Wednesday, March 27, 2019

Social Security: Facts Everyone Should Know

There is so much misinformation on the internet about Social Security, it has become imperative that we dispel as many of these myths as possible.  In addition, a large number of people do not understand the basic facts about this essential government program, which is especially unfortunate since the vast majority of adults in the U.S. have either paid into the program through withholding from their paychecks, or they currently receive Social Security benefits.  As a result, we researched basic factual information directly from the Social Security Administration website, as well as the AARP, and the National Committee for the Preservation of Social Security and Medicare and are sharing this information below.

Facts Everyone Should Know About Social Security

Fact: Social Security still has plenty of money to pay benefits.  The Social Security trust fund currently contains about $2.89 trillion.  In addition, millions of workers continue to pay into the program.  For decades, more money was collected than was being paid out in benefits and the extra money accumulated in the trust fund.  Starting in 2018, the Social Security Administration began to dip into the trust fund to maintain the promised level of payments.  If nothing changes in the future, the trust fund will be empty by sometime around 2034, and future retirees will only be able to collect about 79% of what they have been promised.  Benefits could continue to be paid for decades at these reduced levels, because workers would continue to pay into the system.  At no point would Social Security completely run out of money and be unable to make payments.  Fortunately, the full promised benefits could also be maintained with only a few minor changes to the program.  The National Committee for the Preservation of Social Security and Medicare has recommended specific adjustments which, if implemented by Congress, would assure beneficiaries there is no need to cut benefits in the future.

Fact: We need bi-partisan pressure on Congress to make the necessary changes and maintain the promised benefits.  Although it would require very small changes in order to preserve the full level of Social Security payouts, it has been difficult to get both political parties to agree on anything, even something as important as Social Security.  We need voters in both parties to put pressure on their members of Congress to reach an agreement and protect the program.

Fact: Only a few minor adjustments are required to protect our benefits.  Ideas for saving Social Security fall into three categories, which could be implemented gradually.  These recommendations are: raise the cap on payroll taxes above the current income level of $132,900;  raise the percentage rate workers and employers pay by 1/20th of 1 percent every year for the next 20 years, so that it will only go up by a total of 1 percent over a period of 20 years; slightly raise the age for people to collect their full retirement benefits.  That's it.  If Congress could agree to gradually make those three changes, ALL our promised benefits would be protected for ourselves and future generations, and cuts would not be necessary.

Fact: The Social Security Trust Fund has not been raided by Congress.  This often repeated story is not true. The confusion is because the money we pay in has been invested in U.S. Treasury securities and the government can use the invested money, but must pay it back with interest.  Congress does determine how much money can be used on administration and, in that way, a large amount of the incoming receipts have been eaten away by administrative costs, which is why it may appear that the trust fund has been raided.  Some people believe that modernizing systems and improving efficiency would reduce some of the administrative costs.  However, these expenses can never be entirely eliminated.

Fact:  Social Security is not meant to be your sole source of retirement income.  Unfortunately, approximately one-quarter of retirees rely on their Social Security benefits for nearly all of their living expenses after retirement.  Encouraging workers to put more money into 401(k) and IRA retirement accounts would help future retirees have a better quality of life.  This is especially important because, historically, Social Security benefits have NOT kept up with inflation. It is never too late for workers to begin saving for retirement.  The younger you are when you start, the better off you will be in the future.  Ideally, everyone should retire with a nest egg of retirement savings, as well as low debt, if they want a relaxed retirement.

Fact:  Your Social Security benefits may be taxed.  Currently, thirteen states tax your Social Security benefits. Those are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia.  However, even if you do not retire in one of those states, you are not off the hook for income taxes on Social Security. At the federal level, you may have to pay income taxes on up to 85 percent of your benefits if your combined income from all sources exceeds about $34,000 for a single retiree and $44,000 for a couple.  Many people believe that Congress should significantly raise these income levels or exempt Social Security from taxation for most people, because it makes no sense for the federal government to tax our federal Social Security benefits, except possibly for those with a very high income. Personally, I agree that paying federal taxes on federal benefits simply makes life harder for middle class retirees.

Fact: You can work and get Social Security benefits at the same time, but be careful!  If you work and collect Social Security benefits prior to your full retirement age of about 66 or 67, your benefits will be cut.  If you work after reaching your full retirement age, your benefits will not be cut, but it could increase the amount of taxes you pay on your benefits.  You may want to discuss the pros and cons of your specific retirement job and expected income with a tax professional, so you are certain that a retirement job will not hurt you more than it helps you.

Fact: The Social Security Administration only makes electronic payments into an account.  They no longer mail checks to beneficiaries; the funds have to be direct deposited into a bank account.  This has cut administrative costs and reduced the number of lost or stolen checks.  If you live in another country and have a bank account there, your benefits may be deposited directly into a foreign bank account in many, but not all, countries.  Hundreds of thousands of American retirees receive their benefits in a foreign country.  Other retirees have their checks deposited into American banks, and then transfer it into their foreign bank accounts as they need it. 

Fact:  You can only collect one type of Social Security benefit at a time.  Social Security has four different programs: retirement, disability, dependent and survivor. You can only collect from only one of these programs at a time, so it is important to discuss changes to your situation with the Social Security Administration and determine which benefit would earn you the highest income.  For example, if you currently receive benefits on your own work record and your spouse dies, you may be eligible to increase your benefits by claiming survivor benefits, instead, based on your spouse's work record.  However, you cannot collect both. You may only collect the one which will pay you the most.

Fact: The good news is that the majority of people receive more in benefits than they paid in!  According to research by the Urban Institute (which you can review at, the majority of people receive more lifetime Social Security benefits than they paid into the program during their working years, and this is true for both high income and low income earners.  Of course, there are exceptions when someone dies before they retire, or shortly after retirement, but the majority of people have significantly benefited financially from the program.  This is all the more reason why everyone should put pressure on Congress to fully finance the program.

Before you claim your Social Security benefits, you may want to learn as much as possible about the program by picking up a book which explains everything in easy-to-understand language.  You can find a variety of Social Security guides from at:  Social Security books.  

Readers can also get more information by visiting these websites:

If you are interested in learning more about Social Security, Medicare, financial planning, where to retire, common medical issues and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional helpful articles.

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Wednesday, March 20, 2019

Retirement Housing for Aging Alone - Are You Prepared for the Future?

Millions of Americans are aging alone, often because they are divorced or widowed.  Others may never have married.  Large numbers of them may not have children, or their children may have their own physical, mental or addiction problems which make them unlikely to be of much help.  Although most of us believe we will be able to take care of ourselves for the rest of our lives, this is not always realistic.  What happens if you are diagnosed with a serious illness or dementia?  Everyone needs to understand their options for aging alone, so they are prepared when the time comes and they need extra help.

Reach Out to Others for Help

The first thing you need to realize is that few people really need to be totally alone, unless they are unwilling to reach out for help.  Organizations such as your church or place of worship, the local senior center, and Meals on Wheels have resources to help you, whether you need permanent or temporary assistance, such as after a surgery. 

If you wish to remain in your own home as long as possible, contact the organizations mentioned above, as well as your nearest state Social Services department, and follow their suggestions.  You may qualify for financial assistance, discounts on your utilities, special telephones for the hearing impaired, free or discounted transportation, Meals on Wheels delivered to your home, and handicapped accessible equipment to make it easier for you to live alone.  For many people, these services make it possible for them to remain in their own home much longer than would otherwise have been possible.

It is likely that there are also businesses in your community which will make it easier to stay in your own home as you age.  Find out if you can get your groceries delivered, your cleaning picked-up, and a maid service to clean for you.  Does your local transportation authority have buses or ride share services which will take you to shopping centers or doctors' appointments?  Are you taking advantage of online banking?  All of these conveniences make it easier to live alone, even when you have trouble getting around on your own.

In addition, set up your own circle of friends and relatives who may be in the same situation.  Create a phone circle so you regularly make phone calls and receive calls from others.  In this way, you can help check on them and they can check on you.  This can bring peace of mind in the event you fall or are injured, knowing someone will check on you and, if you do not respond, they will call a neighbor, relative or the police to do a wellness check.

A friend of mine has a 90 year-old neighbor whom she worries about.  Together they came up with a plan that the 90 year-old would open the blinds in her kitchen window by 10:00 every morning.  When my friend sees the blinds have been opened, she knows her neighbor is OK.  A simple plan such as this one can make it easier to live alone, while knowing that your neighbors are looking out for you.

You can also use technology, such as a Great Call device or similar wearable alarm system, so you can easily reach someone in an emergency.  You simply need to push a call button and the agent who answers can call a neighbor, friend, police or ambulance service for you, depending on the situation. You can even do something as simple as taking the time to make sure you always carry your cell phone around in your pocket.

Finally, pull together a few social circles.  These can be people who get together on a regular basis such as book clubs, quilting clubs, lunch pals, or dinner groups.  Join a bridge group or take a class at a senior center or community college.  Send cards or emails to friends and relatives so you stay in touch.  All these social contacts can enrich your life and help you feel less alone, which is important for both your mental and physical health.

Housing for Those Needing More Care

Once you have exhausted all the programs which have enabled you to live on your own, what should you do when you eventually need more care than is possible for you to get in your own home?  This is when you or a person you trust should plan ahead for the best type of housing for you.  You need to consider the types of care you may need, the activities which interest you, the amount of socialization you think you would enjoy, and how close you want to be to your current community support such as your church, old friends and relatives.

You can start by using a reputable agency to hire a personal caregiver.  This may help you stay in your own home even longer.  However, it is important that a friend or relative checks on the caregiver regularly, to make sure they are giving you appropriate care and not taking advantage of you.

You may also consider moving into an over-55 community where you can live in a separate home of your own and participate in community activities, but have an added layer of security as well as the company of neighbors who are also aging in their own homes. 

Several of my friends have moved into a wide variety of special senior living facilities and wondered why they waited so long.  Modern assisted living communities have parties, cocktail hours, special events, classes, trips, pools, art studios, gyms and more, while providing meals, housekeeping and other types of care.  Once they have gotten settled, most of my friends have loved their new homes!

Personally, I am currently living in an over-55 independent living active adult community.  I have plans to move in the next couple of years into senior apartments which include dinner, lunch and housekeeping, but no nursing care.  In the event this is not enough care, I also have long-term care insurance so I can move into assisted living or a memory care facility when I get really old!  However, I'm not in a hurry for that to happen and, perhaps, it never will. 

There are a number of senior housing choices available:

Independent Living Apartments:  These are ideal for people who want the security and simplicity of living in a senior community, but do not need any assistance with daily living needs.  In some of these communities, you prepare your own meals and do your own grocery shopping.  In others, your meals are provided.  Some locations have a hybrid system in which dinner and, perhaps, lunch are provided, but you are on your own for breakfast.  You should check out a variety of communities until you find one which seems right for you.  If you are financially limited, many cities provide senior apartments which can be rented on a sliding scale, depending on your income.  You may need to go on a waiting list, so sign up as soon as you begin to think this is something you would like to do. 

Assisted Living Residences:  These are ideal for people who do not need medical care but who might need assistance with the normal activities of daily living, such as bathing, eating, dressing, using the bathroom, walking or transitioning back and forth from a bed to wheelchair.  They usually provide meals, housekeeping, transportation, medication management, and fun, interesting activities.  The cost can range from about $4,000 to $10,000 a month, depending on the amount of help you need, the size of your room or apartment, and the area where you live.  Long-term care insurance may help with the expense.

Continuing Care Retirement Communities or a CCRC:  These are sometimes called life care communities and it is something you may want to investigate years before you expect to need one.  In this way, you will have a say in where you may end up living.  A CCRC is composed of senior apartments and cottages which have a tiered approach.  You start out living in an independent living unit.  Then, as the need arises, you may be moved to a skilled nursing or memory care facility in the same community, so you can get the assistance you need while still maintaining your connections.  Most of these communities require that you are able to function on your own in an independent living unit when you first move in, so it is important you plan ahead.

A few CCRCs are rentals and some allow you to use your long-term care policy to cover the cost, which can vary depending on the amount of care you will need.

However, most CCRCs require you to buy into the community and they will not accept a long-term care policy.  The "buy-in" can range from $100,000 to $1 million, with the money often coming from the sale of your home.  In addition, the monthly fees can range from $3,000 to $5,000 per person.  There are different types of contracts available including unlimited life care, modified life care with limits, and fee for service, with the responsibility for expensive long-term care lying with the resident, not the facility.  Before you choose a CCRC, you will want to visit all the ones in the area where you plan to live and compare whether they are rentals or the type where you pay an entrance fee, the monthly cost, potential extra fees, as well as what type of contract you will have.  It can be complicated to compare them, so you want to investigate your choices thoroughly while you are still in good health and of sound mind.  The benefit of a CCRC is that you can settle comfortably into one and, if you have planned well, you will never have to move again.  They will take care of you for the remainder of your life.  This brings a great deal of peace-of-mind to many people.

Board and Care Homes:  If you are looking for a comfortable, homey setting which is less expensive than most assisted living residences and CCRCs, then you may want to investigate your choices in board and care homes.  They are private homes which have been converted to small senior living facilities with professional staff.  They do not feel as institutional as other facilities and they can feel safer and more supportive than trying to remain alone in your own home.  You will be living with a small group of other people and have a staff to make your life more comfortable. 

Nursing Homes:  Also known as skilled nursing facilities, they will care for you and provide around-the-clock medical care.  Some of them are also rehabilitation facilities and you may stay in one temporarily while you recuperate from surgery, such as a hip replacement.  They have a higher level of care than an assisted living facility or a Board and Care home.  If you pay for a nursing home out-of-pocket, it can average $82,000 a year or more to stay in a semi-private room, according to a 2016 National Nursing Home Survey.  However, your costs may be covered by a long-term care policy or, in some cases, Medicaid.  You should investigate your financial options as soon as you move into one, before any Medicare or health insurance benefits expire.

Plan Ahead for Late In Life Care

If you expect to age alone, it is smart to start early to investigate your various options for receiving appropriate medical care should you have surgery or become seriously ill.  If you are fortunate, you may discover you never need to use the most expensive, comprehensive care, such as a nursing home.  However, if you do have a need for this advanced care, even temporarily, it is smart to know your options and consider how you will pay for it.  Put your choices in writing and give the information to one or two trusted family members or friends, so you are sure your wishes will be honored, should you not be able to speak for yourself.

Whether you age in your own home or move into some type of senior housing, you should make sure you have a will and trust, your finances are in order, and everything is as organized as possible.  Make certain you have a trustee who can handle everything for you, should you become unable to handle things yourself.

While you are at it, you may also want to consider discussing your healthcare wishes with your doctor and putting them in writing, too.  A Living Will or Healthcare Directive is another way to make sure your wishes will be honored during the last few years of your life.

In you are interested in learning more about aging, common medical problems, where to retire, financial planning, Social Security, Medicare and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

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Wednesday, March 13, 2019

Live a Long and Happy Life According to Harvard Research

How can you increase your chances of living a long, happy life?  Many of us wonder if we are living an optimal life.  Are we enjoying the best life possible?  Are we doing everything we can to maximize both our lifespan and our chances of being happy as we age? Fortunately for us, Harvard researchers decided to investigate some of these big life questions.  What did they learn about living a lengthy, fulfilling life?

The Harvard Research Subjects

In order to come up with a an answer to this question, Harvard decided to follow three groups of people.  This was not a brief, one-time research project.  In fact, they followed 800 people for their entire lives ... six to eight decades!  Their research subjects fell into three groups:

*  268 socially advantaged Harvard graduates who had been born around 1920.
*  456 socially disadvantaged inner city men who had been born about 1930.
*  90 middle class, intellectually gifted women born around 1910.

The research was led by George Vaillant and detailed information is contained in the book, "Aging Well: Surprising Guideposts to a Happier Life from the Landmark Study of Adult Development."  You may want to read the book to get the full perspective on everything they learned after doing research for nearly a decade.

Highlights of the Harvard Research on Aging Well

What did George Vaillant learn about what it takes to live a long, happy life?  While everything cannot be detailed in a brief post, the list below will give you a good idea of some of the highlights.

1.  Avoid smoking and drinking alcohol.  (We can probably extrapolate this to include avoiding the use of illegal drugs.)  They discovered that smoking was significantly more common in the "prematurely dead" than in those who were happy and healthy in later life.  They also found that alcohol use harmed not only the health of the subjects, but also their relationships and other aspects of their lives.  Additional lifestyle recommendations they suggested were to maintain a healthy weight and get regular exercise.

2.  Education improves both longevity and happiness ... not only for the Harvard graduates but also for the inner city men who attended college.  Those with more education had better habits and healthier lives.

3.  A happy childhood was surprisingly important.  Feeling loved by their mothers was a better indicator of high income later in life than the social class of their parents.  However, if you did not have a loving, happy childhood, do not despair.  The damage can be undone if, as an adult, you find a loving spouse and have trusted friends.

4.  Good relationships are extremely important if you want to live a long, happy life.  The ability to build strong relationships is sometimes referred to as emotional intelligence. It can make a significance difference in your life.  One important skill is the ability to form new relationships when old ones fade away.

5.  Healthy coping skills were also important. The ability to cope well when dealing with painful thoughts and feelings was another indicator that you are likely to live a long, healthy life.  According to the researchers, "Blaming others, being passive-aggressive, living in denial, acting out and retreating into fantasy were all maladaptive coping mechanisms associated with poor outcomes."  On the other hand, people who were able to cope well dealt with difficult situations by using healthier skills such as "altruism, sublimation, suppression and humor."

6.  Generativity was a term that many of us have never heard of before, but it also appeared to help people age well.  All this means is the ability to "give back."  It can mean serving as a mentor or advisor to younger adults.  It can also mean serving your community and finding ways to help others.

While no one can guarantee that you, as an individual, will live a long, healthy life, those who are able to benefit from the ideas above will greatly increase their odds.  After all, when it comes down to it, isn't that what we are all seeking?

If you are interested in more information about healthy living in retirement, financial planning, where to retire, Social Security, Medicare and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional helpful articles.

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Tuesday, March 5, 2019

Shocking Financial Facts about Retirement

How financially prepared are you for retirement?  Are you doing as well as the average aging Baby Boomer or are you falling short?  Have you thought about all the issues which could affect your financial situation?  Many people wonder how much it will cost them to retire, how long they need to be able to support themselves after they stop working, and what financial issues they need to consider when they reach retirement age.

Below are some shocking statistics about how people are doing in preparing for retirement in the United States.  These statistics may reassure you, because you have planned well, or help you see where you could make some improvements.  Either way, they should help you have fewer surprises when you retire.

If this information alarms you, you may want to read a helpful retirement guide such as The Five Years Before You Retire.  It is a great way to get your financial planning on track and help you avoid some of the pitfalls mentioned below. 

Scary Retirement Statistics for American Baby Boomers

You may need to work after retirement.  About 9,000,000 senior citizens are still working, according to 2017 statistics.  This number has climbed dramatically over the past few decades, especially since the last recession, which was a serious setback to many Baby Boomers.

You should probably save more money before you stop working.  Approximately 21 percent of retirees have less than $1000 in retirement savings, according to the 2017 Retirement Confidence Survey.  More than a third of retirees have less than $50,000.

You need to be prepared to live for two or three more decades.  Retirees are living longer than ever and many can expect to live 20 or 30 years after they retire.  It is estimated that one quarter of all 65 year olds will live past the age of 90.  One in ten 65 year olds will live past the age of 95.  A significant number will live past the age of 100.  Unfortunately, it is likely that many of those people will run out of money long before the end of their lives.

If it isn't too late, you should probably start saving money at a younger age.  Three-fourths of retirees are concerned that they do not have enough money saved for retirement.  Most of them regret they did not save more and/or that they did not start saving when they were younger.  This is helpful information for those people who are still years away from retirement.  However, even if you are close to retirement, it is not too late to begin to save more now so your retirement years will be more comfortable.

You may not work as long as you expect to.  Inadequate savings is a particularly serious problem because nearly one-half of retirees report they left the work force younger than they expected to, either because of health problems or a layoff at their job.  Some left their jobs before they expected to because of other issues, such as the need to care for another person in their family. 

You may find it hard to survive on your Social Security benefits.  Small amounts of money in retirement savings accounts might not be such a serious issue, if the majority of people received substantial Social Security benefits.  Unfortunately, while only one-third of Americans expected Social Security to be their major source of retirement income before they retired, the reality is that two-thirds of retirees discovered Social Security actually turned out to be their major source of income.  This is a serious problem for those who only receive the average amount of Social Security, which is about $1461 a month in 2019.  Remember that millions of people receive even less than the average benefit.

In addition, most people do not receive the full amount of their promised benefit.  Medicare premiums are subtracted from Social Security benefits, reducing those benefits by $135 a month, or more.  If you purchase a Medicare Supplement, prescription drug coverage, dental and vision plans, etc., your Social Security benefits may be substantially decreased before you begin to pay for food, housing, utilities, out-of-pocket medical costs and other bills.

Over time, you will also have to pay for occasional large expenses, such as the deductible on a hospitalization, purchasing a new car (or making repairs on an old one), replacing items in your home, etc.  This is why it is essential to have as much savings as possible before you retire. 

Fortunately, some retirees will have higher than average Social Security benefits. This is good news for people who were successful both during their careers and in preparing for retirement.  If you had a high income during your working years and postponed your retirement until age 67 to 70, then your Social Security benefits may be in the range of $2,700 to $3,700 a month.  However, those people are also the ones who are likely to have the most savings.  The average retiree does not fall into this category.

Social Security and Medicare are in financial trouble.  The government continues to postpone dealing with the problem that both the Social Security and Medicare trust funds are running out of money.  Although there will always be money from current workers which can be used to pay a significant portion of the promised benefits, future retirees may see their Social Security benefits cut and their Medicare premiums rise. The only way an individual can protect himself from this potential disaster is to have savings set aside.

The long-term Social Security income for retirees tends to fall behind the inflation rate.  Over the past few years, cost-of-living increases have been non-existent or very small and have often been offset by increases in Medicare premiums.  As a result, many retirees have found it increasingly difficult to cover their housing and medical expenses. Look back at your own life.  How much have prices for cars, homes, utilities and food increased in the past 30 years?  If you live another 30 years, you can expect the cost-of-living to increase just as much, but your Social Security benefits may increase very little during the same period of time.  You need a plan for how you will cover your expenses in another 20 or 30 years.

Old student loans may derail your retirement plans.  A lack of savings is not the only financial burden for retirees.  Student loan debt for people over the age of 60 has increased between 20 and 45 percent over the past five or six years.  A significant number of senior citizens are retiring while still paying off the student loans they took out to help get their children through college.  This can be a significant financial burden, especially when they may also still have a mortgage, credit card debt, auto loans or similar expenses at the time they retire.

Many senior citizens help their adult children financially.  Whether you make their student loan payments, their car payment, or help pay for your grandchildren's college education, a significant number of senior citizens have discovered that they continue to help their adult children financially for years after retirement.  This can cause retirees to deplete their savings even faster than they expected.

A divorce could be a major financial setback.  Our children and our debts are not the only causes of financial stress during retirement.  Approximately one-fourth of divorced retirees report they are financially worse off than they would have been if they had not divorced.

You could be shocked by the high cost of medical care as you age.  One financial issue which surprised roughly 44 percent of retirees was that their medical expenses were as much as 27 percent higher than they expected them to be. In fact, the average 65 year old couple can expect to spend $280,000 for out-of-pocket healthcare costs over the remainder of their lifetimes.

Readers of this blog may want to use the tabs or pull-down menu at the top of the page to find links to a number of articles on the Medicare / Social Security tab to learn how to obtain their medical care for the lowest cost.  In particular, they may want to consider a Medicare Supplement which is an HMO, or they may want to check out a Medicare Advantage plan.  Do your research, so you are not surprised by this potentially huge expense during retirement.

Sources:  The Motley Fool compiled many of these statistics from various government and insurance company sources.  You can find more details at:

Other information was based on government records and the experiences of the author and her retired friends.

If you are interested in learning more about Social Security, Medicare, finance, where to retire, common medical problems, travel and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional helpful articles.

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