Ways and Means Committee Convenes Meeting on Social Security Solvency

Sep 28, 2016

Last week, Rep. Sam Johnson (R-TX) held a hearing on the financial health of Social Security.

The specific impetus for the meeting was the discrepancy between the long-term projections of two trusted groups of Social Security experts: the Congressional Budget Office and Social Security’s own Trustees. While both agencies agree the program spends more than it takes in, they differ on when the program’s funds will exhaust. The CBO puts the exhaustion date at 2029, while the Trustees have it at 2034.

Naturally, it is more difficult for Congress to devise a workable solution when they’re unsure of their deadline. Experts from both agencies sat down with Rep. Johnson in an effort to account for the discrepancy. The full hearing may be viewed here.

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Savvy Social Security September 22 Newsletter Now Available Online

Sep 27, 2016

In it, Elaine discusses the recent GAO critique of SSA claims processes.

The full newsletter may be read here.

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IRS Fails to Notify Over 1M Victims of Identity Theft

Sep 20, 2016

The IRS identified about 1.1 million taxpayers who were victims of employment-related identity theft between 2011 and 2015, but informed almost none of them.

Employment-related identity theft occurs when someone uses another individual’s Social Security number to get a job.

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Americans Remain Ignorant About Retirement Benefits

Sep 16, 2016

According to the Government Accountability Office, the continued popularity of 62 as a Social Security claiming age may be attributed to a misunderstanding on the part of pre-retirees.

Representatives of the GAO observed 30 in-person claims at SSA offices and found that, more often than not, frontline SSA employees will not discuss delayed claiming with beneficiares. The issue only came up in 8 of the 26 interviews in which it was relevant. Similarly, the earnings test was pertinent to 18 cases, but only discussed 7 times.

Furthermore, the GAO review of several academic surveys exploring pre-retiree knowledge of Social Security reveals a consistent pattern of ignorance. For example, a phone survey given by the Financial Literacy Center found that 36% of respondents did not understand the relationship between claiming age and the monthly benefit amount.

The full GAO report, including proposals to bridge this knowledge gap, may be read here.

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Effects of SSA Cutbacks by State

Sep 12, 2016

Congress has cut the Social Security Administration’s operating budget by 10% since 2010, a move the Center on Budget and Policy Priorities argues has had an averse effect on communities across the nation. Their full report can be found here.

The CBPP graphic shown left depicts the percent change in Social Security Administration staff between 2010 and 2015. The full-size graphic may be viewed here.

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Savvy Social Security September 1 Newsletter Now Available Online

Sep 6, 2016

In it, Elaine discusses the feasibility of claiming Social Security benefits early and reinvesting them, in response to a recent analysis of the issue by Eva L. Levine. The full newsletter may be read here.

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Yale Professor Proposes Radical Reform to Retirement Age

Sep 1, 2016 3 Comments

Yale Law School professor Anne L. Alstott recently recommended that the Social Security retirement age be raised as high as age 76. Her proposal for raising the retirement age differs from other similar proposals in that it draws a distinction between high-income earners and low-income earners; subjecting high-income earners to a later retirement age and allowing low-income earners to leave the workforce in their 60s.

The reason: low-income earners often work in physically demanding jobs, and cannot reasonably be expected to work into their later years.

Alstott also proposed the gradual phaseout of spousal benefits, which she judges will be less relevant to future generations of earners, even though they remain very relevant to Baby Boomers. More commentary on Alstott’s proposals may be found at FA Magazine.

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New FINRA Letter for SSSP Couples Presentation Now Available

Aug 31, 2016

We’ve received a new FINRA letter for the updated Savvy Social Security for Couples Presentation.

The presentation covers the ins-and-outs of spousal planning, which changed considerably with the passage of the 2015 Budget Act. The presentation and all associated FINRA letters and marketing materials are available for download on our Presentations page.

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Three New Article Reprints Available

Aug 30, 2016

Savvy Social Security’s reprints suite now includes three new articles:

  • Social Security for Divorced Individuals
  • Social Security for Minor Children
  • Social Security for Widows

These client-facing articles cover niche Social Security planning topics. They may be customized with your branding and distributed to clients and prospects. They also work well as part of a drip-marketing campaign.

Our article reprints are available on the Marketing page under “Client reprints.”

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Low Socioeconomic Status Leads to Premature Retirement

Aug 25, 2016

A recent Boston College CRR Study says lower-income workers are retiring too early to maintain their standard of living.

54% of studied households in the lowest-income bracket are facing a retirement gap, compared to 36% of high-income earners.

Though the obvious solution may seem to encourage these workers to remain in the workforce longer, health complications and poor job prospects may make this advice untenable.

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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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