Social Security: Earliest Age to File & the Benefit of Waiting

Contributed by: James Smiertka

According to a recent Gallup poll, 36% of unretired individuals in the U.S. expect to rely on social security as a major source of income. Many of these people don’t completely understand all of the rules of the complex social security system. Fortunately, it’s our job at The Center to know and to educate our clients.

Why Wait to File for Benefits?       

When it comes to your social security benefit, you should know a couple basic things:

1. You reduce your benefit by receiving benefits earlier than your full retirement age.

2. You can increase your benefit by waiting until age 70 to collect.

There are certain circumstances in your financial plan that may affect when you file, but you can obtain an 8% increase in your benefit for each year past your full retirement age that you delay receiving your benefit. These “delayed retirement credits” end at age 70. But how much will you lose by filing early? The earliest filing age in a normal situation is 62, and by filing at this age your benefit will be reduced at least 20%. Depending on your full retirement age, your benefit can be reduced up to 30% by filing at age 62 (those born in 1960 or later). Here’s a chart that breaks it down by birth year and filing date:

Source: Social Secuirty.org

Special Benefits for Widows and Widowers

It gets even more complicated with widow/widower benefits. A widow/widower can receive reduced benefits as early as age 60 or benefits as early as age 50 if he/she is disabled and their disability started before or within 7 years of their spouse’s death. If the widow/widower remarries after they reach age 60, the remarriage does not affect their survivors benefits eligibility. In addition, a widow/widower who has not remarried can receive survivors benefits at any age if he/she is taking care of their deceased spouse’s child who is under the age of 16 or is disabled and receives benefits on their deceased spouse’s record.

In conclusion, you will receive a reduced benefit if you claim before your full retirement age, and waiting until age 70 to collect is a great way to maximize your own benefit and/or the benefit you leave to your surviving spouse. If anything is certain, it is that the social security rules can definitely be enough to make your head spin, so remember to consult your CERTIFIED FINANCIAL PLANNER™ professional here at The Center for Financial Planning if you have any questions.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Jim Smiertka and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Prior to making a financial decision, please consult with your financial advisor about your individual situation.

Year End Planning Opportunities – How to Prepare for 2016

Contributed by: Nick Defenthaler, CFP®

Last week, Melissa Joy and I had the pleasure of hosting a webinar to discuss Year-End Planning Opportunities for clients to consider. In the webinar we outlined certain action items that you may want to keep on your radar going into 2016. As our largest attended webinar for the year, we were eager to review some important, timely planning items to consider before 2015 comes to a close and also touch on some of the more common items we see clients miss throughout the year that we’d like to see avoided if possible. 

Below you will find the links to handouts that we referenced throughout the presentation that contain some key dates and financial planning ideas to consider. 

• 2015 Year-End Planning Opportunities: These important tax and financial planning moves can help prepare you for the upcoming tax season and better align your portfolio with your short- and long-term goals.

• Year-End Tax Planning Worksheet: This worksheet is designed to make organizing your year-end tax planning a little easier. While not intended to be comprehensive, it can help you get ready to discuss your tax situation with your financial advisor and tax professional.

As we stressed several times throughout the webinar – we encourage you to keep us in the loop when things change in your life during the year.  Job changes, large bonuses, early retirement, job loss, moving, starting Social Security, etc. are all examples of events we want you to reach out to us about for guidance and to see if there are opportunities we can help you take advantage of.  Sometimes it will be as simple as us letting you know you’re doing everything you should be doing but other times, there might be items we can help you uncover that otherwise would have been missed.  We are your financial teammate and are here to help you whenever you need us!   

Below is a link to the recording of the webinar that we’d encourage you to share with any friends or family members who you feel could benefit from the information as well.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

What the End of “File and Suspend” and “Restricted Application” Means for You

Contributed by: Nick Defenthaler, CFP®

On November 2nd, President Obama signed the Bipartisan Budget Act of 2015 into law. It contained the first major change in Social Security since 2000, eliminating popular Social Security strategies “file and suspend” and “restricted application”.  The result of this legislation is less lifetime Social Security benefits for many who planned on delaying retirement benefits until age 70.

Let's take a look at an example of how the strategies were most widely utilized:

Mark and Carrie are 65 years old and recently both retired from Microsoft.  They were both highly compensated and paid the maximum into Social Security for several decades, thus creating a $30,000/yr benefit for Mark and a $32,000/yr benefit for Carrie upon reaching full retirement age (FRA) – in their case, age 66.  Because they are both in great health, have longevity in their family and have accumulated a $1.5M portfolio to supplement retirement income, they planned to delay filing until age 70 to both get the highest possible annual benefit for life (benefits increase 8% each year you delay until age 70).    

Mark and Carrie’s financial planner suggested one change to this plan.  If Carrie were to file and immediately suspend her benefit at her Full Retirement Age  of 66, this would allow Mark to file a “restricted application”.  Filing the “restricted application” would entitle Mark to 50% of Carrie’s FRA benefit, or $16,000/yr (50% of $32,000) from age 66 until age 70.  During this same time frame, Carrie would not be receiving any benefit because she “filed and suspended” in order to receive an 8% annual benefit increase until age 70. 

When Mark turns 70, he would switch from the “restricted application” benefit of $16,000/yr to his own maximized benefit of approximately $41,000/yr (compared to $30,000/yr at age 66). At 70, Carrie would finally start to collect on her own benefit that has now grown to approximately $43,000/yr (compared to $32,000/yr at age 66) after receiving no benefits from age 66 – 70. 

It made perfect sense for Mark and Carrie to both delay benefits until age 70 because of the reasons mentioned earlier, however, by taking advantage of the “file and suspend” and “restricted application” strategies, they were able to bring home another $64,000 in total lifetime benefits ($16,000 x 4 years)! 

So why are these strategies going away? 

Lawmakers saw “file and suspend” and “restricted application” as unintended loopholes that emerged from legislation in 2000.  An additional $64,000 in total lifetime benefits really adds up, especially as more and more retirees are maximizing their benefits using this strategy.  The reforms in this year’s budget bill are projected to save Social Security an estimated $168 billion over 75 years – WOW!

Some important things to consider:

What if I’m currently receiving benefits from the “file and suspend” or “restricted application” strategies?

Don’t panic!  You are “grandfathered” in and your benefits will not change or be interrupted whatsoever.

When will the “file and suspend” strategy be eliminated and is there an age requirement?

If you attain age 66 (full retirement age for those born between 1943 and 1954) by April 29, 2016 you are eligible to still take advantage of the strategy but you must also apply for this benefit strategy by the same date.  If you wait beyond April 29, 2016 or attain age 66 after this date, you will not be able to “file and suspend”.  

When will the “restricted application” strategy be eliminated and is there an age requirement?

If you attain age 62 by the end of 2015, you are “grandfathered” in and are able to take advantage of this filing strategy if it makes sense for your situation.  Those who will not be 62 by year-end will unfortunately not be able to employ this filing strategy.

Obviously with this being a very new piece of legislation, there are still questions that need to be answered and details that need to be shaken out.  Keep your eyes open for additional communication regarding this important change in Social Security and as always, don’t hesitate to reach out to us directly if you have questions about your own personal situation!

If you are interested in more on this topic, register for our April 7th webinar here.   

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

---

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James

Where is my Social Security Benefits Statement?

Contributed by: Melissa Parkins, CFP®

You may recall that Social Security benefits statements used to be mailed out to workers every year a few months before your birthday. Then in 2011, due to budget cuts, the Social Security Administration (SSA) decided to stop mailing annual statements to save money. Another change came in 2014 when the mailing of paper statements partially resumed. Since then, paper statements are mailed at five-year intervals to workers who have not signed up to receive their statements online. These annual mailings are sent to workers at ages 25, 30, 35, 40, 45, 50, 55, and 60 and over.

Why Wait 5 Years? Sign up Online!

An easy alternative to waiting every 5 years to receive a Social Security benefits statement is to sign up for a My Social Security account. You can follow the easy step-by-step directions Jim Smiertka shared in his recent blog on how to sign up.  Once you are enrolled, you will no longer receive paper statements in the mail at the five-year intervals. Instead, you will have access to them on a continual basis through your My Social Security account. You will need to log in first, but then your statements are always at your fingertips.

The Benefits of Tracking Your Benefits

No matter your age, reviewing these statements annually is important. They provide a valuable reminder of what you can expect to get back in the future from payroll taxes paid. It is also important to review your earnings history to make sure there are no missing years or discrepancies. It is better to catch it early and get it corrected than having it go unnoticed for years and having to deal with getting it corrected when it is time to apply for benefits. Whether you are still working or not, your social security benefits are an important part of your financial plan. Please share your statements with us on an annual basis so we can better help you plan for your future!

Melissa Parkins, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Melissa Parkins, CFP® and not necessarily those of Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Impact of the 2016 Medicare Part B Premium Increase

Contributed by: Matt Trujillo, CFP®

You may have heard of the pending Medicare part B premium increase for 2016.  If this is news to you, the most recent Medicare Trustees Report is estimating the baseline premium to increase from $104.90 to $159.30 beginning in 2016 (approximately a 52% increase). The reason why premiums are estimated to increase so much next year is mainly attributable to the way the program is currently structured.

Hold Harmless Clause May Protect You

Currently, the law does not allow higher premiums for all participants. In fact, if you are currently receiving social security benefits, have an adjusted gross income under $170,000 (or $85,000 if single), and are having your Medicare part B premiums taken directly from your social security benefit, then you probably won’t see any increase in your Medicare part B premiums for 2016. This is due to the “hold harmless” clause that protects current Medicare recipients from large rate hikes.

Ordinarily the increase in Medicare premiums is pegged to the annual cost of living adjustment from the social security administration. However, next year the administration says there will be no cost of living adjustment, which has left the Medicare Trustees unable to raise the premiums on 70% of current Medicare recipients.

Am I at Risk for a Medicare Part B Rate Hike?

So how will the Medicare Trustees keep up with the rising cost of healthcare? Simple: they will pass along the costs to future recipients. If you’re not currently receiving social security benefits, but are slated to start soon, you might be in for an unpleasant surprise.

You might be a candidate for a rate hike if:

• You pay your Medicare Premiums directly and don’t have them deducted from your social security benefit.

• You have filed for social security benefits but have suspended payment to take advantage of delayed retirement credits (i.e. file and suspend strategy).

• You have an adjusted gross income higher than $170,000 filing a joint tax return or higher than $85,000 as a single filer.

Talk to your financial advisor to find out more about this pending rate hike, and whether or not you will be affected.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

How to Increase Your Social Security Benefit by 8% per Year

Contributed by: Nick Defenthaler, CFP®

Most people have either received their Social Security statement in the mail or have reviewed it online but do you know what your “full retirement age” is and what it actually means?  Full retirement age (FRA) is defined as the age at which a worker is entitled to 100% of their Social Security benefit.  Below is a summary of the current full retirement age “schedule” according to year of birth:

Source:  ssa.gov

The earliest you can collect benefits on your own earnings record is 62, however, the benefit will be permanently reduced, and in most cases, is not something we recommend to clients.  Each year benefits are delayed, you are entitled to a permanent, 8% increase in benefit.  You can also continue to delay beyond your full retirement age until age 70 to fully maximize your benefit. 

Knowing your full retirement age, given your date of birth, is very important because it can impact when you ultimately decide to file and what your actual benefit will be.  As many of you have noticed, several years ago, the Social Security Administration stopped mailing annual Social Security statements out to most Americans as a cost savings measure.  However, creating an account and checking your Social Security statement online has become very easy and is something we recommend to all clients who are still working.  You should check the statement for accuracy as it relates to your wages for the year and to see if your benefits have changed in any way. For step-by-step instructions to quickly set up your own online Social Security account, click here.

Social Security is a critical part of most retirees’ financial game plan, so knowing things such as your full retirement age, is important to make sure you are making the most of the benefits that you’ve earned.  If you have questions about Social Security, we’ll find the answers.  We have a team of CERTIFIED FINANCIAL PLANNER™ professionals who can help guide you through one of the most important financial decisions you will make in your lifetime.  

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

We're Sorry, This Page is No Longer Available

Checkout our current blog posts HERE. See you there!

How to Apply for Social Security Retirement Benefits

Contributed by: Matt Trujillo, CFP®

There are a few different ways you can apply for social security retirement benefits. The easiest and most time efficient is simply to set up an account at https://secure.ssa.gov/iClaim/rib and apply for benefits online.  You can also apply over the phone by calling 800-772-1213 (or 800-325-0778 if you are hard of hearing). 

Of course, you can always stop down to a social security office and apply in person.  For some of the more advanced social security strategies like file and suspend and restricted application, you will have to stop into a branch as these options are not available online. You can find your local social security office by clicking this link.

If you are currently living outside of the United States you can apply for benefits by contacting the Office of International Operations. For more information visit their website here.

When to Apply for Social Security Benefits

It’s a good idea to apply for benefits a month or two earlier than you want your benefits to actually start. This is because social security benefits are paid the month after they are due.  For instance, if you want your benefits to start in July, you will receive your first benefit check in August. If you want to receive your first benefit check in July, you need to be eligible for benefits in June and tell the SSA that you want your benefits to start in the month of June so that you will actually receive a check in July.

Social security can be a very confusing topic. It’s a great idea to consult with a qualified professional before applying for benefits as your decisions in this area can be permanent and irreversible.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

---

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Matthew Trujillo, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

“My Social Security” Online Account Access

Contributed by: James Smiertka

Did you know you can now take advantage of the My Social Security benefits site? When you visit, you simply sign up for an account. It is a free service, and as of May 29, 2015 more than 19 million accounts have been opened.

The Benefits

If you are currently receiving benefits and/or have Medicare, you are able to:

• Get your benefit verification letter if you need proof of income, Medicare coverage, retirement status, disability, or age
• Check your benefit & payment information and view your earnings record
• Change your address and/or phone number
• Start direct deposit of your benefit or change your direct deposit info
• Get a replacement Medicare card
• Get a replacement SSA-1099 or SSA-1042S for taxes

If you do not currently receive benefits, you are able to:

• Review your Social Security Statement including estimates of your future retirement, disability, and survivor benefits
• Review your earnings once annually to verify the amounts are correct
• Review the estimated amounts of social security and Medicare taxes you have paid
• Receive a benefit verification letter if you need proof that you have never received Social security, Supplemental Security Income (SSI) or Medicare

How to Create an Account

Below is a screenshot of what you can expect to see when you visit the website:

When you select “Create an Account” you will be re-directed to the following page:

Since you are a new user, click on the blue  “Create An Account” and enter your personal information:

On the following page you will confirm some information that is provided, such as your mortgage company, auto loan company, license plate, and current vehicle, etc. The confirmation of this information is used to verify your identity.

Next you will create your username & password as well as choose your password security questions:

Now you are ready to sign in to your My Social Security account. Below you’ll see an example of the information you can access when you sign in (included are the Overview & Estimated Benefits pages):

Keeping Your Information Secure

It is always important to keep your information safe and secure. Here are some important things to keep in mind:

• Emails about “My Social Security” and other government agencies always come from a “.gov” email address. Use extreme caution if the email you received is not from a “.gov” sender.
• Links, logos, & pictures will always direct you to an official Social Security website
  • Examples: http://www.socialsecurity.gov/ or https://secure.ssa.gov
  • Hover over a link or picture until a text box appears showing the destination address
• DO NOT respond or click any links when dealing with a phishing scam email message
  • You may forward the scam email to the U.S. Computer Emergency Readiness Team at phishing-report@us-cert.gov
•  Look for poor grammar, wording, phrasing, and/or spelling in all email correspondence
•  Look for outlandish claims that could not possibly be true
  • If a “foreign prince” emails your from overseas offering to share his gold bullion reserves in exchange for you wiring him a few hundred dollars now for safe border passage between war-torn countries, it’s probably not a legit email
  •  If an email includes the name of a business and/or contact information, such as telephone number or website link, you can attempt to verify the legitimacy via a search engine like Google
• Speak to friends and family members if you are questioning the validity of a strange email
• DO NOT respond with any of your personal information if you believe the email may be a scam

I hope this information will be useful for signing up and realizing the benefits of a “My Social Security” account, as well as keeping your information safe. If you have any further questions, you can utilize the www.ssa.gov website or contact your local Social Security office directly.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.

---

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Don’t Make a Costly Mistake

 If you knew that meeting with a financial planner regularly might help you find opportunities and avoid costly mistakes, would you do it? While that might sound like another financial planner’s pitch to get you in for your annual meeting, it’s not. And I have the story to prove it.

Uncovering additional income

I recently sat down with a same sex couple for a routine financial Annual Review. The federal government has found same sex marriage to be legal for filing a joint tax return and for drawing Social Security marriage benefits. These clients are in their late 50s and are both retired. One was a high-income earner throughout her career. The other fell 10 quarters short of the 40 quarters you are required to pay into FICA taxes in order to receive Social Security benefits.

Going back to work for 10 more quarters just didn’t seem worth it to my client since it only meant $2,000-$3,000 a year in benefits. But what she wasn’t thinking about was that, if she did work 10 more quarters, she would be legally entitled to spousal benefits. Her partner had maxed out the Social Security benefit after paying into the system for many decades. We did some quick math:

So, does working for 10 more quarters to become eligible for half of your spouse’s Social Security amount seem worth it? The answer was easy for them. And they realized, without sitting down for an Annual Review, they could have missed the boat entirely.

Your Own Annual Review

This is a very unique circumstance and your situation may not be similar. But there is no denying that Social Security is complex and it makes sense to pay attention to the rules for qualification and how the strategies apply in different circumstances. Could you do it alone? Think of it like going to the dentist. You might not know you have a cavity … that could turn into an abscess that threatens your life … unless you get a regular cleaning. So stay on top of your financial health, just like you do your dental health. Visit your financial planner regularly, discuss issues, and communicate. You might just uncover unforeseen benefits and it will hopefully be less painful than a trip to the dentist!

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

---

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

The material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. The example provided is hypothetical in nature and is to be used for illustrative purposes only. C14-038027