66 or Older?

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It is funny how this business goes – totally cyclical.  People think about their Social Security and retirement at weird times.  Since we handle clients all over the U.S. it has been interesting to watch.  Examples are after hurricanes we see clients come from the Florida and Georgia area.  Off football weekends in Mississippi, folks get out their retirement papers. Tax season becomes overload!!  Anyway, we are thankful for the lulls but really want to encourage people to take a serious look at this stuff at least two years prior to considering retirement. It is worth the effort!

What happens when people linger?  Don’t they just increase their benefit?  Yes, they do increase their benefit, but if 66 years old or older, probably losing income stream as well.  The reason for this is the auxiliary benefits available to their spouses.  If triggered at the RIGHT time, could mean an increase that should not be missed. 

Two clients this week – one called the month he and his wife were eligible for Restricted Spousal benefits and it is going to work out for them.  Had he called in November it would not have been the same story. Another couple were both waiting until age 70 to maximize their earnings – both 68 years of age and a professional gave them our number.  They are out about $15,000 that cannot be recovered, but the good news is they can recover more than $20,000 in retroactive benefits. They had no idea that they were eligible for these benefits, but we are thankful for their professional who had their best interests at heart.  

Most middle-income couples, through life expectancy, look at over a million dollars in their Social Security nest egg.  This is more than most people have saved toward retirement.  So, to many folks, Social Security is considered a critical lifeline in their retirement plan.  All of us realize, after the Crash of 2008, that no assets – not our homes, not our bonds and certainly not our stocks – are safe from life-altering declines.  Figuring out what to apply for and when to do it is not simple.  You have been paying payroll taxes your entire life, make sure you maximize your benefits.

Pillars LLC is located in the Corinth, MS area but services clients in all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 42 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!

Don’t Assume – Part 2

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Funny thing happened about a month ago – one of our clients was going to file for her Social Security benefit and I told her to take her marriage certificate in case they asked for it – sometimes they do, sometimes they don’t.  Anyway, in the process of trying to locate this document, she found $1,000 in her home safety box she had forgotten about.  Moral of this story – your Social Security Advisors can be VERY profitable!!

Now to continue with our series we started on ASSUMPTIONS:

1. Delayed Retirement Credits do not increase spousal and children’s benefits. 

Child benefits, spousal benefits including child-in-care and divorced benefits will not rise if you suspend your benefit to start at a later date to collect more delayed retirement credits.  These auxiliary benefits are based on your Primary Insurance Amount, not your actual retirement benefit amount.

2.Your birthday and Social Security are important

Social Security treats you as if you have attained a given age the day before your birthday.  This is very important when working on filing strategies and Earnings Limitations problems for clients.

3.Disabled widowers have different rules

There is a separate and more generous formula standard for disabled workers.  Widows(ers) can draw their benefits as early as age 50 with no greater reduction than if they were to have filed at age 60.  But remember that there is still a reduction applied for taking prior to Full Retirement Age.

4.Waiting until 70 to draw your benefit may or may not be your best option. 

Depending on your spouse’s benefit amount, your ages and your ability to be flexible, drawing between ages 66/67-70 for one of the spouses may be a better option.  Numbers don’t lie, so needs to be reviewed.

5.Drawing your Social Security benefit early will hurt your Survivor.  

Widow or widower benefits are normally equal to the deceased worker’s (assume this is the husband) benefit at Full Retirement Age, or if he dies at a later age, his benefit including Delayed Retirement Credits.  However, if you file early, this is not the case; you will receive a reduced benefit based on a complicated formula because of filing prior to Full Retirement Age.  

Again, these are just some of the rules you may or may not have been aware of.  There are 2,728 rules so it is a daily, cumbersome, ordeal to navigate this program.  Watch out as what you don’t know, could certainly hurt you and your family’s pocketbook!

Pillars LLC is in the Corinth, MS area but service all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!

Don’t Assume – Part 1

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As a Social Security Advisor, you get tired of the word DEPENDS – that is because there are so many rules for this benefit that most of the time IT DEPENDS.  We thought the best way to dig into some of these rules was to give you a handful of the more common ones; hopefully this will get your wheels turning for further advice or questions.

1. If you don’t ask for a benefit, you might not receive it.

Social Security does not know if you are married, have children, have been divorced or widowed.  Their job is to give you information about your benefit and your benefit only. Also, if your marital situation changes, or a former or current spouse dies, this can affect your benefit and the amount you are eligible to draw.

2. Your Social Security statement reports you are eligible for one benefit at different ages.  Can I be eligible for more than one benefit?

How do you know if you are eligible for more than one benefit?  You need to know the rules and regulations.  If eligible for more than one, which one do you take first.  IT DEPENDS.  With proper timing, strategizing in this area can greatly improve your income stream through life expectancy.

3. There may be no advantage to waiting until your Full Retirement Age to collect a divorced widow(er) or widow(er) benefits.

There is a different calculation called RIB-LIM that is used to calculate the above benefits.  This formula creates no increase in this benefit past a certain point that comes before your Full Retirement Age benefit, up to 51 months before FRA.

4. What if I realize I have made a mistake in filing early?

There is a one-year window, from the date of your first benefit, called a DO-OVER period; during this time frame you can change your mind about how you have filed.  The caveat with this window is that all benefits, including any auxiliary benefits attached to your benefit have to be repaid.  You need to know what you are doing before you make a final decision.

5. Earnings Limitations reductions impact all beneficiaries from worker’s benefit.

If your spouse or your children are drawing a benefit from your benefit, and you trigger the Earnings Limitations reduction rule with your excess income over the limit, a reduction will be appointed on a pro rata basis to all those family members.  This can be a HUGE hurt that usually is unrealized until it is too late.  Before you draw early and continue working, have a professional review of your situation.

Pillars LLC is in the Corinth, MS area but service all 50 states.  Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years.  You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699.  KNOW before you GO!!

Confusion About Divorced Benefits

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If you were married 10 years or longer, are currently single, having been divorced for two years, were born on or before January 1, 1954 and have not filed for your Social Security benefit, this article is about you and for you.

Divorced spouses, if they fall into the category above, have more claiming options than their married counterparts. One of the spouses in a married couple can file a Restricted Application for Spousal Benefits, if born on or before January 1, 1954. But the other party has to have filed for their benefits in order for this strategy to work.

This is not true with divorced couples. As long as your marriage lasted 10 years, has been legally dissolved over 2 years, each are still single, then each party is considered to be “independently entitled” spouses. What does this mean? It means that if both spouses are at least 62 years old, they can claim Social Security benefits on an ex’s benefits record even if the ex-spouse has not yet claimed benefits. So, the other benefit is that while the divorced spouses that qualify are filling off their ex-spouses’ benefit, their benefit is growing by 8% per year until they decide to file.

When did these rules change? Before 1985, divorced spouses were subject to the same requirement as a current spouse. That is, the worker had to apply for Social Security before a benefit was made available to his or her divorced spouse. It was determined by Congress that many ex-spouses were holding grudges against their former spouses and to keep them from applying for benefits off of their records, thus they were waiting until later to file instead of sooner. This caused great hardship for many ex-spouses, usually women. Instead of allowing these ex-spouses to have to file for public assistance and eliminating them being held hostage to their ex-spouses filing decision, the law was changed.

Now, if over age 62, and meeting all the other age and length of marriage and divorce requirements, this exception is in place for those that qualify.
Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!

Social Security Benefits are an Asset

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Day in and day out, we see middle income married couples with an aggregate cumulative Social Security benefit, through life expectancy (85 for men and 88 for women), well over a million dollars as a combined asset. When we show this analysis to our clients, they are in awe as they never knew their benefit to be worth so much. Taking this into consideration, why aren’t people finding out ways to maximize what is their most valuable retirement tool?

Money in general, and more specifically Social Security benefits, tend to evoke very emotional reactions. People want to draw as soon as possible because they don’t want to be subsidizing someone else’s retirement without seeing the benefit for themselves. This fear of missing out often leads to an erroneous investment mindset about Social Security. Retirees with this mindset truly believe that maximization comes from drawing early instead of reviewing what options are available. As we share in our seminars “people are more concerned about dying early, than living too long”. By drawing early, you would have to die before reaching your break-even point to win financially. This does not seem like a good way to maximize an investment.

People also have very good intentions, that usually go by the wayside – they will say “I will go ahead and draw early and invest that money”. This kind of thinking ignores the reality of investments, specifically risk and the volatility of investments; also the fact that LIFE happens and that money does not always end up where you had intended it to go. Because of inflation, money loses value over time. Putting your Social Security checks in conservative investments such as CD’s, Treasury Bills and savings accounts is one of the riskiest things to do – yes, your principal is protected, but the buying power of your money will be eaten away by inflation.

So, let’s look at your Social Security benefit – there is no volatility, it includes Cost of Living Adjustments to ensure the buying power of your benefit, it has the right of survivorship, and for every year you wait to draw your benefit after full retirement age, you will be rewarded with an 8% increase per year. Treating your Social security in the terms of protection versus profit, is a much better way to look at this asset.

Pillars LLC is in the Corinth, MS area but service all 50 states. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years. You may contact them at dthompson@pillarsllc.com, on their website at www.pillarsllc.com or call at 601-954-0699. KNOW before you GO!!

Social Security Review before Filing

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Each and every day, we are confronted with choices that can alter our course of life.  Some of these are short term situations, but many are long term situations that we cannot go back and change.  The same with Social Security and the choice you make about your benefit.  Many times, a quick decision cannot be changed.  As we have stated, time after time in previous articles, do not take your Social Security claiming decision lightly….educate yourself and don’t second guess your decision.    For many of us, it is the cornerstone of our retirement roadmap and will determine our quality of life through retirement.

When reviewing your Social Security statement, you have what appears to be three choices….take your benefit at 62 (early), 66 or 67 (standard) or 70 (maximum).  This is just simply, not the case.  There are literally hundreds of different ways to file for your benefit and this is why you need a customized report.  The customized report will provide you with the following:

  1. Charts and graphs showing you exactly how much you, or you and your wife can expect from your benefit from the year you file until your chosen life expectancy.  There will be no questions about how much income will be received….it is all there in black and white.  Because we cannot determine the Cost of Living increase each year, the numbers will actually be a little understated, which is a good thing!!  
  2. It will provide you with claiming strategies such as Restricted and Spousal Boost.  This will give you additional options for retirement so you can plan when to retire, or when to reduce your income level so your benefit will not be affected.
  3. The report will show you your benefit calculation, based on the age you decide to retire….so you can strategically plan for your future without second guessing your decision.  It is hard to put a price tag on peace of mind.
  4. It will show you what the surviving spouse benefit will be depending on the claiming decision you choose.  This amount can dramatically change with the right claiming decision.
  5. It will provide you with many different age scenarios, both for husband and wife, or for a single, widowed or divorced individual, so you can determine what is best for your situation and for your future.
  6. It will show you how to combine your options, to optimize your benefit as a couple.
  7. It will be customized with your information – no generic information from a book that only gives examples.  Anyone can put numbers into a computer program, but will it be a report designed for you or just a generic guess???  
  8. It can show you how to continue working at a reduced salary, collect a benefit and also provide your spouse with a spousal benefit, if that situation exists.
  9. Privacy is key – we do not need your social security number to complete a report, credit card numbers or bank account information.
  10. It will provide you with the asset value of your social security benefit.
  11. The report is simple to understand, and a follow-up interview is provided to make sure you completely understand the material that has been provided.

If you are between the ages of 60-65, please consider a customized report.  It will get you headed in the right direction when making retirement choices.  Remember,  Social Security is a lifetime annuity,  is inflation protected, and has the right of survivorship.  Call us at Pillars, LLC,  601-954-0699 to order your customized report.   Or your can email us at dthompson@pillarsllc.com or rthompson@pillarsllc.com for more information.  Our website is www.pillarsllc.com.

Do-Over Case Study

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We receive many phone calls from people that want to know if they made a mistake when they filed for Social Security. They either read an article, or someone told them another about a way to file and they start questioning their decision. These phone calls are sometimes very hard because unfortunately some of them did have better options. And, for them to get out of the snare they have elected is a tough and costly remedy.  There is a one-year Do-Over period, but all the benefit monies received by you and others (yours, spousal, and family) must be paid back.

Thought we would share an actual client example of a positive Do-Over:

  1. Husband was born in 1950 and had not started drawing his benefit.  His Full Retirement benefit amount at age 66 was $2600 per month.
  2. Wife was born in 1952 and had started drawing her benefit at age 63 at $220 per month.
  3. He wanted to start benefits at age 67 and wanted us to provide him with options.
  4. As it turned out, the wife had only been receiving her benefit for 5 months so she would have to pay back $1265.00 to start her filing process over.  Remember, this was because she was within the one year window for D0-Over.
  5. We discussed many other options, but they wanted to proceed with the Do-Over.
  6. So, wife filed the necessary forms, (SS Form 521) and paid back her $1265.00.
  7. Husband filed for his benefit at age 67 in the amount of $2684.00 like he had originally planned.
  8. Wife filed a Restricted application for Spousal Benefits at age 66 in the amount of $1,290.00.  An increase of $1,070.00 per month over her original filing.  
  9. This was a total increase in their benefits through life expectancy of $201,249.00.
  10. So instead of their monthly income being $2904.00 it increased to $3974.00.  Quite the difference!

This does not happen every day, but the point is that due to the lack of knowledge about the rules and regulations, this couple was headed down a path that severely shortchanged their retirement income.  

Social Security is complicated folks, and you need to know the rules and regulations before you file, or better yet, have an analysis prepared that will show you all available options.  Then you take the option summary you choose to the Social Security office and file.  Had they contacted us several months later, this would not have been an option for them.

Call Pillars LLC at 601-954-0699 and Roy and Diane will help you with these decisions and show you how to maximize your benefit and accomplish your personal goals.  They are both National Social Security Advisors and Roy is a former CPA of 40+ years.  We are in Corinth but service all 50 states. www.pillarsllc.com

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.