66 or Older?

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It is funny how this business goes – totally cyclical.  People think about their Social Security and retirement at weird times.  Since we handle clients all over the U.S. it has been interesting to watch.  Examples are after hurricanes we see clients come from the Florida and Georgia area.  Off football weekends in Mississippi, folks get out their retirement papers. Tax season becomes overload!!  Anyway, we are thankful for the lulls but really want to encourage people to take a serious look at this stuff at least two years prior to considering retirement. It is worth the effort!

What happens when people linger?  Don’t they just increase their benefit?  Yes, they do increase their benefit, but if 66 years old or older, probably losing income stream as well.  The reason for this is the auxiliary benefits available to their spouses.  If triggered at the RIGHT time, could mean an increase that should not be missed. 

Two clients this week – one called the month he and his wife were eligible for Restricted Spousal benefits and it is going to work out for them.  Had he called in November it would not have been the same story. Another couple were both waiting until age 70 to maximize their earnings – both 68 years of age and a professional gave them our number.  They are out about $15,000 that cannot be recovered, but the good news is they can recover more than $20,000 in retroactive benefits. They had no idea that they were eligible for these benefits, but we are thankful for their professional who had their best interests at heart.  

Most middle-income couples, through life expectancy, look at over a million dollars in their Social Security nest egg.  This is more than most people have saved toward retirement.  So, to many folks, Social Security is considered a critical lifeline in their retirement plan.  All of us realize, after the Crash of 2008, that no assets – not our homes, not our bonds and certainly not our stocks – are safe from life-altering declines.  Figuring out what to apply for and when to do it is not simple.  You have been paying payroll taxes your entire life, make sure you maximize your benefits.

Pillars LLC is located in the Corinth, MS area but services clients in all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 42 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!


Don’t Assume – Part 2

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Funny thing happened about a month ago – one of our clients was going to file for her Social Security benefit and I told her to take her marriage certificate in case they asked for it – sometimes they do, sometimes they don’t.  Anyway, in the process of trying to locate this document, she found $1,000 in her home safety box she had forgotten about.  Moral of this story – your Social Security Advisors can be VERY profitable!!

Now to continue with our series we started on ASSUMPTIONS:

1. Delayed Retirement Credits do not increase spousal and children’s benefits. 

Child benefits, spousal benefits including child-in-care and divorced benefits will not rise if you suspend your benefit to start at a later date to collect more delayed retirement credits.  These auxiliary benefits are based on your Primary Insurance Amount, not your actual retirement benefit amount.

2.Your birthday and Social Security are important

Social Security treats you as if you have attained a given age the day before your birthday.  This is very important when working on filing strategies and Earnings Limitations problems for clients.

3.Disabled widowers have different rules

There is a separate and more generous formula standard for disabled workers.  Widows(ers) can draw their benefits as early as age 50 with no greater reduction than if they were to have filed at age 60.  But remember that there is still a reduction applied for taking prior to Full Retirement Age.

4.Waiting until 70 to draw your benefit may or may not be your best option. 

Depending on your spouse’s benefit amount, your ages and your ability to be flexible, drawing between ages 66/67-70 for one of the spouses may be a better option.  Numbers don’t lie, so needs to be reviewed.

5.Drawing your Social Security benefit early will hurt your Survivor.  

Widow or widower benefits are normally equal to the deceased worker’s (assume this is the husband) benefit at Full Retirement Age, or if he dies at a later age, his benefit including Delayed Retirement Credits.  However, if you file early, this is not the case; you will receive a reduced benefit based on a complicated formula because of filing prior to Full Retirement Age.  

Again, these are just some of the rules you may or may not have been aware of.  There are 2,728 rules so it is a daily, cumbersome, ordeal to navigate this program.  Watch out as what you don’t know, could certainly hurt you and your family’s pocketbook!

Pillars LLC is in the Corinth, MS area but service all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!


Don’t Assume – Part 1

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As a Social Security Advisor, you get tired of the word DEPENDS – that is because there are so many rules for this benefit that most of the time IT DEPENDS.  We thought the best way to dig into some of these rules was to give you a handful of the more common ones; hopefully this will get your wheels turning for further advice or questions.

1. If you don’t ask for a benefit, you might not receive it.

Social Security does not know if you are married, have children, have been divorced or widowed.  Their job is to give you information about your benefit and your benefit only. Also, if your marital situation changes, or a former or current spouse dies, this can affect your benefit and the amount you are eligible to draw.

2. Your Social Security statement reports you are eligible for one benefit at different ages.  Can I be eligible for more than one benefit?

How do you know if you are eligible for more than one benefit?  You need to know the rules and regulations.  If eligible for more than one, which one do you take first.  IT DEPENDS.  With proper timing, strategizing in this area can greatly improve your income stream through life expectancy.

3. There may be no advantage to waiting until your Full Retirement Age to collect a divorced widow(er) or widow(er) benefits.

There is a different calculation called RIB-LIM that is used to calculate the above benefits.  This formula creates no increase in this benefit past a certain point that comes before your Full Retirement Age benefit, up to 51 months before FRA.

4. What if I realize I have made a mistake in filing early?

There is a one-year window, from the date of your first benefit, called a DO-OVER period; during this time frame you can change your mind about how you have filed.  The caveat with this window is that all benefits, including any auxiliary benefits attached to your benefit have to be repaid.  You need to know what you are doing before you make a final decision.

5. Earnings Limitations reductions impact all beneficiaries from worker’s benefit.

If your spouse or your children are drawing a benefit from your benefit, and you trigger the Earnings Limitations reduction rule with your excess income over the limit, a reduction will be appointed on a pro rata basis to all those family members.  This can be a HUGE hurt that usually is unrealized until it is too late.  Before you draw early and continue working, have a professional review of your situation.

Pillars LLC is in the Corinth, MS area but service all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!


Confusion About Divorced Benefits

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If you were married 10 years or longer, are currently single, having been divorced for two years, were born on or before January 1, 1954 and have not filed for your Social Security benefit, this article is about you and for you.

Divorced spouses, if they fall into the category above, have more claiming options than their married counterparts. One of the spouses in a married couple can file a Restricted Application for Spousal Benefits, if born on or before January 1, 1954. But the other party has to have filed for their benefits in order for this strategy to work.

This is not true with divorced couples. As long as your marriage lasted 10 years, has been legally dissolved over 2 years, each are still single, then each party is considered to be “independently entitled” spouses. What does this mean? It means that if both spouses are at least 62 years old, they can claim Social Security benefits on an ex’s benefits record even if the ex-spouse has not yet claimed benefits. So, the other benefit is that while the divorced spouses that qualify are filling off their ex-spouses’ benefit, their benefit is growing by 8% per year until they decide to file.

When did these rules change? Before 1985, divorced spouses were subject to the same requirement as a current spouse. That is, the worker had to apply for Social Security before a benefit was made available to his or her divorced spouse. It was determined by Congress that many ex-spouses were holding grudges against their former spouses and to keep them from applying for benefits off of their records, thus they were waiting until later to file instead of sooner. This caused great hardship for many ex-spouses, usually women. Instead of allowing these ex-spouses to have to file for public assistance and eliminating them being held hostage to their ex-spouses filing decision, the law was changed.

Now, if over age 62, and meeting all the other age and length of marriage and divorce requirements, this exception is in place for those that qualify.
Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!


Start 2020 Thinking About Social Security Issues and Options

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The month of December for most of us is immersed in celebrations, pageant’s, football, parades, writing and mailing Christmas cards, decorating, cooking, parties and family.  We are all over the top BUSY – BUSY and actually anticipate the colder, slower month of January to simply re-load.  Don’t get me wrong, we all love Christmas and the meaning behind that special day, but we just over commit.  Take lots of pictures as these memories fly by in a brief moment!

Having said that, January is also the month most folks start pulling out their tax receipts, 1099’s, W-2’s and other year-end compilations.  This is a good thing as April 15th quickly roars its head.  If nearing retirement, may we also encourage you to look at your Social Security statements?  First of all, your Earnings History must be accurate as these numbers affect your PIA (primary insurance amount) for life. Also, the numbers presented on this statement are not your only options.  Timing, flexibility, and the application of rules that apply to your situation could change your benefit amount.  

Whether married, divorced, single, disabled or widowed, this message is for you.  There are different rules for each situation, and people are in different categories based on their ages.  Combining these differences is complicated, but a welcome challenge if this is your area of expertise.  WHY – because in most cases, there is a better choice which equals improved cash flow.

Check for errors in your Social Security statements – in 2016 alone, the SSA processed 92,000 complaints about mistakes found in statements.  Remember, that your benefit amount is based on your top 35 years of inflation-adjusted earnings, so if these numbers are wrong, your benefit amount will not be accurate.

When you file for your Social Security benefit, that decision has potential repercussions for your spouse as well, not only while you are living, but for your spouse’s Survivor benefit.  Your benefit filing also has repercussions that include family members qualified to share in your benefits.  Your benefits should be reviewed collectively, not individually – this is our area of expertise.  Remember that when one of you dies, only one check remains.  If by simply planning you can improve this amount for the rest of your spouse’s life, why would you not do this?  The answer to this question is simple – a lack of knowledge regarding the rules and regulations that apply to Social Security benefits. 

People who were born after January 1, 1954, will be “deemed” to apply for any available benefits when they file for Social Security and will be paid the higher of the two amounts.  But, “deemed filing” does not apply to Survivor Benefits.  This is a HUGE missed opportunity if not filed for at the right time.  TIMING is critical in all Social Security decisions.

Social Security benefits for divorced spouses remains a fertile area where strategic claiming strategies can make a big difference in retirement benefit planning and future income for these spouses – not just women, men as well.

In agreement with the Social Security laws, there are Spousal Benefits, Family Benefits, Divorced Benefits, and Survivor Benefits, all not included on your annual Social Security statement.  If you don’t know the questions to ask, how do you expect to get the answers you need or the benefit you deserve?

Do yourself a favor next year and make this one of your priorities.  You take your taxes to a professional and you get a better end result – do the same with your Social Security benefit – it is for the rest of your life.  

Pillars LLC is in the Corinth, MS area but service all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!


Are You Missing Something?

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Got a call this week from a couple in Georgia that are both 67, still working, enjoy their jobs and were interested in getting a review of their Social Security benefits. Their plan was to wait until age 70 to maximize both their benefits. Is there anything we can do for them…..yes, yes and yes. 

Unfortunately, because of their age and the fact they are both in Tier 2, (turned 62 by January 1, 2016) they should have called a year sooner. Joe’s benefit was $2875 at his full retirement age of 66. Ethel’s benefit was $1250 at her retirement age of 66. Yes, by waiting their benefits have increased by 8%, but they have lost a full year of benefits using the Restricted Application for Spousal Benefits. 

Here is what they had planned: 

1. By waiting until age 70, there will be no income stream between 66-70, which they are entitled to. 

2. Their cumulative benefit through life expectancy (age 85 for Joe and 88 for Ethel) will be $1,123,155. 

What could happen: 

1. Ethel would begin her benefits in the amount of $1308 in July 2019. 

2. Joe would file a Restricted Application for Spousal Benefits only in the amount of $625 beginning in July 2019. 

3. Joe allows his benefit to continue to grow at 8% per year until age 70. 

4. They have generated an income of $1933 per month until age 70. 

5. They are both past Full Retirement Age, so they do not need to be concerned about the Earnings Limitations Rule. 

6. Joe switches to his benefit at age 70 which has grown to $3,795; Ethel is now eligible for a Spousal Boost at age 69.6 to $1,438 per month. 

7. Survivor Benefits have increased to $3,795 for the remaining spouse. 

8. Cumulative benefits through life expectancy has grown to $1,154,738 a $31,583 increase over and above their plan. 

Also, if interested, they could get six months of retroactive benefits because they were past full retirement age; this would reduce their lifetime benefits by that 6 months reduction. The check for the both of them would be approximately $11,598. This needs to be analyzed before asking for or taking because it is taxable, and the reduction might not be worth the additional income. 

This is not the only option that is available, but one that needs to be recognized. Folks, you need to know what your options are. We like to see our clients about two years before consideration of retirement for this exact reason. 

Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!


Your Birthday, Social Security and Retirement are not Synonymous

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I will be 65 on June 24th, so I am planning to retire. I have worked hard my whole life and am ready to reap the rewards of my hard labors. So, in all one breath, this individual is filing for Medicare, retiring, drawing his/her Social Security and celebrating 65 years. Does it have to be all at one time? 

That depends on many variables. At a minimum, file for your Medicare Part A at age 65; this is very important. You don’t want to procrastinate with Medicare deadlines as they can be very costly. We do not handle Medicare issues, but there are many professionals that do. So, you picked your birthday as your retirement date….why? Because it sounded good, or did you have a plan that took into consideration the rules and regulations that apply to your situation? 

If still working, depending on your birthday month, drawing your Social Security benefit needs to be a strategically calculated decision. The Earnings Limitations Rules can be very costly if retiring prior to your Full Retirement Age. Monthly Social Security benefits may be reduced or eliminated due to the Earnings Test. By making small adjustments, you can have a much more fruitful retirement plan. But by filing, and just continuing to work, you could be hurting your revenue source and not realize what you did. These are the phone calls we get from folks that do not understand the rules and want to change what they have just done. 

The year you turn Full Retirement Age, the Earnings Limitations rule changes to a much higher threshold, and that needs to be calculated into your plan. If your birthday is one of the later months of the year, you could greatly benefit by waiting to draw because of this increase. The year you start drawing benefits, there is another exception to the rule based on a monthly calculation of earnings. 

In the event that other family members are entitled to benefits based on your work record (spousal benefits and/or child benefits), the earnings test will also reduce their benefits as well as yours if your earnings exceed the applicable threshold. 

The good news is that people are starting to understand the need for a professional review before filing. Your date to file for Social Security really should have nothing to do with your birthday, but everything to do with what financially best serves you and your family. People are researching on their own, getting 

frustrated or confused, but continuing that search for a professional review to nail down the rules and regulations. Education never hurt a single soul! 

Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!


What Qualifies for Social Security Credits?

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Social Security credits are based on the amount of your earnings. Not all income qualifies for credits. In 2019, you will receive one credit for each $1,360 of earnings, up to a maximum of four credits for the year. The amount necessary to qualify for earnings increases with each year. For a person born in 1929 or later, it takes a minimum of 40 work credits (10 years of part-time work) to qualify for a Social Security retirement credit; of course, there are exceptions to this rule as with all Social Security rules. 

There is also an annual limit to the amount of income Social Security taxes are applied; that amount in 2019 is $132,900. So, if your salary is over this limit, anything above the limit is not subject to the Social Security, but still subject to Medicare taxes. This does not have an effect on your work credits required, but it certainly has an effect on the increase to your Social Security benefit. 

Things that do count for credits: 

1. Commissions. 

2. Cash tips of $20 or more per month, but only if reported on your Federal Tax Return. 

3. Severance packages with accrued vacation pay and bonuses. 

4. W-2 wages and self-employment income as reported by a sole proprietor, certain shareholders or partner. 

5. Special rules for domestic work, farm work and work for a church that does not pay Social Security taxes. 

6. Military wages – additional credits can be assigned under certain conditions. 

7. Advances on future wages as long as the future wages are a type of income that qualify. 

Things that do not count for credits: 

1. Wages for federal employees not paying Social Security taxes (since 1983, all federal employees have paid the Medicare hospital insurance part of the Social Security tax). 

2. Railroad employees with more than 10 years of service. 

3. Employees of some state and local governments that chose not to participate in Social Security. 

4. Children younger than age 21 who do household chores for a parent (except a child age 18 or older working in the parent’s business). 

5. Investment income or capital gains. 

6. Any gift or loan you receive, even if from your former employer, does not count toward credits (whether property or cash). 

It is important to most to focus on types of income that will boost your Social Security benefits. It is also important to review your annual earnings history each year to make sure that what is reported, is actually what your earned. This mistake falls back on you as it can be corrected if found, and if not found will result in a lower Social Security benefit for life. 

Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!


Do You Know What Questions are Necessary? Part 2

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We met with a new client referral this week that is close to age 62; she had been referred by a financial advisor. Her experience was an Interesting scenario that we thought would interest our readers. 

The husband is older and has been drawing his benefit for several years. The client met with staff at her local Social Security office and was told that she did not have enough quarters to qualify for a benefit. So in her mind, it was a done deal. She stayed at home and raised her family as her husband wished and as a result did not qualify for a benefit based on her Earnings History record. 

Their Financial Advisor contacted us, on her behalf, to determine how many more quarters she needed to qualify for benefits and what is required. In her situation, she would have to work about 4 more years, part-time, to qualify for a very minimal benefit. A “quarter of coverage” generally means the three-month calendar quarter. In addition, you must earn at least $1,320 in a quarter (in 2019) for it to count. 

The Social Security Administration’s credit system uses workers’ earnings and work history to determine eligibility for retirement benefits. People born in 1929 or later need 40 Social Security work credits, which are the equivalent of 10 years of employment for which they paid taxes. Those who don’t have the required number of credits are not eligible to receive retirement benefits based on their work record. However, you may still qualify for benefits based on your spouse’s benefits, even if you were a stay-at-home spouse who never worked. You could receive up to half of your spouse’s retirement benefit amount if your spouse is retired and you are at least 62 years of age. 

This client actually qualifies for between $750-$1100 per month based on the options we have presented. That could be over $12,000 per year in income that she would have walked away from simply because she did not know the questions to ask. Is the Social Security office required to give her this information – actually not. The Social Security Administration is only required to give her information on her benefit, which was zero. But the facts are the facts, and every day people are leaving money on the table due to lack of knowledge about the rules and regulations. How many retiring Mom’s out there are struggling each month to make ends meet because they didn’t have the proper advice on how, when and why to file? 

Professionals are available for this purpose and can be a valuable resource before you file. 

Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!


Do You Know What Questions are Necessary? Part 1

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Met with a new client this week that is close to age 62; she had been referred by a financial advisor. Her’s was an Interesting scenario that we thought would interest our readers.

Husband is older and has been drawing his benefit for almost 8 years. He took an early retirement due to some health issues. Wife met with staff at her local Social Security office and all that they told her was that she did not have enough quarters to qualify for a benefit. So in her mind, it was a done deal. She stayed and home and raised her family as her husband wished and as a result did not qualify based on her Earnings History record.
Her Advisor actually initially contacted us on her behalf to d

Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!


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