Social Security Review before Filing

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Each and every day, we are confronted with choices that can alter our course of life.  Some of these are short term situations, but many are long term situations that we cannot go back and change.  The same with Social Security and the choice you make about your benefit.  Many times, a quick decision cannot be changed.  As we have stated, time after time in previous articles, do not take your Social Security claiming decision lightly….educate yourself and don’t second guess your decision.    For many of us, it is the cornerstone of our retirement roadmap and will determine our quality of life through retirement.

When reviewing your Social Security statement, you have what appears to be three choices….take your benefit at 62 (early), 66 or 67 (standard) or 70 (maximum).  This is just simply, not the case.  There are literally hundreds of different ways to file for your benefit and this is why you need a customized report.  The customized report will provide you with the following:

  1. Charts and graphs showing you exactly how much you, or you and your wife can expect from your benefit from the year you file until your chosen life expectancy.  There will be no questions about how much income will be received….it is all there in black and white.  Because we cannot determine the Cost of Living increase each year, the numbers will actually be a little understated, which is a good thing!!  
  2. It will provide you with claiming strategies such as Restricted and Spousal Boost.  This will give you additional options for retirement so you can plan when to retire, or when to reduce your income level so your benefit will not be affected.
  3. The report will show you your benefit calculation, based on the age you decide to retire….so you can strategically plan for your future without second guessing your decision.  It is hard to put a price tag on peace of mind.
  4. It will show you what the surviving spouse benefit will be depending on the claiming decision you choose.  This amount can dramatically change with the right claiming decision.
  5. It will provide you with many different age scenarios, both for husband and wife, or for a single, widowed or divorced individual, so you can determine what is best for your situation and for your future.
  6. It will show you how to combine your options, to optimize your benefit as a couple.
  7. It will be customized with your information – no generic information from a book that only gives examples.  Anyone can put numbers into a computer program, but will it be a report designed for you or just a generic guess???  
  8. It can show you how to continue working at a reduced salary, collect a benefit and also provide your spouse with a spousal benefit, if that situation exists.
  9. Privacy is key – we do not need your social security number to complete a report, credit card numbers or bank account information.
  10. It will provide you with the asset value of your social security benefit.
  11. The report is simple to understand, and a follow-up interview is provided to make sure you completely understand the material that has been provided.

If you are between the ages of 60-65, please consider a customized report.  It will get you headed in the right direction when making retirement choices.  Remember,  Social Security is a lifetime annuity,  is inflation protected, and has the right of survivorship.  Call us at Pillars, LLC,  601-954-0699 to order your customized report.   Or your can email us at dthompson@pillarsllc.com or rthompson@pillarsllc.com for more information.  Our website is www.pillarsllc.com.


Divorced Exception to the Rule

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We received a phone call this week from a lady that wanted some clarification about something she had heard – this is a red flag to us because most of what people HEAR is fake news or not a legitimate rule of Social Security.  Anyway, she had been married for 8 years, divorced, and two years later married the same gentleman and that lasted 6 years.  She wanted to draw a Spousal Benefit from his benefit and HEARD that you had to be married 10 years to qualify.

Well – she was accurate about the 10 years, but it must be consecutive ten years.  The rule is worded as follows:

The standard divorce rules for Social Security say that if an individual was married for at least ten years to their spouse and then divorced, he or she is eligible to collect spousal benefits on the earnings of the ex-spouse as long as the recipient is currently single.

10 Year Rule:

This requirement is met if the divorce became final on or after the 10th anniversary of the marriage. This is so even if this period was interrupted by a prior divorce, provided the remarriage took place no later than the calendar year immediately following the calendar year of the divorce.

So, had she remarried the same gentleman within one year of the divorce, the exception to the rule would qualify her for benefits.  Unfortunately, this was not the case in her situation.

Again, be careful of what you hear and what you read.  Most of our readers take their taxes to an expert for be prepared because they get a better result.  Why?  Because these professionals are experts in their field and know the tax law.  Consider the same for your Social Security benefit.  Knowing the rules and regulations can offer you options that you were not aware existed. Why?  Because we are knowledgeable of the 2,728 rules and regulations.

Call Pillars LLC at 601-954-0699 and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals.  They are both National Social Security Advisors and Roy is a former CPA of 40+ years.  We are in Corinth but service all 50 states. www.pillarsllc.com


Do-Over Case Study

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We receive many phone calls from people that want to know if they made a mistake when they filed for Social Security. They either read an article, or someone told them another about a way to file and they start questioning their decision. These phone calls are sometimes very hard because unfortunately some of them did have better options. And, for them to get out of the snare they have elected is a tough and costly remedy.  There is a one-year Do-Over period, but all the benefit monies received by you and others (yours, spousal, and family) must be paid back.

Thought we would share an actual client example of a positive Do-Over:

  1. Husband was born in 1950 and had not started drawing his benefit.  His Full Retirement benefit amount at age 66 was $2600 per month.
  2. Wife was born in 1952 and had started drawing her benefit at age 63 at $220 per month.
  3. He wanted to start benefits at age 67 and wanted us to provide him with options.
  4. As it turned out, the wife had only been receiving her benefit for 5 months so she would have to pay back $1265.00 to start her filing process over.  Remember, this was because she was within the one year window for D0-Over.
  5. We discussed many other options, but they wanted to proceed with the Do-Over.
  6. So, wife filed the necessary forms, (SS Form 521) and paid back her $1265.00.
  7. Husband filed for his benefit at age 67 in the amount of $2684.00 like he had originally planned.
  8. Wife filed a Restricted application for Spousal Benefits at age 66 in the amount of $1,290.00.  An increase of $1,070.00 per month over her original filing.  
  9. This was a total increase in their benefits through life expectancy of $201,249.00.
  10. So instead of their monthly income being $2904.00 it increased to $3974.00.  Quite the difference!

This does not happen every day, but the point is that due to the lack of knowledge about the rules and regulations, this couple was headed down a path that severely shortchanged their retirement income.  

Social Security is complicated folks, and you need to know the rules and regulations before you file, or better yet, have an analysis prepared that will show you all available options.  Then you take the option summary you choose to the Social Security office and file.  Had they contacted us several months later, this would not have been an option for them.

Call Pillars LLC at 601-954-0699 and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals.  They are both National Social Security Advisors and Roy is a former CPA of 40+ years.  We are in Corinth but service all 50 states. www.pillarsllc.com


Be Careful What You Read

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I am sitting at my desk just shaking my head.  I have just read five articles from highly acclaimed financial spokespersons or firms and each of them contained wrong information about Social Security claiming strategies or benefits.  Not little errors either – errors, that if followed, would have cost the retiree a lot of money over their lifetime.  On a daily basis, we receive news links from all over the nation, and it is so discouraging to realize that John Q Public is reading this as well, and thinking it is factual.

Some of these errors include:

  1. Full Retirement age is 65 – so very wrong!!  It is 66-67 depending on your date of birth.  This error can be costly in so many areas of filing.  Age 65 is when you file for Medicare.
  2. For a married couple, the higher earner should file first.  WOW – this again can be so WRONG in many cases.  It is a numbers game that needs to be analyzed to determine this decision.  Remember,  every Social Security scenario is different – there is no ONE SIZE fits all to any of these questions.
  3. At age 70 your benefit will automatically switch to your benefit if higher.  Again, WRONG.  You must fill out another application and many clients thinking this is automatic have missed out on months of higher earnings.
  4. File early and take the money and invest it.  Sounds like a good plan, but, how many people will do this?  Also, what about the Earnings Limitations if still working, what about reducing your Survivor Benefit?  Bad advice in most cases.  Also, remember that your Social Security benefit grows by 8% each year you wait to file after Full Retirement Age.
  5. Widows should draw their Survivor Benefit as soon as possible to maximize their income potential.  Again, in most cases this is bad advice.  Widows have many different options and the Bi-Partisan Budget Act of 2015 did not impede their multiple options.  Please, please, this is an area where we see so many mistakes.  Widows can draw their benefit first, they can take their Survivor benefit, they can leave them all alone to grow in value – just because a benefit is available does not mean it is in your best interest to draw it.
  6. Waiting until age 70 is always the best option.  Again, this is not true.  If married and you are both age 62 prior to January 2, 2016, waiting until age 70 will lose you money.  To give you a short summary, this is because you are eliminating claiming strategies that will provide one of you with income between ages 66-70 and allow the other party to let their benefit to grow at 8% per year.  

Remember readers, there are 2,728 rules and regulations involved in Social Security law and most of the laws have exceptions to the rule.  Professional review and advice will clear the way for a better retirement income stream and give you the peace of mind that you have made the best decision available based on the law.

Call Pillars LLC at 601-954-0699 and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals.  They are both National Social Security Advisors and Roy is a former CPA of 40+ years.  They are in Corinth but service all 50 states. www.pillarsllc.com

 


Death of Young Workers

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This is a tough article to write, but needs to be addressed as it does happen.  What do you do if the main breadwinner in the family dies and leaves a widow and child or children behind, and this young person has not accrued the 40 required quarters of earnings to qualify for Social Security benefits?  Is there any help available?

Most people think of the Social Security as a program for older people who are eligible to retire and collect their benefits, or for those that are having to file for disability benefits, or those that qualify to receive widow or widower benefits.  Most people are not aware that is also provides benefits for very young workers.  There is an exception in the law to the 40-credit law in these instances.

When you earn $1300 under the Social Security system, you receive one quarter of credit, with four credits being the maximum allowed each year.  So, to earn 40 credits, you must have worked 10 years, part-time, making the required $1300 per quarter.  This combination will make you eligible for Social Security benefits.  Because widow benefits cannot begin until age 60 (or age 50 if disabled) there is quite a gap for the young widower.

The number of credits needed for a benefit for a younger worker depends on the age of the worker at the time of their death.  The younger the person is, the fewer the credits required for widow and family benefits.  Survivors are entitled to benefits if the worker, after age 21, worked at least one and one-half years during the three years prior to death.  The child is also entitled to a survivor benefit equal to 75% of the deceased parent’s benefit until the child turns 18 (or 19 if still in high school).  Together the mother and the child or children could receive 150% – 180% of the deceased persons Social Security benefit, depending on the number of children that are eligible.  If the sum of the benefits to family members is greater than the allowed limit, they amount will be reduced proportionately.

A caveat here – if the widow is working, she will be restricted on income by the Earnings Limitations laws (currently $16,920 in 2017).  This means for every $2 she earns over the limitation, Social Security will withhold $1 of benefits.  However, her earnings will not reduce the children’s survivor benefits.

There is also a one-time lump-sum death benefit of $255 payable to the surviving spouse.  If there is not an eligible surviving spouse, this benefit can be paid to the children.  This benefit must be applied for within two years of the date of death.

Call Pillars LLC at 601-954-0699 and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals.  They are both National Social Security Advisors and Roy is a former CPA of 40+ years.  We are in Corinth but service all 50 states. www.pillarsllc.com


GPO and Social Security

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If your household receives or expects to receive a pension from a government job considered a non-covered employer (while working your employer did not withhold Social Security taxes) and Social Security benefits from other employment, you’d better learn about the Government Pension Offset (GPO)– because it may leave you with less income than you expected. How bad a bite is it? Well, if you’re collecting a government pension and eligible for spousal or survivor Social Security benefits, the GPO is likely to reduce your Social Security benefits by two-thirds of the amount of your non-covered employer pension payments.
The GPO, enacted as part of the 1977 Social Security Amendments, treated pensions from public employers as though they were Social Security benefits, thus instituting dual entitlement provisions. Spousal benefits were offset dollar for dollar beginning in December 1982.

State workers were left out of the original Social Security Act in 1935, initially because of concerns whether the federal government could tax state and local governments. Later when states were given the opportunity to extend coverage to public sector workers in the 1950s, most states chose to extend coverage. A handful of states, however, chose not to extend coverage to employees. Instead, these states bet they could provide better coverage through state pension plans alone rather than through the combination of a pension and Social Security. Indeed, pension benefits for full-career workers typically have a higher rate of investment return than Social Security.
Here’s an example of how GPO works: Imagine that you would normally receive $1,300 per month from Social Security as a spousal benefit and $1,500 from a government pension. Your Social Security spousal benefit would be reduced by two-thirds of that $1,500 pension, or $1,000. Therefore, your $1,300 spousal benefit would become $300. If your government pension was $3,000 per month, then your Social Security benefit would be reduced by two-thirds of that, or $2,000 — which would effectively wipe out any Social Security benefit, leaving you with just your pension income.

There are currently 15 states where teachers do not pay into the Social Security system – one of them being Louisiana. It is a real shocker to clients from that area when these formulas are attached to their pension and Social Security benefit amounts and we must deliver the news.

There are many exceptions to the rule regarding GPO and each case is an individual story. Before retiring and counting on income that may not be available to you because of GPO, plan and look before you leap.

Call Pillars LLC at 601-954-0699 and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals. They are both National Social Security Advisors and Roy is a former CPA of 40+ years. We are in Corinth but service all 50 states. www.pillarsllc.com


Are you Ready to File? Social Security Questions that Need Answers

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1. If married, who should file first?
2. Should we both just wait until age 70 to file?
3. 30% (down from 45% because people are becoming informed) of the population take their benefits age 62 – why should I not follow suit?
4. Since Delayed Retirement Credits are 8% per year, should I wait to draw by Social Security and use other assets first?
5. Is the age 66/70 strategy best for me and my family?
6. If widowed, should I draw by benefit first and then take my Survivor Benefit later? If so, at what age and are their reductions to my benefit?
7. How will the Earnings Limitations affect my benefit?
8. If divorced, and single, can I draw off my ex-spouse? Should I take by benefit early and his/hers later?
9. Can we change claiming strategies mid-stream?
10. Do I have to wait until age 70 if I don’t file at 66?
11. How will Social Security affect my taxes?
12. Can my family draw benefits from my disability benefit?
13. Do those drawing Disability Benefits get auxiliary benefits as well?
14. What is Deemed Filing and do I fall into that category?
15. What is a claiming strategy and do I qualify?
16. What is a spousal boost?
17. What is my break-even point?
18. What is the difference in filing for my benefit at age 65 vs. age 66?
19. If I sign up for my benefits and change my mind, do I have options?
20.Can I really improve my Survivor Benefit?
21. If I suspend my benefit, will other auxiliary benefits be suspended as well?
22. What if I am widowed, but also was married before for 10 years – who do I file benefits from or just take mine?
23. I am raising a grandchild – does this child have benefits if I file for Social Security?
24. I have been told that Family Benefit maximum is about 185% of the primary benefit amount – is this factual and how is it calculated?
25. What is a Restricted Application and how can it improve my benefit amount through life expectancy?

Here is a partial list of some of the areas we are challenged with each day at Pillars. If you don’t know the answers to the above questions and how they apply to your situation, please wait to file.
Call Pillars LLC at 601-954-0699 (DIAL before you FILE) and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals. They are both National Social Security Advisors and Roy is a former CPA of 40+ years. We are in Corinth but service clients in all 50 states.


Earnings Test for Dual Income Families

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Working later in life, has almost become the norm. People love their jobs, have good health, look forward to additional income and savings, and sometimes just need to stay busy. With that said, whatever your situation might be, taking the Social Security benefit while still working can create quite a challenge.

The Earnings Test is quite complicated if there is not a thorough understanding of the rules and regulations. Prior to your Full Retirement Age, if you draw your Social Security benefit and continue working, you will be limited to $16,920 (2017 limit) earnings before penalties will be applied against your benefit amount. For every $2 you earn over the $16,920 limit, $1 of benefits will be withheld. In the year, you reach full retirement age, a more generous earnings test applies. In this scenario, you will lose $1 in benefits for every $3 earned over the $44,880 earnings limitations cap (2017). After full retirement age, the earnings test disappears.

If married, this poses many questions and requires a review of your situation. What are your age differences? Who is going to file and who is going to continue working? Are you both going to file and both continue working? Who has the excess earnings and whose benefit are the Social Security benefits calculated on if using a spousal benefit? Will this additional income put you in another tax bracket?

Another caveat to this rule, is if a couple decides to draw their benefits early, and one of the couple is drawing a spousal benefit, if the remaining person is still working and earning over the Earnings Limitation therefore reducing their benefit, the other parties benefit will be reduced in unison. Is this a mouthful – you bet!! The earnings test clock restarts each year that the person continues to work while under full retirement age and collecting benefits.

As we have stated over and over, there are 2,728 rules and regulations. And your decision to file is basically a permanent decision. Get it right the first time!! We have had many clients that have filed early, continued working, did not know how to structure what they were filing for, and ended up receiving NO Social Security income because of their earnings, locked in their benefit amount and reduced their Survivor Benefit all in one fell swoop.

Call Pillars LLC at 601-954-0699 (DIAL before you FILE) and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals. They are both National Social Security Advisors and Roy is a former CPA of 40+ years. We are in Corinth but service clients in all 50 states.


Sequencing Social Security Benefits

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People that are considering retirement simply look at their Social Security statement for additional income at the age they want to retire. They have no idea how to sequence their benefits with their spouses for additional income stream or improved survivor benefit.

This is the importance of looking at your benefits collectively. Of course, you must have turned age 62 by January 1, 2016 to be able to look at these options. People younger than that have an option to improve their situation called “Spousal Boost” which will need to be covered in a separate article.

What does sequencing mean? This means that under the new law (Bi-Partisan Budget Act of 2015) if one spouse files for benefits, the other spouse can file a Restricted Application for Spousal Benefits (50% of other parties’ full retirement age benefit) and allow their benefit to grow at 8% per year, until you want to file. This does not mean you must wait until age 70 – you could start filing at age 67.7 and collect the extra benefit amount you have earned. And, most importantly, it is not always the lower earner that should file off the higher earner. It needs to be reviewed because usually quite the opposite is the case. It depends on ages, desired lifestyle, other assets, health concerns, continued employment and many other variables that affect this sequencing.

That is why it is very important to have your benefits reviewed collectively. Some of the goals we strive for our clients are an income stream starting at full retirement age, highest benefit amount within the rules and regulations and your desires, and the highest survivor benefit based on your benefit amounts. This is not a one size fits all equation – it takes time and expertise to ascertain these numbers. The calculators on the internet will not do the job.

Call Pillars LLC at 601-954-0699 (DIAL before you FILE) and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals. They are both National Social Security Advisors and Roy is a former CPA of 40+ years. We are in Corinth but service clients in all 50 states.


Earnings Test for Dual Income Families

Posted on by hgasaway Leave a comment

Working later in life, has almost become the norm. People love their jobs, have good health, look forward to additional income and savings, and sometimes just need to stay busy. With that said, whatever your situation might be, taking the Social Security benefit while still working can create quite a challenge

Call Pillars LLC at 601-954-0699 (DIAL before you FILE) and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals. They are both National Social Security Advisors and Roy is a former CPA of 40+ years. We are in Corinth but service clients in all 50 states.