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Voluntary Suspension of Benefits

Posted on May 13, 2016 by hgasaway Leave a comment

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:

If you SUSPEND, all auxiliary benefits will suspend along with your request. Auxiliary benefits are spousal benefits, family benefits, and no contingency fund provisions.
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.
This increased payment will also be passed along to your surviving spouse as a widow or widower’s payment.
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?

Posted on May 3, 2016 by hgasaway 9 Comments

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.

What Do You Really Know About Social Security Laws?

Posted on April 23, 2016 by hgasaway Leave a comment

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:

Cumulative Benefits – lifetime payout of Social Security benefits.
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.
Delayed Strategy – claiming benefits after Full Retirement Age (FRA) in order to receive increased benefits.
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.
Earnings Record – the history of your earnings for the years you have worked during your lifetime.
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.
Primary Insurance Amount – (PIA) is the benefit you will receive at your FRA.
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.
Survivor Benefits – benefits paid to the surviving spouse of a deceased eligible worker.
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

Posted on March 11, 2016 by hgasaway 3 Comments

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 62^nd 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

Posted on March 4, 2016 by hgasaway Leave a comment

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:

Earliest you can claim is age 60 or age 50 if disabled.
Must have been married 9 months.
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.
Can file if you are the ex-spouse of the deceased, if married for 10 years and are single.
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?

If you are still working, and not Full Retirement Age, your benefit will be hit by the Earnings Limitations rules.
If you take the benefit at age 60, when most would be technically eligible, it will be automatically reduced by 28.5%.
If you take the benefit at age 50 and are disabled, it will be reduced by 28.5%.
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.

The Clock is Ticking

Posted on February 9, 2016 by hgasaway 3 Comments

A deadline will lapse on April 30, 2016, that allows those that turn age 66 by this date to File and Suspend their Social Security benefits. First of all, what is File and Suspend? This is a claiming strategy that allows you to file for your benefit, collect your benefit at a later date, and allow your spouse to file a Spousal Benefit off your benefit (50%) at Full Retirement Age. This other party must also meet the age requirements under the new law.

What kind of difference does this make? It can make a huge difference not only in your lifetime benefit, but in your Survivor’s lifetime benefit amount. How does this work? First of all, File and Suspend allows both the party that turns 66 by April 30, 2015 and the Spouse (if he or she meets the required age standards put in place by the new law) to be able to receive Delayed Retirement Credits on their respective benefit amount, and also receive an income stream. Also, by accruing Delayed Retirement Credits, the Survivor Benefit will increase as well. Another perk, is that under certain circumstances, you can qualify for a Lump Sum Provision or Retroactive benefits.

Let’s use an example: Tier 1 (age 66 by April 30, 2016) Tier 2 – (must be age 62 by December 31, 2015)

Sammy is age 67 and has not filed for his benefit. Susie is age 65 and has not filed for her benefit. Sammy’s Full Retirement Age Benefit is $1830.00, and Susie’s Full Retirement Age Benefit is $1950.00. Since Sammy is already age 66, he qualifies for File and Suspend (Tier 1). Susie is eligible for Spousal Benefits since she is currently 65 (Tier 2). Here is a list of several of their options:

At age 66, Susie files a Restricted Application off Sammy. At age 70 she files for her own benefit which has accrued Delayed Retirement Credits. Sammy begins his benefit at age 67 – 10 months when Susie files for her benefit. Lifetime benefit is $888,905.00 and Survivor Benefit will be $2,574.00.
They can both file at Full Retirement Age – Lifetime Benefit will be $833,090.00 and Survivor Benefit will be $2,098.00.
They can both wait until age 70 – Lifetime Benefit will be $840, 153.00 and Survivor Benefit will be $2,574.00.
Sammy can draw a Spousal Benefit off Susie and Susie draws her Full Retirement Age benefit; Sammy then draws his full benefit at age 70. Lifetime benefit will be $868,200.00 and Survivor Benefit will be $2,416.00.
Sammy can File and Suspend his benefit prior to April 30, 2016. Susie files for a Restricted or Spousal benefit at age 66 and converts to her own at age 70. Sammy draws his full benefit with Delayed Retirement Credits at age 70. Lifetime benefit will be $884,075.00 and Survivor Benefit will be $2,574.00.

As you can see, by having the opportunity to use the File and Suspend claiming strategy, the clients benefit increases by over $50,000 from Full Retirement Age. And the Survivor benefit increase is $500 per month for life.

Under the new law, these claiming strategies will no longer exist. Do not delay in having this opportunity professionally analyzed……the CLOCK is TICKING!!

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

Survivor Benefits Component to Social Security

Posted on February 1, 2016 by hgasaway Leave a comment

As Roy and I do the customized reports for clients, it is amazing what a little adjustment in life can make in your future Survivor Benefit for you and your family. I am sure that most of you, when going to file for your benefit, do not really analyze this component. We emphasize this benefit because people are outliving their retirement and a good choice in this area would mean a huge difference in the quality of life for the survivor.

Let me give you two examples…..true situations, just names changed:

John and Susie – John’s benefit at FRA is $2510.00 and Susie’s benefit at FRA is $1738.00.

Social Security Benefit amounts range from $951, 020.00 to $1,069.095.00 depending on the claiming strategy options presented. We presented 6 options.

Survivor Benefits amounts range from $2,147.00 to $3,313.00 per month depending on the option they choose for their benefit election. A difference of $1,166.00 per month for the rest of the life for the survivor.

Carl and Sandy – Carl’s benefit at FRA is $2318.00 and Sandy’s benefit at FRA is $1038.00

Social Security Benefit amounts range from $881,530.00 to $1,073,547.00 depending on the claiming strategy options presented. We presented 5 options.

Survivor Benefits amounts range from $1729.00 to $3,029.00 depending on the option they choose for their benefit election. A difference of $1300.00 per month for the rest of life for the survivor.

This does NOT mean that either one of these couples were left without income from age 66 to 70 – it means that they used claiming strategies (File and Suspend and Restricted – if you qualify under the new law changes). Both couples waited until after their 66^th birthdays before filing for any benefits, and both had a healthy income stream from age 66 to 70.

These strategies will go away in 3 years and 7 months under the new Bi-Partisan Budget Act of 2015 – the clock is ticking folks. The BIG CLOCK is ticking for those turning age 66 by April 30, 2016. If you don’t File and Suspend by that date, you will not be able to turn back that clock. All you need to do it make an appointment at the SS office, go in prior to the deadline, and File and Suspend. You will not receive benefits, but you have opened the door for claiming strategies that will improve your benefit. After you do this, call us and we will direct you to the next step in the process.

Thank you Rankin County for your support of our business and this community service. Our contact information is dthompson@pillarsllc.com or 601-954-0699 or our website is www.pillarsllc.com.

Public seminar is February 2, 2016 at the Brandon Library – 6:00 p.m. Must call to reserve a seat.

Social Security Knowledge Center: People Thought We Were Joking

Posted on January 8, 2016 by Diane Thompson Leave a comment

Roy and I have been educating our communities for over two years now, and many people thought we were joking…..this all sounds too good to be true. Well, with the passage of the Bi-Partisan Budget Act of 2015 people are waking up to realize this is not a joke, and that these opportunities are going to go away.

The reason behind these changes was to close a loophole that provided people more income on their Social Security benefits. Congress did allow these changes to be slowly phased out (next 4 years if you qualify). But, the most important deadline is for those turning age 66 by April 30, 2016 (Tier 1). The option to File and Suspend will no longer exist. If you don’t File and Suspend by April 20, 2016, if you qualify, you will only be allowed to Suspend, which closes the door on many great benefits. This provided you the option of filing for your benefit, immediately suspending it, allowing it to grow at 8% per year until you decide to take your benefits, and also allowing your spouse to collect Spousal Benefits off your benefit amount. This is called the Restricted Application and there are also rules and regulations regarding this option.

The second category is for those that turned age 62 by December 31, 2015. You will still be able to file a Restricted Application for Spousal Benefits if you meet all the qualifications. This is a very beneficial tool for capitalizing your benefits. One party must file for their benefit, but the other party can still file a Restricted Application and allow their benefit to accumulate Delayed Retirement Credits worth 8% per year.

This information is not available at the Social Security offices. By law, they can give you information on your individual benefit, but not on claiming strategies, combination strategies or other options. It is a shame they can’t give you this information, but on the other hand, don’t blame them for something they are not allowed to do. Blame yourself, for not realizing that these opportunities are available to you, and there are professionals that can help you get the maximum benefit available to you.

We are very blessed with so many seminar requests in the upcoming months. Some are private and some are public….call us at 601-954-0699 to reserve your seat. Or if you just want an individual consultation, we can assist with that.

Those that are Tier 2 (turned age 62 by December 31, 2015) need to consider reviewing what options they will have. It makes sense to PLAN out this decision, because the best end result will come with the proper timing of your benefit, understanding the rules and regulations that apply to your situation, and combining your lifetime Social Security benefit with other assets for your best draw down options. Your lifetime benefit will not fluctuate drastically in 4 years….if you continue working it will only get larger, so it is never too early to PLAN and ANALYZE.

Next public seminar is February 2, 2016 at the Brandon Library, 6:00 p.m. Reservations required. Then we are headed to Florida on February 24^th and 25^th for seminars in the Bradenton/Sarasota area.

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