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Are You Part of the Sandwich Generation?

Posted on March 9, 2017 by - Retirement Benefits, Retirement fears, Social Security Benefits, Uncategorized

Many Americans today are part of what is known as the sandwich generation. No, that doesn’t mean covered in peanut butter or surrounded by lettuce and tomatoes. It refers to being economically sandwiched by two other generations, one older and one younger, that rely on you for financial support.

Providing emotional support for parents and children is part and parcel of being human. It’s both demanding and rewarding, but also creates some fear for the future. Providing financial support for these loved ones while taking care of yourself and your own future, however, can be tough. For many, it seems like an inescapable burden, and fulfilling it can leave you unable to provide sufficient resources to meet your own needs.

If you’re still funding your adult kids’ lifestyles and struggling to take good care of your parents’ financial needs at the same time, you might want to consider whether it’s the best strategy. Despite the desire to provide everything you can for your family, this financial sandwich can leave you in a bad situation a few years down the road.

  • Your kids have their whole life to pay back college and other debts. It feels good to provide your children with a debt-free college education and help with a car, house or other steps toward the good life. But can you afford it? Ignoring your financial future so you can give them the best start isn’t in anyone’s best interest. If you can’t support yourself in retirement, they’ll feel duty-bound to help. It’s often better to let them take out loans to accomplish their goals, while you save for your retirement years. That leaves you better prepared to take care of your own future needs while helping them realize the true costs of their choices and value them appropriately.
  • Learn from your parents and save more toward retirement. The financial sandwich you’re in now should illustrate the importance of saving for retirement. It’s more expensive than most people expect, between rising healthcare costs, inflation and longer lifespans. You’re seeing that first-hand with your parents; learn the lessons that their predicament illustrates and get serious about saving now, so you won’t be in the same one later.
  • You cannot take out loans for retirement. While it’s relatively easy to get a loan for a college education, house or car, just try asking for one to pay for retirement expenses. Lenders will laugh at you! Once you’re past working age, it’s virtually impossible to get a loan unless you can prove you have the resources to pay it back. That’s not a situation that inspires confidence for older Americans who need extra income just to get by, so let the kids get a loan now. It’s far easier to obtain and pay back than the one you’ll need if you don’t save enough for your retirement.

What’s the takeaway? Giving your retirement savings short shrift so you can keep paying for the generational sandwich isn’t wise. If you don’t have enough saved, it’s helpful to do what you can to maximize your Social Security income. But in the big picture, it’s probably more important to save for your own retirement than to fully fund your children’s college and post-college years.

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

Social Security Myth #5: The precise amount of SS benefits

Posted on March 9, 2017 by - Social Security Myths

MYTH: The maximum Social Security benefit in 2017 is $2,687.

There’s a lot of misinformation floating around about the precise amount of Social Security benefits. That’s partly because the amount changes every year, and partly because the amount received differs based on individual work history and the age at which you claim benefits. If you work until reaching your full retirement age and paid a sufficient amount into the program to qualify for the maximum benefit, the current amount of your monthly benefit will be $2,687.

If you delay benefits beyond your retirement age, you will increase your benefit amount by 8% for each year you delay, up to age 70. There are no further increases after reaching age 70 so it doesn’t make sense to delay further. However, there is an annual cost of living increase each year. Since these yearly increases were implemented, they have averaged 2.5%.

Collecting benefits early decreases the amount of your monthly benefit – up to 30%! Not only that, but with a smaller amount in benefits, the annual increases you get will be smaller as well (because they’re a percentage of a smaller number). That’s one good reason to delay benefits at least until your full retirement age if you can. A bigger benefit means a bigger cost of living increase each year, and over time, that can mean a big difference in the amount of money you have to spend each month.

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

Social Security Myth #4: Only Minor Children Get Benefits When You Die.

Posted on March 7, 2017 by - Children's Benefits, Family Benefits, Social Security Myths, Widow Benefits

MYTH: Social Security only helps minor children at your death.

You probably know that Social Security can provide benefits to children, but if you’re like most people, you believe that this can only happen if you die. That’s not the way it works, though.

Social Security was set up in 1935 to protect Americans, including their
children, through a paid insurance program known as FICA. That’s what the FICA taxes that come out of your paycheck each month are paying for. This program provides financial assistance in cases of disability, at retirement and at death.

If a parent – or in some cases, a guardian grandparent – is caring for a minor child or children and is receiving retirement or disability benefits through Social Security, the children may be eligible to also receive benefits. They may qualify for benefits if their parent or guardian dies as well.

In all three situations, the biological, adopted or dependent step-children may be able to receive benefits until they turn 18 – or longer, if they haven’t finished high school. Children with disabilities can continue receiving benefits for even longer.

The amount of benefits a child can receive varies but can be up to 75% the amount the deceased parent would collect from Social Security. A family limit applies when there are multiple children surviving the parent. This “family cap” is usually between 150% and 180% of the parent’s full benefit. No matter how many children are eligible to receive benefits, the total amount cannot exceed the family limit.

In cases where one parent passes away, a non-working parent or one who earns less that $16,920 per year may also receive additional Social Security family benefits until the child reaches age 16. Again, if the child is disabled, these benefits can continue beyond that age for the adult who exercises parental control and responsibility for the disabled child.

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

Social Security Myth #3: Divorce Always Costs You!

Posted on February 27, 2017 by - Divorce, Social Security Myths, Spousal Benefits

MYTH: If you’re divorced, your only option is to file for Social Security based on your own work record.

Luckily for many divorcees, this isn’t the case at all. If you were married for over ten years, you can still file for benefits as if you were married.  This means that as in Myth #2, you can receive up to half the amount of your ex-spouse’s retirement benefit.

If you do not remarry and your ex precedes you in death, the Social Security Administration considers you to be widowed. As a widow or widower, you are eligible to receive the full benefit that your ex-spouse earned – just as if you had still been married at the time of his or her death.

Some divorcees worry that collecting the benefits to which they are entitled will cause resentment, either in the ex-spouse or his or her subsequent spouse (or spouses). The common assumption is that if one ex-spouse is receiving benefits, that will negatively impact the amount other current or previous spouses can receive, or even prevent them from receiving benefits at all.

There’s nothing to worry about, because everyone who can collect Social Security benefits based on a previous or current marriage to someone who is vested into the system does so independently. Even if your ex-spouse married several other people after you divorced, it doesn’t matter. If each marriage lasted over ten years, all the previous spouses – and the current one as well – will be able to collect the full amount of spousal or widower’s benefits.

If the marriage didn’t last for ten years, however, there is no benefit for an ex-spouse. Here is to your fantastic retirement!

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