Tips to reviewing potential benefits

31 Aug 2015 | Author: | No comments yet »

MOOTZ: Behind on Your Retirement Savings?.

The future for Medicare and Social Security might not look bright at the moment, but it’s particularly bleak for the government’s disability insurance program.With Social Security celebrating its 80th anniversary, now might be a good time to review the benefits you can expect — even if you’re skeptical about ever getting those benefits.

If at all possible, take advantage of the catch-up contributions the IRS allows you to make to IRAs and other retirement accounts starting in the year in which you turn 50. Not so: If you’re an adult, you can monitor your benefits situation with a few clicks of the keyboard and start serious planning for your retirement income.

According to the Social Security trustees’ report released last month, the disability insurance trust fund will run out money in 2016 and it needs immediate attention. A new survey by the Transamerica Center for Retirement Studies found that 76 percent of all workers are concerned that Social Security won’t be around when they retire.

The my Social Security accounts give you the chance to change direct deposit of your benefits if you already receive Social Security, as well as request a replacement Medicaid card or order SSA tax documents, among other services. In the absence of any attention, millions of Americans will receive an automatic 19% reduction in their Social Security disability benefits in the fourth quarter of 2016. Thereafter, payroll taxes will cover only about three-quarters of scheduled benefits through 2089, the latest year through which projections currently are made. “When it was originally put into place, Social Security was intended to be a safety net for a minimal amount of income in retirement, and it was supposed to be augmented with other things,” said Jim Blankenship, a financial planner in New Berlin, Ill. Confirm records with tax returns filed with the Internal Revenue Service;Fix errors due to employee omissions from processed employer reports or missing reports;Rectify mistakes “on the face of the record,” that is, errors Social Security can find after examining agency records of processed reports; and Include wages that an employer reported as paid to you but that don’t appear in SSA records.

If you are a Social Security recipient and younger than full retirement age in 2015, Social Security will withhold $1 in benefits for every $2 you earn over $15,720. Benefits, however, are set by a complicated formula based on a worker’s lifetime earnings record at retirement … Workers, on their own, cannot be expected to know how much they could get.” For instance, the study finds that reviewing your records generally leads to an understanding that claiming benefits later increases monthly Social Security income. No evidence, though, indicates that just because most people understand this concept they do delay retiring: Most look at planning for retirement only in terms of saving and investment and not in terms of working longer — the latter of which can drastically increase savings and benefits.

In 2015, you earn one credit for every $1,220 of earnings that are subject to Social Security taxes, up to a maximum of four credits (or $4,880 in earnings). And because you likely haven’t reached your peak earning years, your estimated benefits may be artificially low. (To calculate your benefits, Social Security averages the earnings from your top 35 working years.) Your earnings record. If you can’t balance your budget, consider taking withdrawals from your savings and investment accounts to make up for the reduced benefit, says Vosberg. If it’s not enough to cover your monthly expenses — keeping in mind that even those benefits may not be fully payable if Social Security runs short of funds — think of how you’ll make up the shortfall in retirement. Keeping a foot (or both feet) in the market may be essential if your retirement nest egg is small — not just because it needs to grow, but because it will need to grow faster than inflation.

Waiting a few more years before retiring and filing for Social Security raises your monthly benefit with Delayed Retirement Credits (DRCs); these include a 5.5% increase in your eventual benefits per year of delay if you were born in 1933 or 1934, a 7.5% yearly increase if you were born in 1941 or 1942 and an 8% increase in you were born in 1943 or later. As Ben Franklin wrote in the 1758 edition of Poor Richard’s Almanac, “A penny saved is a penny got” (he never actually said “a penny saved is a penny earned”).

Delaying filing can also of course decrease additional savings you need to maintain your desired standard of living and can shorten the number of years that you eventually draw on savings. Voice your displeasure with how Congress is managing the affairs of this country, says Stephen Stellhorn, president and CEO of MSM Capital Management in Tampa and author of Navigating the Maze of Social Security. “This problem is a legislative one, which Congress must address,” Stellhorn says. “What makes 2016 so unique is there is a presidential election occurring. Helping them pay off their college loans may feel like the right thing to do for them, but it is not the right thing to do on behalf of your retirement. Richard H Mootz, CFP® CERTIFIED FINANCIAL PLANNER™ professional, is a Registered Representative of and offers securities through Securities America, Inc., a Registered Broker/Dealer, member FINRA/SIPC., Advisory Services offered through Securities America Advisors, Inc., A SEC Registered Investment Advisory firm.

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