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Death of Young Workers

Posted on September 12, 2017 by hgasaway Leave a comment

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

Posted on September 11, 2017 by hgasaway Leave a comment

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.

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

Posted on September 10, 2017 by hgasaway Leave a comment

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

Posted on September 9, 2017 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.

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

Posted on July 20, 2017 by hgasaway Leave a comment

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.

GOOD NEWS

Posted on July 7, 2017 by hgasaway Leave a comment

As Roy and I were listening to one of our required webinars, we heard the GOOD NEWS – in the last three years, people filing for Social Security at age 62 has been reduced from 45% to 28%!! People are finally listening to our message.

Okay, we understand that some people need to file at age 62, and that is fine. But, what we try to emphasize over and over is that you have other options that should be reviewed. Pillars LLC looks at your Social Security statement not with a STOP sign on it, but a GO sign for ways you can file, still have an income flow, and capitalize on a higher income stream and a greatly improved Survivor Benefit. Also, we review your situation collectively (married couples, not individually)– makes a huge difference through your life expectancy.

If you are reading this and think this is a joke, shame on you. Especially those individuals that turned age 62 by January 1, 2016 and older, you have a golden opportunity to Improve your position that will not be available after 2020. Don’t delay and don’t become a 45% statistic.

Education and Timing are KEY – and be careful because much of the information on the internet is FAKE NEWS about Social Security. We read probably 15-20 articles per day on Social Security that are national headline news. We just shake our heads, because so many of these articles lead individuals in the wrong direction for advice.

So, how do you get this information and feel comfortable that you are getting the best advice considering your individual circumstances? Well, you could attend a Pillars LLC seminar – we have several seminars being scheduled for the fall. Or you can call us for an individual consultation now. Whatever works best for you.

Social Security has 2,728 rules and regulations. It is not possible, even in a seminar, to cover all the laws that pertain to the law change that took place on November 2, 2015. The Bi-Partisan Budget Act made Social Security more difficult and further complicated what was already confusing. Claiming strategies that allowed people to file many ways, as stated earlier, will be a thing of the past in 2020.

Client Testimonial:

Thank you, Pillars LLC, for wading through all the “stuff” about Social Security and retirement and making our options easy to see and understand. We had gotten so confused that we started to just take whatever. Now, we feel much more in control of our choices and excited about OUR decisions. I heartily recommend Pillars LLC to all who are nearing the age of decision about SS. They are knowledgeable, caring and on-the-ball about a confusing area.

Rev. Donnie and Cynthia Stuart, Pelahatchie, MS

Working During Retirement

Posted on July 5, 2017 by hgasaway Leave a comment

Many of our clients after reviewing the actual costs associated with retirement, are opting to work part-time to supplement their income. Some also miss working and being around co-workers so head in this direction for social reasons. Social Security has changed over the decades. Folks use to decide when they wanted to retire, shook the hands of their co-workers and went their merry way. Not so in 2017. Longer life expectancies and swelling health-care costs have made it more difficult for people to fund retirement, which could feasibly last as long as your working years.

Full retirement age was age 65 when the Social Security program was launched in 1935. In fact, not many people were expected to live long enough to even draw their benefit amount. As more people were retiring and living longer and funds were being drawn from the Trust Fund, the Social Security Administration decided to move the Full Retirement Age from 65 to 66. They also decided that some of these benefits needed to be taxed. Again, the Full Retirement Age has been moved to age 67 and the benefit can be taxes from zero to 85% of your adjusted gross income.

Whatever, your situation, it can be accomplished with a little planning and flexibility. If you decide to file for your benefit prior to Full Retirement Age, and are married, both of you can work but will be limited to earning $16,920 per year (each) without being penalized by the SSA. This number changes to $44,480 (each) the year that you turn Full Retirement Age. Once you turn Full Retirement Age, the earnings limit disappears and any benefits lost to the earnings cap would be restored in the form of larger monthly benefits. But along with this decision, you must realize you are taking a cut in your benefit amount, and decreasing your Survivor Benefit amount.

Maybe if married, one of you wants to draw prior to Full Retirement Age and the other is going to wait on benefits and continue working. This is a viable option as well. With this choice, you need to make sure that you are well-versed in the rules and regulations regarding Social Security as it may benefit you as a couple for the unlikely one to draw, and the other continues to work. The numbers will tell the story.

Claiming Strategies are the REAL DEAL

Posted on July 3, 2017 by hgasaway Leave a comment

Social Security laws changed on November 2, 2015 with the passage of the Bi-Partisan Budget Act. They will change again in 2020 when claiming strategies will no longer be available. There is an urgency to our message – the ability to improve your benefit amount and your survivor benefit will greatly be minimized. Those of you reading this article that turned age 62 by January 1, 2016 need to pay close attention!!

The best way to show you why to pay attention is to give you a real-life client summary:

Wife – born in June 1955 – Full Retirement Age benefit amount is $2475

Husband – born in November 1953 – Full Retirement Age benefit amount is $2512

What are their options?

THE BEST – Best they can ever do based on numbers and life expectancy of 85 for him and 88 for her:

Wife begins benefits at age 64.5 months in the amount of $2,186 (reduction because she took benefit early)

Husband files a Restricted Application at age 66 – income will be $1,238. At age 70 draws his own benefit in the amount of $3,316 (has grown at 8% per year with Delayed Retirement Credits).

Lifetime benefit amount is $1,416,645 and Survivor Benefit is $3,316.

Husband can continue working and draw Spousal Benefit because he is Full Retirement Age and will not be hit with Earnings Limitations – wife will have to limit income to $16,920 per year until Full Retirement Age.

INCOME STREAM – CAN CONTINUE WORKING – BENEFITS GROWING

EARLY –

Lifetime benefit amount is $1,166,804 and Survivor Benefit is $2,072.

BOTH WILL BE RESTRICTED TO EARNINGS OF $16,920 PER YEAR IF THEY RETURN TO WORK

FULL RETIREMENT AGE –

Lifetime benefit amount is $1,283,509 and Survivor Benefit is $2,512

BOTH CAN RETURN TO WORK, EARN AS MUCH AS THEY LIKE AND NOT DEAL WITH EARNINGS LIMITATIONS, but did not use Claiming Strategies which reduces lifetime maximum.

ALTERNATIVE OPTION (one of many)–

Wife draws at age 63 – $1959

Husband draws at age 65 – $2344

Lifetime benefit amount is $1,227,923 and Survivor Benefit is $2344.

BOTH WILL BE RESTRICTED TO EARNINGS OF $16,920 PER YEAR IF THEY RETURN TO WORK

AGE 70 –

Wife benefit – $3,234

Husband benefit – $3,316

Lifetime benefit amount is $1,379,466 and Survivor Benefit is $3,316.

We have only included a few of the options, but this will get the point across:

Survivor benefit amount ranges from $2,072 – $3,316 per month for life. This is a huge difference of over $1300 per month. Remember when one person dies only the highest check remains.
Lifetime benefit amount ranges from $1,166, 804 – $1,416,645 – almost $250,000 difference based on the decision you make about filing.
None of the options leave you without income.
These options were based on their desires for retirement – customized to meet their choices.
You will notice that the difference between THE BEST and Age 70 options is $37,000. So many people say they will just wait until age 70 and that is not the BEST Option. You just flushed $37,000 down the toilet due to lack of education on the matter, plus you missed an income stream between Full Retirement Age and 70.

Remember, make a PLAN and don’t miss this opportunity to improve your Social Security benefit. Professional advice is simply a phone call away at 601-954-0699 or email us at dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of 40 years. We are Corinth, MS residents, but we service clients nationwide.

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