T3 Survey: Voting Is Open

Jan 19, 2022 /

This is your chance to tell the advisory community which software tools you like the best. Naturally we are hoping you’ll help make Horsesmouth’s Savvy Social Security Planning Calculators stand out in the Social Security category. In last year’s T3/Inside Information Advisor Software Survey we scored high, but this year should be even better as the very robust capabilities of our calculators become more well known.

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Understanding CDC Life Expectancy Data

Jan 10, 2022 /

The CDC caused a bit of a stir in July 2021 when it announced that life expectancy in the U.S. declined by a year and a half in 2020, primarily due to the pandemic. This was the largest one-year decline since World War II, when life expectancy declined 2.9 years between 1942 and 1943.

According to the CDC, life expectancy at birth is now 77.3 years. At age 65 life expectancy is 17.4 years for men (to age 82.4) and 20.1 years for women (to age 85.1).

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Who Will Have Unmet Long-Term Care Needs?

Dec 14, 2021 /

The Center for Retirement Research at Boston College just completed a three-part series on the needs and resources available for long-term care.

The first study examined the odds of a 65-year-old developing minimal, moderate, and severe needs, considering both the intensity and duration of the required care. The results show that roughly one-fifth of 65-year-olds never require long-term care and about one-quarter will have severe needs, with the rest falling somewhere in between.

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Why the Big Jump in Medicare Premiums?

Nov 30, 2021 /

The Medicare Part B base premium will be going up by 14.5% to $170.10 in 2022. All of the IRMAAs will increase as well, however the income levels will be adjusted for inflation and will start at $91,000 for individuals and $182,000 for couples. The annual deductible will be going up by $30 to $233. Here’s the explanation according to CMS.

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“Social Security for Future Generations Act of 2021” Introduced

Nov 15, 2021 /

When it rains it pours. After a long dry spell of Congress pretty much ignoring Social Security despite repeated annual calls by the trustees to pass legislation to restore solvency to the system, there has been a flurry of new bills in the House. On October 26, 2021, Rep. Al Lawson (D-FL) introduced H.R. 5737, Social Security for Future Generations Act of 2021.

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More Same-Sex Couples May be Eligible For Social Security Survivor Benefits

Nov 8, 2021 /

The Justice Department and the Social Security Administration have dropped two Trump-era appeals that attempted to deny survivor benefits in cases where couples were either not permitted to marry or not legally married the required nine months even though they had been together for decades. This opens the door to survivor benefits for many people who thought they would be denied such benefits due to SSA’s strict interpretation of its marriage requirements.

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The Latest Social Security 2100 Act: Redesigned for Action

Oct 28, 2021 /

Every year since 2014, John Larson, a Democratic representative from Connecticut, has introduced some version of the Social Security 2100 Act. I’ve always considered it a good bill, with something for everyone. In addition to a few tweaks here and there that raised benefits for everyone by a small amount and changed the index used for the COLA, its most important provision called for a gradual raising of the payroll tax, to 7.4% from the current 6.2%, to restore solvency to the system. In September 2019, SSA actuaries determined that if passed, benefits could be paid in full over the next 75 years and the trust fund would never run out.

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Social Security Checks Going Up by 5.9%, 1960 Cohort Misses Out

Oct 25, 2021 /

As everyone has heard by now, the Social Security cost-of-living adjustment for 2022 will be 5.9%. Everyone currently on Social Security will receive a letter in December telling them what their new benefit will be starting in January. Those who haven’t started benefits yet will also have their PIAs raised by the COLA. Make sure your clients understand that they do not need to claim benefits now to get the COLA. (We’ve received a number of questions about this.)

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Discrepancies in Social Security Benefit Estimates

Oct 12, 2021

SSA has recently redesigned its statements to show benefit estimates at each age from 62 (or the client’s current age if over 62) through age 70. For clients born in 1955 through 1959, whose FRAs are 66 plus some number of months, the statement shows the estimate for FRA (e.g., 66 and 6 months) as well as age 67. In a few (not all) of the cases that we’ve seen, these amounts are the same. Clearly, they should not be. Each month a client delays application, the benefit amount goes up by a few dollars. (See references at the end for the exact formula.)

In addition to this error, we are seeing mistakes in the DRCs (delayed retirement credits) between FRA and age 70. For example, one statement showed a benefit of $3,223 at 68, $3,459 at 69, and $3,773 at 70. Instead of going up by 8% a year, the benefit went up by 7.3% between 68 and 69 and 9.1% between 69 and 70.

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Social Security Announces Redesigned Statement

Oct 4, 2021

After doing a soft launch of its new redesigned statement last spring, SSA has announced that statements have been redesigned “to provide information to people in clear and plain terms about Social Security’s programs and services.” The agency conducted extensive research, review, and testing to make the updated Statement easy to understand. The new Statement is shorter, uses visuals and plain language, and includes fact sheets tailored to a person’s age and earnings history. Examples of the new Statement and fact sheets are available here (PDF).

Read the full press release here.

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Boomer Drawdown Speed May Be Underestimated

Sep 23, 2021

Past generations drew down their wealth slowly in retirement, leaving much of their savings untouched. However, this pattern may not hold as the Baby Boomer generation retires, because they are less likely to have a defined benefit (DB) plan and will need to tap the assets in their defined contribution (DC) plans to support their consumption.

The Center for Retirement Research studied the relationship between access to DB plans and the speed at which past generations drew down their wealth. It found that having access to a DB plan was associated with slower drawdown of retirement wealth. The larger the share of retirees’ resources in an annuity-like form — either DB plans, Social Security benefits, or commercial annuities — the slower they drew down their wealth.

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Media Coverage of Trust Fund Influences Claim and Benefit Expectations

Sep 13, 2021

Does the news about the Social Security trust fund have an impact on when workers plan to claim their benefits and how much they expect those benefits to be? A recent survey says yes. The Center for Retirement Research at Boston College showed study participants identical articles with different headlines. The headline for the control group reports that Social Security has a “long-term financing shortfall,” but does not directly reference the trust fund. The headlines for the three treatment groups highlight the depletion of the trust fund. The first headline read, “The Social Security Trust Fund Will Deplete its Reserves in 2034.” The second mirrors recent media coverage: “Social Security Fund Headed toward Insolvency in 2034, Trustees Find.” And the third emphasizes ongoing program revenue alongside the trust fund: “Revenues Projected to Cover Only 75 Percent of Scheduled Social Security Benefits After 2034.”

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Combined Trust Funds Projected Depletion One Year Sooner Than Last Year

Aug 31, 2021

The Social Security Board of Trustees today released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2034, one year earlier than projected last year, with 78 percent of benefits payable at that time.

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The Impact of Inflation on Social Security Income

Aug 30, 2021

This fall, the U.S. Social Security Administration is likely to announce that benefits will be increased by around 6 percent beginning January 1, 2022. This cost-of-living-adjustment (COLA), which would be the largest in 40 years, is an important reminder that keeping pace with inflation is one of the attributes that makes Social Security benefits such a unique source of retirement income.

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Social Security reports nearly 400,000 more beneficiary deaths in 2020 than 2019

Aug 24, 2021

Last week, for the first time, the Social Security Administration (SSA) released information on the number of beneficiaries who died in 2020, the year the COVID-19 pandemic began. There were nearly 400,000 more beneficiary deaths in 2020 than the agency tabulated for 2019, representing a 17 percent year-over-year increase.

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“Guaranteed Income For Life” More Appealing Than an “Annuity”

Aug 16, 2021

Most people contemplating retirement want guaranteed income for life. Those who want more guaranteed income than Social Security provides can get it by purchasing an annuity—that is, an insurance-backed product that promises guaranteed income for life. The word “annuity” means “a sum of money payable yearly or at other regular intervals.”

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Waiting for the OASDI Trustees’ Report

Aug 9, 2021

The annual Social Security Administration trustees report for this year has yet to be released with post-Covid-19 estimates.

But because the economy is growing, including middle- and upper-income payrolls that comprise most of the trust funds’ revenues, the pandemic’s impact could be small, according to Shai Akabas, director of economic policy at the Bipartisan Policy Center.

“The bottom line is that we don’t think the picture has changed a whole lot,” Akabas said. “It’s still the dire picture that we had a year or two years or three years ago.”

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As More Women Opt Out Of The Workforce, Caregiver Credits Could Help

Aug 2, 2021

Covid-19 prompted many women to leave the workforce.

That’s because many women were forced to choose between working and taking care of their children and families amid a pandemic often opted for the latter.

The difference in earnings and career prospects can be seen immediately. And it could also have implications for women’s retirement security.

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Kotlikoff: SSA Tricking People into Making Poor Claiming Decisions?

Jul 26, 2021

The Social Security Administration is misleading and mistreating Americans by “running scams” and “tricking them” into making claiming choices that cheat them out of benefits to which they’re entitled, argues Laurence Kotlikoff, Boston University economics professor, in an interview with ThinkAdvisor.

One such injustice he calls “a terrible hoax [that] may be the worst public policy this country has ever run.”

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Most Americans in Dire Need of Social Security Education

Jul 19, 2021

Most Americans don’t have as much knowledge of the basic functions of Social Security as they thought, according to a study from Nationwide Retirement Institute.

Around 54% of the adults surveyed by Nationwide—who are not receiving Social Security benefits—claim they know exactly how to optimize their Social Security benefit, but only 6% actually know all the factors that determine the maximum benefit someone can receive, the study reveals… Around 68% of the respondents said it is now more important than ever to optimize their Social Security—a sense especially prevalent among Gen Xers (80%) and millennials (71%).

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