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

Posted on by hgasaway 1 Comment

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

Posted on by Diane Thompson Leave a comment

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

Posted on by Diane Thompson Leave a comment

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

Posted on by Diane Thompson Leave a comment

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?

Is Your Financial Advisor or CPA Equipped to Answer Social Security Questions

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The answer to that question is an easy one…..probably not. And in their defense, they have too many other areas of expertise they need to be concerned about to learn 2,738 new rules and regulations from the Social Security Administration. In fact, we have done many seminars for CPA firms and Financial Planners. As continued cutbacks are made to the Social Security program, the government is providing less support to applicants, and people are left to research their own options prior to applying. Representatives in local Social Security offices cannot offer case specific advice….they can offer information on your benefit, but this leaves many applicants at risk for making costly errors that stay with them for the rest of their lives.

Roy and I are both NSSA certified advisors, and Roy is a retired CPA. NSSA (National Social Security Advisors) are recognized nationally for their standard of competent and ethical Social Security planning. We are required to take a national exam, attend webinars, and must complete CPE hours to keep our licensure current. We have also been published nationally in 4 state CPA journals and are seen in local newspapers throughout Mississippi.

Lukewarm advice is almost as bad as no advice at all. People do not give you bad advice with ill intent, because it does not benefit them financially; they are just sharing what they think they know to be fact. They just do not know the rules and regulations, or the exceptions to the rules; remember Social Security is basically a permanent decision. We often joke in our seminars about cleaning up all the messes that are created at the golf course…..we are not joking about this because it happens!!

Some questions that need to be answered:

What is the best way to claim my benefit? Will my spouse be impacted if I receive benefits early? Why is timing critical? Can I still work and collect Social Security? How can I improve the Survivor Benefit? How will the breakeven point affect me? What if I have earnings that I did not pay SS tax on….how will this affect me? What if there is a large age difference between husband and wife? What if there are dependent children? And the list goes on and on…………

We don’t do Medicare, we don’t do disability, we don’t sell financial products, we don’t sell books as seen in many of the advertisers on the internet……..all we do is Social Security and we are proud of the business we have built – through hard work and a desire to assist people to get the most SS benefit they are entitled to claim. More than 90% of Social Security recipients do not maximize their benefit because they do not understand their options and are intimidated by the myriad of rules and options. The fee for our reports pales the total lifetime improvement you will see in your benefit.

Trust us….this is a BIG DEAL!! Contact us at 601-954-0699 or dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Call us if your business would be interested in a seminar…..great way to assist your employees with accurate information. Check out our client testimonials on our webpage….real people and real success stories.

The Do-Over

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We get phone calls, probably every week, from readers that feel the made a mistake on their Social Security benefit or claiming decision. Why is this? Maybe they have a job opportunity that would put their earnings over the Earnings Limitations maximum, maybe they read something that triggered the thought process, maybe they attended a Social Security (Pillars) seminar, maybe they really didn’t need the additional income, maybe they filed the wrong way for the wrong benefit, or maybe a friend gave them bad advice……whatever, the situation, there is an option available to you.

People file for benefits early for a number of reasons. Perhaps, they initially believed they would get more in cumulative benefits by claiming early. If you are within the first year of claiming your benefit (not the first year and one day, only the first year) you can file what is called the Withdrawal of Application. To put this creative fix in action, the benefit recipients simply complete a form, pay back all of the benefits they have received (including any spousal or other family benefits) and start again later at a higher monthly rate. It is just like you never started benefits. For most this is not feasible….to pay back all the money, including auxiliary benefits off their benefit, is not an option. Even though we have only had a handful of clients exercise this option, we wanted our readers to know that it is available if needed.

And so this is why how to file, when to file, what benefit to file for are extremely important. This is basically a permanent decision that must be given thorough examination and professional review. The Social Security office will answer your questions about your benefit, but not how to utilize claiming strategies. In fact some people do not realize that the Social Security office staff does not know if you are married or divorced until you tell them. Their job is to offer information on YOUR BENEFIT individually. We review your situation collectively, including all the claiming strategies that apply, and provide you with many options. Your report is customized for you and your unique set of circumstances. This is not a ONE SIZE FITS ALL process.

Just looking out for our readers. Trust us….this is a BIG DEAL!! Contact us at 601-954-0699 or dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a retired CPA . Call us if your business would be interested in a seminar…..great way to assist your employees with accurate information.

Shame on You

Posted on by hgasaway Leave a comment

Life is a bucket of choices….some are easy, some not so much. But we all must make more seriously choices that will have a lifetime of consequences. Agreed? Well, that is what you are looking at when you make a decision on your Social Security benefit….basically a permanent decision.

We are going to share with you in this article a real situation…..middle America, both spouses working for most of their lifetime, just trying to keep their heads above water, raising those kids and now approaching retirement. They need to get every penny they are entitled to, so that is where Pillars LLC steps in to advise.

FULL RETIREMENT AGE BENEFIT – JOHN ($2193) SUSIE ($1387)   John is 65 and Susie is 63 – their life expectancy is normal, being 85 for John and 88 for Susie.

After talking with this couple, their desire is for one of them to take a benefit and for the other one to maximize their position by collecting Delayed Retirement Credits. They are not sure how long they want to do this, but will supplement their income with part-time jobs until they desire to both draw. Susie is starting to have some medical issues, so they want to explore all options.

PRIMARY – this is the best option they have, but does not take into consideration their desires and is used for comparison purposes. Their lifetime cumulative benefit would be $1,076,033.00. John would wait and draw his benefit at age 70 and Susie would file a Restricted Application at age 68 years and 1 month and then switch to her own benefit at age 70. Survivor Benefit will be $2895.00

FULL RETIREMENT AGE – both would simply draw their benefits at age 66 – cumulative lifetime benefit would be $968,408.00. Survivor benefit will be $2,193.00.

DELAYED – both would wait at draw at age 70 – cumulative lifetime benefit would be $1,050,814.00. Survivor benefit will be $2895.00.

***Many people think waiting to age 70 is the best option – not so – as you see in these totals, not using a claiming strategy costs them $25,000 and income stream for 2 years****

ALTERNATIVE 2 – Susie files at age 64.1 on her own record; John files a Restricted Application at age 66 and then switches to his own at age 70 – cumulative lifetime benefit – $1,072,628.60. Survivor benefit will be $2895.00.

ALTERNATIVE 3 – John files a Restricted Application at age 66; takes his own benefit at age 68; Susie files for her own benefit at age 66, cumulative lifetime benefit is $1,016,993.00. Survivor benefit is $2544.00.

ALTERNATIVE 4 – John files a Restricted Application at age 66, takes his own benefit at 70; Susie files at age 66,  cumulative lifetime benefit is $1,065,153.00. Survivor benefit is $2895.00.

Our job as Advisors is to keep the income stream where people are comfortable, and to keep the Survivor Benefit as high as possible. Most people do not realize that with some flexibility and knowledge of the rules and regulations, you can continue with income; improve your benefit and your survivor benefit until you decide to draw. In this real life case, from simply drawing at age 66 to utilizing claiming strategies, the lifetime benefit improved over $100,000 depending on the option the client chooses, and the survivor benefit improved over $700 per month. Most online calculators will give you Primary, Full and Delayed….we give you the Alternatives.

Hence, “Shame on You” was written. There are professionals like Pillars that are anxious to help you with your Social Security benefit. Make the right choices…..they are permanent.

Contact us at 601-954-0699 or dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a retired CPA – we have your back on this one!

Software and Social Security

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Social Security is more complicated than before the passage of the Bi-Partisan Budget Act of 2015. We know, as this is what we do each day. There are not just three choices as stated on your Social Security statement, there are literally thousands of different options and ways to file for your benefit. Unfortunately, many advisors and consumers have fallen into the myriad of misinformation traps that exist around Social Security planning.

People tell us their financial planning software includes an option called Social Security. These cost effective software programs have logic flaws and gaps that can be detrimental to making the best decision for you and your family. And worse than that, the free options are about as good as their cost…..FREE!! One well-known tool defaults to age 85 or 95 – for life expectancy and that is it. It cannot be changed, so if your client does not fall into these categories, all the best advice you are receiving is WRONG. The software choice must include all 2,728 rules and regulations, plus the thousands of exceptions to the rules to be effective. We searched, researched, tried and used many different software programs until we settled on the one we use for our clients.

Considering that lifetime Social Security benefits for most of our married clients is well over a million dollars, you want the best advice you can get before making this basically permanent decision. This means considering every option and analyzing the tradeoffs. Pillars’ customized reports are tailored to each individual set of circumstances, and every case is unique. You can’t fool the computer per se, but you can create (with some software programs) situations for your clients that take into consideration their wishes, dreams and desires for retirement.

Many software programs are not capable of calculating benefits for best use of the Survivor benefit, Disability clients, Spousal Benefit, Family Benefit maximums, and the list goes on. We are just cautioning our readers……don’t be fooled by what you see on the Internet…..you are the one that will suffer with a bad decision.

By Laurence Kotlikoff, PBS Newshour

“Unfortunately, Social Security has some very nasty “gotcha” provisions, so if you take the wrong benefits at the wrong time, you can end up getting a smaller benefit forever.”

“Getting this right on your own, is neigh impossible”

“Social Security’s online benefit calculators either don’t handle or don’t adequately handle spousal, divorcee, widow, widower, children, and Restricted options.”

Just looking out for our readers. Trust us….this is a BIG DEAL!! Contact us at 601-954-0699 or dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a retired CPA .