Take Benefits % of benefits paid
Source: GAO analysis of Social Security Administration documentation. Note: The Primary Insurance Amount (PIA) is the benefit a person would receive if he/she elects to begin receiving Social Security retirement benets at his/her full retirement age.
Posted on April 8th, 2014
Would a smartphone break improve productivity for your business? Think of a smartphone break as the new cigarette break. Allowing workers to take small breaks on their phones throughout the day could positively influence and performance and their perceived well-being at the end of the workday, accourding to new research from Kansas State University.
It certainly is worth a try.
Posted on February 11th, 2014
For many Americans, Social Security is the bedrock of retirement income. Yet future retirees could find themselves on shaky ground. The Social Security Board of Trustees, in its laest annual report, estimated that the retiement program would only be able to pay out 75% of scheduled benefits starting in 2033.
You can’t control how the government might fix that problem. Inform yourself about Social Security to ensure that you claim the maximum amount of benefits wo which you are entitled. Here are some essentials you need to know. Check our client resources page to click on the Social Security web site or www.ssa.gov.
It’s an age Thing
Your age when you collect Social Security has a big impact on the amount of money you ultimately get from the program. The key age to know is your full retirement age. For people born between 1943 and 1954, full retirment age is 66. It gradually climbs toward 67 if your birthday falls between 1955 and 1959. For those born in 1960 or later, full retirement age is 67. You can collect Social Security as soon as you turn 62, but taking benefits before full retirement age results in a permanent reduction of as much as 25% of you full benefit.
Besides avoiding a cut in benefits, waiting until full retirement age to take benefits can open up a variety of claiming strategies for married couples. Age also comes into play with children: Minor children of Social Security beneficiaries can be eligible for benefits. Children up to age 18, or up to age 19, if they are full-time studens who haven’t graduated from high school, and disabled children older than 18 may be able to receive up to half of a parent’s Social Security benefit.
How benefits are factored
To be eligible for Social Security benefits, you must earn at least 40 “credits”. You can earn up to four credits a year, so it takes ten years of covered work to qualify for Social Security. In 2014, you must earn $1,200 to get one Social Security work credit and $4,800 to get th maximum four credits for the year.
Your benefit is based on the 35 years in which you earned the most money. If you have fewer than 35 years of earning, each year with no earnings will be factored in at zero. You can increase your benefit by replacing those zero years, say, by working longer, even if is part-time. No low earning year will replace a higher-eaning year. The benefit isn’t based on 35 consecutive years of work, but the highest-earning 35 years. If you decide to phase into retirement by going part-time, you won’t affect your benefit at all if you have 35 years of higher earnings. But if you make more money, benefit will be adjusted upward, even if you are still working while taking your benefit. There is a maximum benefit amount you can receive , though it depends on the age you retire. For someone at full retirement age in 2014, the maximumn monthly benefit is $2642. Yau can estimate your own benefit by using Social Security’s online Retirement Estimator.
One of the most attractive features of Social Security benefits is the government adjusts the benefit for inflation. Known as a c0st-of-living-adjustment, or COLA, this inflation protection can help with rising living expenses during retirement. The COLA, which is automatic, is quite valuable, buying inflation protection on a private annuity can be expensive.
Because the COLA is calculated based on changes in a federal consumer price index, the size of the COLA depends largely on broad inflation levels determined by the government. For example, in2009m beneficiaries receied a COLA of 5.8%. But, in 2010 and 2011 there was no COLA adjustment. In 2012 it was 3.6%, 1.7% for 2013 and 1.5% in 2014. The COLA for the following year is announced in October.
The extra benefit of a spouse
Marriage brings couples an advantage when it comes to Social Security. Namely, one spouse can take a spousal benefit up to 50% of the other spous’s benefit. e.g., if your benefit is worth $2,000 but your spouse’s is only worth $500, your spouse can switch to a spousal benefit of $1,000.
The calculation changes if benefits are claimed before full retiement age. If you claim your spousal benefit before your full retiement age you won’t get the full 50%. If you take your own benefit early and then later switchto a spousal benefit, your spousal benefit will still be reduced.
Note that you cannot apply for a spousal benefti until your spouse has applied for his/her own benefit.
Income for survivors
If your spouse dies before you, you can take a survivor benefit. If you are at full retirement age, that benefit is worth 100% of what your spouse was receiving at the time of his/her death (or 100% of what your spouse would have been eligible to receive if he or she had not yet taken benefits). A widow or widower can start taking a survivor benefit at age 60, but the benefit will be reduced because it’s taken before full retirement age.
If you remarry before age 60, you cannot get a survivor benefit. But if you remarry after age 60, you may be eligible to receive a survivor benefit based on your former spouse’s earnings record. Eligible children can also receive a survivor benefit worth up to 75% of the deceased’s benefit.
Divorce a spouse, not the benefit
What if you were married, but your spouse is now an ex-spouse? Just because you’re divorced doesn’t mean you’ve lost the ability to get a benefit based on your former spouse’s earnings record. You can still qualify to receive a benefit based on his/her record at least ten years and you are 62 or older.
Like a regular spousal benefit, you can get up to 50% of an e-spouse’s benefit — less if you claim before full retirement age. You ex-spouse never needs to know because you apply for the benefit directly through the Social Security Administration. Taking a benefit on your ex’s record has no effect on his or her benefit or the benefit of your ex’s new spouse. And unlike a regular spousal benefit, if your ex qualifies for benefits but has yet to apply, you can still take a benefit on the ex’s record if you have been divorced for at least two years.
Note: Ex-spouses can also take a survivor benefit if their ex has died first, and like any survivor benefit, it will be worth 100% of what the ex-spouse received. If you remarry after age d60,. you will still be eligible for the survivor benefit.
It can pay to delay
Once you hit full retirement age, you can choose to wait to take your benefit. There’s a big bonus to delaying your claim. Your benefit will grow by 8% a year up until age 70. Any cost-of-living adjusments will be included too, so you don’t forgo those by waiting.
While a spousal benefit doesn’t include delayed retirement credits, the survivor benefit does. By waiting to take his benefit, a high-earning husband, for example, can ensure that a lower-earning wife will receive a much highter benefit in the event he dies before her. That extra 32% of income could make a big difference for a widow who has lost her husband’s stream of Social Security income.
One option for a spouse who is delaying his benefit but still wants to bring some Social Security income into the household is to restrict his application to a spousal benefit only. To use this strategy, the skpouse restricting his or her application must be at full retirement age. So the lower-earning spouse, say the wife, applies for benefits on their own record. The husband then applies for a spousal benefit only and he receives half of his wife’s benefit while his own benefit continues to grow. When he is 70, he can switch to his own, higher benefit. Exes at full retirement age can use the same stategy — they can apply to restrict their applicaion to a spousal benefit and let their own benefit grow.
File and then suspend
Here’s a Social Security claiming strategy that is perfectly legal and potentially lucrative. Let’s say a husband decides he wants to delay taking his benefits until age 70 to maximize the amount of his monthly check. But he wants his wife to be able to take a spousal benefit, because it would be higher than her own benefit.
To make that happen, the husband, who must be at full retirement age, can file for his benefits and then immediately suspend them. Because he has applied for benefits, his wife can now take a spousal benefit based on his record. And because he suspended his own benefit, his benefit will earn delayed retirement credits for each year he waits until age 70.
Uncle Sam wants his take
Bringing in too much money can cost you if you take Social Security benefits early while you are still working. With what is commonly known as the earnings test, you will forfeit $1 in benefits for every $2 you make over the earning limit, which in 2014 is $15,480. Once you are past full retiement age, the earnings test disappears and you can make as much money as you want with no impact on benefits.
The good news is that any benefits forfeited because earning exceed the limits are not lost forever. At full retirement age, the Social Security Administration will refigure your benefits going forward to take into account benefits lost to the test. For example, if you claim benefits at age 62 and over the next four years lose on full year of benefits to the earning test, at age 66 your benefits will be recomputed — and increased — as if you had taken benefits 3 years early, instead of four. That basically means the lifetime reduction in benefits will be 20% rather than 25%.
Posted on February 10th, 2014
What you should know about Medicare
Heading into your retirement years brings a host of new topics to learn. One may be Medicare. Figuring out when to enroll, what coverage will be best for you and can be daunting without the assistance of a knowledgeable insurance advisor. Here are ten essential things you should know about Medicare.