After the Equifax Data Breach, You Need to Take This Critical Step to Protect Social Security

The aftermath of the massive Equifax data breach affecting tens of millions of Americans will be reverberating in U.S. households for months to come. Many people are rushing to put a freeze on their credit accounts in order to protect their identity. But there’s something else you need to do immediately if you want to protect yourself against Social Security fraud.

Whether you’re already drawing benefits or not, this extremely important article that just appeared in the Washington Post is a must-read for every member of your family. It was written by nationally known financial expert Michelle Singletary, who writes, “Many people are scrambling, trying to put in place credit freezes to prevent identity thieves from opening up credit in their name. But if you expect to get a Social Security check or you’re already getting a benefit there’s something else you should do and fast. You need to go online and open a ‘my Social Security’ account.” Singletary says you need to do this now, if you haven’t already, “before someone uses your stolen information to hijack this extremely important portal for your Social Security benefits.”

Why is this so critical?  It’s because, says one Social Security official quoted by Singletary, “A ‘my Social Security’ account is your gateway to many of (Social Security’s) online services.” This official said that by creating your own account you “take away the risk of someone else trying to create one in your name, even if they obtain your Social Security number.” Without your own account, your benefits could be in jeopardy. Michelle Singletary quotes another financial writer, this one from the financial website Motley Fool, who explains how this fraud could work. “Someone could, in theory, access your information at some point or another, file for benefits as you (either immediately or once you become eligible), direct those benefits to a new address, and collect them for years with you none the wiser. Then, when you finally decide it’s time to file for benefits, you’ll learn that you have supposedly been receiving them for years.” Undoing that mess could be a time-consuming, stress-inducing ordeal.

With your own ‘my Social Security account,’ which has several security controls built in, you can go online, set up your account, and then file for benefits when the time comes. However, Singletary reminds us in the Washington Post article that the credit freeze many people are placing on their credit bureau accounts in the Equifax aftermath could impede the process of filing for your benefits. “If you’ve placed a freeze or fraud alert on your credit file, you will not be able to open the account until you unlock the file,” Singletary reports. “Social Security uses information in your file to verify your identity.” But, she adds, “You can (always) open an account in person by going to a local Social Security office.”

Recently one of our colleagues logged onto his ‘my Social Security’ account for the first time in several months and noted a few changes. For one thing his password had expired so he was required to reset it. He also had the option of resetting his three security questions. And there was another newer feature (at least since the last time this man logged on): the website sent an access code to his cell phone which had to be entered in order to complete the login process (receiving the code by email was also an option).

As for the Equifax breach, in which financial data impacting more than 140 million Americans was compromised, many experts are advising people to freeze their credit reports to prevent unauthorized access. This can be done online or by phone. If you have questions about how best to secure your accounts and your personal information, contact us here at AgingOptions and let us help you. Our highly experienced staff can answer many of your questions personally, and if you would like a referral to a financial planner or other professional, we have a network of trusted providers whom we can recommend.

When it comes to planning for retirement, we can most assuredly help you gain an awareness of the principles that will ensure a brighter and more secure future as you age. This type of planning goes far beyond finances! You also need to have someone guide you through the maze of medical decisions (both short term and long term) and the significance of appropriate housing choices. There are legal preparations to consider in order to make certain that you and your estate are adequately protected. Finally, you’ll want to plan a family conference so those closest to you will understand and support your wishes. Is it possible to protect your assets in retirement and avoid becoming a burden to your family? Can you live how and where you want without being forced against your will into a nursing home? The answer is yes – if you have prepared an AgingOptions LifePlan.

There’s an easy, no-obligation way to learn more about the power of a LifePlan. Plan now to attend a free LifePlanning Seminar, held frequently at locations throughout the region. Bring all your questions and come to a seminar near you. Simply click here for details and online registration, or contact us during the week. Whatever your circumstances, we can help you face the future with confidence. All it takes is a LifePlan from AgingOptions.

(originally reported at www.washingtonpost.com)

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Some Big Reasons NOT to Claim Social Security Benefits at Age 62

We recently ran across this article about Social Security on the MSN website. It was reprinted from the financial site Motley Fool, and in the “Fool’s” typically irreverent style the provocative title caught our eye: “When Claiming Social Security at 62 is a Really Bad Idea.”

We share this article with you knowing that many of our readers and radio listeners have already made the decision to start benefits early. But if you haven’t, the Motley Fool article does provide some helpful food for thought on reasons why delay is almost always the preferred strategy. For those of you who pay close attention to planning your Social Security benefits, none of this article’s suggestions will come as a surprise, but others of you who are just beginning to think ahead about retirement may find this information timely indeed.

First, the Motley Fool article shares some Social Security background data we find interesting.  “According to the latest monthly data release from the Social Security Administration (SSA),” the article says, “just over 42 million retired workers were receiving a benefits check from the SSA.”  Out of this sizeable group, “more than 25 million of them are reliant on Social Security for at least half of their monthly income.” This is significant because most financial experts say Social Security was always meant to augment other retirement income, not to be a senior’s primary income source. In explaining this situation the Motley Fool article is blunt:  “A history of poor saving habits and the wrong investment choices has left the current generation of retirees, and likely future generations, particularly reliant on Social Security.” (It’s another strong argument for sound and comprehensive retirement planning.)

With that in mind, the article advises, it’s more important than ever that those still working and looking ahead to retirement remain focused on maximizing their monthly Social Security payout. Motley Fool says that there are three factors each beneficiary can control in order to accomplish this goal:

  • Your work history: it’s in your best interests to work at least 35 years because Social Security will use your 35 years of highest earnings when calculating your benefits.
  • Your earnings history: because the government considers your highest-earning years, the longer you work into your 60’s the more likely you are to compensate for your early work history when you probably earned less.
  • Your claiming age – and for many seniors this is the big one, says the Motley Fool article. The age at which you start benefits has a huge, lifelong impact, not just on you but very probably on your spouse if he or she outlives you.

Most of us know that, for those born between 1946 and 1954, full retirement age is 66. However, you can choose to begin taking a reduced benefit at age 62. Some do this because they feel they have to as a result of loss of employment, while others start benefits early because they are in poor health and don’t expect to live through their 70s. But for every year a beneficiary waits beyond 62 to start taking those payments, the annual payout goes up by about 8 percent until benefits max out at age 70. Wait until then and you receive the highest payment possible, and your surviving spouse (assuming you were the higher wage earner) will continue to receive that higher benefit after you pass on.

If the advantages are so clear, writes the Fool, most people wait until 70 to start benefits, right? Hardly. The Center for Retirement Research in Boston reports that only three percent of seniors wait until 70 to enroll. In contrast, a whopping 45 percent begin benefits at age 62. While we would argue that claiming early is a poor strategy for most people, the Motley Fool article calls it “an absolutely terrible idea” if you’re in one of these categories:

  1. Don’t start benefits early if you’re entering retirement with very little savings. These are the people, says the article, who need to keep working as long as possible because they will be relying on Social Security benefits for the rest of their lives – and a permanent reduction in those benefits will prove potentially crippling later on.
  2. Don’t start benefits early if you’re the higher-earning spouse. Because your benefits will grow faster than your spouse’s if you wait, it’s even more important for you to delay as long as you can. Also once you die your spouse’s survivor benefit will be based on yours, so the longer you wait the better it will be for him or her. If you really need an income boost at age 62, your lower-earning spouse can start benefits then, but it will almost always be a better idea to wait as long as you both can.

Are you facing retirement with a host of questions about Social Security, Medicare, Medicaid, VA benefits and the like? Are you in a quandary about your housing options or wondering how to involve your family in your retirement planning? Then we urge you to accept our invitation to attend a free AgingOptions LifePlanning Seminar with Rajiv Nagaich. There you’ll see how financial plans, legal strategies, housing choices and medical coverage can all be arranged so that they work together – and you’ll discover how to ensure that your family understands and will support your wishes. That way you can face retirement with confidence, security and joy. To find out more about upcoming LifePlanning Seminars from AgingOptions, click here for details – then register online for the seminar of your choice, or give us a call.

Don’t enter into your retirement years without a plan. Let AgingOptions show you the power of a LifePlan! We’ll see you at a LifePlanning Seminar soon.

(originally reported at www.msn.com)

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Nearing Retirement? Six Financial Moves You Still Need to Make

This week we ran across this article on the Yahoo Finance website, written by Jeff Rose of Credit.com. We have to admit, we were a bit suspicious of the title: “Ignoring These 6 Financial Moves Could Ruin Your Retirement.”  In our experience, articles like this tend to be far too simplistic, focusing on financial planning at the expense of everything else – an approach that we’ve found to be a recipe for disaster. So we were somewhat pleasantly surprised when we read the six recommendations and found them more useful than we had expected. Still, while the Yahoo Finance piece does offer some helpful advice, we think it leaves out some very important components of retirement planning, and that there’s a lot missing from this list.

“You finally have enough money to retire,” writes Jeff Rose. “The excitement is palpable, and you can hardly believe you’ve reached this milestone.” However, he adds, before your retirement dreams can come true “you still have some work to do if you want to actually stay retired.” In other words, if you don’t complete a handful of important tasks now, “you could wind up heading back to work part-time or cutting back on spending just to get by.”

So what are these six financial moves? Let’s take a look and see what Jeff Rose got right and what (in our view) he may have overlooked.

The first must-do task is to “have the money talk with your adult kids.”  Rose cites a Pew study from 2015 that says more than 60 percent of U.S. parents helped their adult kids financially during the past 12 months. In the words of the Yahoo Finance article, “Helping adult kids may not have been a big deal when you were working, but it can make a huge difference to your bottom line once you’re on a fixed income. This is why you need to have the ‘money talk’ right away.” Your adult children need to know that you can’t keep supporting them financially once you’re retired or your own security could be jeopardized. “If you set expectations early, your adult kids will have time to learn how to fend for themselves and break the cycle of living paycheck to paycheck.” It’s hard to argue with that suggestion, although in our experience it’s certainly not a good idea to wait so long to have the family conference Rose is talking about.

Second on the list is to “dial down your investment risk.” Rose writes, “It’s crucial to reconsider your desired level of risk as you start getting close (to retirement).” What too often happens is that people set up their 401(k) portfolio while they’re still employed and then never bother to adjust it again. Shifting your portfolio away from riskier stocks toward a blend of stock and bond funds could be good advice, but in any event don’t overlook the importance of a “portfolio tune-up.”

The third recommendation is also one we subscribe to: “meet with a financial planner.”  Again, though, while meeting with a planner is a good idea, waiting too long to get solid financial advice is a bad one. “There is no one-size-fits-all retirement income portfolio or investment approach retirees should take,” says Jeff Rose, but “a financial planner can find the right mix for your financial goals.” The sooner you sit down with a planner you can trust, the sooner you can get yourself onto the right financial course – but remember our strong advice to select a fee-based financial planner and not one who has a product to sell. Contact AgingOptions and we can recommend a trusted, experienced financial planner who meets these criteria.

Number four on the list sounds a lot like number three. Jeff Rose advises you to “create a long-term financial plan” – because “with a solid plan in place, you won’t have to stress over market fluctuations that would normally leave you stressing out.” Of course this makes sense, but we always remind our clients, radio listeners and seminar guests that a financial plan absolutely must be made in concert with the rest of your planning process! That’s why a LifePlan is the only approach to retirement planning we endorse. We’ll tell you more about LifePlanning in a minute.

The fifth item is to think long and hard about your long-term care options.” “No one ever thinks they’re going to need long-term care or have to move to some kind of facility,” Rose writes, “but more and more individuals are finding out that’s not the case.” For that reason, “even if you don’t think it’s ever going to happen, you still have to prepare.” The article only mentions two types of preparation – buying long term care insurance and what he calls “setting up steps with your children.” We think this simplistic approach is woefully inadequate. It takes careful preparation and solid professional advice to make certain you can avoid becoming a burden to your loved ones as you age – which is all the more reason why a LifePlan is absolutely essential.

Finally, Jeff Rose’s article from Yahoo Finance advises that you “decide how to handle Social Security.” Considering that this article is written for the benefit of those about to retire, we can’t really understand why Rose tacks this advice onto the end as an afterthought. In our experience, the time to talk about and plan for your Social Security strategy is years before you stand on the doorstep of retirement. Most people know that waiting to draw benefits until age 70 not only maximizes those benefits for the recipient but also in many cases for a surviving spouse – so if this is your strategy, then you must plan well ahead to make it happen. The important thing is to weigh your options carefully, and if possible do so years before you have to make a Social Security decision.

As is so often the case, we find the advice from this article to be basically sound but definitely insufficient. The only way for you to plan adequately for the type of retirement you’ve always hoped for is to adopt the type of planning strategy that takes all the critical facets of retirement into account: finances (of course) but also your legal strategy, your housing plan, your medical protection and your communication with your family. The sooner you learn about LifePlanning from AgingOptions, and the sooner you adopt the LifePlanning precepts, the sooner you can begin experiencing the kind of retirement security that only a LifePlan provides.

Ready to find out more? It’s simple to do: come to a free LifePlanning Seminar. Click here for upcoming dates, times and locations, then register online or call our office for assistance. An inadequate retirement plan is almost worse than no plan at all, because it can lull you into a false sense of security. For true peace of mind, you need a LifePlan from AgingOptions!

(originally reported at https://finance.yahoo.com)

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If You Don’t Plan Ahead, These 4 Tax Penalties Could Cost You Plenty

Because we at AgingOptions work in the arena of retirement every day, we sometimes assume that there are certain basic facts about retirement that everybody knows. But the truth is that millions of people approach retirement woefully uninformed, and for that reason they tend to make costly mistakes that can play havoc with their finances. A big part of our mission at AgingOptions is to help make certain that our clients, seminar guests and radio listeners are armed with the knowledge they need to plan wisely.

This helpful article came to our attention recently on the popular financial website Kiplinger.com.  The article describes four government tax penalties that can take retirees by surprise – “costly government penalties retirees should avoid,” in the words of the Kiplinger article. As Kiplinger puts it, “Retirees facing the challenge of making their nest eggs last as long as they do are often surprised by the devastating impact that taxes can have on their cash flow. Although many people welcome the upfront tax breaks of contributing to traditional IRAs and 401(k) plans during their working years, they’re not so thrilled when Uncle Sam demands his cut when they start tapping those retirement accounts.”  But income taxes aren’t the only unhappy surprise retirees can face. “Beware costly penalties or disincentives for acting too soon or too late or simply accumulating too much money,” the Kiplinger authors warn.

The first potential pitfall that surprises some retirees – although we’re not sure how anyone could be uninformed about this fact – is the lifetime reduction in payments that results when you file for early Social Security benefits. “The age at which you start to collect Social Security benefits has a big impact on the amount of money you ultimately get from the program,” Kiplinger says. “The key age to know is your full retirement age.” For most boomers, those born between 1943 and 1954, the full retirement age is 66. For those born in 1960 or later, the number is 67; and for the rest, those with birth years between 1955 and 1959, it’s somewhere in between. Plenty of retirees take Social Security at the earliest possible age, 62, but be warned: if you do, your benefit will be permanently reduced by up to nearly 26 percent. Not everyone understands how challenging this permanent loss can be to your retirement finances. (Another potential loss for those who file for early benefits is what’s called the Social Security Earnings Test.  If you file early and are still working, you’ll lose one dollar in benefits for every two dollars you earn over the earnings limit, which is currently $16,920. This doesn’t apply once you reach full retirement age.)

The second unhappy surprise facing some retirees, says Kiplinger, is the tax penalty you’ll pay for failure to take out your required minimum distribution, or RMD, from your IRA and 401(k) accounts. (Roth accounts are not subject to RMD rules since you’ve already paid taxes on those dollars when they were deposited.) You need to start withdrawing funds at age 70 ½, and Kiplinger includes a link to a calculator designed to help you determine the amount of your RMD, but be forewarned: if you fail to take that distribution in time, your tax penalty could equal 50 percent of the amount you failed to withdraw. Talk about your unpleasant tax surprises!

The third area where some retirees are caught off-guard is failure to sign up on time for Medicare. Generally once you start Social Security you’re automatically enrolled in Medicare, and if you’re still working for a qualifying employer and receiving health benefits you need not sign up until you leave. Kiplinger describes some of the specific details, but in general if you fail to sign up on time and aren’t exempt because of your employment status, you’ll pay a late-enrollment penalty that amounts to a 10 percent surcharge of your Part B premium for every year you should have had coverage. That can really add up.

Finally, Kiplinger warns, many retirees are clueless when it comes to what is commonly called the Death Tax. “Die too wealthy, and the IRS will take one final swipe at your assets,” says Kiplinger. Right now the federal estate tax kicks in for estates worth about $5.5 million or more (about $11 million for couples).  But even if those high dollar amounts are way beyond the value of your estate, you may not be in the clear – because the state where you live could also be waiting in line for a share of your legacy. Every state has different laws about estate taxes. Here in Washington State where AgingOptions is located, you can find estate tax filing thresholds and exclusion amounts on this table from the Department of Revenue. In short, estate taxes in our state generally don’t apply until the value of the estate exceeds $1 million – but you’ll need to consult a qualified financial planner to make sure you’re making tax preparations that are right for you.

As we said, these four tax and penalty pitfalls listed in the Kiplinger article, concerning Social Security, required minimum distributions, Medicare enrollment and estate taxes, shouldn’t really come as a surprise to anyone. The fact that they do surprise so many seniors tells us that too many people are failing to make proper plans for their lives as they age. If only they would do what thousands of folks in the Pacific Northwest have done and attend a free AgingOptions LifePlanning Seminar! If you’ll invest just a few hours with us, you’ll come away better informed than you ever thought possible about the facts you need to know and the plans you need to make concerning your retirement. Your finances, your legal protection, your housing choices and your medical coverage all need to work together – and with a LifePlan, they will.  We even take into consideration the importance of involving your family in your decision-making so you’ll be assured that those closest to you will understand and support your wishes.

We invite you join us soon at a LifePlanning Seminar near you. Click here for all the details plus convenient online registration, or contact us for assistance during the week. Don’t go into your retirement years uninformed. Arm yourself with the best plan available – a LifePlan from AgingOptions.

(originally reported at www.kiplinger.com)

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Social Security COLA for 2018 is a “Good News, Bad News” Mix

First, let’s consider the good news about a Social Security cost of living adjustment (COLA) for 2018: it looks like there’s going to be one, and it could be the most generous in years. But the bad news is it may not amount to much in actual purchasing power for the typical senior.

That’s the conclusion we drew from this article we read a few weeks ago on the website of Investment News. Actually, there have been a slew of similar articles since the Social Security Board of Trustees announced their projection (still not set in stone) that benefits would go up 2.1 percent next year, the largest cost of living hike in 6 years.   That’s a significant boost from the paltry 0.3 percent last year, and a big jump from the “zero COLA” offered in 2016. If the projection holds true, and Medicare Part B premiums remain unchanged as projected, the average Social Security recipient could see an extra $28 in his or her pocket – not a lot but better than nothing. Remember, though, that at this point these are strictly projections. We’ll have to wait until October to learn the actual COLA for 2018.

But things aren’t exactly rosy for most retirees for whom Social Security represents all or most of their income. The article in Investment News quotes a study by The Senior Citizen League (TSCL) estimating that Social Security recipients “have lost nearly a third of their buying power since 2000 as the costs of items typically purchased by the elderly have significantly outstripped the annual inflation increased in their retirement benefits.” Since 2012 the annual COLA for Social Security has only averaged 1 percent, largely because benefit adjustments are based on what’s called the CPI-W – the Consumer Price Index for Urban workers. “Senior advocacy groups, including The Senior Citizens League, argue that when it comes to measuring inflation experienced by retired and disabled individuals, the government is using the wrong index,” says Investment News. “The CPI-W gives less weight to medical care and housing costs — two categories that have experienced rapid inflation and represent a larger portion of the budgets of older households than younger workers.”

The Senior Citizens League did some calculations to measure the erosion in buying power for the average beneficiary. Since 2000, benefits have increased a total of 43 percent, but the actual expenses incurred by most seniors have gone up by twice that rate – 86 percent. In real numbers, the average beneficiary back in 2000 was receiving $816 per month, an amount which by 2016 had grown to about $1,170. By using a more accurate estimate of rising costs affecting seniors, TSCL calculated that it would take almost $1,520 today to match the buying power of the average benefit in 2000, leaving the typical Social Security beneficiary about $350 short in buying power every month. No wonder things are getting tougher for many low and moderate income seniors.

According to the Social Security Administration, more than 62 million Americans are receiving Social Security benefits in 2017. About one-sixth of those are disabled workers and their dependents, so the great majority of beneficiaries are retirees whose average benefit is $1,360 per month.  For more than 40 percent of single retirees, Social Security accounts for 90 percent or more of their monthly income. Benefits in 2017 are estimated to total $955 billion.

In researching the story about Social Security COLA for 2018, we also found this timely article on the popular financial website Motley Fool. It quotes much of the same information as the Investment News article but adds this warning. “COLAs aside, Social Security is still facing a pretty dire shortfall within two decades’ time. The latest projections confirm what we were already told last year – that without intervention from Congress, the program’s trust funds are set to run dry come 2034.” Financial analysts estimate that if that happens, Social Security will manage to pay out only about 77 percent of scheduled benefits. “For today’s younger retirees who don’t have independent savings,” says the Motley Fool article, “that could spell major trouble down the line.”

So what’s the answer? At AgingOptions our answer is a familiar one: you must have a comprehensive retirement plan in place. And we don’t simply mean a financial plan, as important as that is: financial planning by itself cannot protect you against the unexpected twists and turns of your retirement journey. Time and time again we have seen situations where a nicely done financial plan unravels when someone faces a medical crisis, an unanticipated housing change or a legal challenge. Is there a way to plan for all these elements and also to make certain your family will support your wishes as you age? Fortunately the answer is yes. The answer is an AgingOptions LifePlan.

Our approach to planning for retirement is different from everyone else’s. A LifePlan weaves together the financial, legal, housing, medical and family elements so that each piece supports the other. With a LifePlan in place you’ll be able to protect your assets as you age, avoid become a burden to your loved ones, and escape the trap of being forced into an institution against your will. You’ll also be protected against the uncertainties of Social Security and other government programs whose future health seems very much in jeopardy. Why not invest just a few hours and attend a free LifePlanning Seminar? Bring your questions and become better informed about what a solid retirement plan can look like. You’ll be very glad you did!

For details and online registration, click here, or contact us during the week. It will be our privilege to serve you!

(originally reported at www.investmentnews.com and www.fool.com)

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Is This Lump-Sum Offer from Social Security a Scam? You Decide.

Here’s a new wrinkle many may not have heard about until now. Apparently officials from the Social Security Administration are calling people who are delaying benefits until age 70, offering them a cash incentive if they’ll file for benefits early.

Does that sound like a scam to you? It does to a lot of people, and it did to syndicated columnist and Social Security expert Laurence Kotlikoff. But writing in this article that just appeared in the Seattle Times, Kotlikoff says the call and the offer are real – however, that doesn’t mean people should be sucked in by this lure of a lump sum payment. Apparently Social Security is offering cash now in an effort to save more money in the long run.

Kotlikoff writes about a man who was planning on commencing Social Security benefits when he turns 70 this coming August. Last fall this gentleman received a call from the Social Security Administration (SSA) telling him that if he filed for benefits as of November 2016 instead of August 2017 the government would pay him a lump sum incentive check of almost $19,800, in essence paying him for six months’ worth of benefits. The caller from the SSA explained that if the man declined the offer and stuck with his plan to delay benefits until 70 it would take him until age 80 to make up the difference. Based on this assertion the man agreed to start his benefits earlier than planned and claim his one-time cash incentive.

So far this sounds like one of those too-good-to-be-true hoaxes, but apparently it’s not. This man received his $19,800 check in the mail and his benefits commenced as promised. So it was a good deal, correct? No, it wasn’t a good deal for this particular gentleman, and if you get a call from Social Security under similar circumstances it might not be the best for you, either. What was going on here?

“This is, indeed, a scam being run by the Social Security Administration,” writes Kotlikoff. “Social Security appears to be calling everyone who is trying to maximize their retirement benefit by filing at 70 and bribing them to file early.” There are several reasons why he uses the word “scam” to describe this incentive plan. But before we get into the details, let us strongly advise you that deciding when to begin Social Security benefits can be a complex matter with many individual factors to consider. We at AgingOptions will be happy to provide you with expert counsel, based on our many years of experience with this complicated decision.

So why does Kotlikoff call this a scam, and why should someone be hesitant about accepting the offer of a cash bonus for filing early? First, the SSA is failing to fully disclose that filing early permanently lowers monthly benefits. For a person this man’s age, born between 1943 and 1954, benefits grow by 8 percent for every year the beneficiary waits to start payments, topping out at age 70. If this man in the article starts his benefits 9 months before age 70, his payments will be reduced by 6 percent, permanently.

Second, not only are monthly benefits reduced, but the family’s lifetime benefit would drop fairly dramatically. Using a computer model, columnist Kotlikoff estimated that taking the early payment would actually end up costing this man and his family more than $22,000.

Finally, not only does this man lose out on monthly cash in his Social Security check, but so will his wife if she outlives him. Under the regulations, the surviving lower-earning spouse will receive the benefit of the higher-earning spouse. In this case, the difference for the surviving wife could amount to several hundred dollars monthly, a significant amount that could dramatically affect her quality of life for years to come.

So why, asks Kotlikoff, is this happening? “Is Social Security intentionally scamming the public?” he asks.  “Possibly. Getting people to file early saves the system money” – even with a lump sum bonus as an incentive. He speculates that government officials may be gambling that it will be cheaper for the SSA to make these lump sum payments and getting beneficiaries to lock in lower payments, playing the odds that many beneficiaries won’t do the math. There are exceptions, but for most people in good health, delaying until age 70 pays good dividends. If you live past your early 80s, you’ll earn significantly more than those who started benefits at age 66 or 62.

What about the man who was subject of this column – the one who accepted the offer of a lump sum check and a lower benefit? His advisers reminded him of the wisdom of sticking with the original plan, so he decided to file a form withdrawing his application for retirement benefits. He mailed back the check and chose to hold out until age 70.

Planning for your retirement future is not only complicated, it’s also multi-faceted. Here at AgingOptions we frequently encounter people who have made careful financial plans involving Social Security, savings and pensions, only to find that when a crisis hits those plans often prove inadequate. Finances alone simply cannot ensure a safe and secure retirement! If your desire is to protect your assets as you age, avoid becoming a burden to your loved ones, and escape the trap of being forced into a nursing home against your wishes, you need an AgingOptions LifePlan – a blueprint for your future that connects your financial, legal, housing, medical and family plans into one seamless whole.

We invite you learn more at one of our free LifePlanning Seminars. There are several of these fast-paced information-packed sessions planned for this month at locations throughout the area.  Click here for details and online registration, or call us during the week and we’ll gladly assist you.

(link to www.seattletimes.com)

 

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Should You Delay Retirement? Here Are 5 Good Reasons to Say “Yes”

When should you retire? If you ask ten seniors that question you’re likely to get at least ten different answers – maybe more. Deciding when to hang up the tool belt or the briefcase is one of the most individual, personal decisions we’ll ever make. We can’t count the times when a guest at a LifePlanning Seminar or a caller to our AgingOptions radio program has described their situation and then asked the question – “So, when can I stop working?”

Several weeks ago this article appeared on the popular Money website of CNN. Written by a reporter named Christy Bieber, it’s called “5 Benefits of Delaying Retirement.” According to Bieber, only about half of all working Americans report that they’re looking forward to retirement – yet half of us “quit working for good between ages 61 and 65.” Many workers retire because they have to, due to layoffs and a tight job market for older workers, while others leave the workforce for health reasons. “But many others are lucky enough to have the option of retiring when they’re ready, and on their own terms,” Bieber writes. “Even if you can hardly wait for the day when you leave work forever, it’s important to be strategic about when you retire so you don’t spend your post-work life worrying about whether your money will run out.”

So before you make the decision that it’s time to retire, we suggest you consider these five reasons why waiting might be the best idea, provided you have the choice. As tempting as it may seem to enter the so-called carefree period of retirement, this is one decision where delayed gratification can pay off, and not just financially. In fact, in our opinion the CNN Money article does tend to focus a bit too much on financial reasons why continuing to work makes sense: three of the five reasons have to do with money. Here at AgingOptions we always remind our clients and listeners that having plenty of money in retirement is not enough to guarantee you’ll be able to live the way you want to live as you age. More on that in a moment.

So why keep working? CNN Money says the first reason is that you’ll have more time to save. This works in two ways. First,  as a worker over 50 you are allowed to set more money aside in your retirement accounts: up to $24,000 in your 401(k) and up to $6,500 in your IRA. Second, the savings you already have set aside will have had more time for the interest to compound. CNN Money gives this example: if you have a $350,000 nest egg earning 6% interest, waiting one extra year – even if you don’t contribute any more of your own income – boosts your savings by $21,000. If you wait five years, the difference is astounding: your $350,000 nest egg will have grown to almost $470,000. This is one clear example where waiting pays dividends.

Two more of the benefits of delay in the CNN Money piece are closely linked (and also deal with your wallet). Waiting to retire allows you to delay taking Social Security, which is something we recommend in most cases. Most of our readers and listeners have heard this before, but assuming your full retirement age is 66 (which is the case for those born between 1943 and 1954), your benefit grows 8 percent for every year you delay benefits from age 66 to age 70. There are circumstances in which we would advise taking benefits earlier, but if you’re in good health and can afford to delay until 70, we think most of you will be glad you did.  The other fiscal benefit has to do with employee pension plans: the longer you work, the more you can contribute to your defined-benefit plan, and the greater your payout may eventually be.

(If you’re serious about evaluating your retirement finances, there are some helpful online resources you can use to build your own “retirement dashboard.” AARP is often a good source of helpful tools, and you can click on this link to go to the AARP Retirement Calculator. Another good resource, found here, is the financial planning calculator from US News.)

When we talk about workers remaining on the job longer and delaying retirement, one of the benefits we hear about over and over again is the ability to remain on your employer’s health care plan.  According to CNN Money, the average monthly health-insurance premiums for people between 55 and 64 last year came to about $580 per person. While it’s true that the Affordable Care Act (also known as Obamacare) may provide subsidies for some older insurance buyers, the future of that law is uncertain. “Giving up your employer-provided healthcare benefits could cost you thousands, and you might have to switch doctors, which could be an issue if you or your spouse has any chronic health conditions,” says CNN Money.

In other words, keeping your employee medical is a powerful incentive to stay on the job.

The final point in the CNN Money article may be one of the most important. The longer you keep working, the more your mind stays active and healthy. Research has shown that working keeps you physically healthier (one study indicated that mortality rates drop 11 percent for every year a worker stays on the job after 65). What’s more, keeping your mind active and engaged with the give and take of the workplace helps preserve mental acuity and is believed to help stave off dementia. Staying on the job also provides a psychological boost, preserving a sense of identity that retirees can sometimes lose when they leave their work lives behind

The CNN Money article ends with this: “Before you decide to retire, make sure your financial life is in order and that you have a plan for how to stay healthy, active, and connected to your community. If you’re not quite ready yet, why not wait?” This strikes us as good advice. At AgingOptions our approach to retirement planning takes all the key facets into account: not just finances, but also the other aspects that have to be part of a strong plan. What about your housing options – have you considered where and how you want to live so you won’t become a burden to your loved ones? Have you planned ahead so that your medical needs will be met? Are all your legal affairs in order, and your family fully informed about your wishes? The way to make sure the answer to all these is a confident “yes” is to work with us to develop your own AgingOptions LifePlan. It will be your blueprint to help you build the retirement of your dreams.

Find out more by investing a few hours attending a free AgingOptions LifePlanning Seminar at a location near you. You’ll be very glad you did!  For dates, times and locations, click here. You can register online or call us during the week for assistance. Bring your questions! We’ll look forward to meeting you.

(originally reported at www.money.cnn.com)

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Observing Memorial Day by Honoring and Helping Our Service Members

By Kirk Larson, Social Security Washington State Public Affairs Specialist

On Memorial Day, we honor the soldiers and service members who have given their lives for our nation. Social Security respects the heroism and courage of our military service members, and we remember those who have given their lives in defense of freedom. Part of how we honor service members is the way we provide Social Security benefits.

The unexpected loss of a family member is a difficult experience for anyone. Social Security helps by providing benefits to protect service members’ dependents. Widows, widowers, and their dependent children may be eligible for Social Security survivors benefits. You can learn more about Social Security survivors benefits at www.socialsecurity.gov/survivors.

It’s also important to recognize those service members who are still with us, especially those who have been wounded. Just as they served us, we have the obligation to serve them. Social Security has benefits to assist veterans when an injury prevents them from returning to active duty.

Wounded military service members can also receive expedited processing of their Social Security disability claims. For example, Social Security will provide expedited processing of disability claims filed by veterans who have a U.S. Department of Veterans Affairs (VA) Compensation rating of 100 percent Permanent & Total (P&T). Depending on the situation, some family members of military personnel, including dependent children and, in some cases, spouses, may be eligible to receive benefits. You can get answers to commonly asked questions and find useful information about the application process at www.socialsecurity.gov/woundedwarriors.

Service members can also receive Social Security in addition to military retirement benefits. The good news is that your military retirement benefit does not reduce your Social Security retirement benefit. Learn more about Social Security retirement benefits at www.socialsecurity.gov/retirement. You may also want to visit the Military Service page of our Retirement Planner, available at www.socialsecurity.gov/planners/retire/veterans.html.

Service members are also eligible for Medicare at age 65. If you have health insurance from the VA or under the TRICARE or CHAMPVA programs, your health benefits may change, or end, when you become eligible for Medicare. Learn more about Medicare benefits at www.socialsecurity.gov/medicare.

In acknowledgment of those who died for our country, those who served, and those who serve today, we at Social Security honor and thank you.

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Ex-Spouse Benefits, Taxes, and You

By Kirk Larson, Social Security Washington Public Affairs Specialist

During the month of April we observed both Ex-Spouse Day and Tax day. These two observances are extra important if you are an ex-spouse, because Social Security pays benefits to eligible former spouses. In addition, you may need to have claimed this income on your tax forms.

If you are age 62, unmarried, and divorced from someone entitled to Social Security retirement or disability benefits, you may be eligible to receive benefits based on his or her record. To be eligible, you must have been married to your ex-spouse for 10 years or more. If you have since remarried, you can’t collect benefits on your former spouse’s record unless your later marriage ended by annulment, divorce, or death. Also, if you’re entitled to benefits on your own record, your benefit amount must be less than you would receive based on your ex-spouse’s record.  In other words, we’ll pay the higher of the two benefits for which you’re eligible, but not both.  You are potentially eligible for up to 50% of what your ex-spouse could receive at their full retirement age.

You can apply for benefits on your ex-spouse’s record even if he or she hasn’t retired, as long as you divorced at least two years before applying.  In addition, your ex-spouse must be at least age 62.

The amount of benefits you get has no effect on the benefits of your ex-spouse and his or her current spouse. Visit Retirement Planner: If You Are Divorced at www.socialsecurity.gov/retire2/divspouse.htm to find all the eligibility requirements you must meet to apply as a divorced spouse. Our benefits planner gives you an idea of your monthly benefit amount. If your ex-spouse died after you divorced, you can still quality for widow’s benefits. You’ll find information about that in a note at the bottom of the website.

Visit www.socialsecurity.gov/retire2/divspouse.htm today to learn whether you’re eligible for benefits on your ex-spouse’s record. That could mean a considerable amount of monthly income. What you learn may bring a smile to your face … even when Tax Day rolls around!

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How Many Wait Until 70 to Begin Social Security? The Surprising Answer

Here at AgingOptions a great number of the retirement-related questions we get involve Social Security benefits. It’s surprising how much misinformation there is about this program that touches so many millions of lives. That’s why we’re always on the lookout for articles that help people better understand this vital government-run system of benefits.

Here’s one recent example of a helpful article from the popular financial website Motley Fool. Most people approaching retirement age know that the longer you wait to start claiming Social Security benefits, the more monthly benefit you get – but just how much more still seems to confuse people. In plain-spoken language the Motley Fool article explains how waiting to file for benefits will have a dramatic life-long impact, not only on you but your spouse as well. Yet in spite of the demonstrated benefits of delay, the actual number of seniors who maximize benefits by waiting as long as possible to file is shockingly low.

First let’s consider a few basics. As far as the Social Security Administration is concerned, your “full retirement age” is determined by your birth year: if you were born between 1943 and 1954, your full retirement age is 66. (For those born later, this handy chart on the Social Security website shows how full retirement age is gradually increasing.) The earliest date when a person can claim Social Security benefits is 62. So if that’s the case, many people argue, why wait? Why not take the benefits at the earliest possible date?

The answer lies in the way Social Security incentivizes people to delay. For every year between age 62 and 70 that you hold off taking benefits, those benefits increase by about 8 percent. That means waiting the extra eight years from 62 to 70 boosts your benefits by more than 75 percent, for the rest of your life. If you are survived by a spouse who is relying on your benefits, their lifetime payout will probably be increased as well. So if waiting is such a great idea, most people put off taking benefits, right? Definitely not.

According to Motley Fool, quoting research from Boston College, “a vast majority of (seniors) wind up taking benefits before they hit their full retirement age.” This translates into about 60 percent of seniors who sign up for Social Security benefits between ages 62 and 64. Another third or so tend to enroll at or near their full retirement age. This means that only 10 percent of all seniors are waiting to file for benefits after their full retirement age. And how many manage to max out their benefits by holding off until age 70? The answer is surprising, to say the least: only 3 percent!

Experts do acknowledge that there are times when taking early benefits may be necessary. If you’re in ill health, for example, with a limited life expectancy, taking benefits early on may be better that waiting too long for benefits you’ll never see. And for those left unemployed and facing economic crisis from the recent recession, Social Security benefits can provide an economic lifeline. But claiming early benefits just because you want a little more cash in your budget is shortsighted, and you’ll almost certainly come to regret it. Once you lock in those lower benefits, you’re pretty much stuck.

There’s another reason to delay benefits: protecting yourself against future benefit cuts. Lurking behind the advice to wait, there’s an ominous warning implied in the Motley Fool analysis. “The reality is Social Security isn’t in good shape,” says the article, “and the program that seniors rely on is nearing a point where its foundation will begin cracking.” The article explains that by the year 2020 “Social Security’s Trust will begin paying out more cash than it’s bringing in…culminating in the program’s extra cash being completely exhausted by 2034.” Assuming Congress does nothing to stop the bleeding and shore up the program, Social Security Trustees “estimate that an across-the-board benefits cut of up to 21 percent may be needed to sustain payouts to the year 2090.” Social Security was designed to provide beneficiaries with 40 percent of their retirement income, but for a huge number of retirees (including 43 percent of singles) the program provides 90 percent of their income. “With so many seniors reliant on Social Security,” the Motley Fool notes, “a 21 percent haircut would be a major problem.” But the larger your monthly check, the less painful it would be.

There’s much more to the issue of how to maximize Social Security benefits, and we encourage you to seek out good sound guidance for your specific situation. Contact us here at AgingOptions and we will gladly advise you. But remember, planning for your financial future is only one facet of preparing for retirement. At AgingOptions, we employ a unique and comprehensive approach called LifePlanning that “connects the dots” like no retirement plan we know of, blending your financial plan with medical, legal and housing strategies in a seamless, well-crafted whole. Your LifePlan also brings your loved ones into the picture, since it’s essential that those closest to you agree with and support your wishes as you age.

If you’re tired of piecemeal retirement planning and curious about this comprehensive method of preparing for a fruitful and secure future, we invite you to attend a free AgingOptions LifePlanning Seminar. These popular events take place at locations throughout the region, and we welcome you to bring your questions and come join us. You’ll be very glad you did! For dates, times, locations and online registration, simply click here – or contact us by phone during the week. We’ll look forward to meeting you.

It may be a good idea to delay taking Social Security – but it’s never a good idea to delay planning for your retirement. Let AgingOptions be your guide. Age on!

(originally reported at https://www.fool.com)

 

 

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