2016 Year-End Housekeeping for Social Security

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As we wind up 2016, there are several items you might want to look at with regard to Social Security:

  1. Check for errors in your Social Security statements – in 2016 the SSA processed 92,000 complaints about mistakes found in Social Security statements. Officially, you have to correct errors within 3 years, 3 months and 15 days following the year of the mistake. You will need to prove what you have earned to have the SSA correct your record; a W-2, a tax return or pay stubs will suffice as evidence.
  2. Don’t get caught off guard by not knowing your Full Retirement Age. This will affect how much of your benefit you will receive, based on how early you will retire.
  3. When you take your Social Security benefit has repercussions for your spouse as well, not only while you are still living, but their Survivor benefits as well.   Your situation should be reviewed collectively, not individually. This is our expertise.
  4. People who were born after January 1, 1954, will be “deemed” to apply for all 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.
  5. Social Security benefits for divorced spouses remains a fertile area where strategic claiming strategies can make a big difference in retirement income planning.
  6. The Earnings Limitations will increase in 2017 to $16,920 and the year you reach Full Retirement Age will increase to $44,880. Now, if you don’t understand this, you need to get some advice. If you think you can double-dip with Social Security, think again, unless you are earning under these amounts.
  7. Obviously not every situation is ideal. If you can’t find work for an extended period of time, or you are dealing with long-term health issues, then claiming early could be a smart decision. But, an otherwise healthy individual signing up early for Social Security benefits with little to nothing saved could be a regrettable decision.
  8. Half of your Social Security benefits counts toward your combined income, which includes your adjusted gross income plus nontaxable interest. If your combined income reaches a certain threshold – $25,000 for an individual and $32,000 for a married couple filing jointly – you will have to pay income tax on a pro-rated portion up to 85% of your Social Security benefits. Have a professional tax advisor review your overall tax situation.
  9. To get the most from your Social Security benefits, you need a PLAN. You need to start reviewing your situation about two years before making a decision, so the best case scenario can be achieved.
  10. Have a professional review your Social Security situation. These laws are very complicated and just like the tax laws, need professional review and advice. If you don’t know the questions to ask, how can you get the answers you need?

Happy New Year from Pillars LLC

Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.


Retirement Benefits and Disability Benefits

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What exactly are disability benefits? Disability benefits are paid to people who cannot work because they have a medical condition that is expected to last at least one year or result in death. There are two earnings tests before qualifying: a recent work test, based on the your age at the time you became disabled, and a duration of work test to show that you worked long enough under Social Security rules and regulations.

If approved:

  1. Amount is based on your average lifetime earnings.
  2. If denied, can appeal.
  3. After two years of receiving benefits you will automatically qualify for Medicare coverage, regardless of age.
  4. At Full Retirement Age, your disability benefit will automatically convert to Social Security or Retirement benefits.

Roy and I do not assist people in applying for Disability Benefits, but if they do come to us when they are drawing we can assist with their rollover to Social Security benefits. Most software programs do not handle Disability issues, but we subscribe to a group of consultants that assist us in these matters. We do not handle Medicare, Disability, or sell financial products…..we only assist with Social Security. This was an intentional decision on our part – Social Security is too complicated to try and consult in more than this area.

If you are drawing Disability benefits certain members of your family may qualify for benefits based on your work record: your spouse if over age 62, natural children, adopted children, in some cases grandchildren and stepchildren, an adult child who was permanently disabled before age 22, or your spouse who is caring for your child younger than age 16. Be careful here…..many exceptions to the rules!

In some cases a divorced spouse may qualify, if they were married for ten years, is at least 62 years of age and currently single. The money paid to a divorced spouse does not reduce or affect the other benefit or any benefits due to your current spouse or children. All these qualifications are subject to the extensive rules and regulations of the SSA.

Persons collecting Disability payments can at Full Retirement Age, suspend their benefits, and allow them to increase with Delayed Retirement Credits until a later age (up to age 70). But, because he/she was on Disability they cannot collect any benefits during the suspension.

If someone dies prior to his/her Disability benefit converting to Social Security benefits, the surviving spouse is still entitled to Survivor Benefits. At what age they should take this benefit, depends on many variables and should be reviewed.

With the passage of the Bi-Partisan Budget Act of 2015, new rules and regulations were set in place. Make sure that you have researched all possible scenarios before filing……remember, basically a permanent decision.

Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.


WOMEN Need to PAY ATTENTION

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Women currently represent more than half of all Social Security beneficiaries age 62 and older and two-thirds of all beneficiaries over the age of 85. Because women usually live longer, and because they are more likely to live alone due to widowhood or divorce, they need to pay special attention to the rules and regulations regarding Social Security. Actually, they need to have a professional review of their situation before filing, because that decision to file is basically a permanent decision. Statistics show for unmarried women 65 and older including widows, nearly half of their income is from Social Security benefits, and for elderly unmarried women age 85 and older, 90% of their income is from Social Security benefits.

Available benefits for women are as follows: as a worker or spouse of a worker that qualifies for benefits, as a widow or surviving divorced spouse, as a divorced spouse, or as the caregiving spouse of a worker’s minor or disabled child. The Bi-Partisan Budget Act of 2015 changed the rules in many areas and beneficiaries need to understand which benefit to take first and what the possible consequences would be for each option.

We experienced so many errors in this Survivor Benefits area, we felt it necessary to visit some of the Funeral Homes in the Jackson, MS area to share with them the REAL rules regarding Survivor Benefits. They were very grateful for the education. Widowers are told (not with any harm intended) that they need to look at their Survivor Benefits as soon as possible.   Yes, look at them, but not necessarily take them. You need to weight the options….possibly taking yours first, at the appropriate age, then draw the Survivor Benefit at the appropriate age, or vice-versa depending on the higher income outcome. Tax consequences, Earnings Limitations, and Delayed Retirement Credits should be reviewed to work in your favor to make the best decision. And if you are divorced, were married at least 10 years and are still single, you add a whole new layer to the equation.

Again, ladies heed this warning…..this benefit is for the rest of your life. 10,000 Boomers are retiring each day and 40% regret the decision they made. Please, get this right!!

Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.


HOT OFF THE PRESS

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Some good news to share about Social Security and Medicare:

  1. Earnings Limitations in 2017 will increase from $15,720 to $16,920 annually or $1410 per month.
  2. In the year you turn Full Retirement Age, Earnings Limitations increase from $41,880 to $44,880 or $3740 per month.
  3. The maximum SS benefit in 2017 rises to $2687.
  4. Medicare will increase to $134 per month for people 65 and older who do not yet collect Social Security benefits, higher-income retirees subject to a premium surcharge, and those who will be enrolling in Part B for the first time in 2017.

We do not handle Medicare issues, but wanted to include this information to our readers. Also, the cap on SS wages is going to increase from $118,500 to $127,200.

Getting your Social Security benefits right the first time is essential, as it is basically a permanent decision. There are 10,000 Boomers retiring each and every day and 40% regret the decision they made…..don’t find yourself in this category. We have your back on this one!!

Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.


66/70 Strategy – Sometimes it works, sometimes it doesn’t

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Should you always wait until 70 to claim your Social Security benefit? The answer to that is a resounding NO. For those that fall into the age range of 62 (as of December 31, 2015) to 70, have other options available that can greatly improve your income stream: Hence, the 66/70 strategy.

How do you find out about such things? Well, you can try and navigate the internet, but that comes with logic gaps and internet computer flaws. Or, you can have a NSSA professional review your situation and give you advice or provide options from which to choose. Listening to family and friends is not a good choice – why? Because their advice has nothing to do with your story – your highest 35 years of earnings history is the basis for your Social Security benefit, and that story cannot be duplicated. What was right for them may not be right for you. And when you include your spouse’s story, for optimal claiming strategies, you have another story that cannot be duplicated. Pillars LLC looks at your situation collectively, not individually.

If you and your spouse are close in age, the 66/70 strategy could possibly be the option for you. One of you files early (meaning age 66); the other files a Restricted Application for Spousal Benefit, and receives one half of the benefit of the first spouse. You receive a monthly check while your benefit grows at 8% per year to age 70 (or whenever you decide to file) due to the Delayed Retirement Credit. But along with this strategy comes the following questions: Who should file first? How will this affect our taxes? What about Earnings Limitations? Can we switch strategies mid-stream? How can we improve our Survivor Benefit? What about Widow/Widower benefits? Should I take this benefit early with a 28.5% reduction? If divorced can I file off my ex-spouse and wait on my benefit? Or, if divorced should I take my benefit first and draw on theirs at a later date? Can my family draw off my benefit if I am receiving Disability Benefits?

These questions, along with many, many more need to be answered before you file for benefits. Please remember, that your Social Security benefit is basically a permanent filing decision. Put yourself in the position to tell the Social Security office what you are filing for…..all questions being answered and all options have been reviewed.

Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.


Social Security is More Complicated

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Since the Bi-Partisan Budget Act of 2015 changed the Social Security rules, you may have heard that Social Security planning is now less complicated. It is actually quite the opposite. The complexity of Social Security claiming hasn’t lessened at all; in fact it is more complicated to advise clients about their optimal strategies.

Social Security provides crucial income for retirees and helps bridge the gap between what they have saved and what they need to be confident in retirement. Yet, most people leave this decision to chance. Why would you take what they give you instead of telling them what you are entitled to? Did you know?

  1. Over 70% of retirees claim benefits early.
  2. About $100,000 is the average amount of Social Security benefits left on the table by married couples who claim early.
  3. 18 years is the average length of retirement.
  4. 80% of Americans have not saved enough for retirement.
  5. 10 years is the additional portfolio longevity that is possible by coordinating Social Security with a tax-efficient spend down strategy.
  6. $52,920 is the additional annual income provided by Social Security benefits for the average dual-earning couple.
  7. You can improve your Survivor Benefit amount if you know how and when to file.

Attending a seminar is a great way to start and understand the process. With over 2,728 rules and regulations, you cannot possibly learn what you need to know to make the BEST decision for you. Why do you take your taxes to a professional? Because they have a better understanding of the complicated rules and regulations and your end result is usually much better. The same is needed before claiming your Social Security benefit. This is basically a permanent decision and needs professional advice. A customized analysis will leave all questions answered and give you several options to choose from, based on your personal situation. Social Security is your life story….and if married, you add your spouse’s story and your situation cannot be duplicated.

Roy and Diane Thompson are both National Social Security Advisors and Roy is a former CPA of 40 years. Their guidance and direction will make a difference for you and your family. You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699. We are located in Corinth, MS but assist clients throughout the United States.


Recap of United States Senate Special Committee on Aging Meeting

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William Meyer, Founder and CEO of Social Security Solutions recently testified before this committee and we felt it worthy of summarizing for our readers. The purpose of the hearing was to examine the Government Accountability Office’s recent review of the extent to which Americans understand Social Security rules affecting their retirement benefits and the information the Social Security Administration provides applicants about claiming retirement benefits. We will recap in bullet points his testimony:

  1. It is important to note that every service our firm provides the Social Security Administration could provide.
  2. The rules are very complicated, and resources such as the SSA Program Operations Manual (used by employees) are not intuitive.
  3. Currently the Social Security Administration is providing neither the “right” nor “enough” information for someone to make an informed decision.
  4. No cumulative lifetime benefits are provided. This would better equip an individual in making the decision to file early or later.
  5. Additionally, all benefits a person is entitled to are not included in a person’s statement. It excludes spousal benefits and survivor benefits. Putting all benefits together and showing trade-offs between claiming strategies changes claiming behavior as more individuals better understand the merits of one strategy over another as they compare and evaluate their options.
  6. Currently, Social Security Administration rules do not allow agents to give advice on how to claim benefits. The policy states an agent can only give information, but no guidance. Note that claiming Social Security is the largest financial decision 99% of Americans make in their lifetimes. Americans are making an irrevocable decision with limited information, and no one at the Social Security Administration is allowed to help them explore their options.
  7. According to the Center on Budget and Policy Priorities in their June 2016 report, the Social Security Administration’s core operating budget has been reduced by 10% over the past six years, at a time when the numbers of American’s needing services are at an all-time high. This has left the Administration with too few resources to deliver essential services.
  8. My research shows that we can make someone’s retirement last between 2 to 10 years longer by maximizing Social Security. Choosing how and when to begin Social Security benefits is a huge decision and is the cornerstone for retirement security. The Social Security Administration could make some simple changes to help more Americans live better in retirement.

And readers, this is why we founded Pillars, LLC, to assist Americans with this decision. We are truly passionate about teaching, reaching and assisting individuals in making this basically permanent decision. There are currently six, licensed National Social Security Advisors in the Mississippi area – 3 in Biloxi, one in Ridgeland and 2 in Corinth that are trained and seasoned to assist you with this decision.

You may contact Pillars LLC on our website at www.pillarsllc.com or email at dthompson@pillarsllc.com or simply give us a call at 601-954-0699.


Let’s Take a Quiz

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The current Social Security laws were changed on November 2, 2015. Let’s take a minute and see how much you know about the new laws:

  1. How many and which years of earnings are used to calculate Social Security Benefits?
  2. A. 30 years of your highest earnings.
    B. 35 years of your most recent earnings.
    C. 35 years of your highest earnings.

  1. Section 831 of the Bipartisan Budget Act addresses which of the following?
  2. A. The Department of Defense spending.
    B. Section 831 helps wealthy people get more Social Security income.
    C. How someone’s full retirement benefit is calculated based on their earnings history.
    D. Phase out of the File and Suspend and Restricted application process.

  1. Which of the following phrases best mirrors President Obama’s 2015 budget proposal reason for including and passing Section 831 within the Bipartisan Budget Act of 2015?
  2. A. To prevent duplicative or excessive Social Security benefit payments.
    B. To provide more Americans with the opportunity to get more Social Security payments.
    C. To provide non-wage earnings spouses ways to get more Social Security payments.
    D. To reduce excessive payments on widower(s) benefits.

  1. With respect to the BBA 2015, which of the following are correct age(s) and dates for phase out triggers or the two Social Security claiming techniques?
  2. A. Age 66 by April 9, 2016 for File and Suspend.
    B. Age 62 by December 31, 2015 for use of Restricted Application for Spousal Benefits.
    C. Age 62 by April 29, 2016 for use of Restricted application for Spousal Benefits.
    D. Both A and B.

  1. The File and Suspend Strategy:
  2. A. Will no longer be available to retirees who were younger than 66 by April 29, 2016.
    B. Is a claiming strategy that allows couples to collect Spousal Benefits while allowing their own retirement benefit to increase due to delayed retirement credits.
    C. Was first used after the passage of the Senior Citizens Freedom to Work Act of 2000.
    D. All of the above.

  1. If you file for Social Security and feel you have made a mistake, how long do you have to correct the mistake and pay back all received benefits including auxiliary benefits?
  2. A. 2 years.
    B. 1 year.
    C. 5 years.
    D. 3 years.

Answers are as follows:

  1. C
  2. D
  3. A
  4. D
  5. D
  6. B

So, how did you do? These questions are just a few of the new laws passed that must be considered before filing. Do you have enough knowledge to make a permanent decision? There is a little over three years left to take advantage of these changes…..don’t shortchange your opportunity to improve your position. Contact us at 601-954-0699 or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a former CPA. We are located in Mississippi but help clients throughout the United States.


Divorce, Remarriage and Social Security Benefits

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What benefits are available and when? It depends. Social Security is very complicated at best with over 2,728 rules and regulations. We find ourselves using the word “depends” over and over – but, case in point as to why this benefit should be professionally reviewed before filing.

The BASICS – as long as you were married at least 10 years, are divorced and currently single, are age 62 or older, you can collect benefits on your ex-spouse’s earnings record just as if you were still married, even if your ex has remarried. A spousal benefit is worth 50% of the worker’s benefit if claimed at age 66 or older, and a reduced benefit if taken earlier than age 66.

Now to the EXCEPTIONS to the rules:

  1. The law was changed on November 2, 2015, and only those turning age 62 by this date, can take advantage of this claiming strategy.
  2. If you wait until age 66, you can file a Restricted Application for Spousal Benefits. This will allow you to collect only Spousal Benefits for up to 4 years, while your own benefit grows at 8% per year up to age 70. Then you can switch to your own increased benefit amount.
  3. If you are also entitled to benefits on your own work record and you claim before age 66, Social Security will only pay you a Spousal Benefit if it is larger than your own.
  4. Divorced spouses can each claim spousal benefits on their ex’s earnings record, assuming they are old enough to be grandfathered under the old rules.
  5. If you have been divorced at least two years, you are “independently entitled” to benefits. This means you can claim benefits from your former spouse even if that spouse has not yet filed for his/her Social Security benefits. Both must be at least 62 years of age.
  6. If you wait until age 60 to remarry, you can collect survivor benefits if your ex-spouse dies.

Without exception, Divorced Social Security benefits calculations are the most complicated of cases we review – simply because there are many rules and exceptions to deal with. We highly recommend that all divorced individuals have their benefits professionally reviewed before claiming. Contact us at 601-954-0699 or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a retired CPA.

 


Earnings Records Mistakes – Can Be a BIG Deal

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Many people that we advise on their Social Security benefits have not paid much attention to their Social Security statements. They look at it and toss it. BIG MISTAKE! If you are not retiring anytime soon, what is the big deal? The big deal is that we have found many mistakes in the Earnings Records of clients….and this earnings history is how your Social Security benefit is calculated.

We share in all our seminars that people should review their statements every year and compare it to your W-2 for accuracy. It is very difficult to correct an error in arrears, especially if you haven’t kept accurate records.

The amount of Social Security benefits you and your family will receive is based on your top 35 years of earnings. The Social Security Administration has a complicated formula they use to calculate the amount, but it is based on those 35 numbers – right or wrong. You, your employer and Social Security share responsibility for the accuracy of your earnings record. The agency updates your record each time your employer – or you, if self-employed – reported your earnings. But you are the only person who can look at this entry and verify whether it is complete and accurate.

On your statement there are two separate columns for each year of reported earnings. The first column indicates your earnings up to the taxable maximum for the year – in 2015 that amount was $118,500. If you earn more than this amount, it is not included for purposes of the Social Security formula. The second column lists total earnings that are subject to the 1.45% portion of the payroll tax used to finance Medicare.

According to the Social Security Administration you cannot correct your earnings after three years, three months and 15 days from the end of the taxable year in which wages were paid; however, you can correct your record after that period of time if you have proof of your earnings such as a tax return, W-2, or a pay stub. You will need to contact the Social Security office to handle any discrepancies.

How could this happen? Easy – your employer may have reported your earnings incorrectly or reported your earnings using the wrong name or Social Security number. Did you get married or divorced and changed your name but did not report this to the Social Security Administration?