Social Security & You – March 19, 2015

[vc_row][vc_column width=”1/1″][vc_column_text disable_pattern=”false” align=”left” margin_bottom=”0″]Join Justus Morgan, CFP® and Justin Moilanen to learn the basics of Social Security including how benefits are determined for workers, spouses, and surviving spouses, the interaction between claiming now versus delayed benefits, and how different claiming strategies can significantly impact your retirement income sustainability.

This interactive presentation to be held at our office on March 19 from 6:30 p.m. to 8 p.m. is for individuals and couples getting close to the age when they may start collecting Social Security retirement benefits.

To reserve your seat, please call Lori at (262) 554-4500 ext. 105 or use our registration form below. Seating is limited.[/vc_column_text][mk_content_box heading=”Register for the Workshop”][vc_column_text disable_pattern=”false” align=”left” margin_bottom=”0″]Social Security & You
Date: March 19, 2015
Time: 6:30 p.m. – 8 p.m.
Location: Financial Service Group[/vc_column_text][/mk_content_box]

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Undoing Social Security decisions

As published in the Racine Journal Times | February 4, 2014

Have you ever made a decision you later regretted? rewindWouldn’t it be nice if you had a chance to rewind the clock? In many areas of life this is not an option but when it comes to collecting Social Security benefits  there are actually a couple of ways to undo your benefit decision.

Why would anyone want to change their benefit once it began? Besides winning the lottery, perhaps you received an inheritance or had another change in your financial circumstances resulting in less dependence on Social Security benefits for income. Or maybe you decided to go back to work because golfing everyday started losing its appeal. Finally, maybe you realized claiming early was just a poor decision because of the reduction in future benefits which can have a significant impact on you as well as your spouse.

If you started claiming benefits in the last 12 months, you can unwind the whole decision as if it never happened in the first place. In order to do this you need to repay any benefits received. If you paid taxes on the income in a previous year, you can receive a credit or deduction for the tax paid. In the future, when you apply for benefits, the new benefit amount is based on the new application date removing the penalty for filing early.

If it’s been more than a year since you started collecting benefits, all is not lost as there are two additional opportunities. If you’re still below your Full Retirement Age (typically age 66 for most people facing this decision), you can earn above certain amounts from wages or self-employment income which results in benefits being withheld. People often confuse this as losing benefits but your benefit is actually increased at Full Retirement Age as if you had never collected the benefit. In other words, the impact is the same as if you suspended benefits resulting in a higher future benefit amount.

A third strategy to consider is only available once you reach Full Retirement Age which also involves suspending your payment resulting in benefit increases of 8 percent per year until age 70. These increases are added to the monthly benefit you received until suspending benefits but could potentially increase your total benefit by 32% over the four years!

A survey released last year, indicated almost 40 percent of people who started collecting their benefit early now regret it. Will you be one of them?

To learn more about Social Security, I recommend Jim Blankenship’s book “A Social Security Owner’s Manual.”

Retirement income for surviving spouses

As seen in the Racine Journal Times | November 5, 2014

One of the biggest financial changes we see in our clients’ lives is the death of a spouse.

Besides the emotional toll this loss incurs, the fears around money also become much more acute. In particular, the fear of running out of money or being a burden on other family members. Fortunately, there are a number of sources of income to help mitigate these fears, including Social Security and pension survivor benefits.Continue reading

Social Security – A history of change

As published in the Racine Journal Times | August 6, 2014

The Social Security Board of Trustees released their annual report a few weeks ago indicating the program is projected to exhaust its assets by 2033 resulting in only being able to pay less than 75 percent of promised benefits. Similar to past years, the trustees recommend Congress act to avert this from happening. Whenever changes are proposed, it leads to anxiety and fear, but the reality is Social Security has continuously changed since its inception in 1935. To believe that changing the system would be something new is to ignore the history of the program.

Within several years of being signed into law by President Franklin D. Roosevelt, Congress started modifying the program. One of theSocial-Security first changes was to add benefits for spouses as well as survivor benefits that would last beyond the death of the worker. It wasn’t until 1950 that Congress added cost-of-living adjustments to add protection against the erosive power of inflation.

Of course, adding benefits also increased the cost of the program which led to additional changes. In the mid-1970s, Congress took action to prevent insolvency of the program by increasing the payroll tax paid by workers. Unfortunately, this wasn’t enough and Congress again made changes in 1983 to start taxing benefits collected by retirees as well as gradually increasing retirement ages from 65 to 67. The amount of benefits subject to taxation was changed again in 1993.

Today, we’re faced with similar challenges of an underfunded system. Based on past actions, I wouldn’t anticipate any major changes but it would also be foolish to assume benefits and funding sources will remain the same in the future. I suspect we’ll see some minor changes (the sooner the better) to avert imminent disaster but this won’t be the last time changes need to be made.

So what does this mean to you? For one, I wouldn’t plan on the imminent demise of Social Security. At the same time, you can also plan on either a reduction in benefits in the future or higher taxes to pay for the benefits (or perhaps a combination of the two).

Second, it’s worth setting aside some of your own money to supplement Social Security once you stop working. People who have planned ahead will have more choices and flexibility in dealing with the inevitable changes we will see in the future.

April 2014

In this month’s issue:

  • Justus Morgan’s To Your Wealth column as seen in the Racine Journal Times: Common Sense can apply to mortgages
  • March 19 Social Security Workshop recap
  • Office closed notices: April 18 and 25
  • Save the dates for upcoming FSG events

Download April’s newsletter