Savvy Social Security August 18 Newsletter Now Available Online

Aug 23, 2016

In it, Elaine discusses the relationship between immigration and Social Security, as well as the conversation surrounding it in the 2016 presidential election.

The full newsletter may be viewed here.

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2016 ‘Save Our Social Security Act’ Contains Surprising Conservative Concessions

Aug 19, 2016

The “S.O.S Act” introduced by Rep. Reid Ribble (R-WI), includes many forms of benefit cuts, including a higher retirement age and a less generous inflation adjustment.

However, it also includes proposals more often favored by Democrats: The bill would raise the cap on the payroll tax from $118,500 to $308,750, raise benefits for the oldest Americans, and create a minimum benefit for beneficiaries at or near the povery level.

Advocates of Social Security expansion have construed this move as an evolution in the national Social Security conversation, and a net shift towards the left.

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SSA Backs Down on New Online Security Measures

Aug 16, 2016

Last month, the SSA announced a two-factor authentication system for online “my Social Security” accounts. The plan was for new and existing account holders to provide the SSA with a cell phone number; upon signing into their account, they would be texted a PIN number for completing their login.

Initially, this change was mandatory for all users—people uncomfortable providing the SSA with a phone number would have to forgo conducting their Social Security-related business online.

The SSA recently rescinded this rule. This text message feature is still offered optionally for the security-conscious.

Computer security expert Brian Krebs offers further analysis here.

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Chile to Reform Private Pension System

Aug 15, 2016

Chile’s President Michelle Bachelet proposed reforms to the national private pension pension system implemented under former dictator Augusto Pinochet (pictured right).

Pinochet’s retirement system, once hailed by many economists as the fiscally-responsible answer to the problems of pay-as-you-go retirement systems like Social Security, deteriorated in popularity with the Chilean public as the first generations to work under the system began to retire.

Though Pinochet’s plan bolstered the Chilean economy, its pensions only replace 38 percent of pre-retirement income on average, or $400 per month. The program’s architects promised a 70 percent replacement rate.

Bachelet’s reforms would require employers to pay a tax to supplement the worker’s contributions to their pensions, boosting the payout for individuals.

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SSA Facing Office Closures, Worker Furloughs Under GOP Cuts

Aug 11, 2016 1 Comments

An appropriations bill pushed by House Republicans could be bad news for the Social Security Administration.

“There would be up to two weeks of furloughs for all employees,” the SSA warns in a communication acquired by the Washington Post. Furthermore, the bill would necessitate a hiring freeze and cause “service degradation and long wait times and delays.”

Opponents of the bill view it as a step towards privatization, with Rep. Tom Cole (R-Okla.) going so far as to say “these cuts would be a disaster and the American people will suffer.”

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Survey: Americans Overconfident in Financial Knowledge

Aug 9, 2016

A five-question financial literacy survey issued annually by the Finra Investment Education Foundation reveals a striking disconnect between what Americans think they know about financial matters and what they actually know.

76% of respondents gave themselves a “very high” rating on financial knowledge, but only 14% of survey respondents answered all five questions correctly. Only 37% of respondents got four in five questions correct, a 5% drop in overall performance from 2009.

However, Americans understand some financial topics than others: Most respondents (75%) got a basic question on interest rates correct, while only a minority of respondents (28%) could answer a basic question about bond prices.

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SSA Tightening Security on Online Social Security Accounts

Aug 2, 2016 2 Comments

Starting this August, Social Security will implement two-factor authentication for their online services.

Each time you sign into your Social Security account online, you will complete two steps:

  • Step 1: Enter your username and password.
  • Step 2: Enter the security code sent to your cell phone.

This change is mandatory. If you do not wish to provide your cell phone number to the SSA, you will not be able to access your online Social Security account.

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PROGRAM UPDATE: Survivor Planning Calculator Now Available Online

Jul 29, 2016

Use the Survivor Planning Calculator to help widows and widowers determine when to claim their survivor benefit as it coordinates with their own retirement benefit. You will need to know the widow’s own PIA as well as the amount of the survivor benefit.

For greatest accuracy, have the widow contact SSA and ask for the amount of the survivor benefit if it is claimed at the widow’s FRA. If this is not possible, you can use the deceased spouse’s PIA from a recent statement (if decedent hadn’t started claiming yet) or, if the deceased spouse was receiving benefits at the time of death, use that benefit amount and also enter the age the decedent originally claimed his/her benefit. The calculator will determine the original survivor benefit and adjust it based on the widow’s claiming age.

The tutorial may be viewed at the bottom of the Calculators page, as well as the “read more” link below.

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Election 2016: Party Platforms on Social Security

Jul 28, 2016

With the dust clearing on the presidential primaries, the time has come to reexamine the nominees’ stances on Social Security.

The Democratic Party’s platform promises to extend the solvency of the trust fund by lifting the cap on the payroll tax, thus having wealthier Americans contribute more to Social Security, while also raising average monthly benefits for seniors and retooling cost-of-living adjustments. Furthermore, Hillary Clinton has expressed interest in expanding benefits for widows and women who took time from the workforce to raise children.

Early in his campaign, Republican nominee Donald J. Trump said he would oppose cuts in Medicare and Medicaid. However, Trump policy advisors have said the candidate would be open to changes in Social Security and Medicare after his administration has been established. Trump has plans for a series of interrelated initiatives, including a tax-reform plan, the renegotiation of trade deals, the repeal of Dodd-Frank and the Affordable Care Act, and immigration. Trump believes these initiatives will bolster the American economy and secure Social Security for the future.

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Social Security: When and Why

Jul 27, 2016

A Spectrem Group survey of 634 affluent American investors suggests that even the wealthiest Americans consider Social Security a key piece of their retirement plan.

Highlights include:

  • 44% of ultra-high net worth respondents ($5MM account size or greater) plan to delay their Social Security claim to 70.
  • By contrast, only 32% of the larger “mass affluent” sample ($100K - 1MM) intend to delay, even though they theoretically need the extra income more.
  • Only 31% of recipients say they’ve discussed Social Security with their financial advisors. However, wealthier investors were more likely to do so.

The full report may be downloaded here.

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Savvy Social Security July 14 Newsletter Now Available Online

Jul 20, 2016

In it, Elaine discusses regret as one of the hazards of growing older. Part of the financial advisor’s mission is to help their aging clients avoid regret; this objective has special meaning where Social Security claiming is concerned.

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Consumer Financial Protection Bureau Synthesizes Startling Claiming Data

Jul 14, 2016

The Consumer Financial Protection Bureau published a brief with some startling figures about Social Security claiming. These statistics are derived from the Social Security Administrations’s 2013 claim data, Alicia Munnell’s earlier analysis of the SSA data, and other recent sources.

Some big figures include:

  • 75% of 2013 claimants filed early (that is, between the ages of 62 and 65).
  • 46% of 2013 claimants filed at 62.
  • Only 12% of Americans self-report an understanding of how claiming age affects benefits, according to recent surveys detailed in the brief.

Clients of financial advisors are better informed than most Americans. Nevertheless, the public is losing money to ignorance.

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Social Security Even More Crucial to Children Than We Thought

Jul 13, 2016

A new report from the Center for Global Policy Solutions argues that Social Security is even more crucial to children than the Social Security Administration’s own stastics suggest.

The SSA’s figures already account for children who receive Social Security directly—there were 3.2 million such children in 2014. The CGPS Report attempts to account for children who benefit indirectly from the Social Security system; including children in multigenerational households, children with retired parents, children who live with their grandparents, and so on. Once these indirect beneficiaries are properly accounted for, the 3.2 million figure doubles to 6.4 million.

The full report may be read here.

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Savvy Social Security June 30th Newsletter Now Available Online

Jul 5, 2016

In it, Elaine discusses the state of Social Security in light of the most recent Trustees report. Elaine supplies key insights into the direction of the political winds, as well as the rhetoric on both sides of the Social Security question. The full newsletter may be read here.

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Nationwide: Most Clients of Financial Advisors Still Not Receiving Social Security Advice

Jun 30, 2016

A recent survey of retirees and pre-retirees found that only 52% of respondents had received Social Security advice for their financial advisors. In other words, half of advisor clients still are not getting this advice.

This is, suffice to say, a potentially disastrous oversight. The Nationwide survey gives four major reasons why:

  1. Advisors risk losing clients if they fail to include Social Security in their clients’ financial plans.
  2. Many clients are uninformed about Social Security.
  3. Many clients take Social Security earlier than they should.
  4. Advisors can make all the difference.

As Savvy advisors, it will fall to you to help your clients navigate around the many Social Security pitfalls.

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Savvy Social Security June 16th Newsletter Now Available Online

Jun 27, 2016

In it, Elaine Floyd discusses the recent developments in policymakers’ thoughts on Social Security reform, as researched in the Commission on Retirement Security and Personal Savings’ two-year report on the subject.

Some of the popular proposals are revisions to the PIA formula, modifications to cost-of-living adjustments, raising the maximum taxable wage base, and replacing the WEP and GPO.

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The Excluded: New Statistics on a Dark Chapter in Social Security History

Jun 21, 2016

When Social Security was first passed, benefits were largely denied to both agricultural and domestic workers. This move disproportionately affected blacks and other minorities, who were overrepresented in those fields.

A recent study by the Center for Social Development at the Washington University in St. Louis attempts to estimate the economic and political consequences of this exclusion. The excluded black workers lost $143.20 billion in today’s dollars; their white counterparts lost $460.80 billion this way. The report concludes that this exclusion stifled the economic growth of the American South and preserved racist post-Reconstruction power structures.

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Prospecting Tip: Help Your Clients File For Social Security

Jun 20, 2016

In a recent newsletter, Elaine Floyd encouraged advisors to have their clients to deal with the SSA online instead of heading down there in person.

There are times when that may not be possible, though—for instance, when attempting to file for a survivor benefit. At a recent Savvy Social Security 2-Day Intensive Workshop for advisors, financial advisor and retirement specialist Peter Murphy made a case for visiting the Social Security office with your clients and prospects. Not only is this a good practical step in that it minimizes the chance of miscommunication between clients and the SSA, it’s also a great way to develop your business relationships.

There’s an intermediate option, too. You may want to bring your clients and prospects into your own office, get them set up on a computer, and help them file their online application. This demonstrates responsibility and builds goodwill.

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Presentation Tips: Workshops at Restaurants

Jun 17, 2016

Though dinner seminars have their share of skeptics, many Savvy Social Security members are finding success with this approach, as we discovered at our last Savvy Social Security 2-Day Intensive Workshop. If you’re going to go the restaurant road, though, it pays to be attentive to detail.

If you are pursuing the lucrative pre-retiree niche, be sure to choose a restaurant that’s easily accessible to older attendees and has good parking. Though costs will generally require you to limit the menu, be sure to include a vegetarian option. Most importantly, make sure to visit the restaurant in advance and double check your room’s setup: outlets, Wi-Fi, acoustics, and so on. More presentation advice can be found in our Marketing Toolkit.

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Presentation Tips: Show Attendees a Savvy Social Security Calculator Report

Jun 14, 2016

At our last Savvy Social Security 2-Day Intensive workshop, program director Elaine Floyd took some time to demonstrate our Spousal Planning Calculator’s reporting feature.

Presenting to a roomful of prospects on the subject of Social Security can be tricky. You need to position yourself as a financial educator, forgoing any “sales” conversation. However, you also want attendees to leave with some idea of what you can do for them. The reports generated by our Savvy Social Security calculators can be helpful here. Show one off during your presentation to give the audience a firsthand idea of what you do for your clients.

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