How to Predict the 2023 COLA and Avoid Being Surprised by a Lower Annuity Payment – Federal Retirement News
/by joe carrenoLast year, the entire cost-of-living adjustment (COLA) of 5.9% was the highest in 40 years. The COLA in 2023 is projected to wipe out that 40-year record, stirring the question of what the COLA for 2023 would be.
One COLA prediction for 2023 is 7.6%
The Senior Citizens League predicted a 5.3% COLA last year. But because inflation continued to rise, this turned out to be lower than the actual COLA amount of 5.9%. The COLA forecast for 2023 could be too low, given that inflation is still rampant and rising.
How To Calculate The COLA For 2023?
Here is how the 2023 COLA is calculated:
- The Consumer Price Index (CPI-W) values are taken from the current year’s third quarter (July–September).
- These figures are then compared to the average CPI-W reading from the prior year’s third quarter (2021).
- The average reading for this year’s (2022) third quarter is compared to the previous year’s third quarter (2021).
- If the average CPI-W rises in 2022, beneficiaries will receive the difference, rounded to the nearest 0.1%, as an increase in 2022.
- If the value is lower, no adjustment is made, suggesting deflation, which happened multiple times throughout Obama’s presidency.
While it’s quite improbable that there will be no COLA raise in 2023, the question is how much inflation will rise and what the final COLA estimate will look like then.
Calculating the Cost-of-Living Adjustment (COLA) for FERS Employees
The COLA calculation differs for employees under Federal Employees Retirement System (FERS) and Civil Service Retirement System (CSRS).
• If the CPI rises by less than 2%, the Cost-of-Living Adjustment (COLA) is equivalent to the CPI rise for FERS special benefits.
• The COLA is 2% if the CPI rises by more than 2% but not more than 3%.
• If the CPI increases by more than 3%, the adjustment is 1% lower than the CPI increase. The new figure is rounded to the nearest whole dollar.
• Except for disability, survivor benefits, and other notable provisions upon retirement, FERS special COLA is not provided until age 62.
How To Calculate the COLA for CSRS?
For Civil Service Retirement System (CSRS) employees’ benefits, the COLA percentage increase is typically applied to the monthly benefit amount before deductions are made. Payments are rounded to the nearest whole dollar.
How Will the COLA of 2023 Affect Your Annuity If You Retire in 2022?
Those wondering how to calculate their 2023 COLA should consider numerous factors, like the retirement system that applies to them, how many months since they started receiving retirement payments in the previous year, their age, and whether they are eligible for FERS special benefits, and so on.
Contact Information:
Email: [email protected]
Phone: 8139269909
Bio:
For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.
Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.
Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claims‐paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.
Being on Medicare Means No Money in a Health Savings Account
/by marvin duttonCongress is discussing if a Health Savings Account (HSA) would be authorized for Medicare recipients.
However, it would alter a few of the advantages of HSAs for those over 65.
The Health Savings for Seniors Act (H.R. 7435) was recently filed in the House of Representatives and is a bipartisan effort to allow Medicare beneficiaries to contribute to HSAs once again. As more people use HSAs with their workplace health plans, the number of people eligible for Medicare at age 65 is expected to rise.
Elizabeth Gavino, founder of Lewin & Gavino and an independent broker and general agent for Medicare insurance, noted that many customers who have opened HSAs assume they may continue contributing to the HSA after enrolling in Medicare.
What are the compromises made by the legislation? It would be impossible to pay Medicare premiums using HSA withdrawals, which are presently permitted. It would also abolish penalty-free withdrawals for non-medical costs for those 65 and older.
According to an estimate by financial consultancy Devenir, 32 million of these accounts will be by the end of 2021, an increase of 8% from 2020, with a total value of $98 billion. By 2024, the company expects that number to rise to 38 million accounts and $150 billion in assets.
Annual Contributions to HSAs
Individual HSA contributions are capped at $3,650, and family contributions are capped at $7,300 in 2022. (Next year’s limitations will be increased.) People over 55 can contribute an additional $1,000 yearly to their retirement accounts.
Withdrawals from HSAs are tax-free as long as they are used to pay for eligible medical expenditures, and contributions can be deducted from taxable income. According to a 2021 report from the Kaiser Family Foundation, over 28% of workers have such a plan, up from 17% in 2011.
A Health Savings Account (HSA) is only available to those with a high-deductible medical plan, and Medicare is not one of them. Health savings accounts (HSAs) can be used to pay medical bills, but beneficiaries cannot open a new HSA or make contributions to an existing one.
Medicare Part A (hospital coverage) and Part B (prescription drug coverage) can be signed up for at 65. However, many people continue to use their employer’s health plan in addition to Medicare (outpatient care). To continue making pretax contributions to an HSA, they must delay signing up for Medicare if the employer plan is high-deductible.
High-Deductible Health Plan for 2022
High-deductible health plans in 2022 must-have deductibles of at least $1,400 for an individual or at least $2,800 for family coverage and annual out-of-pocket payments (not including premiums) of no more than $7,050 (for an individual) and $14,100 (for a family), respectively (family plan). Out-of-pocket expenses are not included.
Medical Savings Accounts (MSAs), comparable to Health Savings Accounts (HSAs), are available under the Medicare program, although just 5,600 beneficiaries were enrolled in health plans that utilized them in 2019.
Some Medicare beneficiaries may choose a high-deductible Medicare Advantage Plan that includes one of these MSAs. Individuals cannot make contributions to these accounts. However, you can take tax-free withdrawals from the plan to pay for medical expenditures, which may fluctuate yearly depending on the insurer.
Contact Information:
Email: [email protected]
Phone: 2129517376
Bio:
M. Dutton and Associates is a full-service financial firm. We have been in business for over 30 years serving our community. Through comprehensive objective driven planning, we provide you with the research, analysis, and available options needed to guide you in implementiong a sound plan for your retirement. We are commited to helping you achieve your goals. Visit us at M. Dutton and Assoiciates.COM. Tel. 212-951-7376: email: [email protected].
Social Security Differences by Gender
/by mickey elfenbeinWhile the numbers for your “average” Social Security recipients are reported regularly by the Social Security Administration (SSA), the statistics can vary depending on many factors. From gender to years spent within the labor force and lifespan and overall earnings, the Social Security Administration (SSA) computed the data differently. By pulling the numbers from the Department of Labor (DOL), Social Security Administration (SSA), and Bureau of Labor Statistics (BLS), we can determine the most vital figures by gender.
The existence of a gender-based pay gap is a historical fact based on the available data, with men and women earning vastly different salaries. Because Social Security benefits are dependent upon a citizen’s lifetime earnings, the pay gap continues in retirement through Social Security payouts. A report released by PayScale noted that, in 2022 alone, women earned 82 cents for every dollar their male counterparts earned.
The income earned by an individual, regardless of gender, plays a vital role in the final determination of qualifying Social Security benefits. On average, men have higher incomes than women, which means their Social Security retirement benefits will also be higher. Furthermore, men have a higher level of participation in the workforce than women, meaning fewer women participate in Social Security contributions overall.
On average, women continue living longer lives than men, producing unique data within the Social Security system. As such, women make up more than 55% of Social Security benefit recipients, whereas men make up 45% or less. Over the course of a lifetime, this information helps even out payout balances. While men receive a higher payout, women receive payouts for a more extended period.
These differences can be dramatic, with retired male citizens earning $1.7k per month on Social Security, compared to women receiving an average of $1.3k. With more women taking on part-time work than men, it’s easy to see how these rates are so different from one another. Ultimately, these payout differences equate to a 24% difference across the board, further highlighting the issues associated with gender-based pay gaps in the United States.
Contact Information:
Email: [email protected]
Phone: 6122163911
Bio:
Mickey Elfenbein specializes in working with Federal Employees relative to their retirement benefit plans, FEGLI, TSP, Social Security and Medicare, issues and solutions. Mr. Elfenbein’s mission is to help federal employees to understand their benefits, and to maximize their financial retirements while minimizing risk. Many of the federal benefit programs in place are complicated to understand and go through numerous revisions. It is Mr. Elfenbein’s job to be an expert on the various programs and to stay on top of changes.
Mickey enjoys in providing an individualized and complimentary retirement analysis for federal employees.
He has over 30 years of senior level experience in a variety of public and private enterprises, understands the needs of federal employees, and has expertise built on many years of high-level experience.
Wondering About A Divorcee’s Social Security Benefit? Here’s What You Need To Know
/by mark heinrichWhen going through a divorce, Social Security is the last thing on your mind. But divorce can affect how much Social Security you get when you retire. In some cases, you may get a more considerable benefit than expected, while you may get nothing in others. Here’s how divorce and Social Security work together and how to plan to maximize your benefits.
Qualifying under your work record
The Social Security Administration (SSA) bases retirement benefits on the retiree’s work history. To be eligible for Social Security benefits, you must have worked for at least 40 “quarters of coverage” or ten years. You’ll get your full benefit at 67. However, you’ll reduce it if you claim it at 62 or increase it if you wait until 70. If you qualify for your own Social Security benefits, your divorce may have no impact on them. The SSA will compare your work record benefit to any potential spousal benefit, and you’ll get the higher of the two.
Spousal benefits for shorter marriages
Sadly, many divorced spouses don’t qualify for Social Security benefits, especially if they were homemakers before the divorce. If you were married less than ten years before the divorce, you’re ineligible for spousal benefits. That can be problematic for stay-at-home spouses with no work history. In that case, you’ll have no Social Security benefit and have to fund your retirement with outside savings and investments.
Spousal benefits if married for at least ten years
If you were married for at least ten years before divorcing, you might be eligible for Social Security benefits. Spouses married for ten years or more are entitled to the same spousal benefits. The ex-spouse pays no penalty and keeps their full retirement benefit.
Remember that if you remarried, you wouldn’t be eligible for a spousal benefit unless you were over 60.
The amount of a spousal benefit
The base spousal benefit is 50% of the primary beneficiary’s payment. You lose money if you retire before the Full Retirement Age (FRA)â€â€67 for those born after 1960. If you claim at age 62, your benefit may be reduced from 50% to 32.5% of the primary worker’s benefit. Waiting until 70 increases your Social Security benefit, but not spousal benefits, which are capped at 50% of the primary beneficiary. However, even that amount could be generous if you don’t qualify for your own Social Security benefit due to a lack of work history.
For those born before Jan. 2, 1954
You can still file and suspend if you were born before Jan. 2, 1954. That means you can file for spouse benefits at full retirement age and suspend your primary benefits immediately. Then, at 70, you can move from your spouse’s benefit to your own, presumably greater benefit. This procedure is no longer authorized. However, it’s grandfathered for people born before Jan. 2, 1954.
The spousal Social Security benefit
The most straightforward approach for claiming spousal Social Security is online. Other options are going to a Social Security office or calling 800-772-1213. You’ll need to present confirmation of citizenship or legal alien status and your final divorce judgment. The SSA will also ask for your name, gender, Social Security number, birthplace, job, and marriage(s). If you’re eligible, tell the SSA when you want to start receiving benefits, and they’ll take care of the rest.
Contact Information:
Email: [email protected]
Phone: 9187441333
Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families. Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation. Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.
Disclosure:
Securities offered through GRF Capital Investors, Inc., 6506 South Lewis Avenue, Suite 160 Tulsa, OK 74136 Phone: 918-744-1333 Fax: 918-744-1564 Securities cleared through RBC Capital Markets, LLC. 60 South 6th St., Minneapolis, MN 55402 Member FINRA www.finra.org / SIPC www.sipc.org Broker Check http://brokercheck.finra.org/
What You Need To Know About Social Security if You Remarry
/by bill hoffThere is more to Social Security than merely a source of income in old age. Social Security also provides spousal and survivor benefits, as well as disability and child benefits.
However, if you divorce and then remarry, the arithmetic underlying these advantages takes on an additional degree of complication. If you’re remarrying, you’ll want to talk to a tax professional or someone from the Social Security Administration about how your benefits may be affected.
Do You Know What Spousal Benefits Exist?
Social Security payments are always paid at the greatest level possible when applying. More of your benefit, based on prior employment records or up to 50% of your spouse’s benefit, is available for married couples.
This spousal benefit doesn’t affect the primary beneficiary’s payout. However, if your spouse is entitled to $2,000 per month in spousal benefits and has never worked, you may also be eligible for up to $1,000 per month. Couples are eligible for up to $3,000 in grants.
Spousal benefits are available to those divorced for at least ten years and are at least 62 years old. The regulations for spousal benefits, on the other hand, alter when you remarry.
Who Qualifies for the Survivor Benefits?
To qualify for Social Security survivor payments after the death of your spouse, you must be a widow or widower. These benefits should be claimed as early as age 60 to collect 71% of the deceased’s pension.
If you wait until full retirement age, which is 67 for individuals born in 1960 or after, you will be eligible for the deceased’s entire payout. If you and your ex-spouse were married for at least ten years, you are still eligible for spousal and survivor benefits. You may also qualify for a $255 death benefit if you and your spouse are still living together.
It is possible to alter your claim to the survivor benefit if your spouse dies after you begin collecting spousal benefits. Your surviving benefits may be affected by remarriage in the same way that spousal benefits would be.
How does Remarrying Affect Your Benefits?
Your Social Security benefits will be altered if you decide to remarry. When you remarry, your ex-marital spouse’s benefits are no longer available to you. Instead, you’ll be bound to your new spouse’s compensation plan. This is the same with your survivor’s benefits, which are likewise nullified by a subsequent marriage.
It’s worth noting that if you get married again beyond 60, your ex-record spouse can still be used to get you survivor’s benefits. Remarrying before your 60th birthday may allow you to get survivor benefits based on the earnings record of your deceased spouse if the marriage fails.
Contact Information:
Email: [email protected]
Phone: 2178542386
Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.
Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.
Why I Consider My Social Security Benefits to Be a Bonus When I Retire
/by mickey elfenbeinSocial Security generally provides a large amount of seniors’ income. Some seniors depend solely on such perks for financial assistance. However, I don’t plan to rely on retirement benefits. That doesn’t mean I won’t profit from the program. There are rumors that Social Security could soon run out of money, but the worst-case scenario is benefit cuts. These cutbacks will end the program. Despite this, I approach Social Security differently. I won’t depend on those benefits to entirely fund my senior living costs. I see Social Security as extra money. Why?
Social Security was founded with good intentions. However, it falls well short of expectations in current times when it comes to assisting elders alone.
The program was never meant to be seniors’ sole source of income. In the past, businesses gave pensions to long-term workers. Currently, the private sector has mostly abandoned this strategy. Individual employees must now save to supplement Social Security income.
The amount of your pre-retirement income that Social Security will replace will only be 40%. If you make more than the average, the percentage of your pay that your benefits will replace will be even lower than if you make the average. Retirees need 70 to 80% of their prior salary to live comfortably. As a result, relying heavily on Social Security may be a dangerous option.
I’ve also mentioned benefit cuts. If Congress doesn’t solve Social Security’s financial problems quickly, the scenarios above might happen in a little over a decade. If benefits are cut, they will replace less income.
Due to these and other circumstances, I won’t invest too much in Social Security. I also believe it’s necessary to be active in planning for the forthcoming event, which means I must work harder to save money for my 401(k).
I control how much I save. I can work more and make wise spending choices to save for retirement. I can’t depend too much on Social Security’s benefits since I can’t control its future.
Because of this, I find it easier to consider Social Security money supplementary rather than necessary for daily needs. I plan to construct a retirement budget that considers how much I may withdraw from savings and how much I can earn via part-time work.
If my Social Security payment is more than expected, I’ll have more money for my hobbies and interests. If I don’t use it all, I may gift it to loved ones or donate it.
But I don’t want to be worried about losing my benefits or having the program changed without my input. If I don’t rely on Social Security, the strain will ease. If you’re like most Americans, your retirement savings are several years behind. Knowing several “Social Security secrets” may boost your retirement income.
Contact Information:
Email: [email protected]
Phone: 0
Bio:
Mickey specializes in working with Federal Employees relative to their retirement benefit plans, FEGLI, TSP, Social Security and Medicare, issues and solutions. His mission is to help federal employees to understand their benefits, and to maximize their financial retirements while minimizing risk. Many of the federal benefit programs in place are complicated to understand and go through numerous revisions. It is Mickey’s job to be an expert on the various programs and to stay on top of changes.
Mickey enjoys in providing an individualized and complimentary retirement analysis for federal employees.
He has over 30 years of senior level experience in a variety of public and private enterprises, understands the needs of federal employees, and has expertise built on many years of high-level experience.
The 2023 COLA For Federal Retirees
/by bill hoffAccording to the Bureau of Labor Statistics (BLS), the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) grew 8.9% over the past 12 months to an index level of 284.575 (1982-84=100).
Before seasonal adjustment, the index climbed 0.5% in April.
Estimated 2023 COLA Trend (FERS / CSRS / Social Security) 
The calculation of the 2023 COLA estimate
The Cost-of-Living Adjustment (COLA) for each year is calculated by comparing the change in the CPI-W from year to year using the average of the third-quarter months of July, August, and September. For the third quarter of 2021, the average CPI-W was 268.421.
The amount of a COLA is calculated by the percentage change in the base quarter price index from the prior year to the year the COLA is to take effect (the final value is adjusted to the closest 1/10th of 1%).
The trend toward a 2023 COLA as of April 2022 is: (284.575 – 268.421) / 268.421 x 100 = 6.018 (adjusted to the closest 1/10th of 1% = 6%)
The May Consumer Price Index (CPI) is set to be issued on June 10, 2022.
The Social Security Administration (SSA) will publish the official 2023 COLA in mid-October 2022. The SSA will compute the percentage change in average prices between the third quarter of this year (ending September 30) and the prior year’s third quarter.
Contact Information:
Email: [email protected]
Phone: 2178542386
Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.
Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.
7 Things You Should Know About Claiming And Maximizing Your Social Security Benefits
/by mark heinrichAs you get closer to retirement, your decisions can significantly impact how much money you get from Social Security, some of which are irreversible.
Be aware of these 7 crucial factors
1. Full Retirement Age of Social Security
Your monthly benefit amount will vary depending on whether you claim your Social Security payments a few years before or after reaching Full Retirement Age (FRA).
Your Social Security’s FRA is when you are eligible for 100% of your Social Security benefits. Beneficiaries born between 1943 and 1954 have an FRA of 66, which eventually increases to 67 for those born in 1960 or after. Your benefits can decrease if you apply for benefits before FRA. If you register at the age of 62, your benefits could be reduced by up to 30%.
2. How Do You Qualify for Social Security Benefits?
You must earn a minimum of 40 “credits” throughout your employment to be eligible for Social Security benefits in retirement. You can earn up to four credits every year. Hence, qualifying for Social Security takes 10 years of labor.
3. What Factors Go Into Determining Your Social Security Benefits?
To compute your primary insurance amount (PIA), Social Security considers your highest 35 years of earnings, adjusted to a national average salary index. The years without earnings will be reported as zero if you have less than 35 years of earnings.
The amount of Social Security benefits you can get is determined by your retirement age. The maximum monthly benefit for someone reaching Full Retirement Age (FRA) in 2022 is $3,345. The maximum monthly amount for someone filing at age 70 is $4,194. The maximum monthly benefit for someone retiring early, at age 62, is $2,364.
4. The Social Security Cost-of-Living Adjustment (COLA) is made every year
One of the finest aspects of Social Security benefits is that they are adjusted annually for inflation by the government, which helps you keep up with rising living costs.
Because the COLA is based on changes in a federal consumer price index (CPI), its magnitude is determined mainly by the government’s overall inflation levels, which are different from those used in the monthly consumer price index (CPI) by economists and others.
5. The longer you wait to file for Social Security, the higher your monthly benefits will be.
You can file for Social Security benefits as soon as you turn 62. However, if you do that before reaching your Full Retirement Age (FRA), it will permanently reduce your payments by up to 25% to 30%, depending on your FRA.
You will receive 100% of your earned benefits if you wait until you reach FRA to collect Social Security payments. However, if you delay filing until you’re 70 to claim your Social Security benefits, your monthly Social Security income will increase by 8% annually.
6. Consider Social Security spousal benefit
When it comes to Social Security, marriage is rewarded. A spousal benefit of up to 50% of the other spouse’s Social Security benefit can be taken by one spouse. For example, if your Social Security benefit is $2,000 monthly, but your husband’s benefit is only $500, your spouse can receive a $1,000 spousal benefit, bringing in $500 more in monthly income.
Taking the spousal benefit at an early age, such as 62, can cut the amount, and you may end up earning as low as 32.5% of the higher earner’s benefit.
7. Your Social Security benefits may be reduced if you have other pensions.
If you have a pension from employment where Social Security taxes were not deducted from your income, your benefits would be affected. These include people who worked for a public school system, railroad workers, and the federal government hired before 1984 and covered by the Civil Service Retirement System (CSRS).
Spouses and children can get Social Security survivor benefits.
You can collect a Social Security survivor benefit if your spouse passes away before you. However, this will not be in addition to your benefits – one of them has to be chosen.
Contact Information:
Email: [email protected]
Phone: 9187441333
Bio:
Mark, a lifelong Tulsan graduated from Westminster College, Fulton, Missouri with a Bachelor of Arts in Accounting. Mark served in the United States Army as a Captain in the 486th Civil Affairs BN. Broken Arrow, Oklahoma and retired in 1996. Mark is married to his high school sweetheart Jenny and has four beautiful children. Mark’s passion for his work, which includes over 20 years in the Financial Industry started as an Oklahoma State Bank Examiner. Mark examined banks throughout Oklahoma gaining a vast knowledge and experience on bank investments, small business and family investments. Mark’s experiences include being formally trained by UBS Wealth Management, a global investment firm where he served as a Financial Consultant specializing in Wealth Management for individuals & families. Mark is a licensed Series 24 and 28 General Securities Principal and an Introducing Broker Dealer Financial Operations Principal. Additionally, Mark is a Series 7 and 66 stockbroker and Investment Advisor focusing on market driven investments for individuals, businesses and their families.
Mark specializes in providing financial knowledge, ideas, and solutions for federal employees, individuals, families and businesses. We serve as your advocate, and assist you in the design and implementation of financial strategies while providing the ideas to maximize your security and wealth. Our goal is to give you maximum control of your financial future. We provide the expertise to help you with personal issues such as: practical tax Ideas, risk management, investment solutions, and estate preservation.
Additionally, we’ve counseled hundreds of employees on their transitions from careers in federal government, and private industry to their next life stage, whether that is retirement or a second career. We specialize in devising strategies that roll your TSP, 401(k), pension plan, to a suitable IRA to meet your objectives.
Disclosure:
Securities offered through GRF Capital Investors, Inc., 6506 South Lewis Avenue, Suite 160 Tulsa, OK 74136 Phone: 918-744-1333 Fax: 918-744-1564
Securities cleared through RBC Capital Markets, LLC. 60 South 6th St., Minneapolis, MN 55402
Member FINRA www.finra.org / SIPC www.sipc.org
Broker Check http://brokercheck.finra.org/
Updates On Social Security And What To Know For 2022
/by bill hoffYour Social Security payments for retirement, disability, family, and survivor do not vary regardless of where you reside in the United States or if you relocate from one state to another. Although states handle many aspects of the federal program, such as SNAP and Medicaid, eligibility standards, payments, and protocols for Social Security are identical nationally. They do not vary by state, unlike those two programs.
While the program itself does not differ from one state to the next, how the program is managed varies.
Most States With Tax Benefits Are Expecting Change
12 states continue to tax Social Security benefits and the federal tax imposed on recipients whose incomes reach a certain threshold. Here’s the rundown:
- Colorado
- Connecticut
- Kansas
- Minnesota
- Missouri
- Montana
- Nebraska
- New Mexico
- Rhode Island
- Vermont
- Utah
- West Virginia
While there are no significant changes in store for residents of these states in May, the tax code is constantly changing, so it’s vital to keep informed about how any recent or upcoming changes may affect you.
For example, Colorado recently modified its regulations to allow retirees to deduct more of their federally taxable Social Security income. The maximum deduction used to be $24,000, but it will be unlimited starting in 2022, thus eliminating Social Security taxes for everyone over 65.
Utah increased its Social Security tax credit for low-income people in February.
As part of a substantial package of tax cuts, the Minnesota Senate voted to repeal the state’s Social Security tax in April. While the bill’s future is unknown, Social Security recipients in Minnesota will want to keep an eye on the situation.
The situation is even better in New Mexico. In March, the governor of that state signed a measure repealing the state’s Social Security tax. In 2022, West Virginia will finish the final step of its phased elimination of the state’s Social Security tax.
These are just a few instances; significant changes are in the plans for several more states that tax Social Security income, regardless of whether they are implemented in May.
State Supplemental Security Income (SSI) Benefits Vary
Every year, the maximum Supplemental Security Income (SSI) benefit fluctuates. Individuals will receive $841, and couples will receive $1,261 in 2022. However, this is simply a federal benefit. The states – at least the majority of them – supplement federal SSI payments with their contributions.
If you live in Mississippi, Arizona, West Virginia, or North Dakota, your best options are $841 (individuals) or $1,261 (couples). Residents of the other 46 states and the District of Columbia who qualify for SSI receive additional benefits. Individuals living alone in New York, for example, can earn $928, while couples can receive $1,365.
Contact Information:
Email: [email protected]
Phone: 2178542386
Bio:
Bill and his associates of Faith Financial Advisors have over 30 years’ experience in the financial services industry.
He has been a Federal Employee (FERS) independent advocate and an affiliate of PSRE, Public Sector Retirement Educators, a Federal Contractor and Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants.
Bill will help you understand the FERS Benefits and TSP withdrawal options in detail while also helping to guide you in your Social Security choices.
Our primary goal is to guide you into your ment with no regrets; safe, predictable, stable and for life using forward thinking ideas and concepts.
Bullet points:
> Financial Services consultant since 1984
> FERS independent advocate and an affiliate of Public Sector Retirement Educators (PSRE), a Federal Contractor and Registered Vendors to the
Federal Government
> Affiliate of TSP Withdrawal Consultants
> His goal is to guide individuals into retirement with safe, and predictable choices for stability using forward thinking ideas and concepts.
Lawmakers Attempt to Increase Retirement Age in an Effort to Save Social Security & Medicaid
/by todd carmackRecently, lawmakers have struggled in vain to ensure Social Security assurance for our senior citizens. The current financial stability of the Social Security program poses serious threats to Medicare, tax caps, and the modern retirement age, as lawmakers explore several solutions. With statistics showing Americans currently live longer, it enforces advocates to insist on increasing the age citizens are eligible to take advantage of Social Security benefits. Does an increase in the tax cap or retirement age make sense to aging senior citizens, and what are the future implications?
Depleted Concern or Depleted Funding?
While the statistical data implies modern-day Americans live longer than ever before, lawmakers are currently considering a retirement age increase from 65 to 69 by 2030 if they ultimately fail to raise it to 75 by the year 2032. Ultimately, the goal of multiple senators in favor of the proposal is to claim this is the best solution to getting a grip on our nation’s climbing debt crisis. This concept involves adjusting retirees’ long-term benefits rather than raising revenue through taxation.
Other lawmakers favor an increase in the income subject to Social Security and Medicaid taxes, claiming it is a fair solution for higher earners. Currently, the tax cap sits at $147,000, which may face either total elimination or significant increases should Social Security and Medicaid suddenly become insolvent. At our current rate, experts expect Social Security to be entirely depleted by 2034. However, with the increased number of senior citizens and improved life expectancy, it’s concerning to wonder whether Social Security could disappear altogether.
Could Social Security Disappear Entirely?
As Americans continue to reach retirement age or linger a few years behind it, many are left to wonder whether Social Security can go bankrupt or disappear entirely. If Social Security had failed to exist at all, nearly half of all elderly would live in a state of poverty. Currently, roughly 10% of America’s aging citizens live in poverty. But, thus far, the government-funded program has provided a steady source of income for aging, retired workers to rely on from month to month. Protecting this program could mean the difference between taking care of or leaving them to live in unacceptable living conditions.
Unfortunately, the demographic changes have put Social Security in a tough spot, falling short by nearly $17 trillion. Some experts blame baby boomers for leaving the workforce in droves, and as they retire, they are also living longer and consuming more Social Security funds than ever before. As time marches on, our society is witnessing record-low birth rates, which threatens the worker-to-beneficiary ratio the program relies on so heavily. If lawmakers halt efforts to increase the retirement age or tax cap, Social Security could face insolvency.
Contact Information:
Email: [email protected]
Phone: 6232511574
Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.
Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.
The Positive and Negative Aspects of Working In Retirement
/by todd carmackAccording to a Natixis Investment Managers survey from 2021, 42% of retirement savers fear they won’t be able to retire. The group behind that percentage, in particular, includes retirees with $100,000 to $450,000 in investable assets – individuals who have already started building their nest eggs.
Working longer is the common-sense option for underfunded retirement savers. If you imagine retirement as a series of leisurely days filled with interests and personal time, the prospect of returning to work may be unappealing. There are unquestionably disadvantages to working in retirement, but there are also benefits.
By examining both sides as objectively as possible, you can develop the best plan for your senior years. Begin by going over this list of three benefits and two drawbacks to working in retirement.
Pros
Pro 1: The income increases the longevity of your retirement savings.
Your reliance on retirement withdrawals will be reduced due to your working income when you work. You’d continue to meet your living expenses with your wages and invest your savings in an ideal world. The longer you invest, the higher your growth potential.
Pro 2: You’re less likely to become bored.
TD Ameritrade polled 2,000 people aged 40 to 79 in 2019 to find out what might encourage them to return to work after retirement. 60% of those who have not yet retired stated they would return to work due to boredom. By the way, boredom is a reason cited by 67% of those returning to work.
Pro 3: You Could Be Eligible for a Higher Social Security Payout.
When you delay claiming Social Security, you give up immediate income in exchange for a larger monthly amount later. So, if you work in retirement while delaying Social Security, you should get more money.
This benefit increase is granted after reaching full retirement age (FRA), and it’s based on your earnings history. Your FRA is the age at which you are eligible for full benefits. Your FRA would be between 66 and 67 if you were born after 1942. Please create an account at My Social Security to find yours.
If you apply for Social Security benefits before FRA, your total payout will be cut by around 30%. If you file your claim after the FRA, your benefit will be increased by up to 32%.
Now that you know the pros, here are some cons of early working in retirement.
Cons
Con 1: Your Social Security payment may be reduced (temporarily).
You are subject to income limits if you retire and collect Social Security before your FRA. The Social Security Administration (SSA) will cut your federal retirement payments if your income exceeds certain limits.
The impact of these on your Social Security benefits could be substantial.
For example, if an individual is working in retirement and their income exceeds $19,560, the SSA will deduct $1 from their Social Security benefits for every $2 they earn above that amount.
This will continue until the year you reach FRA, at which point the threshold will increase. In 2022, the income threshold for the year you attain FRA is $51,960. Your benefit will be reduced by $1 for every $3 you earn above $51,960.
Con 2: You won’t have as much time for other activities.
Perhaps the most significant disadvantage of prolonging your career is the time commitment it entails. When you work, you can’t go to see your family or do what you want to do.
With part-time employment, you might be able to enhance your work-life balance. Another choice is a compensated opportunity that integrates a pastime or involves a cause that is important to you.
Working in retirement has its advantages and disadvantages.
Working in retirement may not be the best option, especially if you don’t enjoy your current position. However, it’s difficult to dismiss the financial advantages. Your savings account can keep growing.
You will also get more money from the government if you delay taking Social Security.
On the other hand, continuing to work may be counterproductive if you file for Social Security early. Moreover, If you earn more above a specific limit, your Social Security payout may be reduced.
Contact Information:
Email: [email protected]
Phone: 6232511574
Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.
Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.
7 Categories of Workers Won’t Get Social Security, Will You? – Joe Carreno
/by joe carrenoPeople nearing retirement age need to ask if Social Security is accessible to everyone. The answer is no, although only a few American workers will not be eligible for Social Security. If you are a federal worker, who is ineligible for Social Security benefits, you need to do either of these two things:
• Find out the possibility of you being eligible for Social Security.
• Identify other income sources.
Suppose you want to know your eligibility status for Social Security. Below are the seven common classes of workers who are neither eligible nor entitled to Social Security benefits.
1. Workers with fewer Social Security benefit credits
Generally, you cannot get Social Security benefits if you don’t have any previous work history. This is because “doing enough work, which is equivalent to receiving 40 U.S. security credits,” is a criterion for collecting the benefits.
In 2021, you will earn a credit for every income earnings of $1,470, and the maximum annual credit you can earn is four. Therefore, doing enough work means working for at least ten years. People working either part-time or full-time can earn the maximum yearly benefit.
Earned Social Security benefits remain for life and do not expire. So anyone who has earned credits less than 40 should consider working for more years by getting back to work. You may check your earned credits on the Social Security website by opening an account and downloading your balance.
2. Federal workers who die before reaching the federal retirement age (FRA)
The earliest time you can claim your retirement benefits is at age 62. If a worker dies before age 62, the spouse and dependent children may receive the survivor benefits. Widows and widowers may start to claim Social Security benefits at 60, while those with a disability may claim at 50, depending on the earning record of their dead spouse.
Suppose you are not eligible for Social Security benefits; you should find more income sources if you want to maintain your financial stability in the future.
3. Divorced couples
Divorced people may collect benefit payments based on their ex-spouse’s earnings. Most of these people are parents without work. To access this benefit, they must be 62 years or older, single, and have lower benefits earnings than their previous spouse. Suppose the couple divorced before ten years of their marriage. In that case, they are not eligible for the spousal benefits.
4. American retirees in specific foreign countries
Americans who reside in or travel to certain foreign countries may receive their Social Security benefits when they retire. However, the government won’t pay the benefits if that country is North Korea or Cuba. You can quickly check your benefits payment status while staying abroad using the “Payments Abroad Screening Tool” provided by the U.S. government.
5. Specific non-citizens
Specific non-citizens with enough work credits (40 credits) in the U.S. are eligible for the Social Security income benefits. Non-citizens without 40 credits can still receive the benefits if they are from the 30 countries in the totalization agreement, also called the”Social Security Agreement” with the United States. The combination of their work credits in the U.S. and abroad determines their eligibility for Social Security payments. However, immigrants without a minimum of six U.S. work credits are not eligible for Social Security.
6. Evaders of self-employment tax
If you are self-employed, you need to pay tax, covering your contributions to Social Security. You will pay this tax annually when filing your tax returns. However, you won’t pay taxes on Social Security if you don’t file your tax returns. If you haven’t paid into the Social Security system before, you will not receive Social Security payments. Moreover, you don’t have any right to benefits if you don’t report your income and have a lifetime history of evading taxes.
7. Specific Immigrants above 65
Retirees who travel to the U.S should not be eligible for Social Security because they don’t have the required work credits. However, if they are immigrants from countries in totalization agreement with the United States, they need to earn at least six U.S. work credits to receive the prorated benefits.
Conclusion
The majority of retirees in the U.S. will receive Social Security benefits when they retire if they have reached the full retirement age (FRA). Those without enough work history in the United States may not receive the benefits based on their personal work history. However, these people may receive spousal benefits if their spouse qualifies for benefit payouts. Some federal workers may not currently qualify for Social Security payments. Still, they can find a way to become eligible in the future.
Contact Information:
Email: [email protected]
Phone: 8139269909
Bio:
For over 30-years Flavio “Joe” Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.
Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.
Benefits of the Social Security Online Statements, by Joe Carreno
/by joe carrenoWhile the government works to reopen its field offices, the Social Security Administration (SSA) recommends that recipients seek assistance via the agency’s website first.
However, many people are apprehensive about applying for help on the internet. According to the Boston College Center for Retirement Research, only about half of retirees have used this method since 2013. This is regardless of the fact that, according to an executive order recently issued by President Joe Biden, the SSA has enhanced its online application abilities and is expected to do much more in the future.
Another helpful resource, according to CNBC, is the recently redesigned online benefit statements, a tool that can offer essential information for improving your Social Security retirement payouts.
You may view your statements online by registering a “My Social Security” account. Individuals over 60 who haven’t claimed benefits or set up an online account may have their statements sent via mail three months before they turn 60.
The SSA hopes the new design will simplify federal employees’ process to acquire information and streamline the agency’s complex processes. These assertions are now backed up by fact sheets aimed at specific age groups.
They recommend that workers of all ages review their statements at least once every year to ensure it’s accurate. This is true for employees, from age 18 to 70 years who participate in the program.
Experts believe that such information could also disclose how to get the best out of these benefits. Other information that isn’t specified in those statements should also be looked for.
A Tool for Estimating Your Retirement Benefits
As a result of these changes, the benefit estimates are shown in a bar graph in blue on the new statements when someone claims at nine different sample ages.
As you already know, if you file a claim at the age of 62, when you are first eligible, your payments will be permanently decreased.
Each year you delay until you reach the age of 70, the number of your monthly benefit checks will grow. If you file a claim when you reach full retirement age – 66 or 67, depending on your birth year – you will receive the amount of the full benefit you have earned.
Your advantages will climb even more if you wait until you’re older. This expires when you are 70, as there is no additional benefit for deferrals at that point.
From the ages of 62 to 70, the statement includes a graph that shows how much money you will get each month when you retire.
“The blue bar form is a wonderful addition for workers who need the information to help them make informed decisions about their benefits,” said David Freitag, a MassMutual financial planner, and Social Security expert.
Earnings Record
The new statements also include a table that shows a worker’s earnings history, with wages taxed for Social Security and Medicare broken down by year.
However, the statement only shows 20 years’ worth of earnings, whereas the prior statement style contained all of a worker’s earnings history. Workers’ personal “My Social Security” accounts have access to their entire salary history. According to experts, looking back only 20 years is quite limited, and it’s vital to go the extra mile to see your complete earnings history.
However, mistakes do happen. Therefore, the SSA estimates your average monthly earnings based on your 35 highest-earning years. The SSA and other experts recommend that workers review their earnings history to ensure that it displays the exact amount earned each year and that no income has been omitted.
Joe Elsasser, founder and president of Covisum, a Social Security claiming software firm, said that checking the record of your past earnings in your statement “is a valuable exercise for folks to perform to make sure they don’t have any misreported wages.” Sometimes people get a zero when they shouldn’t, he explained.
If you worked in employment where you earned a pension but did not pay Social Security taxes, seeing your whole earnings history will help you figure out how much of your benefits will be changed. The Windfall Elimination Provision, sometimes known as the Government Pension Offset, affects your and your family’s benefit eligibility.
“Seeing the whole revenue history is the only reliable way to test for WEP/GPO offsets,” Freitag stated.
Benefits for Disabled People And Survivors
Also, the statement predicts how much money you would make each month if you were to get disability benefits. This is in addition to finding out if you are eligible for retirement benefits.
There are also estimates of how much money your qualified spouse or children will get each month if you die.
Eligibility for Medicare
The benefits statement will also tell you if you have accumulated enough credits to be eligible for Medicare at the age of 65.
While it is not required to enroll in Medicare Part B when you turn 65, the SSA warns that failing to do so may result in delays or increased monthly costs in some cases.
Key Points
- Social Security Administration is working to strengthen its online services, such as the benefit application portal.
- The Social Security Administration’s online benefit statements have been updated.
- According to experts, the Social Security online statement can provide information on how to get the most out of your benefits.
Contact Information:
Email: [email protected]
Phone: 8139269909
Bio:
For over 30-years Flavio “Joe” Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available.Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.
Disclosure:
Not affiliated with the U.S. Federal Government, the State of Florida, or any government agency. The firm is not engaged in the practice of law or accounting. Always consult an attorney or tax professional regarding your specific legal or tax situation. Although we make great efforts to ensure the accuracy of the information contained herein we cannot guarantee all information is correct. Any comments regarding guarantees, safe and secure investments & guaranteed income streams or similar refer only to fixed insurance and annuity products. Fixed insurance and annuity product guarantees are subject to the claimsâ€paying ability of the issuing company. Annuities are long-term products of the insurance industry designed for retirement income. They contain some limitations, including possible withdrawal charges and a market value adjustment that could affect contract values. Annuities are not FDIC insured.
Here’s Complete Information on Which States Do and Do Not Tax Income from Social Security Benefits. By: Marvin Dutton
/by marvin duttonThe Tax Foundation recently released a report that mentions the names of the states that do and do not impose a tax on income from Social Security benefits. In this article, we have included all states and cleared which states will tax or not tax your Social Security benefits.
All of us know that information on taxes is always complicated. Some states are not imposing a tax on Social Security benefits income, and some do not include Social Security income as a part of their calculation for taxable income. Some states follow the same procedure as followed by the federal government, and some states have exempted Social Security income for different reasons.
The states that do not tax income from the Social Security benefits federal taxable income are Delaware, Arizona, Idaho, Massachusetts, South Carolina, Illinois, New York, Ohio, Oklahoma, Colorado, Georgia, and Virginia.
States that tax income in the same way as taxed by the federal government are Utah and Nebraska.
States that offer exemption have been discussed in the report given by the Tax Foundation:
Connecticut offers an exemption for federal adjusted gross income (AGI) taxpayers with income below $75,000 (single tax filers) or $100,000 (joint filing).
Kansas offers an exemption for federal AGI of $75,000 (single and joint tax filers both)
Minnesota has its graduated system of exemptions in case the provisional income of a person is under $81,180 (single tax filer) or $103,930 (joint filing).
Missouri offers 100% tax income exemption on Social Security benefits provided the taxpayer is 62 years or older and annual income below $85,000 (single tax filer) or $100,000 (joint filing).
North Dakota offers subtractions when the AGI is below $50,000 (single tax filer) or $100,000 (joint tax filing).
Rhode Island offers a tax exemption for taxpayers who have attained full retirement age and have a federal Annual Gross Income of below $81,900 (single tax filer) or $102,400 (joint filing).
Vermont State has its graduated system to offer an exemption of Social Security income if the income of an individual paying taxes is under $34,000 (single tax filer) or $44,000 (joint filing).
West Virginia is a state which currently imposes a tax on Social Security income, but under a new law, that is being phased out, and will utterly exempt income from state taxes starting in 2022.
Will Your Social Security Benefits be Enough During Retirement? By: Joe Carreno
/by joe carrenoSocial Security benefits have been designed to help you cater for a portion of your daily expenses after retirement. As soon as you attain the eligible age of 62, you can expect to receive monthly checks from the SSA to replace a portion of the monthly paychecks you have just lost. However, your Social Security checks will not be solely responsible for a comfortable life after retirement. On average, experts say Social Security checks only make up for 40% of pre-retirement incomes.
This figure becomes even more insufficient for people whose pre-retirement incomes were above average and thus used to a different lifestyle. If you are in this category, you are likely used to a more comfortable lifestyle, and your Social Security benefits won’t be worth much to you. To avoid any unpleasant surprises upon retirement, you have to calculate how much your Social Security benefits will be worth and what you can do to cover the difference.
What Will the Social Security Monthly Checks Be Worth?
On average, Social Security benefits are able to replace only 40% of a retiree’s previous paychecks when they used to work. However, this estimate does not apply to all retirees. It only applies to workers whose earnings fall in the category classified as average. Some workers earn above average and spend more money than the average American household. People also have different standards as to what they describe as a “comfortable lifestyle” after retirement.
For example, the Bureau of Labor Statistics Consumer Expenditure recently estimated that average households headed by someone who is at least 65 years old spend around $50,220 annually. As a result, the $26,355 that these households receive yearly from the SSA amounts to around 52% of their expenses.
However, the calculation only considers the common household expenses of senior citizens. It doesn’t consider other factors, such as travel expenses, new hobbies, and other activities that some retirees look to embark on after retirement. The number of Social Security recipients in one household also affects the amount of money they can receive from SSA. Experts say families with multiple recipients have problems covering their expenses compared to homes with single recipients.
In addition, workers earning below the average use their Social Security paychecks to cover more expenses than others. With all these variables, it is impossible to generalize the worth of Social Security benefits for all categories of workers and retirees.
How to Estimate the Worth of Social Security Benefits for Your Situation?
Since we have ascertained that generalizing the worth of Social Security benefits for all situations is a fruitless venture, it is time to discuss how you can make a personalized estimate. You can start by creating a personal Social Security account. With this SSA resource, you can calculate an estimate of what you will receive from the SSA. You only need to input your current earnings, possible age of retirement, and other personal details. You can also adjust your income and age of retirement if anything comes up in the future.
Once you’ve got your estimated monthly benefit, you can multiply it by 12 to get your estimated annual benefit. Then, you can divide that by your estimated annual retirement expenses and multiply that by 100 to figure out what percentage of your income Social Security will cover.
After putting in the necessary details, the resource will give you a close estimate of your expected monthly Social Security benefits. You can use this sum to come up with the percentage of your annual income that you will get from Social Security. To do this, multiply the monthly estimate by 12 and divide the result by your estimated annual retirement expenses, and then multiply by 100. The result of this simple calculation will help you determine the percentage of your post-retirement expenses that Social Security will cover.
For example, if our fictional employee’s monthly estimate from the online resource is $2,000, and he/she wishes to spend $50,000 every year after retirement, then the calculation will look like this:
$2000 × 12 = $24,000.
$24,000 × 100 = 48%.
$50,000
Our employee’s Social Security will cater to 48% of their monthly expenses after retirement. It would help if you did your calculation to ascertain what to expect from the SSA after retirement. It is also advisable that you run the calculations at least once in two years because of changes in governmental policies and other factors that can change the figures.
How Do You Make up the Differences if the Estimate is Lower Than You Expect
There are very slim chances that your Social Security will exceed $25,000 annually. So, it is always important to have a Plan B that will make up the difference. Luckily, we have several options you can call Plab B that will help you live comfortably even after you retire. Your first option is saving money in a 401(k) account if you work with an organization that matches or adds to their workers’ 401(k) contributions. Your 401(k) contribution will be made in pre-tax dollars, so you make the most of every dollar.
Another option is opening and contributing to an Individual Retirement Account (IRA). IRAs will help you have a little bit more control over your savings and investments. They also come with some tax advantages.
A retirement calculator will help you figure out how much you need to invest in these accounts to cover the difference between your Social Security estimate and your post-retirement expenses. The calculator will request the estimated yearly growth rate of your investments. You should use a 5-6% growth rate. Your investments may do better than that, but it is safer to aim low and have a surplus than aim high and be disappointed later on.
If you will not be able to meet up with the calculator’s estimates, you may have to make a few changes. You may decide to either work for more years to make up the difference or reduce your post-retirement expenses. You can also look for other sources of income, such as a side job, or seek a better job that would pay you more.
Planning for Retirement in Five Years by Ron Raffino
/by Ron RaffinoTips 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.
Check your eligibility for Social Security benefits
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.
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