Why Don’t More People Wait Until Age 70 to Claim Social Security Benefits?/by Admin(2)
Why Don’t More People Wait Until Age 70 to Claim Social Security Benefits?
The most common age for people to claim social security is 62, which is the earliest possible age to claim retirement benefits. However, if you wait until age 70, you will receive the highest monthly benefit amount possible based on your earnings history. This can help maximize your overall retirement income from the Social Security Program.
By claiming retirement benefits at age 62, you are locked into the lowest monthly benefits you could receive. So why wouldn’t people wait until they’re 70?
One of the main reasons is that they need the money. Over 60% of retirees get at least half of their income from Social Security. Average retiree benefits are around $1,369 a month, or $16,428 a year. If this is half of one’s income, it makes sense that they would need the money sooner.
Others don’t expect to live long enough to make waiting until age 70 worthwhile. If one waits until they’re 70, they will need to live until they’re 80 or older to reap the benefits of waiting. If they don’t think they’ll live that long or aren’t willing to risk the gamble, there’s no sense in waiting to collect. Another side to this story is that some people want the money while they’re still young enough to enjoy it. Even if retirees expect to live a long time, most people slow down as they get older. If retirees are unable to use or enjoy the money near the end of retirement, the increased income isn’t doing them much good.
Some retirees expect benefits from their spouse’s work history. While your Social Security benefit depends on your own earnings history, if you’re married you may be able to claim a benefit up to a level that’s half of your spouse’s. Spousal benefits stop increasing at a person’s full retirement age rather than at age 70. Therefore, there’s no reason to wait until age 70 for those benefits.
Alternatively, maybe they’re just really good investors. It may be a wise decision to shift some of your money into bonds once you retire. If you collect benefits earlier than age 70, you can keep more money in stocks longer. Faster compounding stocks may deliver a better option than the benefits you would have received by waiting until age 70.
Overall, it’s your choice when to collect Social Security, but unless you have reason to believe you will live a significantly shorter or longer than average lifespan, you will probably receive about the same amount throughout your life regardless of when you start collecting.
For more information on Social Security and when to claim benefits, contact your local financial professional.
A Social Security Increase is Expected for 2018, Along with a Cost-of-Living Increase/by Admin(2)
A Social Security Increase is Expected for 2018, Along with a Cost-of-Living Increase
The cost-of-living is now the highest that it’s been in the last 6 years. How will this affect retirees?
A cost-of-living adjustment for 2017 was just announced by the Social Security Administration. In December of 2017, Americans who receive Social Security payments should start to see a 2% increase in their check every month. This is great news for millions of retired Americans who depend on their Social Security checks. Many have waited 6 years to see a cost-of-living adjustment increase as big as this one.
On the other hand, 2% is not that high when you compare it to the cost-of-living adjustments of the past. Plus, the cost of Medicare could make the increase virtually unnoticeable. At the same time, older Americans have a lot more expenses each year, which the cost-of-living adjustment increase will not cover.
Now let’s look at how the cost-of-living adjustment is determined and why a 2% increase may not be noticeable to retired Americans. Basically, inflation is what causes cost-of-living adjustments of Social Security. When the cost of services and goods go up, the Social Security payments are supposed to match this increase percentage wise. That way the recipients will have the same purchasing power as they did before.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is what specifically determines the cost-of-living adjustment of Social Security. The CPI-W tracks the costs of various items which working families commonly need. There is also a special Consumer Price Index called CPI-E which tracks the living expenses of retired Americans. However, the CPI-E is not factored into the cost-of-living adjustment to Social Security.
The CPI-E and CPI-W look at expense categories differently from each other. The CPI-E shows that older Americans have to pay double the amount of money for their medical needs as those under the CPI-W. For the last 35 years or so, there has been an average 0.2% increase in CPI-E per year. Experts say that older Americans are continuing to gradually lose their purchasing power and that these yearly adjustments are not going to help anything.
Social Security Cost-of-Living Adjustment History
The cost-of-living adjustment procedure used today has been used since the year 1975. Prior to 1975, legislation determined the increases that Social Security payment recipients would get. There were no formulas to determine it like there are now.
The yearly cost-of-living adjustment has varied throughout the years. Ever since the formulated method of determining the cost-of-living adjustment was put in place in 1975, the highest cost-of-living adjustment so far has been 14.3% which occurred in 1980. The lowest cost-of-living adjustment has been 0% which has occurred 3 times and all within the last 10 years.
Although 3.75% has been the average cost-of-living adjustment of Social Security, this year shows a 2% increase which is more than 50% of the past average.
So, what will retirees have to face?
The average American who receives Social Security payments receives about $1,371 in their monthly check. With a 2% increase, there is $27 more added to this amount which makes the total $1,398.
A lot of retired Americans receive a bigger Social Security payment than the national average. This means their increases will also be bigger as well. The biggest payment that an American of retirement age received in 2017 was approximately $2,687. With a 2% increase, they would have received an additional $54 in their monthly payment. Those who waited longer to claim their Social Security benefits will earn even more money. One person who waited until they were 70 years of age will be receiving $3,538 each month. This means they have a $71 per month cost-of-living adjustment increase waiting for them in December. That will come out to $850 in extra benefits per year.
But is the cost-of-living adjustment for 2017 really a big increase? It may appear that way to a lot of American retirees, especially if they get paid $1,400 each month because that will give them an additional $28 for each payment. Unfortunately, the premiums of Medicare Part B are also increasing which means that 2% increase won’t really be noticeable. That extra money will just go right toward paying the additional premium amounts for Medicare. Of course, this won’t be for certain until the premium amounts of 2018 are officially announced to the public.
Since inflation for retirees rises faster than the CPI-W increase, seniors may not see the cost-of-living adjustment of Social Security this year as anything more for them in their payments.
OPM Terms Federal Retirement Benefits as Very Generous/by Admin(2)
OPM Terms Federal Retirement Benefits as Very Generous
Recently both the Trump administration and the Office of Personnel Management (OPM) came out saying that they consider federal retirement benefits to be very generous. They mentioned this in a document in support of the presidential budget that will impact the lives of every federal employee as well as for FERS employees who retire before they are eligible to draw Social Security. OPM has also tried to clear the change in contributions that awaits employees who work among special groups.
Why OPM Termed Federal Retirement Benefits as Very Generous?
OPM has termed federal retirement benefits as generous because it wants to show support for the budget proposal shared by the Trump Administration. The budget will make many of the federal employees and retirees to increase the required contributions. It will also diminish inflation protection of the annuities and put an end to a supplement for FERS employees who choose to or are forced to retire before they are eligible to draw Social Security.
In the document where OPM mentioned that federal retirement benefits are very generous, it was also mentioned that the employee retirement landscape is continually evolving as private firms are offering less compensation in the form of retirement benefits to employees. The shift away from the defined benefits programs as well as cost of living adjustments for annuitants is also a part of that evolution.
The document also stated that federal government has continued to offer a very generous retirement benefits package when compared to the private sector companies. The document mentioned that it had proposed adjustments to trim down the long-term costs associated with these benefits so that the goal of bringing federal retirement benefits in line with the private sector can be achieved.
OPM is not only responsible for managing the retirement program, but it is also accountable for assuring that the federal compensation package is attractive enough so that a high-quality federal workforce can be there. Since the inauguration of President Trump, the White House or OMB have stressed upon initiatives that affect the workforce. While OPM played a supportive role in this scenario, it has never made policy statements with only an Acting Director present there. George Nesterczuk has been nominated, but he hasn’t even had a confirmation hearing yet. He has been involved with federal personnel matters in several different of roles over numerous years under Republicans.
Clarifying an Important Issue
The document has also clarified one important issue regarding proposed increase in the retirement contributions that may soon be a reality. Though the proposal calls for increasing contributions made by the FERS employees and reducing the employee share until these two become equal, there has been uncertainty with regard to special group employees that mainly include all the firefighters, air traffic controllers and law enforcement officers who enjoy special retirement provisions.
When compared to people under the standard retirement coverage, the special group employees are already paying an additional 0.5 percent of salary into the retirement fund, as their benefits are more valuable, the agencies pay an even higher amount to them as compared to those who have the standard retirement coverage. It raised the question of whether the administration proposal would mean a steeper increase for those employees in the future.
OPM document has tried to answer that by stating that for employees working under special group, the employee contributions would increase but they won’t equalize.
Though the statement made by OPM in which it said that federal retirement benefits are very generous is a bit unexpected, it’s not shocking at all because the agency seemed to be backing the Trump administration since a long time now. It has also supported the budget shared by President Trump openly. This budget impacts every federal employee and is threatening for FERS employees who retire before they become eligible to draw the Social Security.
Can Working During Retirement Hamper Your Social Security Benefits?/by Sonny Dothard
It’s often said that retirement is not a destination, it’s a journey. Some retirees find the journey includes a return to part-time work. A few of the common reasons for reentering the workplace include a lack of retirement savings, pursuing a second career, rising health insurance costs or even boredom. For many retirees, simply having a job that they enjoy is a good reason to get up in the morning. Let’s also not underestimate the impact that boredom can have on your mental and physical health. In fact, the healthier you are, the less you are likely to spend on health care costs during retirement. If you are planning to work during retirement, even if only part-time, here’s how this decision could impact your Social Security benefit and taxes situation.
Does it Make Sense to Work and Collect Social Security?
The simple answer is that it depends on your age. Determining, however, if it makes financial sense for you to work and collect Social Security at the same time is a more complicated assessment. It depends on how much you earn and when you begin taking Social Security benefit. While it can seem tempting to take your Social Security benefit as soon as you’re eligible at age 62, it can be a costly decision. Starting Social Security at age 62 can mean a 25% reduction in your monthly benefit versus waiting until what the government considers your “full retirement age” or FRA. Furthermore, recent changes to Social Security mean that age 65 is no longer the milestone for FRA. Depending upon the month and year in which you were born, FRA now ranges from age 66 to 67.
A Paycheck Can Affect your Social Security Check
Aaron Steele, a financial planner with Steele Capital Management in Olympia, Wash. points out that if you’re counting on a certain level of Social Security income to supplement your part-time job, it’s important to be aware of how your paycheck can affect your benefit check. There is a limit to how much you can earn and still receive your full Social Security benefit if you are younger than your FRA. The income limit is scheduled to increase each year, but for 2017 you can earn up to $16,920 ($1,410 per month). For every $2 you earn over the $16,920 limit (in 2017) Social Security deducts $1 from your benefit.
“Social Security will only allow you to earn $16,920 this year (2017) before you start seeing your benefit check reduced by a $1 for every $2 you earn at work,” says Steele. “For my clients that have returned to part-time work post-retirement, I work closely with them to incorporate Social Security planning into their overall financial plan. Ongoing monitoring of their financial situation helps ensure that they don’t encounter an income shortfall by losing benefit dollars to withholding.”
In the short-term, this reduction can appear to be significant for those that claim their Social Security benefit before FRA and continue to work. The good news is that if Social Security does withhold a portion of your benefit, some of those dollars will be returned to you by way of a higher monthly benefit once you reach FRA. Additionally, if your most recent year of earnings turns out to be one of your highest income years, Social Security will recalculate your benefit based on the higher earnings.
If you reach your FRA in 2017 and will celebrate your birthday in the fall or winter then you need to plan carefully. Between January and the month of your birthday, you can earn up to $44,880 (in 2017) without any benefit withholding. If you earn more than $44,880 (in 2017), Social Security will deduct $1 for every $3 you earn over the limit. Once your birthday passes, the income limit no longer applies.
In determining your earnings, Social Security will include not only your wages but also commissions, bonuses and vacation pay. Income from annuities, pensions, interest, IRAs, investment earnings, federal employee or civil service retirement benefits and capital gains are not included in the calculation. The Social Security Administration provides an Estimated Retirement Calculator on their website that can help you estimate how your earnings could affect your benefit.
Taxes and the Good Old Days
The first person that uttered the words “the good old days are gone” must have been referring to a time when Social Security was completely tax-free income for every recipient. It still holds true that your Social Security benefit won’t be subject to income tax if that’s the only income you receive during the year. However, if you have income from other sources such as a part-time job or a retirement plan such as a Thrift Savings Plan (TSP), 401(k) or pension then a portion of your benefit may become taxable. The worksheet contained in IRS Publication 915 is a good starting point to determine if a portion of your Social Security benefit is subject to income taxes. For more complex tax situations you may benefit from consulting a qualified tax professional.
In addition to the federal government potentially taxing a portion of your Social Security, 13 states also tax benefits. As of the date of this publication, Connecticut, Colorado, Kansas, Nebraska, New Mexico, Minnesota, Missouri, Rhode Island, Utah, Vermont, Montana, North Dakota and West Virginia all have the potential to tax a portion of benefits for its residents. Many of these states only tax a very small percentage of the population due to rather generous income exemptions. However, four of the states follow the federal government schedule of no exemptions. These states are Minnesota, North Dakota, Vermont and West Virginia. Based on the potential bite that taxes can take out of your Social Security benefit, it’s easy to see that where you retire matters.
Throughout your working years, you have probably viewed your retirement as a destination. The professionals at Public Sector Retirement, LLC (PSR) want to change your perception to one that retirement is simply a milestone on your journey. Your life will continue to evolve and that may include a return to the workplace. If your vision of retirement potentially includes working part-time, it’s important to carefully plan when to begin your Social Security If you are planning to work during retirement, even if only part-time, here’s how this decision could impact your Social Security benefit and taxes situation. It is quite clear that when you choose the best date to retire, you should also think of whether you plan to work in retirement because if you do, you may need to pay heavy taxes on retirement benefits savings or you may get less social security benefits than you expected.
Medicare Begins Replacing Social Security Numbers on Medicare ID Cards/by Sonny Dothard
Identity theft is an ever-increasing concern, especially for seniors. An easily lost or misplaced source of personal information that can have a devastating impact on your credit is your Medicare card. This one card carries a vital piece of personal information that can be used to steal your tax refund or even open credit lines in your name. That piece of information is your full Social Security number (SSN).
Currently, Medicare cards reflect your health insurance claim number (HICN) which is the same as your SSN. While the Social Security Administration (SSA) warns Americans to not carry their Social Security card with them, Medicare instructs beneficiaries to carry their card at all times.
Change is rapidly approaching as Medicare prepares to issue new Medicare ID cards without SSNs in order to comply with the Medicare Access and CHIP Reauthorization Act of 2015. By April 2019, all Medicare recipients should receive a new card that reflects a Medicare Beneficiary Identifier (MBI) number that will be used for billing, eligibility verifications and claim status.
Timeline for Replacement
Officials have recently stated that the replacement of Medicare ID cards is on track and it will be able to meet the 2019 deadline. While a final prototype of the new card has not been revealed to the public yet. It is believed that the MBI will have 11 characters which will have a combination of randomly generated upper-case letters and numbers. In April of 2018, the agency plans to start mailing the new cards to all current Medicare beneficiaries. Beneficiaries will be instructed to safely and securely destroy their current Medicare cards and keep the new MBI confidential.
It’s Not the First Complicated Health Care Transition
Though changing the numbers on Medicare ID cards presents a few challenges, it’s not the first of its kind. Much has been learned from the massive launch of “Obamacare” and the Medicare drug program rollout, neither of which were without difficulty. Many people will remember that the Healthcare Marketplace computer systems were plagued with issues when they first launched to the public. You may also recall that millions of low-income Medicare drug program beneficiaries were not able to get their prescriptions filled initially.
Aim of a Seamless Transition
The replacement of SSNs with a randomly generated MBI extends far beyond the nearly 57 million elderly and disabled Medicare beneficiaries. It also requires that the health care provider community prepares their systems for the change. However, many providers were dedicated to the Social Security Removal Initiative (SSNRI) long before legislation mandating the removal was signed into law. Many are already prepared for a seamless transition to the MBI number system.
In a statement made recently, Seema Verma who serves as Medicare Chief stated that the Trump administration is aiming for a seamless transition over a 21-month period which will involve coordination with hospitals, doctors, beneficiaries, family members, state government, insurance companies and pharmacies.
While long overdue, the removal of Social Security numbers from Medicare cards should help lessen the chances of identity fraud for Medicare beneficiaries. In the meantime, Medicare Beneficiaries are still at risk for identity theft so it’s important to carry your card safely and be vigilant about who has access to this important piece of personal identification.
Living Expenses Stopping New Yorkers from Saving Enough towards Retirement Benefits/by Sonny Dothard
A new poll has stated that Baby Boomers and Gen Xers in New York are not saving enough towards retirement benefits because they are just getting by. Many of them are worried that social security benefits won’t be enough in retirement and still, they haven’t done anything about it. The cost of food, utility bills, and housing costs are a problem for many of the people as it takes out a major chunk of their salaries.
The Poll on Living Expenses and Retirement Benefits
The poll which states that around 70 percent of Gen Xers and baby boomers admitted that saving towards retirement benefits is a significant problem was conducted by AARP in New York. The Siena College survey for AARP was done on more than 800 New Yorkers between the ages of 35 to 70. The aim of the poll was to help AARP in pressing for federal and state solutions that would solve the problem of the lack of retirement options for all the aging New Yorkers. It concluded that New Yorkers have serious concerns regarding their retirement expenses and income but they are hardly doing anything about it.
The Director of Siena College Polling Institute Don Levy stated that about half of the Gen Xers and Baby Boomers are just getting by and it the best they can do. He added that most Xers and about a third of baby boomers were concerned regarding the social security benefits but only a few of them were doing anything about it.
The Vital Results
The survey also found that 59 percent of Gen Xers have admitted that constantly increasing food costs are negatively impacting the finance of the middle-class people. It also highlighted that the numbers of middle-class Gen Xers who were facing difficulties in managing their finances are three times the number of baby boomers facing the same problems and with similar income.
About 39 percent of baby boomers accepted that cost of food is a problem for them. About 58 percent of baby boomers and 68 percent of Gen Xers also said that utility bills were a problem for them. Housing costs were a big problem for 70 percent of baby boomers and 81 percent of Gen Xers. It’s no secret that New York is among the highest costs of living in the nation so the challenge of saving towards retirement benefits is also more complicated.
Many Women Fear Running Out of Money in Retirement/by Sonny Dothard
It is a known fact that the position of American women in the workforce has improved a lot in the last few years. They are also earning a higher number of college and graduate degrees as compared to men. The number of women business owners is also growing as more than 36 percent of American businesses are now owned by women. Yet, many women fear running out of money in retirement.
Research Claims Women Fear Running Out of Money in Retirement
A recent research conducted by Merrill Edge, the online discount brokerage service offered by Bank of America Merrill Lynch said that 59 percent of mass affluent women have a concern that they would run out of money in retirement. It also said that both men and women fear running out of money in retirement but this insecurity may be compounded for women because they have some additional challenges.
The additional challenges women have to face are longer life spans, varied earnings patterns, and unique careers. It is a fact that women live 5 years longer than men so they must expect to spend more in retirement. They must also remember that the retirement savings of a couple may be diminished due to the costs related to caring for a partner.
Another fact is that most women spend about 7 years out of the workforce to try alternating career paths and caring for a family member like children or elderly people. This reduces the number of total working years of women as compared to men. A thing every woman with fewer working years must understand is that if a person doesn’t have at least 35 years in the workforce, the Social Security Administration would add zero-earnings years to their record to equal 35 years which may lessen the amount of earnings and benefits considerably.
The only solution to the problem that women fear running out of money in retirement is that they should start saving and investing as much money as they can. It would help them a lot in their golden years. The relationship status of the women should not matter when it comes to retirement savings. Whether a woman is single or has a family, she must try to save and invest a lot of money for a better future rather than depending on someone else (even their life partner) for money in the golden years.
Americans Saving Longer Towards Retirement Benefits/by Sonny Dothard
A new study has revealed that the Americans today are saving for longer years so that they can get retirement benefits for several more years than their predecessors. The study also highlighted the fact that Americans didn’t rely on kids for support in retirement and it also mentioned the ways in which they plan to support themselves financially after retirement. The study also revealed many other interesting facts about retirement.
The study was conducted by HSBC and named The Future of Retirement: Generations and Journeys surveyed. The study has found out that that Americans are planning to save longer for retirement. They would be saving for 7 years more than their predecessors. The survey was conducted in 17 nations and the number or respondents were over 18,000. On an average, American people work about 5 years longer than the people of other parts of the world. It is 35 years vs. 30 years.
The main reason for the longer time needed to save towards retirement was that the Americans didn’t want to rely on their children. About 3 percent Americans want to rely on children while at a global level this percentage is 12 percent. The people of Hong Kong and Singapore are more willing to depend on their kids as the percentage of people relying on children in these nations are 41 percent and 34 percent respectively.
Relying on Money Sources
Most of the Americans wish to reply on some cash sources for their retirement income. About 56 percent of Americans are using cash savings to survive in their retirement and 51 percent are depending on social security. About 38 percent depend on stocks, 32 percent rely on mutual funds and about 29 percent depend on the income of their spouse or partner. About 10% Americans are more likely to sell a property as compared to other retirees.
Though Americans are saving longer for getting steady retirement benefits, about 44 percent Americans wish that they had started to save for retirement a bit earlier. About 33 percent also admitted that they regret not saving a larger portion of income towards retirement savings. Some Americans still have no savings at all. About 14 percent of working age people has not started to save for retirement. About 3 percent of these people have already crossed the age of 60 years.
Planning for Retirement in Five Years by Ron Raffino/by Ron Raffino
Tips from Ron Raffino for Those Planning on Retiring in Five Years
You must have heard that it’s never too late to start planning, but have you heard it’s never too early to start planning? In fact, the earlier you start your retirement planning, the better it will be for you. Retirement planning is no joke as a lot of factors need to be considered carefully. We will advise you take some assistance from your local personnel service center. Since they have your employment records, they are in a position to provide you with personalized assistance.
We all know and understand that health and life insurance are of top most priorities but still, we see a lot of retired personnel without proper coverage. This usually happens because of lack of awareness and lack of knowledge. It must be noted here that in order to carry the coverage forward, one must be covered continuously for five years before retirement.
Help from your employer
You can get all the information you need on the retirement process from your agency. It should be noted here that the agency only provides you with the information. In order to interpret it and get advice on what to do, you should contact your local personnel service center. As they have your employment records, they are in a better position to advise you on such matters.
When to start planning
This is an important question. We hear a lot of employees asking this question – when should I start planning. Well, to be honest, it’s better to start as early as possible. But just in case if you haven’t done it then make sure you start planning at least five years before retirement. We advise you to start planning five years prior to your retirement as you must have insurance coverage for five years immediately before retirement to keep it after retirement.
Keeping your health insurance benefits after you retire
Pay close attention to this part. Following are points that specify the conditions for being eligible to continue your health insurance coverage.
- You must be covered at the time of retirement.
- Your coverage must not fall under the category of converted individual policies.
- The date of issuance of the first annuity check must not be later than 30 days after the retirement.
- Prior to 5 years of the date of retirement, you must have continuous coverage.
You can also avail the benefits of optional life insurance if at the time of retirement you are eligible to continue your basic coverage, and again if you were continuously covered for a period of 5 years before your retirement date.
Waiver of the requirement for continuing life insurance coverage into retirement
Currently, there is no such provision that allows a retirement employee to bypass the stipulated conditions for continuing life insurance coverage. However, if you do find yourself in such a situation then you always have the chance to migrate to an individual policy.
Review your service history
As someone who is about to retire, it’s always a good idea to review your service history. You can find all the information in the Official Personnel Folder (OPF). The purpose of such a review is to make sure that all your service records are valid and verified. If you encounter a situation where some of the records are missing then you must report it to your employer. Your employer can help you to find the missing records and document them properly. Some employees are required to make retirement contributions. You can enquire about the consequences of payment or nonpayment of such contributions from your employer.
A complication can arise if you haven’t made payment for receiving the military credits (only if you have served in the military). Such payments are to be made before you retire. You can also get advice from the Personnel Officer on waving the military retired pay.
In order to check for your eligibility to receive social security benefits, you need to visit your local Social Security Office. After you fill and submit the form SSA-7004-PC, you will be provided with a benefit estimate statement. This statement will contain all the information your future eligibility for Social Security benefits and estimates of these benefits at specified dates.
Government Pension Offset
In some cases, it has happened that the social security benefits of a retiring employee’s spouse saw some kind of offset. This mostly happens when the pension of the retired employees is not covered by social security. In such cases, there is no offset on the social security benefits of the retired employee; it happens only to the social security benefits of the retired employee’s spouse. This offset amounts to two third of the federal pension.
Such an offset does not apply universally. There are some exceptions. For example, those employees who are covered by the Federal Employees Retirement System (FERS), Civil Service Retirement System (CSRS) Offset, and those who voluntarily took transfers to the FERS before January 1988, are exempted from the Government Pension Offset.
Windfall Elimination Provision
Windfall Elimination Provision reduces the Primary Insurance Amount (PIA) of a person’s Retirement Insurance Benefits (RIB) or Disability Insurance Benefits (DIB) when that person is eligible or entitled to a pension based on a job which did not contribute to the Social Security Trust Fund. While in effect, it also affects the benefits of others claiming on the same social security record.
The Windfall Elimination Provision does not apply if:
The WEP is applied to certain beneficiaries who are receiving RIB or DIB and who also:
- The beneficiary becomes entitled to the benefits after 1985
- The beneficiary also first becomes eligible, after 1985, for a pension based in any way upon earnings from employment that was not covered by social security
- The beneficiary’s entitlement to this pension has not yet ended (even if not yet claimed)
- The beneficiary is still alive
- The beneficiary has not obtained 30 Years of Coverage (YOCs) at the age of 62 years.
Estimating the amount of the Windfall Elimination Provision reduction
At your request, using the form SSA-7004, the Social Security Administration will send you a Personal Earnings and Benefits Statement (PEBES) that will list your earnings from employment covered by Social Security and provide a Social Security benefit estimate assuming retirement at alternative ages, 62, 65, and 70. You should contact your local Social Security office (external link) to determine the effect of the Government Pension Offset and the Windfall Elimination Provision on your Social Security benefits.
Effects on benefits
When the WEP applies, it is used in determining all benefits on the record, both for the primary beneficiary and any auxiliaries. This includes an effect upon the maximum total benefits paid on the record as well. Since the WEP does not apply after the death of the primary beneficiary, it is never used for survivors.
More from Ron Raffino:
Ron Raffino Author Page
http://benefitseducationgroup.com – Ron Raffino
New Mexico Joins the Efforts to Provide Retirement Benefits to Private Sector Workers/by Sonny Dothard
The lawmakers of New Mexico have initiated the process of understanding how they can provide steady retirement benefits to the private sector workers. Experts believe that low-wage workers in the state have no access to a retirement plan. When they have a plan they would have better savings. Some experts also think that only private sector employees do not only need an income in retirement, the general public needs it too so it must be a focus area.
The Brief Regarding Offering Retirement Benefits to Private Sector Workers
The members of the legislative committee of New Mexico were recently briefed on the efforts to boost automated access to retirement benefits plans by the national experts. The members of the committee are responsible for overseeing state investments and pension.
A harsh fact revealed by The AARP Public Policy Institute is that about 64 percent of private sector workers present in New Mexico do not have access to any sort of employer-sponsored retirement plan. It is the highest rate in America. As seven other states are moving to increase access to retirement benefits, it’s high time for New Mexico to do the same.
The Worst Hit
The Director of Consumer Affairs and Financial Security at AARP, Gerri Madrid-Davis recently informed the New Mexico lawmakers that the lower wage workers in the state are least likely to get access to any employer-sponsored savings plan. They don’t even have an access to tools like automatic retirement withdrawals from paychecks which can play a key role in boosting the retirement savings. She also said that workers who have an employer-sponsored retirement plan are 15 times more likely to save for retirement as compared to those who don’t have access to such plans.
Needs of the General Public
George Munoz who serves as the Chairman of the Investments and Pensions Oversight Committee believes that the legislators must cater to the retirement needs of not only employed professionals but the general public as well. If the general public has no source of retirement income, the federal social security system feels immense pressure.
Efforts of Other States
It is pertinent to mention here that five states such as Maryland and Illinois have made it mandatory for numerous small businesses to provide retirement benefits plans that have features like automatic enrollment and allow a person to opt-out anytime.
Public Sector Employees are Confident about Retirement/by Admin(2)
Public sector employees are confident about retirement despite the fact that they don’t have any idea about how much money they would need in retirement and they have not saved much money for the medical expenses post retirement. Most of them are not making many changes to the benefits and most of them are also confident that they will receive money from the employers post-retirement. They lack confidence in medicare and social security.
Survey Says Public Sector Employees are Confident about Retirement
The fact that public sector employees are confident about retirement was revealed in a recent survey. The survey was conducted entitled TIAA’s 2016 Retirement Confidence Survey and it targeted the State and Local Government Workforce. The survey states that 20 percent of the respondents were very confident about the fact that they were saving and investing for retirement in an appropriate manner. About 55 percent of the respondents were somewhat confident about their saving and investment decisions for retirement.
Changing the Plans
The survey that reveals that public sector employees are confident about retirement also noted that most of the respondents are covered by a primary defined benefit pension plan and most of them don’t make changes to it. About 20 percent of the workers reported changes to the plan in the last two years. About two-thirds of them expected to receive retiree health care benefits from their employers after the retirement. Among the latter, about one-quarter of the employees reported changes to the benefits in the last two years.
The Age Factor
Almost every employee who was serving the state and local government wishes to retire at the age of 62 but they were forced to work until they reached the age of 65.
The survey says that the public sector employees are confident about retirement only after taking into account the views of the respondents. About 44 percent of the respondents mentioned that they are very confident about the fact that they will receive all the benefits of their retirement plans and the same percentage of the respondents is somewhat confident. The analogous figures pertaining to retiree health care benefits are 30 percent and 54 percent. The survey also found out that the confidence of the respondents in the medicare and social security is far lower than the confidence in receiving the benefits they think they deserve.
Retirement Woes of Black New Yorkers Escalating/by Sonny Dothard
A recent survey has highlighted that the retirement woes of black New Yorkers are on the rise. They have not saved enough for retirement and they are barely getting by. They don’t intend to retire in the New York City. Many of them haven’t looked up basics like social security and they haven’t even started saving up for retirement.
The Survey on Retirement Woes of Black New Yorkers
The survey on retirement woes of black New Yorkers was conducted by Siena College in association with AARP New York recently. It stated that the African-Americans belonging to the Gen X and baby boomers generation who live in New York City are not prepared for retirement. The survey was conducted telephonically and more than 600 African-Americans participated in it.
The survey on retirement woes of black New Yorkers revealed that 63 percent of the African-Americans between the ages of 36 to 70 are worried about having enough money to retire. It includes 72 percent of middle-class Gen Xers who were earning $40,000 to $120, 000 on an annual basis. It also exposed that 6 out of 10 respondents thought that they were just getting by. The reason behind the same could be increased costs of necessities such as housing, food, and utilities.
In the survey, about 47 percent of middle-class Gen Xers also mentioned that they don’t plan to live in New York post retirement.
The survey on retirement woes of black New Yorkers also mentions that about 56 percent of the African-American Gen Xers haven’t researched the social security benefits. About 61 percent have not researched the Medicare benefits and 74 percent have not written a plan such as a budget for retirement. Around 62 percent even do not have a plan for care if they become disabled or sick. Almost half also stated that they have not discussed retirement concerns with their families or life partners.
No Basic Steps
Commenting on the results of the survey on retirement woes of black New Yorkers, Reggie Nance who is a member of AARP stated that most people want to retire at a certain age or when they become eligible. The survey found that majority of African-American Baby Boomers and Gen Xers are concerned about saving enough for retirement but still they are not taking all the necessary steps to retire such as sitting down to create a budget or holding meetings with a financial planner.
Traditional Retirement Benefits Savings Methods still Working for Retirees/by Admin(2)
Traditional retirement benefits savings methods are working for the retirees these days. This was revealed in a survey. Many retirees stick to social security to sustain in retirement. They also think that their financial condition is good and that they would not run out of money.
Survey on Retirees Preferring Traditional Retirement Benefits Saving Methods
Most retirees who are enjoying a good standard of living these days have confessed that they have relied on traditional methods of retirement benefits savings. This was revealed in a study conducted by Insured Retirement Institute during last summer. About 40 percent of the respondents stated that they were dependent on pensions as the source of income in retirement. The total numbers of respondents were 800 Americans who were between the ages of 65 and 60.
A huge chunk of the respondents had an annual household income of more than $50,000 and all of the respondents had the investible assets of at least $50,000. About half of the participants have investible assets worth $100,000 and $500,000. The survey also revealed that only 24 percent of the workers in the private sector had a defined benefit plan.
A huge variety of the respondents stated that their financial condition was good or better than they expected it to be in retirement. The title of the study that revealed the financial wellness was It’s All About Income. This study also highlighted that over 70% of respondents were not concerned that they would exhaust all their financial resources while living in retirement.
Social Security Dependence
The survey also made it clear that social security was a big factor for ensuring retirees’ financial wellness too. About half of the income enjoyed by 15 percent of the retirees was through social security. Other sources of income were employment or systematic withdrawals from the savings. They comprised of only a small part of the total income of retirees.
Minimum Distribution Rules
Over half of the respondents mentioned that they had withdrawn money from the retirement accounts only to satisfy the rules regarding minimum distribution and they didn’t want that money to take care of the immediate spending needs.
The report stated that the significance of pension as a retirement benefits savings option for retirees cannot be overstated as without it, the retirees would most likely have a lower standard of living and they would also be less confident regarding their ability to sustain savings in retirement.
Many Americans Fear that they will Outlive Their Retirement Benefits Savings/by Sonny Dothard
A new survey has highlighted some very terrifying facts about retirement. It says that many Americans fear that they will outlive their retirement benefits savings despite the fact that a majority of them plan to have multiple sources of income. Those earning less were more anxious about retirement than those earning more. The survey also highlighted that people were not giving up saving even when they were past the 50 year age mark. The dependence on social security is also clearly evident.
Fear of Outliving retirement Benefits Savings
About one third of the respondents in the AP-NORC Center for Public Affairs Research survey admitted that they fear to outlive their retirement benefits savings. In contrast, 34 percent of respondents who were more than 50 years of age believe that they are financially prepared for retirement. All the others are not sure about their future.
Multiple Sources of Income
Despite the fact that many Americans fear that they will not have money to lives comfortably in retirement, about81 percent admitted that they have at least two sources of income while 60 percent have three or more source of income in retirement.
Low Income, More Worry
The fact that people with low income are more worried about retirement was proven once again. About 58 percent of respondents from households that have less than $50000 income were anxious about retirement while only 40 percent of the respondents belonging to households that have income more than $100,000 were anxious about the same.
The survey also dug up the fact that about 67 percent of the respondents who have to work are still setting aside some money towards the retirement savings. About 90 percent of respondents from households that earn over $100,000 income accepted that they were saving for retirement while only 47 percent of people with household income less than $50,000 are still saving.
Dependence on Social Security
Social security is still among the preferred income sources of the retirees. About 44 percent of the respondents admit that social security would be the highest component of income for them. Around 54 percent of the respondents that had a household income less than $50,000 also said that they were relying heavily on social security as the topmost among all the retirement benefits they will likely get in the future.
Americans Dependent on Social Security and Employer-Sponsored Plans for Retirement Benefits/by Admin(2)
A bit of new research has shown that many Americans are depending on social security and employer-sponsored plans for retirement benefits. The study also found that Americans are saving less towards retirement benefits because they wish to pay off the short-term debts first. The study also stresses on the fact that technology is not enough for making the most of the employer-sponsored plans, personalized services are also required.
The Research on Retirement Benefits
The research that showed Americans are relying upon which sources on forming their retirement benefits was conducted by the Lincoln Financial Group. It revealed that the Americans are highly dependent on the social security and employer-sponsored plans.
After the study results were available, Lincoln’s Retirement Plan Services created a video starring a fictional character Bob to help people understand the value of saving early and often. This video is aimed at helping people take actions today that will help them to have more benefits after retirement.
Value of Technology
The results of the study also show that technology is not enough to encourage people to save more. A combination of technology and personalized services are what’s needed the most to drive positive results.
In the video, Bob makes good retirement benefits saving decisions and receives that full employer match. He increases the amount of money he contributes to his employer-sponsored plan. He also meets with a financial advisor and creates a strategy that translates the saved money into retirement income.
The President of Retirement Plan Services, Lincoln Financial Group Jamie Ohl has stated that from the company’s perspective the ultimate goal of people in retirement should be their income. The data from the American Consumer Study carried out by the company shows that people truly believe that they will be responsible for their own retirement security. The company wants people to understand how to make the most of an employer-sponsored retirement plan so that they are able to achieve the retirement that they have envisioned.
The survey also showed that about 36 percent of respondents wished to put more money in the retirement benefits plans but more than half were giving priority to paying off the short-term debt over accumulating some solid savings for retirement. The study also highlighted that only 56 percent Millennials are contributing towards a retirement benefits plan.
Nearly Half of Young Americans have Zero Retirement Benefits Savings/by Jeff Boettcher
The retirement savings of young Americans are not up to the mark. It has been proven again by a survey which found out that nearly half of young Americans have zero retirement benefits savings. Their chances of getting regular income post-retirement are also low and they also don’t trust the social security system. Still, the majority of young Americans believe that they will have ample amount of money in retirement.
Survey Exposing Zero Retirement Benefits Savings
The survey that revealed the retirement savings problem was conducted by the Black Youth Project at the University of Chicago in association with Associated Press-NORC Center for Public Affairs Research. The survey was conducted via a GenForward poll. It stated that 48 percent of Americans who were between the ages of 18 to 30 have zero retirement benefits savings and they don’t have access to a traditional pension either. Over 4 in 10 respondents between the ages of 25 to 30 have admitted that they have saved nothing for retirement.
Fewer Traditional Pensions
In the survey, it was also revealed that younger Americans won’t be able to access the traditional pensions that were enjoyed by earlier generations. Only 7 percent of the respondents said that they would be getting the rare benefit so that they get a pre-defined monthly amount post retirement.
No Faith in Social Security
The age in which the Americans receive social security is climbing high too. It is up to 67 rather than 66 so young Americans would have to wait longer for it as compared to their parents and grandparents. Young Americans don’t have faith in the social security system. Only 5 percent have admitted to having full confidence in this benefit while 28 percent said that they are somewhat confident.
The Self Confidence
Despite the sad fact that many of the young Americans have zero retirement benefits savings, their confidence in their own abilities is not lacking. A majority of the respondents admitted that they would have enough money they need in retirement and they will not be dependent on others. About 53 to 56 percent of Asian Americans, African Americans, and white Americans are sure that they will have enough money post-retirement. Only the confidence level of the Latinos is not that high. Just 43 percent think that they are either very confident or somewhat confident that they would have enough money to live comfortably in retirement.
The Bad News Regarding Retirement Benefits of Baby Boomers/by Matt Pierce
We recently reported how Baby Boomers are meeting the retirement challenges nicely. Unfortunately, all is not as good as it seems. There are some negative findings in the 17th Annual Transamerica Retirement Survey of Workers. These findings state that baby boomers might not be able to work for as long as they wish. It also highlights that baby boomers have low savings, menial backup plans and minimal knowledge of social security.
Why Baby Boomers Won’t Increase their Retirement Benefits by Working Longer?
Many baby boomers expected to increase their retirement benefits savings by working for a few years after retirement but this may not be possible. The reasons may vary from declining health to lack of job opportunities, says the 2016 Retirement Confidence Survey.
Employers are not Aging Friendly
About 47 percent baby boomers accepted in the TCRS survey that their employers may allow them to work past retirement as they are aging-friendly. The rest of them think that they might not be able to keep the job post retirement. About 29 percent admitted that their employers have made flexible transition arrangements.
About 42 percent baby boomers said that their retirement savings are not enough or too low. The median amount they think they need is about $500,000. But when the 4 percent rule is used as a reality check, the annual income would be just $20,000 per year which is not enough to cover the expenses even when the social security income is added to it.
Lack of Financial Counseling and SS Knowledge
It is believed that financial counseling might help in increasing the savings but only 12 percent baby boomers admit that their employers provide any finance related counseling. About 19 percent of baby boomers accepted that they know a great deal about social security and 34 percent expected social security to be the primary source of income post retirement.
Only 25 percent of baby boomers have a backup plan in place if they are unable to work until they plan. About 26 percent said that they have only less than $5,000 to take care of a financial setback such as a medical emergency, unemployment, etc. Lack of a backup plan means that more than 28 percent have taken a loan, opted for early distribution or made a hardship withdrawal from IRA or their retirement benefits savings.
OPM and SSA to Stop Paying Deceased Federal Employees/by Sonny Dothard
It has been highlighted that the Social Security Administration paid about 1.7 million dollars to the families of deceased federal employees because they had no idea that the employee was dead. A recent audit says that a major reason behind this mistake was that SSA received the data on the death of federal workers from various sources but not from OPM. It is being seen that SSA is asking OPM to come to a data agreement and provide data pertaining to the dead federal workers and retirees on a regular basis.
The Money Paid to Deceased Federal Employees
In a period of 21 years, the SSA paid benefits to about 35 deceased federal retirees and federal employees. The average beneficiary received about $49,156 during a time span of 84 months and the total money paid this way was 1.7 million dollars.
SSA Inspector General conducted an audit related to the matter to ensure that it does not keep paying the deceased feds anymore. The audit found out that SSA paid $932 billion as benefits payments to all the feds during 1991 to 2013. The amount of money paid to the relatives of deceased people was less than one-tenth of the total amount. The audit did not include the benefits paid post-2013.
In the report of the audit, it was mentioned that SSA gets a report on the death of a federal worker or retiree via many sources like close family, friends, funeral homes, etc. It also gets the reports from the state bureaus of vital statistics and other federal agencies except for OPM. OPM didn’t share the data because the two agencies have no formal data sharing agreement, according to SSA.
In July 2016, the SSA requested OPM formally for the monthly death reports and the agencies are currently negotiating for that. In essence, the OPM has agreed to supply the data requested by the SSA. It is also verifying data and researching the expected volume of new death records. When all the negotiations between the agencies are complete, SSA will begin the process of collaborating with OPM on drafting a fresh Information Exchange Agreement along with developing the project timeline for the data it has requested.
Washington has reported that 7 deceased federal employees and retirees were paid by the SSA and Maryland claimed four. Florida and Ohio had three such cases each.
Research States Millennials Are Better at Retirement Benefits Savings/by Sonny Dothard
Recent research shows that millennials are better at managing retirement benefits savings as compared to the baby boomers. Researchers highlighted the challenges millennials must tackle to boost their savings and their retirement plans. The research goes on to show that millennials are less dependent on social security as a main component of retirement income when compared to baby boomers.
The Numbers of Retirement Benefits Savings
A survey conducted by Ramsey Solutions revealed that about 58 percent of Millennials are saving for retirement. It also exposed the fact that about 38 percent Millennials know how much money they will need when they retire. Millennials who responded that they are saving for retirement have been doing so since they were just 23 years old.
Not Enough Savings
Though millennials are better at saving for retirement, about 60 percent have less than $10,000 saved towards retirement. Interestingly the amount is about the same saved by the Baby Boomers. The reason behind it is that Millennials will have to live a balanced lifestyle and they have to manage debt.
As per the disclosed figures, about 50 percent of millennials save less because the cost of living is too high. About 27 percent think that taking care of their children hampers their savings while 23 percent admitted the student loans are the reason. About 22 percent accepted the reason to be credit card debt and 21 percent said that the mortgage is the reason behind fewer savings for retirement.
Chris Hogan who was serving as a spokesperson for Ramsey stated that it was encouraging to see that the Millennials are setting themselves up so that they can have a positive retirement outlook.
Hogan also pointed out the challenges that are yet to be tackled by the Millennials. He says that they need to maintain a balanced lifestyle and eliminate debt as it will allow them to boost the amount of money they are saving for the retirement.
The Future Plans
The survey highlighted that about 80 percent of Millennials were planning to save more towards retirement benefits in the future while 70 percent of Millennials hoped that they should have saved earlier. Around 40 percent of Millennials have already set an age at which they plan to retire.
Less Dependence on Social Security
The survey also pinpointed the fact that Millennials are less dependent on social security as the main component of retirement benefits. Just 28 percent Millennials depend on it while over 50 percent of Baby Boomers expect the Social Security to be a major chunk of their retirement income.
SSA has the most satisfied IT Federal Employees/by Sonny Dothard
A report has revealed that the overall satisfaction rate of federal workers has improved a bit. It also revealed that keeping the IT professionals satisfied with their jobs is a challenging task and only a few organizations like the Social Security Administration are succeeding in that. The report also emphasized on the need to involve professionals in vital tasks, the need to train them and the need to onboard them right.
Data Reveals Organizations that have Satisfied IT Federal Employees
The data that reveals the organizations that keep the IT federal employees satisfied was 2015 federal job satisfaction data which was recently analyzed by The Partnership for Public Service. It exposed that the IT professionals working at the Social Security Administration are the most satisfied ones as the index is more than 71 out of 100. NASA stands at second position with 69.7 out of 100. The other agencies that succeed in keeping the IT professionals happy are Commerce, Justice, Treasury, Interior, State and Labor.
The Overall Satisfaction
The index score of all federal employees stands at 58.1 average. It has improved for the first time in last four years. The average score of IT professionals’ satisfaction was just 56.2.
The findings are based on the data prepared by using the OPM’s Federal Employee Viewpoint survey. The survey included input from over 421,000 people who were surveyed during the period of April 2015 to June 2015. The Partnership also organized a workshop in May 2016 that involved IT, HR and contract specialists from all across the federal government.
The Key Factors
The report has highlighted three key factors that influence job satisfaction. They are serving as a team member, strategic partner and an advisor in the agency or having an innovative and creative culture or investing in employee training so that they can feel connected to the mission of the agency they are serving.
Several participants of the 2016 workshop stated that they feel disconnected from the big picture. In the OPM report, just 43.5 percent people showed satisfaction with on the job training while only just more than 47 percent accepted that their training needs are assessed.
Finally, many federal employees also accepted in the report that if they have had the opportunity to learn the organizational culture during the onboarding process, the process would have helped them to easily integrate into the job they are assigned.