66 or Older?

Posted on January 23, 2020 by hgasaway Leave a comment

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

Posted on January 16, 2020 by hgasaway Leave a comment

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

Posted on January 10, 2020 by hgasaway Leave a comment

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

Posted on January 3, 2020 by hgasaway Leave a comment

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!!


Start 2020 Thinking About Social Security Issues and Options

Posted on January 1, 2020 by hgasaway Leave a comment

The month of December for most of us is immersed in celebrations, pageant’s, football, parades, writing and mailing Christmas cards, decorating, cooking, parties and family.  We are all over the top BUSY – BUSY and actually anticipate the colder, slower month of January to simply re-load.  Don’t get me wrong, we all love Christmas and the meaning behind that special day, but we just over commit.  Take lots of pictures as these memories fly by in a brief moment!

Having said that, January is also the month most folks start pulling out their tax receipts, 1099’s, W-2’s and other year-end compilations.  This is a good thing as April 15th quickly roars its head.  If nearing retirement, may we also encourage you to look at your Social Security statements?  First of all, your Earnings History must be accurate as these numbers affect your PIA (primary insurance amount) for life. Also, the numbers presented on this statement are not your only options.  Timing, flexibility, and the application of rules that apply to your situation could change your benefit amount.  

Whether married, divorced, single, disabled or widowed, this message is for you.  There are different rules for each situation, and people are in different categories based on their ages.  Combining these differences is complicated, but a welcome challenge if this is your area of expertise.  WHY – because in most cases, there is a better choice which equals improved cash flow.

Check for errors in your Social Security statements – in 2016 alone, the SSA processed 92,000 complaints about mistakes found in statements.  Remember, that your benefit amount is based on your top 35 years of inflation-adjusted earnings, so if these numbers are wrong, your benefit amount will not be accurate.

When you file for your Social Security benefit, that decision has potential repercussions for your spouse as well, not only while you are living, but for your spouse’s Survivor benefit.  Your benefit filing also has repercussions that include family members qualified to share in your benefits.  Your benefits should be reviewed collectively, not individually – this is our area of expertise.  Remember that when one of you dies, only one check remains.  If by simply planning you can improve this amount for the rest of your spouse’s life, why would you not do this?  The answer to this question is simple – a lack of knowledge regarding the rules and regulations that apply to Social Security benefits. 

People who were born after January 1, 1954, will be “deemed” to apply for any 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.

Social Security benefits for divorced spouses remains a fertile area where strategic claiming strategies can make a big difference in retirement benefit planning and future income for these spouses – not just women, men as well.

In agreement with the Social Security laws, there are Spousal Benefits, Family Benefits, Divorced Benefits, and Survivor Benefits, all not included on your annual Social Security statement.  If you don’t know the questions to ask, how do you expect to get the answers you need or the benefit you deserve?

Do yourself a favor next year and make this one of your priorities.  You take your taxes to a professional and you get a better end result – do the same with your Social Security benefit – it is for the rest of your life.  

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!!


Husband says “NOW”

Posted on October 15, 2017 by Pillars LLC Leave a comment

Believe it or not, we get calls from wives that are concerned about their husbands knowledge of Social Security laws. Because we are in 5 state newspapers, depending on the article, these calls are frequent. This might be because women are reading the articles we write more thoroughly and this causes them to question. Whatever the reason, we are thankful for the calls because on many occasions their concern was legitimate.

This is a real example just the names have been changed:

Larry – age 66.0 months and Full Retirement Benefit amount is $2500.00

Evelyn – age 64.3 months and Full Retirement Benefit amount is $1250.00

Larry wants to file now – they may need the additional income. If Larry files at Full Retirement Age (FRA) and Evelyn files at age 64 and 3 months, their lifetime benefit (85 him/88 her based on national averages) will be $984,537.05. Larry will draw his FRA (full retirement age) benefit amount and Evelyn’s will be reduced for taking early to $1110.00. The thing they may or may not have realized was that the Survivor Benefit will be reduced by over $783.00 per month in comparison to other options that were presented.

But what if?

Evelyn files at 64 and 4 months for a reduced benefit amount of $1,067.00 per month. Why 64 and 4 months? Because this opens up the opportunity for Larry to file a Restricted Application for Spousal Benefits from Evelyn’s benefit in the amount of $600.00. At 68 and 3 months

Evelyns is able to file for Spousal Benefits off Larry in the amount of $1,117.00 and at age 70

Larry files for full benefit that has improved by 8% per year for 4 years in the amount of $3,300.00. Also, their Survivor Benefit has improved to a maximum of $3,300.00 per month vs. $2500.00.

This is only one of many options available to this couple, but we are presenting the best and the worst. You take if from there – remember you do have options, over and above what your Social Security statement reflects.

Social Security is complicated and the Bi-Partisan Budget Act of 2015 only made the system more complicated. Don’t leave this benefit to chance – professional review is recommended in all situations.

Call us at 601-954-0699 (located in Corinth, MS but serve all 50 states) or email us at dthompson@pillarsllc.com for more information. Website is www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of over 40 years.


Voluntary Suspension of Benefits

Posted on October 4, 2017 by Pillars LLC Leave a comment

In our world of Social Security and the clients we meet, it is becoming more and more common for clients to proceed with a Voluntary Suspension of their Benefits. What does this mean and why would someone do this?

  1. The option to “voluntarily suspend” refers to a process that is only available after reaching Full Retirement Age and Full Retirement Age is different for each individual based on their date of birth.
  2. In the POMS Manual (Social Security Administration Rules and Regulations) this is explained in POMS GN 02409.100. “Beginning in January 2000, the Senior Citizens’ Freedom to Work Act of 2000, permitted primary beneficiaries who were at Full Retirement Age, but were not yet age 70, to voluntarily suspend payments to earn delayed retirement credits.” Delayed Retirement Credits are 8% per year, for every year you don’t file until age 70. This request can be written or oral and does not have to be signed.
  3. If you elect to Voluntarily Suspend your benefit, please be aware that in the Bi-Partisan Budget Act of 2015, new rules were created that will also stop any spousal or other family benefits paid from the suspended account. This is a huge consideration.
  4. People elect to do this for several reasons: they realized that filing prior to Full Retirement Age was not a good decision on their part. Another reason could be that they have gone back to work and they do not need this benefit, and they would rather collect the Delayed Retirement Credits. Another reason might be that he and his spouse have a big differential in their ages, and she could not file off of his benefit until after he started his benefit again at the later age.

EXAMPLE: Tom began his benefits at age 62. His PIA (primary insurance amount) is $2,000. Starting at age 62 reduces his monthly payment to $1500. At his Full Retirement Age, Tom can suspend his benefit. He will earn 2/3 of 1% delayed retirement credit per month until he resumes benefits. If he waits until age 70 to start them again, his monthly payment will be $1,980 – about 99% of his PIA. Remember though, if any auxillary benefits are being paid off this benefit, they will be suspended also.

This option can be tricky if not calculated with all variables taken into consideration. Social Security has so many options that people are not aware of. You can email us at dthompson@pillarsllc.com or rthompson@pillarsllc.com for more information. Our website is www.pillarsllc.com. We have the experience and knowledge necessary to make an educated decision about these benefits.


Social Security and Student Loan Debt

Posted on October 1, 2017 by Pillars LLC Leave a comment

A situation regarding student loan debt has come to our attention again, and thought we would share some insight to this problem. Students, at an alarming rate, are borrowing the maximum amount from the government to pay for their higher education. They are allowed to pay very low monthly fees for these loans over a long extended period of time. In their minds, this means I will just paying for this the rest of my life. Well, guess what?
“Unpaid, federally guaranteed student loans are one of the reasons you can have your disability checks, both Veterans Affairs and Social Security, garnished by the federal government. There are limitations on how much the government can take each month, but they can take the money.” Garnish Disability to Pay Student Loan? Dr. Don Taylor, PhD, CFA, CFP, CASL – Bankrate – Jun 7, 2013.

So, if this debt extends past retirement age, the Federal government is going to garnish a portion of the Social Security you earned for retirement.

In 2008, when so many older adults lost their jobs, many went back to school to get their degrees in an effort to make themselves more marketable. Now some of these folks, that are wanting to retire, are faced with the option of dipping into other assets to get these loans paid off, or having a chunk of their retirement garnished. Not a good situation.

Recommendations:

1. Have a heart to heart with your students about how this debt could harm them when they are approaching retirement.
2. Limit the amount they borrow if possible.
3. Pay off this debt as soon as possible. It may hurt for a while, but they will be glad it is off their back.
4. Have them work during college to limit the amount of money needed to borrow.

Can you imagine the amount of money the Federal government will save when all these Millennials are of retirement age, and their benefits are partially garnished?

This benefit is too important not to have it professionally reviewed. We talk to people everyday that wish they could take back the decision they made – simply because of lack of education on the subject. You can email us at dthompson@pillarsllc.com or rthompson@pillarsllc.com for more information. Our website is www.pillarsllc.com.


Earnings Test for Dual Income Families

Posted on September 9, 2017 by hgasaway Leave a comment

Working later in life, has almost become the norm. People love their jobs, have good health, look forward to additional income and savings, and sometimes just need to stay busy. With that said, whatever your situation might be, taking the Social Security benefit while still working can create quite a challenge.

The Earnings Test is quite complicated if there is not a thorough understanding of the rules and regulations. Prior to your Full Retirement Age, if you draw your Social Security benefit and continue working, you will be limited to $16,920 (2017 limit) earnings before penalties will be applied against your benefit amount. For every $2 you earn over the $16,920 limit, $1 of benefits will be withheld. In the year, you reach full retirement age, a more generous earnings test applies. In this scenario, you will lose $1 in benefits for every $3 earned over the $44,880 earnings limitations cap (2017). After full retirement age, the earnings test disappears.

If married, this poses many questions and requires a review of your situation. What are your age differences? Who is going to file and who is going to continue working? Are you both going to file and both continue working? Who has the excess earnings and whose benefit are the Social Security benefits calculated on if using a spousal benefit? Will this additional income put you in another tax bracket?

Another caveat to this rule, is if a couple decides to draw their benefits early, and one of the couple is drawing a spousal benefit, if the remaining person is still working and earning over the Earnings Limitation therefore reducing their benefit, the other parties benefit will be reduced in unison. Is this a mouthful – you bet!! The earnings test clock restarts each year that the person continues to work while under full retirement age and collecting benefits.

As we have stated over and over, there are 2,728 rules and regulations. And your decision to file is basically a permanent decision. Get it right the first time!! We have had many clients that have filed early, continued working, did not know how to structure what they were filing for, and ended up receiving NO Social Security income because of their earnings, locked in their benefit amount and reduced their Survivor Benefit all in one fell swoop.

Call Pillars LLC at 601-954-0699 (DIAL before you FILE) 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 clients in all 50 states.


Can I Ever Get the Maximum Benefit from Social Security?

Posted on January 6, 2017 by hgasaway Leave a comment

Did you know that 61% of Social Security retirement benefit recipients receive at least half of their income from Social Security? And, 33% of beneficiaries rely on Social Security for 90% or more of their income. With that being said, how can I get the most from my Social Security benefit?

In 2017, the maximum benefit for someone retiring at Full Retirement Age will be $2,687 per month. That is an increase of $48 per month over the 2016 maximum of $2,639. On an annual basis, the 2017 amount will produce $32,244 in income.

However, the one thing that affects the true maximum benefit from Social Security is the age at which you decide to file for benefits. The above amount assumes that you take your benefits at Full Retirement Age, which is 66 for those who were born in 1951 and retiring in 2017. If you claim your benefits earlier than Full Retirement Age, you get less. At age 62, this benefit amount would be $2,153 per month. On the other hand, if you wait until age 70, that amount increases with Delayed Retirement Credits to $3,538 per month.

Yet, the main reason why most people don’t acquire the maximum benefit is simply because they don’t earn enough money throughout their careers. Social Security looks at the highest-earning 35 years of your work history to determine your benefit amount (PIA), adjusting earlier earnings for inflation to determine your average indexed monthly earnings.

Social Security is a progressive program, which means it is designed to replace more pre-retirement income for low earners and less for high earners. Also, Social Security only gives workers credit for the amount they earned up to a certain wage cap – in 2017 this cap is $127,000.

That means in order to qualify for the maximum amount payable to beneficiaries; you must have earned at least the wage base limit for 35 years of your career. For most Americans, earning a salary of $127,000 or more is an unrealistic goal. But that should not keep you from working toward that goal – remember your benefit is based on your top 35 years of earnings, so keep plugging away.

When reviewing your situation collectively with your spouse’s earnings, as we do at Pillars LLC, you can improve your lifetime benefit by utilizing claiming strategies. Timing is critical in the Social Security world when it comes to benefits. Don’t settle for less than you are entitled to, because of not knowing.

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.


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