Worried about Social Security and your retirement?

If you’re worried about Social Security and your retirement, you should be. Hi, I’m Tom Cock from Merriman and let’s talk about the Social Security System. Remember this is a pay-as-you-go system. In other words, dollars are supposed to come in, dollars are supposed to get paid out. Unfortunately, the government, of course, has put IOUs against most of that money and has used it for other things, and we’ve got some bad news here in the past few days.

We learned that Social Security, the giant trust fund, is expected to run out of money by the year 2037 and will be net negative by the year 2016. Years earlier, that had been expected and the reasons why are pretty easy to understand; we’re in a recession, there are few people working, fewer people paying into Social Security and part 2 is the 78 million baby boomers, of which I am one, are getting older and they’re starting to draw on Social Security. Read more

May 29, 2009 | Filed Under Retirement Planning | 1 Comment

“Just like you and I, Social Security is going to change”

Nicole Livas: 10 On Your Side wants to help you plan for a comfortable retirement. So we headed to Langley Federal Credit Union to sort out part of a Social Security mystery.

Tom Schaad: It’s a financial forms set up to explain the current status of Social Security and what it may hold for your future. 10 On Your Side Eric Harryman joins us now with more on what you can do now to prepare.

Eric Harryman: Tom, Nicole, it comes down to realistic expectations and staying informed long before retirement age. Don’t get me wrong though. The daunting question of “Will there be any money left when I retire?” remains. But the experts say, “Worry less, plan more”.

Commentator: With the US economy in crisis mode, many believe Social Security could disappear.

Marsha Kilburn: Are there going to be funds there when we are ready to retire?
Read more

Barbara Kennelly on Social Security and Medicare Trustees Report

News Anchor: Joining us now with her reaction is Barbara Kennelly, the President and CEO of the National Committee to Preserve Social Security and Medicare. She is a former Congresswoman from Connecticut who is a ranking member of the Social Security sub-committee and a former counselor to the Social Security Administration.

Miss Kennelly, welcome to Bloomberg news, and Lindsey’s report painting a very dire picture. The trustees saying that Social Security fund would be depleted by 2037.

Barbara Kennelly: Well Earl, first of all, all this reporting on Social Security is dire. The fact of the matter is that last year the trustees said that Social Security could pay full benefits to 2041. Now they’re saying 2037. Would you notice that that’s three decades away? The whole program has been planned for the long term to have these kind of economic cycles going up and down. In the 1990s Social Security could only pay up to 2000 say. But no, Social Security is not going bankrupt. Social Security has a surplus. It can pay full funding till 2037, that’s what the trustees are going to tell you. And then after that…

News Anchor: Where is the disconnect between what you’re saying and some of the things that Lindsey was telling us over in that report?

Barbara Kennelly: Well, Lindsey is reporting as people report and say, “Hey, the number went from 2041 down to 2037″. And yeah, that is a drop and are we surprised? No, we have a recession. Are we surprised that tens of thousands people have been laid off and are not paying into the payroll tax. But the Social Security program has been designed specifically to have these economic going up and going down. I was on the committee in 1983 the last time we reformed it. We raised the payroll tax, we raised the age because we knew the baby boomers were coming.

So no, Social Security is not going bankrupt. Do we have a problem right now? We have a fiscal problem. We’ve got a deficit problem. We don’t have a Social Security problem because we have that surplus. Think of the good years we had in 2005, 2006, 2007, 2008. So much more money was coming in to Social Security from payroll taxes than was going out. That built up the surplus. So that’s the base we have right now. That’s why we can go up to 2037 and say Social Security can still pay its benefits. Read more

May 15, 2009 | Filed Under Medicare, Retirement Planning, Save Social Security | Leave a Comment

Do you worry about your Social Security and Medicare?

TV Interviewer: Are you worried about your Social Security and Medicare?

Man1: Not particularly, because the risk of insolvency may seem a bit closer today than yesterday, but I have faith that the government can enact reforms to force through all that.

Woman 1: Absolutely.

TV Interviewer: How so?

Lady1: I don’t think it’s going to be there by the time I retire.

Man 2: A little, I won’t say a lot because I am sure that there will be some resolution to it.

Man 3: I wouldn’t say worried, I’m just not confident I am going to receive it. I am making other plans, that’s why I am not worried.

TV Interviewer: Would you prefer to see an increase in taxes or reduction in benefits to help solve this problem?

Man 4: Realistically I think it is going to have to be a combination of both. That the Americans that can most afford it need to have their benefits reduced, and perhaps the tax rates and some of the income levels that… like hedge fund managers that get theirs at a reduced rate of taxation… maybe should pay the full rate of taxation and Social Security.

Man 5: The reduction in benefits is probably going to be more feasible. I don’t know which, they’re both not a very good solution but, you know, of those two that’s the one I would prefer.

Woman 2: I think unfortunately an increase in taxes is the only answer.

Man 6: Probably a combination of both. Some decrease in benefits and some increase in taxes to pay for it. That’s seems to me like a reasonable solution.

TV Interviewer: Do you think we should revisit the idea of privatizing Social Security?

Lady 3: Ha, ha, ha. I don’t think we should revisit the idea of privatizing anything. The era of privatizing, of taking the responsibilities of government and farming them out to the lowest bidder who winds then jacking up the prices on the private citizen is just outrageous.

Man 7: Yes, I do think that despite the fact that the Bush plan was based on the assumption that stock markets would always rise, which turns out not to be the case, a system more based on individuals makes more sense.

Lady 4: Look what we’ve done on Wall Street and look at the mess we are in now. I don’t think giving it to individuals will help the situation any better.

Man 8: It hasn’t worked so well with the government so maybe we should give privatization a try.

What about our readers? Do YOU worry about your Social Security and Medicare? Post your comments below.

May 14, 2009 | Filed Under Medicare, Retirement Planning, Save Social Security | Leave a Comment

Will my Social Security benefits change at full retirement age?

Senior Citizen: I received Social Security disability benefits. Will my Social Security benefits change when I reached full retirement age?

Social Security Representative: The benefit information will change, but you won’t really see it. The interesting thing that some of our clients don’t understand is that Social Security disability is calculated, you know, the amount, is how much an individual would get at full retirement.

So if you get disability, say you’re 55 and you go on disability, then when you get to be 62 and you start thinking about a retirement benefit, the retirement benefit is your full retirement reduced. Well, you went and switched over to your retirement benefit. So our client doesn’t have to do anything while they are on disability. What we do is that when they get to be full retirement age, then we change the disability wording on their record to say retirement, because nothing works than sending somebody a disability update package and they’re 70.

Senior Citizen: Right.

Social Security Representative: You know, that’s why we take that information off. We correct our records because we keep track of our clients based on what we need to do for them and if they’re past full retirement age, we never need to update their disability information.

Senior Citizen: Okay.

May 6, 2009 | Filed Under Retirement Planning, Social Security Benefits | 1 Comment

Should I retire at age 62 or 63?

Senior Citizen: If I start my retirement benefits at age 63, is the amount I would get the same as age 62?

Social Security Representative: I like to use this question here because the answer is something that most people should just kind of understand, but sometimes people get pension systems mixed up. Social Security does not have a fixed amount for an individual when they get to be 62.

In fact, with my sister, up in Canada, they have a fixed amount that an individual gets because of being a worker in Canada and then you get something above and beyond that. Well, for workers in the United States, we look at how much you’ve earned and paid into the system to figure out how much you’re going to get.

We send out a benefit statement every year. That’s what people need to do. Pull out their benefit statement, you look to see what your benefit is at age 62, what your benefit would be at age 66, if that’s your full retirement age. Well, for that four years, if your difference is $480 and there are 48 months there, well, then you know that your benefit is going to increase $10 per every month that you wait and hold off retirement from age 62.

So do the math, do look at that benefit statement because that’s the first place that you need to start looking when you start doing some retirement planning and you don’t have to wait until, you know, a date of birth. You don’t have to work until January. Sometimes retirement plans are, you know, personal.

Senior Citizen: Right.

Social Security Representative: You know, maybe October is the right time to go out on retirement for you and you can find all that information on our website to help make those decisions.

Senior Citizen: It’s awfully hard to get along anymore without the access to the Internet, isn’t it?

Social Security Representative: Well, and that’s the thing is that if you’re paying for Internet access and you have it at home, use it.

Senior Citizen: Right.

Social Security Representative: Also, we’ve talked to a lot of individuals where the libraries have got Internet access. We have some tribal council organizations that make Internet access available to their members and so use the access where you have availability, but be, you know, safe. Be sure to come right into our website, socialsecurity.gov.

Senior Citizen: Okay, thank you, Mark.

April 29, 2009 | Filed Under Frequently Asked Questions, Retirement Planning, Social Security | Leave a Comment

Social Security Retirement Planning

“I’m just curious. How many people think we should delay Social Security as long as possible? A few folks. You’ve seen my talk before? How many think to take it as early as possible. A few folks. Okay.

And actually, the answer… there is not a single answer here. It is a personal decision like we heard earlier from Nick. But I just want to give you some insights into this. First of all, this is a chart which just shows the monthly benefits and this is just an example. We are looking at someone who is earning $75,000 in 2009 and had always been making this amount. This is for a single person and if you’re married, if both of you work, each of you will get a benefit that comes from these kinds of charts and then your household income is just the sum of the two.

If one of you didn’t work or works sporadically then there is a special spouse’s benefit, which I will get to in a second. But just look at this chart. Say you are born in 1950, if you retire at 62, the monthly benefit is $1,470. If you retire at 65 its $1,850. And this person their full retirement as Nick was talking earlier is 66 and so their monthly benefit would be $1,980. And finally if you wait till age 70 the monthly benefit is $2,660. So you can see that there is a pretty dramatic increase in the amount of your monthly benefit if you delay your retirement benefits.

This is the same chart but for a married worker where the spouse didn’t work, and this is just a sum of the workers benefit and the special spouses benefit. But it’s the same pattern, you know, if you delay your benefits then your benefits go up. And so I like this chart. You know, when you put up charts that show percent increases it’s hard to relate to a percent, but here monthly income we can relate to a dollar amount of monthly income. It makes it easier for us to decide what’s the right thing to do. Read more

April 23, 2009 | Filed Under Retirement Planning, Social Security | Leave a Comment

When should I start planning for retirement?

This one’s so open ended as far as the question goes. I was talking to a young group at a company and it came up as far as retirement planning. Retirement planning should basically start the day you start working, because there are a lot of things that you can’t catch up on if you don’t start early. You start with a company that has a 401K plan, and if you don’t join that plan until you’re thinking… you know… maybe you’re 60 and you’re looking ahead for retirement, you’re not going to do much good saving for a couple of years. It’s when you save for decades that’s where you get the most benefit.

April 17, 2009 | Filed Under Retirement Planning | Leave a Comment

The Case For Not Privatizing Social Security

If there is one thing this most recent stock market crash has demonstrated it is the extreme danger retirement benefits would be in if we adopted a privatized Social Security system.

Proponents of a privatized system have argued for years that private accounts would be totally safe because they would be limited to blue chip stocks exclusively. The type of companies investors would call a sure bet for long term investments. Companies like Bear Sterns and Lehman Brothers. What could possibly go wrong if we invested our Social Security accounts in those types of companies?

Apparently everything could go wrong. Both Bear Sterns and Lehman Brothers, two of the largest financial companies on the planet, had a complete collapse. Can you imagine if people’s Social Security benefits were tied into those companies?

Think about the pressure this would put on the government to keep these types of companies afloat. The amount of expense to the taxpayer that would have to go into it would be tremendous. Not a pretty picture is it?

Unfortunately, the current situation is not much better either because the Social Security Trust Fund is already guaranteed by the government and ultimately the taxpayer. The way the system was set up, it has become a burden to just about everyone.

Therefore, Social Security should not be privatized, it should be abolished - in a safe and slow manner. Seniors should still get what they paid for and what they were promised, but we must stop being cruel to young workers who are forced against their will to pay into an antiquated system they might not agree with and that might not ever benefit them at all.

Abolish Social Security, pay outstanding benefits by raising taxes or printing money, and allow everyone else to invest their money as they see fit. If some people (rightly) believe stocks are too risky, they can buy government bonds instead, or real assets that preserve their value over the long term, like gold.

March 13, 2009 | Filed Under Retirement Planning, Save Social Security, Social Security Reform | 1 Comment

Social Security Retirement Age: Making The Right Choice

With prices ever increasing in the public market, and Social Security become more and more of a concern, it isn’t a surprise that many are choosing to opt for benefits at the youngest possible retirement age. But choosing to receive your checks at age 62 could be an extremely bad idea, especially if you are currently employed, and so some are deciding instead to defer their payment for the official retirement age.

Whether your official retirement age is 65 or 66, which will depend on when you were born, it is better to wait for that time rather then request your payments at a younger age. The reason is simple: if you decide not to defer your payments, you may end up paying the money back.

This is because anyone who is still earning a wage that is not directly related to an investment income from a healthy portfolio may not qualify for full Social Security as an untaxed income. This is also dependent upon the limitations placed annually on income levels. For example, this year the limit is $14,160. Every time you go over that amount by $2, you will lose $1 off of your checks. This adds up quickly, especially since most who are still working will receive much more then that.

This rule only applies for those who are not yet at their retirement age. Once you hit that point, you will be able to earn any level of income, and still receive full benefits from your Social Security fund. So don’t worry about losing the funds in the meantime, they will still be there. Deferring your checks is a positive move, not a negative one, and as long as you don’t wait too far past your retirement age, you should be just fine.

Consider saving benefits for age 65 – 70. You might be glad that you did.

March 11, 2009 | Filed Under Retirement Planning, Social Security Benefits, Social Security Tips | Leave a Comment

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