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Estimating Your Social Security Benefits

What is estimating your Social Security benefits?estimate social security benefits

Estimating your Social Security benefits is particularly important when you are planning for retirement, although you may be interested in estimating survivor benefits or disability benefits as well. When planning for retirement, you should neither overlook nor overstate the value of your Social Security benefits. Predicting the future of Social Security is difficult, because to keep the system solvent, some changes must be made to it. The younger and wealthier you are, the more likely that these changes will affect you. But even if you retire in the next few years, remember that Social Security was never meant to be the sole source of income for retirees. As President Dwight D. Eisenhower said: “The system is not intended as a substitute for private savings, pension plans, and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built.” Estimating your Social Security benefits now will not only help you plan an effective long-term retirement strategy, but it can also help you understand what benefits might protect your family if you were to die or become disabled.

Obtaining a benefits estimate

You can estimate your retirement benefit online based on your actual earnings record using the Retirement Estimator calculator on the Social Security website, ssa.gov. You can create different scenarios based on current law that will illustrate how different earnings amounts and retirement ages will affect the benefit you receive. Other benefit calculators are also available that can help you estimate disability and survivor benefits. You can also sign up to view your Social Security Statement that contains a detailed record of your earnings, as well as estimates of retirement, survivor, and disability benefits. If you’re not registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every year, starting at age 60.

Understanding how your benefit amount is calculated

Your Social Security benefits will be based on your average lifetime earnings, expressed as your primary insurance amount (PIA). Calculating your PIA is complicated because some factors used in the benefit formula change annually.   Instead of calculating it yourself, it’s easiest to obtain a benefit estimate directly from the SSA (see preceding section).

However, knowing how your PIA is calculated may be useful in benefit planning. Currently, the two PIA calculation methods most frequently used are:

  1. The simplified old-start benefit method–This method is used if age 62, disability, or death occurred prior to 1979. It averages actual (not indexed) earnings and uses a table to calculate the PIA.
  2. The wage indexing method–This method has been used since 1979. Indexing earnings is a way of adjusting them to reflect changes in wage levels throughout years of employment. This ensures that your benefits reflect increases in the standard of living. In general, the wage indexing method calculates your PIA by indexing your lifetime earnings up to and including the year you turn 59. Then, your highest earnings for a specific number of years (usually 35) are averaged and a benefit formula is applied to this figure to calculate the PIA.

Two other benefit computation methods are less frequently used:

  1. “Special minimum” benefit tables are used sometimes to compute benefits payable to some individuals who have long periods of low earnings and who have at least 11 years of coverage.
  2. Flat-rate benefits are provided to workers (and to their spouses or surviving spouses) who became age 72 before 1969 and who were not insured under the usual requirements.

How to calculate your PIA using the wage-indexing method

The wage indexing method can be used to calculate retirement, survivor’s, and disability benefits. However, the method used to calculate disability benefits is slightly different. The following discussion applies only to calculating your PIA for retirement and death benefits.

Follow these steps to calculate your PIA:

  • Count the number of years elapsed between 1951 (or the year you turned 22, if later) and the year you turned 61. If you were born in 1929 or later, this number will be 40.

Example(s): Peter retired from his job in 1992. He was 62. He turned 22 in 1952, so count the number of years between 1952 and 1991 (the year he turned 61). Forty years have elapsed.

  • Use the number of elapsed years to determine the number of benefit computation years. To do this, subtract five from the number of computation elapsed years. This figure will be used to calculate your average indexed monthly earnings (AIME). If you were born in 1929 or later, this number will be 35.

Example(s): Peter’s computation elapsed year figure is 40. 40-5=35. So, Peter’s benefit computation year figure is 35.

  • Use your earnings record to calculate your indexed earnings. To do this, use the appropriate table to determine what the indexing average wage was or will be in the year you turn 60. Then, look to see what the indexing average wage was in the year you are indexing. These figures become part of an indexing ratio applied to each year of earnings starting with 1951 and ending with the year you turn 59. (Earnings before 1951 are generally disregarded. Earnings in the year you turn 60 (your indexing year) and earnings in all later years are considered in calculating your PIA, but they are not indexed.) The indexing ratio can be expressed as the actual earnings in the year being indexed multiplied by the indexing average wage in the year you turned 60 divided by the indexing average wage in the year being indexed. The result will equal your indexed earnings for the year being indexed.

Example(s): Peter started working in 1951 and retired in 1992. For each year starting with 1951 and ending with 1989 (the year he turned 59), calculate his indexed earnings. His indexing year is 1990 (the year he turned 60). For example, Peter’s earnings in 1965 were $2,000. In 1965, the indexing average wage was $4,658.72. In 1990, the indexing average wage was $21,027.98. Calculate his 1965 indexed earnings:

$2,000 multiplied by $21,027.98 divided by $ 4,658.72 = $9,027.36

Tip: Actual earnings are earnings credited to an individual’s Social Security record. However, each year’s actual earnings are subject to a maximum earnings limit. If your earnings for the year you are indexing exceed the maximum limit, then you must substitute the maximum earnings limit amount for your actual earnings amount in the ratio.

Example(s): In 1965, the maximum earnings limit was $4,800. Had Peter’s actual earnings exceeded that amount, he would have replaced his actual earnings figure in the ratio with $4,800 to calculate his indexed earnings for 1965.

Once you have indexed your earnings for each year you have worked before age 60, you will be able to use those figures to calculate your average indexed monthly earnings (AIME).

  • Calculate your AIME by selecting your highest earnings for the benefit computation years (including any earnings not subject to indexing). Add these up and divide by the total number of months elapsed during these years.

Example(s): Peter had 39 years of indexed earnings and two years of earnings (1990 and 1991) not indexed but included in the calculation. Select his 35 highest earning years. The earnings for these years total $950,000. Divide this figure by 420 months (35 x 12). His AIME is $2261.90.

  • Calculate the PIA for the year you attain age 62 by applying percentages to certain dollar amounts of the AIME. The percentages are fixed, but the dollar amounts (called bend points) are adjusted each year for inflation.

Example(s): Peter attained age 62 in 1992. His PIA would be calculated using 1992 bend points–90 percent of the first $387 of his AIME, and adding 32 percent of the AIME in excess of $387 through $2,333, and adding 15 percent of the AIME in excess of $2,333. So, Peter’s PIA is calculated to be the sum of $348.30 (90 percent of $387) plus $599.65 (32 percent of $1,873.90) or $947.95, rounded to the next lower multiple of 10 cents, $947.90.

Bend points make calculating your future PIA difficult because the bend points for each year are only published on or before November 1 of the preceding year. For 2021, the bend points are $996 and $6,002.

  • Adjust your PIA to account for changes in the cost-of-living allowance (COLA) yearly.

Example(s): If Peter’s PIA was $947.90 when he retired in October 1992, then his PIA was adjusted for COLA in December 1992, and his January 1993 benefit check reflected the change.

Using your PIA to determine your benefit amount

Once the PIA has been calculated, all your benefits (and those of your family members who are dependent upon your Social Security record) will be based on this figure. Your PIA is the maximum benefit that you could receive once you become eligible.

Your maximum benefit may be payable if:
  • You retire at full retirement age
  • You are a widow or widower who is at least full retirement age
  • You are a disabled worker

In other circumstances, the benefits that you receive will be a certain percentage of your maximum benefit. For example, if you elect to receive early retirement benefits, your maximum benefit will be reduced by a certain percentage for each month of early retirement. If you or your family members are eligible for reduced benefits, the reduction will be expressed as a percentage of your PIA.

Example(s): Mr. Jones retired at age 66 (his full retirement age) after working for many years. His PIA was determined to be $1,176. He receives the maximum retirement benefit (100 percent of his PIA) so his monthly benefit check is $1,176. His wife retired at age 66 as well (her full retirement age). Since her own PIA was less, she decided to base her retirement income on her husband’s PIA. She is entitled to 50 percent of his PIA, so she receives a monthly benefit check of $588.

The following chart summarizes the relationship between your PIA and your eventual benefits:

Factors that can increase or decrease your benefit

Early retirement

If you elect to receive retirement benefits early (before full retirement age), your benefit will be reduced proportionately. You can elect to receive retirement benefits as early as age 62. For each month of early retirement, your total benefit will be reduced by 5/9 of 1 percent, up to 36 months, and by 5/12 of 1 percent thereafter. For example, if you elect to receive retirement benefits at age 62 and your full retirement age is 66, then you would receive approximately 25 percent less each month than you would at age 66.

Delayed retirement

If you delay receiving retirement benefits past full retirement age, you will receive a higher benefit when you retire. Late retirement may increase your average earnings (which may, in turn, increase your benefit). You will also receive a special delayed retirement credit. This credit is figured as a percentage of your Social Security benefit and is paid in addition to your regular benefit amount. It does not affect your PIA upon which your benefit is based.

This credit varies depending on the year in which you were born and how many months or years after full retirement age you retire (up to the maximum age of 70). For example, if your full retirement age is 67, you will earn an extra 8 percent of your benefit for every year you delay retirement up to age 70. This means that if you delay receiving your retirement benefit until age 70, your benefit payment will be 24 percent greater than it would have been if you began receiving retirement benefits at age 67.

Earnings during retirement

Any income you earn after you retire must be reported to the Social Security Administration and may temporarily reduce your retirement benefit if you have not yet reached full retirement age. However, some of your annual earnings are exempt and won’t affect your benefit.

Simultaneous benefits

Occasionally, you may be entitled to receive benefits based not only on your earnings record, but on someone else’s as well. This often happens when a married couple retires.

Example(s): Mr. Jones is not planning on retiring and receiving Social Security retirement benefits until he is 68. His PIA is $1,176. His wife, who is 63, wants to retire now, but she can’t begin receiving a spouse’s retirement benefit until her husband begins receiving his retirement benefits. However, since she is already over the age of 62, she can receive retirement benefits based on her own PIA. Her benefit, adjusted for early retirement, will be $400. Later, when her husband retires, she can receive her own retirement benefit and a spouse’s benefit of $188, the difference between her own worker’s benefit ($400) and the spouse’s benefit she would have received based on 50 percent of her husband’s PIA ($588).

A family maximum benefit applies

Your family may receive benefits based on your earnings record. There is, however, a limit to the amount of monthly benefit that can be based on an individual’s Social Security record. The limit varies but generally ranges from 150 to 180 percent of your PIA. Benefits to family members may be reduced if they exceed the family maximum. The formula used to compute the family maximum is similar to that used to compute the PIA.

If you are interested in our Social Security planning options, learn more here! We understand that retirement planning can be daunting, and we are here to make it easier for you. Our newsletter is a great way to stay up-to-date with our latest offerings and get helpful retirement planning tips. Signing up is easy; click here. We appreciate your interest in our services and look forward to helping you retire better!

Broadridge Investor Communication Solutions, Inc. prepared this material for use by Social Security Benefit Planners, LLC.

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on individual circumstances. Social Security Benefit Planners, LLC  provide these materials for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Social Security Benefit Planners, LLC and its affiliates are in no way associated with or approved, endorsed, or authorized by the Social Security Administration.

Social Security for Dependent Parents

Parents take care of us for so many years, and in some cases we are able to help our own parents in their retirement.  But what will happen if your dependent parent doesn’t outlive you?

Very few people know about an important social security benefit that can help your financially dependent parent should you die. If your parent relies on you for more than half of their living expenses, they may be able to receive benefits after your death. In order to take advantage of this benefit you must have earned enough credits to qualify for social security – that’s 40 credit hours – and your parent must:

Receive at least half of his or her support from you

  • Be at least 62 years old
  • Not have remarried since the adult child’s death
  • Not have an individual social security benefit that’s more than the potential benefit based on your earnings

How This Affects Social Security Benefit Planning

First, the age at which you claim your own retirement benefit doesn’t affect the time at which your parent can start receiving a parent’s benefit. (It is your date of death that determines that.)

Second, the age at which you claim your retirement benefit doesn’t affect the amount of your parent’s benefit based on your work record. The amount of a parent’s benefit is 82.5% of the deceased person’s primary insurance amount if there is one eligible parent. If there are two eligible parents, each parent’s benefit as a parent is 75% of the deceased person’s primary insurance amount. (If the parent is already receiving a different Social Security benefit — such as their own retirement benefit — then the total amount they will receive is the greater of the two benefits.)

We offer a FREE Quiz that you can take to test your knowledge on YOUR social security. Most often people wait until they need it the most.  Don’t be that person. Contact us today! Or Call: 877-270-SSBP (7727)

What Every Expat Needs to Know About Social Security

So you have decided to work or retire out of the United States. How does this affect your Social Security and Medicare benefits? The answer varies by country, and it will work out better for you in certain countries than in others. It’s important to understand what is at stake.  We broke down what Expats or (Expatriate) needs to know

  • About 20 countries have agreements to prevent double taxation. In the rest, you will pay taxes to your host country as well as Uncle Sam.
  • About 25 countries maintain bilateral agreements that allow you to transfer social security credits to and from the US. For example, if you work in the US for 20 years and then move to Canada and work there for another 10 years, when you retire you can transfer your US credits to Canada to vest into their system (or vice versa).
  • There are a few countries, such as North Korea and Cuba, where you will not be allowed to receive social security benefits while living there.
  • Your non-US spouse may or may not be entitled to your benefits if you were to pass. The laws vary by country and are quite complex.
  • If you think you will ever move back to the US then it is very important to sign up for Medicare part A, which is free, at age 65. There are ways to opt out of part B if you qualify, but if you do not sign up for part A there are permanent penalties that will persist throughout your retirement.
  • If you worked overseas and did not pay into social security for certain years, your pension from that country will most likely trigger a Windfall Earnings Provision (WEP) that partially offsets your social security benefit.

Determining retirement benefits for expats can be a confusing and complex situation, with many country-specific rules that change over the years. If you need help navigating social security options for expats and their families, please visit our website at www.socialsecuritybp.com to learn more.

Military Service and Social Security – How it works

Worried about how your military service affects your Social Security? You don’t have to, because the retirement income you’ve earned through military service won’t reduce your Social Security benefits. In fact, if you served on active duty between 1957 and 2001, you may even be credited for extra earnings on your Social Security record.

For Social Security purposes, active duty includes active duty, reserve duty and active duty for training (ACDUTRA), and includes your service in the:

  •         Army
  •         Navy
  •         Air Force
  •         Marines
  •         Coast Guard
  •         National Guard
  •         Public Health Service (service as a commissioned officer)

Although your benefits are not impacted by retirement income from the military, Social Security benefits for survivors may reduce the income beneficiaries receive through the Department of Defense Survivors Benefit Plan. Your military retirement advisor or the Department of Defense will be able to offer information specific to your situation.

Whenever you served, the American people thank you and wish you a happy retirement, complete with all the Social Security benefits to which you are entitled. Want assistance in understanding optimal options for maximizing your Social Security? Choose one of our plans and please use USA2017 to save $50 off any plan.

Social Security and Railroad Earnings

Working for a railroad means your Social Security benefits may be calculated differently than for other industries. To qualify for a pension from the Railroad Retirement Board, which maintains your record of earnings, you’ll need to have worked for the railroad at least 120 months or 60 months of railroad work that took place after 1995.

  • For railroad workers whose work history includes less than five years of service since 1995 and less than ten total years of railroad work, your railroad earnings will be added to your other work history to calculate your Social Security credits and your benefits from Social Security. To see your earnings history, you can view your Social Security Statement online. Note that railroad earnings prior to 1973 do not show on your statement but are included in calculating the credits shown and your estimated benefits.
  • Workers who have at least ten years of railroad work or five or more years of railroad work since 1995 usually qualify for a pension from the Railroad Retirement Board. The earnings from this railroad will not be used to calculate Social Security credits or benefits.
  • If you’re entitled to a pension from the Railroad Retirement Board, you can still receive Social Security benefits as long as your work history includes enough credits to qualify for Social Security based on your non-railroad employment history. However, your Tier 1 Railroad Retirement Annuity will be reduced if you also receive Social Security.

We are here to help if you would like to project what your retirement income options will look like.  Please go to our “Select a Plan” to learn more and sign up and use RAILROAD2017 to save $50 off any plan.

Top 7 Reasons that you should NOT have a plan to maximize your Social Security Retirement Income

  1. Even though your dreams were to always travel the world you didn’t save enough and love to watch “Rick Steve’s Europe” and “An Idiot Abroad” instead. It still feels like you are there, right?
  2. Living in a 600-square foot rental apartment in retirement with no spectacular view was in the future plans.   
  3. Or even better was your life long goal to move into the in-law suite on your kid’s property-  now this could be extra fun!
  4. Being able to order anything off the dollar menu at any fast food restaurant always rocks – YUM.
  5. Not having the option to NOT work well after you wanted to retire. Hi Ho, Hi Ho off to work we go.
  6. Your 1982 Dodge Colt isn’t pretty but still gets you from A to B.. just not C.
  7. Delaying, reducing the dosage or not purchasing all your needed prescriptions because of the high cost. Who needs their health anyway!

Of course we want people to travel, have decent housing and food, the option to retire when they want and being able to take care of their health.

Did you know that almost 50% of Americans opt to take Social Security as early as they can and therefore lock themselves in up to a 30% permanent reduction in Social Security retirement income? We have helped many individuals and families see how they can increase their annual income anywhere from 3k to 30k per year.

Now that is some real Clams, Cheddar or Dough back in your pocket.

You paid into this over your whole career why not make the most of this valuable insurance program!

To get our free e-book go to www.socialsecuritybp.com or sign up to get your own customized plan to get your extra Clams today!  

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Expert Faye Sykes on the Air with Radio Host Dana Barrett

Faye Sykes, CEO of Social Security Benefit Planners joined us in studio during hour one of today’s show! Faye explained the right time to take social security and how she and her company is able to help families maximize their social security benefits.

During hour two, Jackie Cannizzo, Executive Director of JCI Foundation joined us to dish on two upcoming events you don’t want to miss! The JCI Foundation will host the Judson Women’s Leadership Conference on June 20th at the Cobb Galleria; a great opportunity for women to learn and be inspired by successful leaders from all walks of life.

The Birth of Social Security in America

How do I collect Social Security?

We take Social Security for granted, but where did this important insurance program come from and when did it start? It hasn’t been around forever, has it? The answer is no. Social Security began after the Great Depression, when millions of Americans who had lost their savings were facing an old age defined by stark poverty. Few workers had pensions through their jobs, and President Franklin Roosevelt wanted to do something to alleviate the poverty that faced so many older workers in their retirement years.

Since its creation in 1935, millions of retirees have been able to live more comfortably because of this national insurance program, which they collectively funded through payroll taxes during their working years you will see this as FICA on your payroll statement. Though Social Security wasn’t meant to be the only source of income for beneficiaries, it was in its early years and, unfortunately, it still is today for many. As per Social Security fact sheet in 2017 21% of married couples and 43% of unmarried persons rely on Social Security for 90% or more of their income. Many people do not realize that this is a program that has a life insurance, disability and retirement income benefits that you and your family can benefit from.

With changing demographics that include more retirees and fewer workers, Social Security has had to evolve over the years. President Reagan signed into law several revisions to Social Security after Congress passed suggestions made by the Greenspan Commission, which had reviewed the program’s financial picture. These changes included an increase in the payroll tax that pays for benefits as well as a gradual increase in the retirement age, from 65 to 67.

In the future, it’s likely that more changes will have to be made to keep the program financially sound. The prospect can sound alarming, but making necessary tweaks to keep a valuable program that provides millions of Americans with the basic income they need is well worth the effort. Long live Social Security!

For a full customized projection of your Social Security income please sign up for a plan option or learn more at www.socialsecuritybp.com.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Broke as a Joke? Social Security’s Finances

What is the future of Social Security?

Is Social Security broke? Reading the news can sometimes leave you with the impression that Social Security is practically out of money. This massive program provides key income and takes in millions of dollars each year, but is it going belly-up?

Here’s how it works. The payroll taxes that you and everyone else pay each month (FICA and Medicare) go to the treasury, where they are counted as credits to the Social Security Trust Fund. Those who receive Social Security benefits get their money from what’s paid in, but there is some left over. The excess is invested in special issue U.S. Treasury bonds, which earn interest. The interest is credited to the trust fund, as well.

Right now, more money comes into the program through taxes and interest than goes out in benefit payments. Years of this excess pay-in has created a surplus that amounted to $2.7 trillion by 2014’s close. That figure will continue to increase until 2019, when the surplus is expected to reach $2.8 trillion.

But as the Baby Boomers retire and smaller birth cohorts begin to fill the ranks of the workers whose taxes fund Social Security, there will be more money going out in the form of benefits than there is coming in through payroll withholding taxes. At that point, the treasury bonds that the Social Security Trust Fund owns will be needed to help cover the benefits that beneficiaries receive.

The program is expected to fully utilize its surplus in 2034, which will leave payroll taxes as the only source with which to make benefit payments. According to current projections, those taxes will cover approximately 79% of the anticipated amount needed. Congress will have to decide whether to cut benefits or increase funding, which they could easily do by raising the limit on the amount of income to which FICA and Medicare taxes apply.

Social Security isn’t exactly going broke, but it will need to be tweaked in order to provide the benefits that today’s workers have been promised when they retire. Do you have an opinion on how to handle the future shortfall in the program’s budget? Let your senators and representatives know!

To receive your own customized Social Security benefit projections please visit our website www.socialsecuritybp.com to learn more or sign up for a plan.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Is More than Just a Retirement Plan

How to Retire on Social Security?

Social Security Isn’t Just for Retirement

When you think of Social Security, you probably think about retirement. It’s true that the program provides critical income for millions of retired Americans, but Social Security also does much more.

Designed as a safety net to provide older people who could no longer work with a basic income, Social Security has grown into a much broader safety net over the years, offering financial benefits to protect not only retirees, but also disabled workers and the families that have lost a family member.

Just a few years after the program began, it was expanded to provide benefits for the spouse and any minor children of a deceased worker. Starting in 1939, survivors could receive financial support from Social Security if the family’s breadwinner died. This makes it function as the largest life insurance program in the country, although it’s not generally considered to be one.

Would you think of the payroll deductions you contribute to Social Security as disability insurance premiums? Probably not, but in 1954, Social Security also began making payments to disabled workers and their dependent spouses and/or children. Trying to purchase the same kind of disability protection that Social Security offers can be prohibitively expensive, or even impossible for some workers. With Social Security, everyone who has worked enough to buy into the program is covered. Typically, you need to show that you have earned over the minimum amount to vest currently $5,200 per year five out of the last ten years.

Retirement benefits are an important and well-known part of Social Security, but don’t mistakenly believe that’s the only thing it does. Social Security protects working Americans and those who depend on them in many different and equally valuable ways.

There are over 2,700 regulations that oversee Social Security which affect life, disability and retirement benefits. Please check out our website www.socialsecuritybp.com to learn more or to sign up for a customized plan.  

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Is a Lifesaver for Many Women

How do Women collect Social Security?

Social Security a Women Lifesaver

Social Security is a retirement, disability and life insurance program and if you’re a Woman, this can be a lifesaver in retirement. It’s not that women are more interested in a financially secure old age than men. Americans of both sexes rely on Social Security for critical support in their retirement years, but for a variety of reasons, it’s often women who depend on it the most.

  • Longer lives – Women, on average, live longer than men. Without sufficient private retirement savings, this longevity can result in Social Security being the sole or majority source of income. The potential of running out of retirement savings is a problem that affects many retirees, but because of their longer life expectancy, more women end up counting on Social Security alone to support them.
  • Smaller paychecks – Sadly women on average don’t earn as much as men. They often work in fields that are lower-paid than those where men predominate, and even in the same job women frequently earn less than a man does in the same position. Fair? Maybe not, but it’s a fact. That makes it harder to save for retirement and reduces pension benefits, where they exist. As a result, Social Security often forms a greater part of women’s retirement income than men’s.
  • Fewer working years – Between raising children and caring for aging parents, women often take years out of their careers that men do not. While some men do choose to stay home with children or serve as caregivers for parents, it is far more likely that a woman will do so, statistically speaking. Since the formula that determines Social Security benefits is biased toward lower-earning workers, women get some protection from the hit they would otherwise take from a shorter work history.
  • Less other retirement income – Men are more likely than women to have pensions through their jobs, and to have larger pensions than the women who do qualify (partly because of women’s shorter work histories and lower wages). Without this additional income in retirement, women tend to be more dependent on the benefits they receive from Social Security than men are.

Social Security shouldn’t be your only plan for retirement income, but whether or not it is supplemented by private savings, if you’re a woman, it’s a critical component. Having a plan with your spouse before taking benefits can make a huge difference in how much money is available in retirement. Sign up today to have your own customized Social Security plan www.socialsecuritybp.com or info@socialsecuritybp.com.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Redo for Social Security Retirement Benefits

Did you sign up early to start receiving Social Security benefits? If you’ve only recently begun to take benefits, you can still change your mind. For the first twelve months that you’re receiving Social Security income, you have the option to reset this to a later date and increase your payments.

During the initial year, you can halt your monthly payments and delay benefits to get further increases with age 70 being the maxed benefit. This flexibility comes at a cost though; you’ll have to pay back any amount you have already received. For some people, doing so is worth it, if you took benefits at age 62 this is up to a 30% reduction in benefits for the rest of your life. Each year you delay between ages 62 and 70 gives you a nice increase. If you’re the breadwinner in your family ideally you should wait as long as possible as a survivor spouse only gets the higher of the two.  

It isn’t just the currently calculated benefits that will be affected, either. Since Social Security cost of living increases (COLA) are figured as a percentage of your current benefits, delaying until full retirement age or longer means that each year you receive benefits you’ll have a higher amount from which to calculate annual COLA increases.

Unless you really need Social Security income as soon as you are eligible, it’s usually best to wait until your full retirement age or when it maxes out at age 70. One of our Social Security retirement advisors can help you find the best time to take benefits, or help you halt benefits now to increase your retirement income later. www.socialsecuritybp.com to read more, info@socialsecuritybp.com or call 877-270-SSBP (7727)

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security & Your Full Retirement Age: Are you leaving retirement money on the table?

The Social Security term “full retirement age” or FRA is unfamiliar to many people, but it shouldn’t be. Your birth year is one of two factors in determining your Social Security retirement income. Your full retirement age (FRA) is the point at which you can begin taking Social Security retirement benefits at the full amount based on your individual work history. The second factor is how much you paid into the Social Security insurance program which is shown as a FICA deduction. If you have not pulled your statement recently you can go to www.ssa.gov to review your personal history.

Although you can elect to take benefits as early as age 62, that’s rarely a good idea. Taking benefits before your FRA will cost you big-time – as much as 30% of your monthly benefits! So, what is your full retirement age? That depends on when you were born. Congress has gradually raised the FRA, meaning that it is different for different birth cohorts. There are some nice increases in your Social Security retirement checks by delaying your start date with age 70 being when your benefits max out.

For those born in 1954 or earlier, the FRA is 66 years. You can start collecting full benefits as soon as your 66th birthday. Those born later will have to wait a bit longer before taking retirement benefits to receive the full amount:

Birth Year                                                                                     Full Retirement Age
1943-1954                                                                                   66
1955                                                                                            66 years and 2 months
1956                                                                                            66 years and 4 months
1957                                                                                            66 years and 6 months
1958                                                                                            66 years and 8 months
1959                                                                                            66 years and 10 months
1960 or later                                                                                67 years

Almost 50% of American’s elect to take Social Security at age 62! Don’t risk losing almost a third of valuable retirement income but not understanding the true cost of taking this early.

Sign up today to have one of our Social Security retirement advisors www.socialsecuritybp.com help you understand when is the best time to start taking benefits.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Expert Faye Sykes on the Air with Radio Host Eric Holtzclaw

Planning today for tomorrow. Social Security expert Faye Sykes, NSSA, CLTC, National Social Security Advisor and CEO of Social Security Benefit Planners joined radio show host Eric V. Holtzclaw on Build Your Best Business to highlight steps all entrepreneurs can take to protect their retirement income.

Faye shares what inspired her to enter into this niche market and add on to her current services to help both new and existing clients and expand her business. LISTEN NOW!

 

 

Common Retirement Fears

Do you have fear around retirement? A startling number of Americans do, so don’t feel silly if thinking about the whole idea of retirement just makes you want to shut down.

The very common response of fear and anxiety when thinking about retirement stems from several sources. Getting older itself is anxiety-provoking for most of us. We want to stay young and healthy forever, and it can be unsettling to admit that this isn’t how our lives are going to work.

But beyond the basic discomfort with aging, there’s often a more specific fear around the idea of retirement. That fear frequently leads even highly intelligent people to push away the thoughts and ignore the issue. It’s a natural response, but an unfortunate one because avoiding the issue is precisely the action that is most likely to lead to a negative experience at retirement.

If you do make yourself examine your fears around retirement, you’ll probably find that they center on four questions that many people share:

Will Social Security even be there when I retire? This is a reasonable fear, given that so many politicians try to inspire panic about the program’s future. But Social Security has been around a long time and it probably isn’t going anywhere. True, the funding formula and/or benefits will need to be adjusted at some point, but the situation is nowhere near as dire as some make it sound. You’ve been paying into Social Security for many years and it will almost certainly pay you back in your retirement years. Don’t depend on the program as your only income in retirement, but don’t worry too much about it either. Social Security is going to be there.

What if I didn’t save enough? This question is another valid concern. Most people don’t save enough to provide the same income they had when they were working. Since we’re living longer now, it’s more important than ever to build your retirement savings. You know this, so don’t waste time in fear of the future; save for it instead. Talking with a retirement planner can help you understand just how much you’ll need to save each month so that you will have enough funds to live comfortably for many years after retirement. This is one area where ignoring the problem will only make it worse, so face your fear and talk with your financial advisor. Taking action feels good, and you’ll thank yourself later.

Will I be bored and lonely not working? As our parents age, we sometimes seem them struggle with these issues. It’s natural to wonder if you’ll face the same problems. Retirement can be a lonely time or a wonderful period to pursue old and new interests, relish relationships with all kinds of people and thoroughly enjoy yourself. To ensure your experience is positive, it’s important to prepare yourself for the changes. Remember, you don’t have to retire all at once. You can work less over gradually in many cases, while also strengthening your social networks and engaging in interests that you didn’t have time for when you were working full time. Make friends and hobbies a priority now, and you’ll be thrilled to have more hours to enjoy them when you retire.

What about health care costs? The rising costs of health care inspire fear in most people, whether they’re working or retired. Save for retirement expenses, including health care, but don’t let the fear paralyze you. Medicare is one of the most generous health insurance programs available, and you’ll qualify for it by the time you retire, most likely. Also keep in mind that the healthcare landscape is changing, and costs may not be as high as you fear when you actually retire.

Retirement fears are real and reasonable. Taking an active stance as you prepare for your retirement and examine the reasons for your anxiety will go far toward alleviating those fears. It will also reduce the risk of those fears coming true, so don’t play ostrich any more. Look forward to retirement with your eyes wide open, and take advantage of your current opportunities to ensure a positive experience later.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Myth #7: Is Retirement Income Taxable?

MYTH: Your benefits are not taxable in retirement.

Surprise! If you continue to have earned income in retirement while receiving Social Security, then part of your Social Security income can be included in your taxable income. That’s not to say that everyone pays taxes on Social Security
benefits or that the full amount is taxable, but it’s important to know that some of your benefits may be taxed. About half of all beneficiaries paid federal tax on Social Security in 2015.

To figure out whether your benefits are taxable or not, you’ll need to understand the IRS’ definition of “combined income.” This means your adjusted gross income plus any nontaxable income you receive, added to one half of your Social Security benefits. The total of these three numbers will determine whether your benefits are taxed, and how much.

If you are single and have a combined income of  $25k to $34k you’ll owe taxes on up to 50% of your Social Security benefit. Couples that earn between $32K and $44K a year and file jointly will owe the same rate if their combined income is between $32k and $44k.

For single filers with combined incomes over $34k and married filers whose combined income exceeds $44k, the portion of benefits that may be taxable is 85%. That’s assuming the married couple files taxes jointly. Filing a separate return makes it far more likely that your benefits will be taxable.

You may also pay state taxes on part of your benefits if you live in Minnesota, North Dakota, Vermont and West Virginia; these states mirror the federal tax schedule. The following nine states may also tax a portion of Social Security but provide exemptions based on income and age: Montana, Colorado, New Mexico, Utah, Nebraska, Kansas, Missouri, Connecticut and Rhode Island. The remaining 37 states not listed above do not tax Social Security.

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Expert Faye Sykes on the Air with Ryan Poterack

Planning today for tomorrow. Social Security expert Faye Sykes, NSSA, CLTC, National Social Security Advisor and CEO of Social Security Benefit Planners joined radio show host Ryan Poterack with expert advice on Social Security planning. LISTEN NOW!

Not associated with or endorsed by the Social Security Administration or any other government agency.

Social Security Myth #6: No more Social Security?

MYTH: Social Security will go broke in the next 20 years.

That’s a scary statement, and it gets tossed around frequently. Should you worry about it? Not really. Social Security is essentially a pay-as-you-go system. The workers today are paying through their FICA taxes for the benefits current retirees are receiving.

In 2017, if you are W-2 employee you pay 7.65% of your income into the program and your employer pays an equivalent amount. Self-employed workers are required to pay the full amount of 15.3% (but they may be able to deduct some of the expense when they file their annual tax returns).

Any surplus money currently goes into a trust fund and is invested into treasury bonds. By 2034 the trust is projected to run out of money, and this is the source of the scary “going broke” concept. Even if the projection is accurate, however this doesn’t mean that benefits will stop all together. The payroll taxes alone from those working in 2034 should still cover about 79% of promised benefits.

But it’s true that in this scenario there would not be enough money for the program to continue exactly as it is. Congress will need to act by raising taxes, cutting Social Security benefits or both. We should expect a solution to be hammered out long before 2034. Though either of these options would be hard choices that will no doubt inspire real debate, the risk to millions of Social Security beneficiaries that vote will hopefully get politicians of all persuasions to act in plenty of time to prevent the program from facing a true crisis.

Not associated with or endorsed by the Social Security Administration or any other government agency.