Social Security

Social Security Made Simple – Free 11/30 and 12/1

November 30th, 2015  |  Published in Social Security  |  Comments Off on Social Security Made Simple – Free 11/30 and 12/1

The book “Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less” is available free on Amazon for two days.  This book has been updated as of November 2015 to reflect the changes made to Social Security by the Bipartisan Budget Act of 2015.  According to the book description this book explains the following topics.

  • How your Social Security retirement benefits, spousal benefits, and widow/widower benefits are calculated,
  • How your benefits are affected if you have a government pension or if you continue working while claiming Social Security,
  • How to decide when is the best age for you (and your spouse, if you’re married) to claim Social Security in order to get the most out of your benefits,
  • Whether or not it makes sense to take Social Security early in order to invest the money,
  • How to check your earnings record on the Social Security Administration’s website to make sure you’re getting the full benefit you deserve, and
  • How Social Security benefits are taxed and how this affects retirement tax planning

Social Security can be complicated and most of us will be collecting it someday so it makes sense to read a book such as this to ensure we get the most possible. If you have been thinking about researching Social Security options getting this book for free would be a good start.

Three Reasons Young People Should Care About Social Security

September 11th, 2013  |  Published in Social Security  |  Comments Off on Three Reasons Young People Should Care About Social Security

There are millions of high school and college students that are searching for jobs.  Whether a new worker is beginning the career of a lifetime or just earning some extra money for the school year to come, there is one question that is likely to be on each new worker’s mind when they see their first pay stub: Where’s the rest of my money?

Generally, employers are required to withhold Social Security and Medicare tax from a worker’s paycheck. The amounts you pay in Social Security and Medicare taxes are matched by your employer. Usually the money that is withheld is referred to as “Social Security taxes” on the employee’s payroll statement. Sometimes the deduction is labeled as “FICA taxes,” which stands for Federal Insurance Contributions Act. This post will tell you how that money is being used, and what’s in it for you.

The taxes paid now translate to a lifetime of protection, when you eventually retire or if you become disabled. In the event that you die young, your dependent children and spouse may be able to receive survivors benefits based on your work. Today you probably have family members — grandparents, for example — who already enjoy Social Security benefits that your Social Security taxes help provide.

You may be a long way from retirement now, so you may find it hard to appreciate the value of benefits that could be 40 or 50 years away. But consider that your Social Security taxes could pay off sooner than you think. Social Security provides valuable disability benefits — and studies show that a 20-year-old has about a three in 10 chance of becoming disabled sometime before reaching retirement age.

Another bit of helpful advice for young workers: be wary if you’re offered a job “under the table” or “off the books.” If you work for any employer who pays you only in cash, understand that you’re likely not getting Social Security credit for the work you’re doing.

If you want to find out more about Social Security then you should go to the source.  The Social Security Administration has lots of helpful information available at SocialSecurity.gov.

Ruling Affects Retirement Benefits for Married Gay Couples

July 1st, 2013  |  Published in Retirement, Social Security  |  Comments Off on Ruling Affects Retirement Benefits for Married Gay Couples

Married gay couples should take a closer look at their Social Security benefits and their Individual Retirement Accounts. Last Wednesday, the Supreme Court ruled the Defense of Marriage act unconstitutional. Now that the Act denying federal benefits to legally married same-sex couples has been struck down the retirement benefits of married same-sex couples will be affected.

The Social Security benefits of married gay couples will be affected due to the ruling. Surviving spouses should now be able to claim the Social Security benefits of their deceased spouse. In general, married gay couples have the same options to collect their Social Security benefits in the same way heterosexual couples do.

Another change is that if an IRA is rolled over from a deceased same-sex spouse to the surviving gay spouse the individual retirement account would not be taxed. Pensions could also be left to a surviving same-sex spouse. These are just a couple of the changes that will affect same-sex couple financially. Changes affecting retirement plans are just a small part of the changes that will be made overall. Same-sex married couples should now receive the same tax treatment as heterosexual married couples at the federal level. It is not yet clear when the changes will actually be put into effect but couples should be on the lookout for an announcement of when the changes go into effect so they can make changes to their retirement plans.

If you want a more detailed breakdown of the possible changes due to the court ruling check out this summary article at Lambda Legal.

Solving Social Security Problems

November 7th, 2012  |  Published in Social Security  |  2 Comments

Discussion about how to get the United States in a better financial position is something that has been all over the news within the past few months. With debt in the country mounting, it is the right time to start considering changes that would allow the country to overcome this debt while improving their financial position in the world today. There are many things that can be done to saving social security and ensure that it is around for generations to come. At the moment, there is a lot of fear of being unable to provide for people that are paying into the system at the moment. If we hope to keep this program in place, there will need to be some changes for the purpose of saving money. One of the best ways to limit the financial strain placed on this system would be to increase the retirement age to 68. When people work longer, they will pay in a larger amount to the system. Additionally, they will not require as many benefits as they currently due with a lower retirement age in place.

Additionally, saving social security would be possible by decreasing benefits for those earners at the highest income levels. Reducing benefits by twenty eight percent for those earning the most would get rid of a lot of the strain that currently exists within this program. Additionally, the savings would be helpful in ensuring that those making payments into the system are able to count on the security of payments in the future. While these are some simple changes that could have great benefits, it is important to start lowering the amount of benefits that people are able to enjoy in the future. If benefits were tied to a consumer index, the savings would be large over a period of time. We are currently dealing with a social security program that we cannot afford to keep up. If a social security program is going to remain in place, taking these changes into consideration would be well worth the time. They help to save money and protect security for the future of this country.

How Social Security Benefits are Calculated

October 31st, 2012  |  Published in Social Security  |  2 Comments

In order to start preparing for your retirement, it is necessary to calculate social security benefits. This will help you to get a clear idea of how much money you will be receiving each month. You can plan ahead and create a budget based on what your income will be.

Social Security benefits are calculated according to several factors. First, the money that you previously earned is restated to reflect the wages of today. Next, your earnings that were highest for 35 years get averaged and divided by 12. This will give the number termed the Average Indexed Monthly Earnings, also known as AIME.

The third and final step of the calculation is that the Social Security benefit formula will be applied to the AIME, producing the Primary Insurance Amount, also known as the PIA. This number  is the benefit that is paid at Full Retirement Age. This will then be the monthly amount that you can expect to receive.

It is important to note that each individual should have worked for at least 35 years at the time of retirement. If this is not the case, it would be wise to consider working until that number has been reached. If not, zeros are added into the calculation for years less than 35.

The final number is going to be lower if you have not met the 35 years of work. This makes it worth it for many people who can reach the requirement to continue working. If you do plan to continue working, the estimated number that you come up with at this time will likely be different from the actual amount.

A person’s Full Retirement Age varies based on the year of their birth. There are many factors that play into an individuals decision to start collecting benefits early. It may be a good choice for someone who is in poor health, or is unable to find work and needs the income to pay bills and living expenses.

It is very important to consider when you will start collecting benefits. Each person has their own unique situation to consider. You can calculate social security benefits at any time, but the most accurate number will be achieved closer to retirement.

Will You Get Social Security?

September 19th, 2012  |  Published in Social Security  |  3 Comments

With reports that Social Security is spending more than it takes in Social Security doesn’t seem so secure any more.  It is predicted that the Social Security trust fund will run out in 2036.  A lot could change by that time to make Social Security last longer or end sooner.

What Is Social Security?

Social Security was established and signed into law in 1935 by President Franklin D. Roosevelt. The first lump sum payment was made, shortly after, in 1937 and on-going monthly payments first began in 1940. Social Security was originally meant to be a retirement account during the Great Depression.

All of the businesses that failed during the Great Depression, had no funds to pay out the retirement accounts for their workers, so the government stepped in to help. The idea at the time was to have the people currently working help out and pay the retirement for those who were no longer able to provide for themselves.

This was great until the baby boomer generation came. This extremely large generation put a lot of money in to help out the older generations, but now there are far fewer people working than are retiring.

How Social Security Works

Social Security is often referred to as a Ponzi scheme, but it is actually a pay as you go system.  There is a difference between the two. As you pay into Social Security, those funds immediately get paid out to the people currently eligible for Social Security. The reason this has been so hard to swallow for some people is due to the introduction of the 401(k) and personal retirement accounts. With the 401(k), the same amount of money put in will earn more interest than Social Security and the personal retirement account has your name on it, whereas there is no traditional account with Social Security.

How Much Will You Get Back?

You can go to the  SocialSecurity.gov site and get an estimate of how much you will collect.  This is based on the current rules staying in effect. There are also calculators that give a rough approximation based on your age and current income, but they are not exact.

It is likely that you will at least get something from Social Security since even after the trust fund dries up the amount being paid in will cover about 70% of benefits.  Even if you were 100% confident that you would get your full Social Security payment it is best not to rely on it alone.  Using additional methods of retirement planning, such as personal retirement accounts, is always a good idea.

Check Your Social Security Report Online

June 18th, 2012  |  Published in Social Security  |  4 Comments

You should check your Social Security report annually to make sure it is free from errors.  One of the more common errors is an incorrect amount of earnings reported in your earnings record.  Since your Social Security is based on your 35 highest earning years you want to make sure that they have all of your earnings recorded.  If you discover a mistake you can call your local office to have it corrected.  Other errors are possible so inspect all parts of your report.

To get your Social Security report online all you need to do is go to http://www.ssa.gov/mystatement/.  Once there you will have to verify your identity so you can create a “my Social Security” account.  After that is done you will be able to use your username and password to log in to your account in the future.  Inside your account you can get:

  • Estimates of the retirement and disability benefits you may receive;
  • Estimates of benefits your family may get when you receive Social Security or die;
  • A list of your lifetime earnings according to Social Security’s records;
  • The estimated Social Security and Medicare taxes you’ve paid;
  • Information about qualifying and signing up for Medicare;
  • Things to consider for those age 55 and older who are thinking of retiring;
  • General information about Social Security for everyone;
  • The opportunity to apply online for retirement and disability benefits; and
  • A printable version of your Social Security Statement.

I have done it myself and the process was fairly simple.  If you haven’t yet signed up for an account you should sign up as soon as you can to ensure there are no errors in your report.

Retirement Plan in Tatters

May 10th, 2012  |  Published in Retire Abroad, Retirement, Social Security  |  6 Comments

Recently, we read a New York Times article by Joe Nocera called My Faith-Based Retirement.

 It was a cheerless piece detailing the failure of 401k’s as an investment vehicle, the decline of pensions, the lack of employer-sponsored healthcare benefit plans and the consequent reduction of Boomer’s retirement expectations. A dreary, rain-drenched, out-in-the-street future was being painted focusing on stark data from EBRI that states: “only 22 percent of workers 55 or older have more than $250,000 put away for retirement and 60 percent of workers in that same age bracket have less than $100,000 in a retirement account.”

 Taking this information as the only premise from which you work out your retirement, you may as well give up. Just chuck the idea of having any appealing options, start on the cat food now and simply get used to it.

Houston, we have a problem

 Remember the 1995 movie Apollo 13 starring Tom Hanks and Kevin Bacon? The future of these astronauts looked pretty bleak also, with the seeming possibility of arriving back to earth safely being all but a lost dream. What they did – what they HAD to do – was put everything available to them out on the table and take a hard look at what they had to work with. There was no room for mental darkness, no room for whiners. And time was running out.

 From unrelated bits and pieces they fashioned the part they needed to repair a life-threatening problem and made it unscathed into their future.

 If you find yourself in a future-threatening financial situation today, you, too, need to ask yourself “What do I have available to me, and how can I make it work?”

But… but… but…

 When we retired over 20 years ago, we had no pension and no guaranteed healthcare plan. We were 38 years old and too young to draw social security. Today, that situation would be described as a crisis. In the wisdom of the current moment, we would be told that our retirement is out of the question. Talking heads would paint a bleak picture, emphasizing the drop in our standard of living and the possibility of bankruptcy due to medical costs.

 Accompanying this gloomy description from the media would be the bleating chorus of: “If only Wall Street wasn’t so greedy. If only the housing market hadn’t gone bust. If only health care was guaranteed and free. What a shame to find yourself in this state of affairs at this time in your life. Don’t rely on yourself, all is lost.”

Back to your future

 In those long-ago years we chose to look at creative combinations to fashion our future. Mind you, there were no guarantees our plan would work, and there still aren’t any today. Our stance has always been to take advantage of options that are available, and make the most of them.

 Keep in mind that it’s impossible to reach for the stars when your nose is pointed to the shadows. Caution! Looking only at the dark side of a situation is a dangerous road to walk. Believe us, you can find anything you want to support that line of thinking.

 Instead, why not reduce your spending footprint, and increase both your lifestyle and financial longevity by looking at other places to live?

Some inspiration and a practical plan

 According to the U.S. Government Social Security Website, the average monthly benefit received in 2012 will be $1,229 per retired worker. That equates to $14,748 annually. For easy math, let’s call it $15,000.

 Billy and I just finished living in Panajachel, Guatemala for 6 months on just over $34 per day. That equates to $12,550 a year, and that was for the both of us. We ate out, took boat rides across gorgeous Lake Atitlan, sent presents home to family and friends, grabbed beers at a bar with friends and drank the best tasting cappuccino every afternoon.

 It was not a hardship.

 We met other couples in the thriving Expat community doing the same exact thing – living in beauteous surroundings with views of volcanoes, the lake, or majestic waterfalls and paying as little as $200.00 per month rent. All of us chuckled to ourselves over our good fortune.

 Living in this location on one’s Social Security payment would be a breeze. If there were two checks coming in, you’d have money to spare. Medical Care in the larger cities of Xela, Antigua or Guatemala City is top notch, and there were several dentists in our town of Pana who were highly recommended.

 Don’t like Guatemala? Try Chapala or San Miguel de Allende, Mexico, Medellin, Columbia, Chiang Mai, Thailand, Silver City, New Mexico or any number of exotic, exciting and easy-to-live locations. Open your mind; open up to your options.

 If you are one of the “unfortunate ones” who only have $100,000 in retirement savings, you can still bump your $15,000 annual social security income up another $5,000, and that $100,000 will last you 20 years.

The American Expectation Syndrome

 Do you really want to keep your current standard of living? How’s that working out for you? If supporting this lifestyle involves the pressure of maintaining a mortgage, car payments, upkeep and fuel, credit card debt and hefty monthly payments – you may want to think twice.

 Just because someone else imagines that you are “taking a cut in lifestyle” doesn’t mean it’s true. It’s entirely possible that they don’t know what they are talking about!

 It may take a while for you to find the right combination in your new lifestyle. Allow yourself time. There is a natural process in letting go of the “American Expectation Syndrome.”

 Years ago when we first retired, we had been living pretty high – we had a new home, and were illustrious members in the local town. We had gardening service, house cleaning service, dry cleaning service, and we owned two new cars. Dining in the best places wherever we went, we took high priced vacations, and our medical care was paid for through our employer (which of course, is no longer the case). We expected our lives to go UP from here (which meant more spending) and we “couldn’t” see value in simplicity.

 But the stress was too much. We came face-to-face with some very significant personal choices; Keep up our expectations which incurred more spending and therefore more pressure, or simplify and set ourselves free.

We chose freedom

 To be honest, the hardest part of the transition to retirement (and our freedom-based lifestyle of today) was just letting go of the psychological and financial weight of having these expectations. Equally as hard, was letting go of peer pressure to consume, peer judgments over our choices and our peers’ expectations – of us and of themselves.

 However – just to clear away any confusion – we have been retired now for 22 years, have traveled the globe and opened our world (which has gotten larger not smaller), and our friends have continued to work for the last 2 decades. Now those same people are wondering how they can ever afford retirement.

 If you feel that your retirement plan is in tatters, why not put everything you have on the table, take a hard look and be willing to consider the possibilities that are right in front of you?

 There are many workable solutions if you are willing to look.

About the Authors

Billy and Akaisha Kaderli are recognized retirement experts and internationally published authors on topics of finance and world travel. With the wealth of information they share on their popular website RetireEarlyLifestyle.com, they have been helping people achieve their own retirement dreams since 1991. They wrote the popular books, The Adventurer’s Guide to Early Retirement and Your Retirement Dream IS Possible.

Early Retirement and Social Security

May 4th, 2012  |  Published in early retirement, Social Security  |  3 Comments

I probably don’t have to worry about early retirement since I am way behind on my retirement savings but for those of you who are considering early retirement and planning on collecting Social Security there are several things to consider.

Millions of Americans are coming up on their long-awaited break from the workforce. With the first wave of the baby boomer generation reaching the age to begin to draw Social Security, many people are wondering if it is worth taking the hit and retiring early. This plays into both Social Security and withdrawing the retirement accounts, which usually hold a high penalty and taxes for early withdrawal.

What Decisions Do I Have To Make?

According to the U.S. Census, over the next five years more than 15 million people will begin to cross into the age bracket for early retirement; 62. Many of these people will consider retiring early and collect Social Security benefits. Some may consider waiting until the normal retirement age. Read the rest of this entry »