Showing posts with label social security. Show all posts
Showing posts with label social security. Show all posts

Sunday, March 30, 2014

Social Security Decisions are Complicated!

Many people assume that when they reach their early to mid-60's, they will simply quit their jobs, start collecting Social Security and the whole process will be fairly predictable.  In fact, this is actually what the vast majority of people do.  Sometimes it works out; sometimes people have regrets, especially when they learn that their friends are receiving a lot more money than they are.  Making the right choices about Social Security actually involves some of the most complex decisions you will make in your lifetime.

No one likes to make a costly and embarrassing mistake.  It is easy to do, however, when you consider that there are actually 2700 rules that will affect your benefits.  What are some of the decisions you need to make?  Should the breadwinner in your family collect as soon as they turn 62, wait until their full retirement age of 66 - 67, or postpone receiving their benefits until the maximum age of 70? At what age should the spouse, and ex-spouses, apply for their benefits?  Should you take the "file and suspend" option?  Do you even know what that is?

After reading several books on the subject, I realized that I would have to write dozens of articles on Social Security, and keep them updated, in order to even come close to providing the helpful information that is available in this book:  "Social Security Income Planning: The Baby Boomer's Guide to Maximize Your Retirement Benefits."  (Use this link to see the book on

This book takes you through virtually all of the different options you have and the advantages and disadvantages of each.  It also explains how to invest your investment savings in such a way that you will minimize the income taxes you will pay on your retirement income.

Make sure you read the most recent edition of this or any other retirement book that you order.  Several significant laws changed at the beginning of 2016.  For example, the File and Suspend option is no longer available to couples ... a program that substantially increased the retirement income of many couples in the past.

After looking over the different books that have been written about Social Security, I felt that this was the most comprehensive and up-to-date book I could find.  Whether you are getting ready to retire in a few years or you are decades away, this book will help you make the decisions that are right for you.

Whether you read this book, a different one, or order all the available government brochures that explain Social Security, you owe it to yourself to thoroughly research what you want to do BEFORE you stop working and start collecting.  After that, it is really too late.

Since Social Security benefits make up the largest part of the retirement plans for the majority of people, this is not an area you want to neglect.  There are many legal tricks you can use to maximize your benefits ... and the employees of the Social Security Administration are not allowed to tell you about them.  All they will do is implement your benefits when you ask them to.

You may also want to use the tabs at the top of this blog for links to hundreds of articles about where to retire in the United States or abroad, medical issues that may come up as you age, family issues and more financial planning ideas.

You are reading from the blog:

Photo credit:

Thursday, September 26, 2013

Retirement Planning Is a Three-Legged Stool

Shortly before my recent retirement from my long-time job for a local school district, I attended a retirement seminar that was designed to help employees make sure they are financially prepared to stop working.  One of the things the speaker told us was that retirement is a three-legged stool, with Social Security as only one of the legs.  Here is how he explained it:

As mentioned above, the first leg of your retirement stool is Social Security.  This national pension program was never intended to be the only way that retirees supported themselves during their senior years.  Since recipients only receive a median benefit of about $1200 a month, this is not enough for anyone to fully support themselves.  If you had a stool with only one leg, you might be able to balance on it for a short while, but eventually you would fall over.

The second leg of the stool is a pension, annuity or fund.  At one time, many private companies provided their employees with a pension.  Today, only a few private companies still provide this perk, although some public employees, such as non-certificated school employees, still receive a pension.  Pensions are complicated.  For example, I had a job in which I paid into both the state pension plan as well as Social Security.  Therefore, I am able to collect both.  However, many people (such as California teachers) are only able to collect one or the other, in most circumstances.  If you do not have a pension, you may wish to take a portion of the money you have saved in your 401K or IRA and use it to invest in an annuity or investment fund in order to provide additional income.  This is the second leg of your stool.  At this point you have income from Social Security and income from a second source ... a pension, annuity or mutual fund.

The third leg of the stool, as suggested by the speaker at the retirement seminar, is your savings.  This is money that is accessible and not tied up in an investment.  It is money you can use in an emergency.  Everyone should have an emergency fund.  The size should depend on your available assets and your income.

The retirement consultant did not discuss the fact that the majority of Baby Boomers do not have enough savings to invest in an annuity or fund, let alone have enough put aside for emergencies.

However, if he had talked about it, he would probably have suggested that Baby Boomers find a way to earn a little extra money after retirement, as well.  As you will see in the Money section of this blog, I have written several blog posts over the years about ways that retirees can continue to earn money after they retire in order to supplement their income.  (We might think of a retirement job as the fourth leg of your stool.)

I have also written posts about how to save money, including cheap places to retire in both the United States as well as overseas.

In addition, you may want to consider downsizing.  Many people who have a lot of equity in their homes decide to sell the house, downsize and use the money they now have to put in savings and invest in various ways.  This is how they get the other two legs of their "stool."  Some people choose to get a reverse mortgage.  However, as I have mentioned in the past, this can be a dangerous decision and should only be reserved for people who are quite elderly.

If you are hoping to retire and you haven't saved enough money, you may want to check out some of the posts listed in the index articles listed below:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the blog:

Public domain photo of money is courtesy of

Friday, August 30, 2013

When to Take Your Social Security Early

As most readers of this blog know, I am a big proponent of waiting as long as possible before you begin to take your Social Security benefits.  This is because the longer you wait, the larger your check will be each month.  This has always seemed like an easy, clear-cut decision for me, and I often wondered why intelligent people I knew were choosing to take their benefits early.

Recently, in a conversation with one of my friends, I realized that waiting to take your benefits until you are age 66 or older is not the best business decision for everyone.  In fact, for many people, it can be a much better financial decision to take your benefits early.  If you need to stop working before you reach age 66, it can take ten to twelve years to make up for the money you would lose by going without Social Security for a couple of years.  In fact, as result of this conversation and a meeting I had at the Social Security office, I have actually decided to go ahead and apply for my benefits at age 64.

Reasons to Take Social Security Early

1.  In my situation, my husband has a serious illness which may shorten his life.  Although we hope he will live many more years, if he does die before me I will receive Social Security widow's benefits based on his earnings.  Meanwhile, since I recently retired from a job at age 64, I can go ahead and collect my own benefits now, which will amount to about 42 percent of my husband's Social Security.  We decided together that there was no reason to postpone my benefits for two years, during which time I would have lost over $24,000, since it would take more than a decade for us to make up that amount of money from the slightly increased benefits I would have received by waiting.  In other words, if the family breadwinner is in poor health, it may be wise for the spouse to begin collecting benefits as soon as possible.  If my husband manages to live another 15 or 20 years with his illness, we might regret the decision.  However, that was a risk we were willing to take.

2.  Even if there is no spouse involved, you may be wise to take your Social Security benefits early if you do not expect to live until your late 70's or early 80's.  Many people with a debilitating chronic illness may choose to make this choice.  Although you will receive a smaller payment when you collect early, you could receive the payments for many more years.  According to estimates by the Social Security Administration, a person who begins to collect at age 62 will receive payments that are only about half as large as a person who waits until they are 70 years old.  However, because they will receive benefits for eight additional years, the break-even point will occur in their late 70's.  If your health makes it likely that you will not live until your late 70's, then you may receive more in total earnings by collecting early.  In addition, if you don't need to use all the money in your early 60's and you invest some of it, the break even age may even be older.

3.  Some people may also decide to take their benefits early because of lifestyle choices.  For example, if they want to travel or pursue a second career, taking their benefits early may make it possible for them to pursue their goals while they are still young enough to enjoy the experience.  However, in this case it is important for people to realize that they are making a life-long decision.  Once they are tired of traveling or pursuing the second career, they cannot go back and ask for more money.  This choice is more risky than the ones mentioned above that were based on life expectancy.  If you are healthy and live a long time, you may end up regretting your decision to collect your benefits early, since your income will be so low.

4.  A fourth legitimate reason why some people may choose to take their Social Security benefits early is when unemployment or illness leaves them with no other income options.  In many cases, people are grateful that they have earned these benefits so that they have some source of income when it is no longer possible for them to earn money any other way.  Of course, most financial planners still recommend that people rely on some other source of income, if at all possible, and postpone collecting their Social Security as long as possible.  If they do this, the income they receive later may be even more meaningful.  However, if you have no other choice, you may be grateful that you have the money available.

No matter when you decide to collect your Social Security benefits, between the ages of 62 and 70, you need to do research and talk to representatives in the Social Security office before making a final decision.  Everyone's situation is different.  Do not base your decision on what your friends are doing.  Finally, despite the reasons I gave above for collecting early, if you can postpone collecting for a few years, it is still the best decision for many people.


If you are planning your retirement, you may also want to check out the index articles below.  Each of them contains links to a variety of articles on that topic:

Gifts, Travel and Family Relationships

Great Places for Boomers to Retire Overseas

Great Places to Retire in the United States

Health and Medical Topics for Baby Boomers

Money and Financial Planning for Retirement

You are reading from the blog:

Copy of old Social Security card courtesy of

Sunday, October 28, 2012

Social Security Changes in 2013

Moderately good news was announced recently for retirees who are already receiving their Social Security benefits.  Your Social Security benefits are expected to increase by about 1.7% beginning in January, 2013.  If you are working and receiving Social Security benefits at the same time, the size of your check should increase even more than this because of the increased premiums you have been paying into the system during the past year.

The 1.7% increase is not as much as the 3.6% cost of living adjustment that was received in 2012.  However, since Social Security recipients did not receive any cost of living increase in either 2010 or 2011, it is helpful to be getting any increase at all this coming year.

There are other changes to Social Security that we can expect in 2013 that will affect both those who are working and paying into the system, as well as those who are already retired.

Other Social Security Changes in 2013

Unless the government takes steps to change it, the temporary payroll tax cut will expire at the end of this year, meaning that workers will once again return to paying 6.2 % of their income for Social Security, rather than the 4.2 percent that we have been paying for the past couple of years.  For many workers, this will mean a substantial decrease in the amount of their take-home pay.

Another change will affect people who are retired and collecting Social Security benefits but who are younger than their full retirement age (approximately about age 66).  If they are still working and collecting their reduced Social Security benefits at the same time, they will be able to earn $480 more next year before their Social Security benefits are reduced.  In other words, they can earn $15,120 rather than the current amount of $14,640 before their benefits are reduced.  Once retirees reach full retirement age, they can work, earn as much money as they want, and receive their full benefits without a penalty.

Another change that will benefit some retirees is that the maximum possible monthly benefit for someone who waits until their full retirement age to collect their Social Security benefits will increase to $2,533 a month.

Finally, everyone needs to be aware that, as of March 1, 2013, the Social Security Administration will no longer mail out paper checks.  Instead, beneficiaries can choose to either have their payments deposited directly into a bank account, or their funds will be loaded onto a Direct Express Debit MasterCard.  Doing away with paper checks will save the government money and provide a safer way for people to receive their benefits.

You may also be interested in reading:

You are reading from the blog:

Photo of old Social Security card is courtesy of

Sunday, June 10, 2012

No Choice But Early Social Security

Many people have spent decades working hard and carefully planning for their retirement years.  Often they have held responsible jobs, paid into Social Security, had a pension or a 401K, and taken other steps to assure themselves that they could spend their retirement years painting, traveling or doing whatever they want.

What If You Are Forced Into Early Retirement?

When the Great Recession came along, many Baby Boomers lost their jobs; they spent their savings in order to survive; they lost much of the equity in their homes, and perhaps even lost their homes, too.  In far too many cases, their only choice was to begin collecting Social Security at age 62 instead of being able to wait until they turned 66, 67 or, even better, age 70.

In the blog post, Lies and Liars: The Retirement Lie, you can read the story of Ms. Clare Keany, a resident of Palm Springs who shared her personal situation in a New York Times story called "Forced to Early Social Security, Unemployed Pay a Steep Price."  Ms. Keany felt disappointed and discouraged when she shared her story.  She believed she tried to do everything right, and was cast aside when the recession hit and she lost her job.  She went through her savings and is now struggling to get by on a below average amount of Social Security.

Ms. Keany is not the only one who feels this way.  Many Baby Boomers have been put between the proverbial rock and a hard place.  Often they feel that they did everything that was expected of them, and they still will not be able to have the comfortable retirement they had planned.

Issues Faced By Millions of Baby Boomers 

When people are in their late 50's or their 60's, it can be very difficult to recover from an economic setback. Here are some of the issues that they sometimes face:

*  It is sometimes more difficult for Baby Boomers to find new employment than it is for younger adults.
*  They tend to remain on unemployment much longer. 

*  Once they run out of unemployment benefits, many unemployed Baby Boomers feel they have no other alternative than to begin collecting their Social Security benefits early.  The unfortunate consequence of this is that their benefits will be permanently reduced by about 20% or more.

You May be Able to Turn Things Around

If you are one of those retirees who has been forced into early retirement, you may feel that you are doomed to spend the rest of your life in poverty.  While this may be very discouraging, there are a few things that you can do to improve your situation:

*  Even though you are already collecting your Social Security benefits, you can still work part-time.  Once you have reached full retirement age, you can even work full time and receive no decrease in your retirement income.  Millions of Baby Boomers have found it helpful and rewarding to go back to work in their retirement years.  Don't pass up an opportunity to go back to work, even if you are already collection your Social Security benefits.

*  Your Social Security benefits, even if they are small, may allow you to have enough of a basic income that you can try other occupations that you never thought were possible when you were younger ... working for a non-profit, selling your artwork, baby-sitting, or trying an entirely new career.

*  If your income is low, you may discover that you are entitled to other benefits that you may not have considered.  Talk to both your local Social Security office and social services department to find out if you are eligible for SSI (Supplemental Insurance Income), food stamps, Section 8 housing vouchers, financial aid to cover your Medicare premiums, or similar programs.  Do not be embarrassed to accept this extra assistance.  You have contributed to these programs all your life and now there is no reason to hesitate to use them.

With a little patience and creativity, you can recover from a forced early retirement. 

If you are looking for more assistance with your retirement planning, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles on where to retire, financial help, medical issues that can arise, changing family relationships and more.

You are reading from the blog:

Photo courtesy of