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

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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 .

 

 

 


Voluntary Suspension of Benefits

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There is quite a bit of confusion out there about what is still available to consumers wanting professional advice about how to improve their Social Security Benefits. What you read on the internet is confusing at best. This article will try and balance some of that confusion with fact vs. fiction.

Yes, the claiming strategy “File and Suspend” is gone. Although this was a powerful tool to use, a much higher percentage of our clients utilize the claiming strategy “Restricted Application for Spousal Benefits” to improve their income stream position. Why is that? Usually because of circumstances, most people we are advising need at least one of the parties to receive benefits to supplement what they have saved or have available for retirement through pensions or other sources.

Now, under the new rules created by the Bi-Partisan Budget Act of 2015, those turning age 62 by December 31, 2015, can still SUSPEND your benefit but that comes with new rules. These rules are as follows:

  1. If you SUSPEND, all auxiliary benefits will suspend along with your request. Auxiliary benefits are spousal benefits, family benefits, and no contingency fund provisions.
  2. Your benefit will improve by 8% per year while suspended. You can unsuspend at any time, but allowing it to suspend until age 70 will provide you with a 132% increase over your full retirement age benefit.
  3. This increased payment will also be passed along to your surviving spouse as a widow or widower’s payment.
  4. If you took Social Security early, you can SUSPEND any or all payments from Full Retirement Age to age 70 to erase part of the payment reduction for early filing.

Do not confuse this information with Restricted Application as they are two different strategies.

The decision when to file any claiming strategy is very important. Sometimes what appears logical at the time, does not work out that way on paper. That is why when people call us with questions, we are hesitant to answer the questions on the phone without having their available benefit numbers and information about their situation in hand. Sometimes we even get fooled, but we have the Cadillac software to assist us. Professional advice is recommended for this lifetime benefit choice.

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!


What Now?

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The Claiming Strategy called File and Suspend is a thing of the past (deadline was April 30, 2016), but many Americans age 62 (by December 31, 2015) have a lot to cheer about. The “Restricted Application” for spousal benefits will continue for many years to come.

What is a Restricted Application? It is a claiming strategy that allows someone who is at their Full Retirement Age to claim only spousal benefits – worth half of their spouses or ex-spouse’s full retirement age amount for up to four years while their benefit continues to grow by 8% per year up to age 70.

The caveat to this claiming strategy is that one of the parties must be actually receiving Social Security benefits. The last of the eligible retirees will turn age 66 on January 1, 2020. This gives an eight year window of opportunity.

The situation is a little different for divorced spouses – one ex-spouse can claim spousal benefits on the other ex-spouse’s earnings record at age 66 – even if the other spouse has not yet claimed Social Security. Attached to this benefit is the requirement that the former spouse is at least 62 years of age and the couple has been divorced for two years.

You can still SUSPEND your benefit until age 70, but that will also SUSPEND any auxiliary benefits that are attached to that strategy – family benefits and spousal benefits. And for both parties to delay until age 70, you would effectively increase the monthly benefits while both are alive, but the smaller of the two benefits would stop upon the death of the first spouse. And to not claim a spousal benefit on one side this equation would eliminate income stream for a 4 year period.

Professional advice on this benefit is still recommended. When, why and how to file are all questions that are not easily answered without knowledge of the old and new laws attached to Social Security. Internet calculators have logic gaps and numerical flaws that can lead you down the wrong path – ultimately costing you money over your lifetime.

Remember, your decision is basically permanent….take an analysis with you to the Social Security office and tell them what you are filing for.

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!


What Do You Really Know About Social Security Laws?

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Roy and I have found with talking to people each day, even the most basic knowledge about Social Security is not understood. With all the articles on the internet, some good and some bad, people are just confused and basically give up educating themselves. They drive to the Social Security office and just take what they are given. This does not have to be the case. Remember, the Social Security office will give you information on your benefit only…..not advice on how to file collectively and improve your income position.

In this article, we are going to define some of the more elementary terms related to Social Security:

  1. Cumulative Benefits – lifetime payout of Social Security benefits.
  2. Delayed Retirement Credits – 8% increase in your benefit amount per year, for every year you wait to file after your Full Retirement Age. This is actually calculated monthly, so you do not have to wait an entire year.
  3. Delayed Strategy – claiming benefits after Full Retirement Age (FRA) in order to receive increased benefits.
  4. Divorced Benefits – benefits paid to the divorced spouse of an eligible worker to whom you were married at least 10 years – must comply with the new law changes effective November 2, 2015.
  5. Earnings Record – the history of your earnings for the years you have worked during your lifetime.
  6. Earnings Test – the reduction in benefit taken if you continue to work while receiving benefits before you reach Full Retirement Age (FRA). Once you reach FRA, the earnings test no longer applies, and there is no limit on your income. The year your turn FRA, the Earnings Limitations amount is substantially higher.
  7. Primary Insurance Amount – (PIA) is the benefit you will receive at your FRA.
  8. Windfall Elimination Provision (WEP) – a provision that may reduce Social Security benefits based on your earnings history if you are eligible to receive a pension from work not covered by Social Security taxes.
  9. Survivor Benefits – benefits paid to the surviving spouse of a deceased eligible worker.
  10. File and Suspend – a Social Security policy allowing a worker to file an application for retirement benefits but immediately suspend payments. This makes the worker’s spouse eligible to file for and receive spousal benefits. This also allows the worker’s benefit to accrue delayed retirement credits. However, the Bi-Partisan Budget Act of 2015 has altered this policy. Effective April 30, 2016, File and Suspend will no longer exist.

This is truly only a fraction of the many rules and regulations (2,827) that encompass the Social Security law. And, all of these laws carry exceptions to the rules. Most people that take their taxes to be done by an accountant or CPA have a better end result…..because these professionals are versed in the law and know the exceptions to the rules. This is also true of your Social Security Benefit. This is a benefit that will be with you the rest of your life, so have it professionally reviewed for the best end result.

Please visit our website at www.pillarsllc.com or email us with any questions at dthompson@pillarsllc.com. You may also call Pillars (Roy and Diane Thompson) at 601-954-0699 with any questions you may have. We enjoy what we do and love to help people better their Social Security benefit.


Divorced and the New Laws

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Divorced spouses were not affected by the new File and Suspend Restrictions if they meet the age restrictions. Even if an ex-spouse files and suspends his/her benefit, it will not affect the option of the former spouse to collect benefits on his/her earning record   BUT, both spouse and ex-spouses who turn age 62 after January 1, 2016, will lose their right to claim spousal benefits only on their mate or ex-mate’s earnings. These people will now be paid the highest benefit to which they are entitled, whether on their earnings or their spouses. They will not be able to file for only Spousal Benefits and allow their benefit to grow with Delayed Retirement Credits until age 70. That option will no longer be available starting in 2020 – this is when the last of those currently grandfathered in under the old law will reach their Full Retirement Age.

Pillars LLC will continue to remind our readers until the deadline of April 29, 2016 about the Bi-Partisan Budget Act of 2015. The new rules implemented for File and Suspend strategy are critical for the lifetime income stream of those turning age 66 by April 29, 2016, and for the spouses of those individuals. If you meet the age 66 deadline, you also create an option to collect a lump sum payout of suspended benefits. If someone requests to File and Suspend on or after April 30, 2016, he/she is subject to the new law. If his/her spouse or children were receiving benefits on his/her record, their benefits will STOP.

Anyone who is 62 or older by the end of 2015, including those who celebrated their 62nd birthday on January 1, 2016, can still file a Restricted Application for Spousal Benefits when they turn age 66. You do not have to do anything prior to age 66. Social Security’s practice considers a person attains his/her age the day before his/her actual birthday. PLEASE, if you don’t understand this law or need help with your choices about filing, do not hesitate to contact us – there is too much to lose!!

Confused…….it is very complicated. And to make matters worse, people are reporting to us conflicting comments and information given to them at the Social Security offices. This is your benefit and it is basically a permanent decision. Professional advice is strongly recommended. Pillars website is www.pillarsllc.com and our email is dthompson@pillarsllc.com or you can contact us at 601-954-0699.


Widows and Widowers Were Left Untouched

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One of the redeeming factors of the new Bi-Partisan Budget Act of 2015 is that they did not restrict options for Widows and Widowers, or as some may refer to as Survivor Benefits. You still will be able to claim your own benefit first and switch to a widow(er)’s benefits later, or vice versa.

Some things you need to know about Widow(er)’s benefits are:

  1. Earliest you can claim is age 60 or age 50 if disabled.
  2. Must have been married 9 months.
  3. Can claim at any age if you have child or children in care under the age of 16, or if you are the disabled child of the deceased.
  4. Can file if you are the ex-spouse of the deceased, if married for 10 years and are single.
  5. You can remarry after age 60 and still collect this benefit.

Just because you are eligible for this benefit, does not mean it is in your best interest to file. Why would we say that?

  1. If you are still working, and not Full Retirement Age, your benefit will be hit by the Earnings Limitations rules.
  2. If you take the benefit at age 60, when most would be technically eligible, it will be automatically reduced by 28.5%.
  3. If you take the benefit at age 50 and are disabled, it will be reduced by 28.5%.
  4. If you wait to take at Full Retirement Age, (66 for most of our readers) you will receive 100% benefit, and can continue working without Earnings limitations.

When looking at the combinations of options available for widow(er)’s, it is very important to have this choice reviewed by a professional. Let’s look at an example:

Sam Smith, age 65 died 10/23/2015 with a Full Retirement Age Benefit of $2500

Lisa Smith is 63 and her Full Retirement Age Benefit is $1600.

If Lisa takes her Survivor benefit Early her lifetime maximum benefit will be $713,360. Also if she is working, for every dollar she earns over the $15,720 ceiling, her benefit will be cut $1 for every $2 over the $15,720 amount.

If Lisa takes her Survivor benefit at Full Retirement Age her maximum benefit will be $720,000. No earnings limitations.

If Lisa takes her own benefit at age 65 and then switches to Survivor Benefit at age 66, her lifetime maximum benefit will be $737,920. A $25,000 difference just because she was given good advice on how to file.

In working with clients, we have seen this too often….people are told that the first thing they need to do after a death, is file for their Survivor Benefit, because they are eligible. Whoever told them this was probably just trying to help….but as you see, it can cost you money in the long run.

Those turning age 66 by April 28, 2016, please do not delay in contacting a professional in the area of Social Security claiming strategies….once this benefit is gone, it is gone.

You can contact Pillars LLC at 601-954-0699 or visit our website at www.pillarsllc.com for further information.


2016 Seminars

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McLaurin Heights Baptist Church – January

Oak Hill Baptist Church – January

Crossroads Baptist Church – January

Mississippi Fire Academy – January

Brandon Mississippi Library – February

Vicksburg Mississippi Chamber of Commerce with May & Co. – February

Bradenton/Sarasota, Florida seminars – February

Mississippi College – Lunch and Learn – March

Mississippi College – evening seminar – March

Braxton Senior Day – May

Mississippi Development Authority – June

June 22, 2016 –  Mississippi Development Authority – Jackson, Ms
September 22, 2016 – First Baptist Corinth
September 27, 2016 – Central Mississippi Association of Accountants – Florence, MS