Here's how Social Security's looming shortfall could affect your retirement plans

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Yahoo Money 15 September, 2021 - 03:29pm 16 views

When is Social Security COLA announced?

We determined a 1.3-percent COLA on October 13, 2020. We will announce the next COLA in October 2021. ssa.govCost-Of-Living Adjustment (COLA)

How Will Your Social Security Benefits Stack Up to the $1,557 Average?

The Motley Fool 15 September, 2021 - 05:00pm

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Social Security benefits are a substantial source of income for millions of retirees, so it's wise to make the most of them. Especially if your retirement savings are falling short, your monthly checks can go a long way toward helping you enjoy your senior years more comfortably.

As of July 2021, the average retirement benefit amount is around $1,557 per month, according to the Social Security Administration. The maximum amount you can collect, however, is $3,895 per month.

How much you receive in benefits will depend on several factors, and there are ways to ensure you collect a higher-than-average monthly payment. How will your benefits stack up to the average? And what can you do to get closer to the maximum payment? Here are the factors to consider.

When determining your basic benefit amount (or the amount you'll receive by filing for benefits at your full retirement age), the Social Security Administration looks at your earnings throughout the 35 highest-earning years of your career. Those earnings are averaged and adjusted for inflation, and the result is your benefit amount.

To earn a higher-than-average monthly payment, you'll need to ensure you've worked for at least 35 full years before you begin claiming. If you've worked fewer than 35 years, you'll have zeros included in your earnings average to account for the years you were not working. That, in turn, will bring down your basic benefit amount.

Not only does the length of your career make a difference in your benefit amount, but so do your earnings throughout your working years.

To earn the maximum benefit amount, you'll need to have been reaching the wage cap consistently. The wage cap is the maximum income that's subject to Social Security taxes, and for 2021, that limit is $142,800 per year.

If your income falls below that limit, that's OK. The majority of workers won't be able to reach the maximum benefit amount, but that doesn't mean you can't take steps to earn a higher-than-average monthly payment.

The more you're earning, the more you can collect in benefits. If you're able to pick up a side hustle or find a source of passive income, that can result in a higher benefit amount in retirement.

Finally, the age you file for Social Security will have a dramatic impact on the amount you receive each month.

You can begin claiming benefits at 62 years old or any age after that. The longer you wait (up to age 70), the more you'll collect each month. While delaying benefits isn't the right move for everyone, if you are able to hold off on claiming, you could potentially receive hundreds of dollars more per month.

If your goal is to earn a higher-than-average benefit amount, delaying benefits could be a smart strategy. By waiting until age 70 to file, you could receive up to 32% more each month on top of your full benefit amount, which can go a long way.

The amount you ultimately collect in Social Security benefits will depend on many factors. However, you can check your benefit amount by reviewing your statements through your mySocialSecurity account. From there, you can see your estimated future benefit amount based on your actual earnings.

Keep in mind, though, that that number isn't necessarily set in stone. There are ways to increase the size of your monthly checks, and with the right strategy, you can give yourself the best shot at beating the average benefit amount.

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Social Security benefits might get cut early – what does this mean for you?...

The Sun 15 September, 2021 - 05:00pm

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Social Security benefits are a substantial source of income for millions of retirees, so it's wise to make the most of them. Especially if your retirement savings are falling short, your monthly checks can go a long way toward helping you enjoy your senior years more comfortably.

As of July 2021, the average retirement benefit amount is around $1,557 per month, according to the Social Security Administration. The maximum amount you can collect, however, is $3,895 per month.

How much you receive in benefits will depend on several factors, and there are ways to ensure you collect a higher-than-average monthly payment. How will your benefits stack up to the average? And what can you do to get closer to the maximum payment? Here are the factors to consider.

When determining your basic benefit amount (or the amount you'll receive by filing for benefits at your full retirement age), the Social Security Administration looks at your earnings throughout the 35 highest-earning years of your career. Those earnings are averaged and adjusted for inflation, and the result is your benefit amount.

To earn a higher-than-average monthly payment, you'll need to ensure you've worked for at least 35 full years before you begin claiming. If you've worked fewer than 35 years, you'll have zeros included in your earnings average to account for the years you were not working. That, in turn, will bring down your basic benefit amount.

Not only does the length of your career make a difference in your benefit amount, but so do your earnings throughout your working years.

To earn the maximum benefit amount, you'll need to have been reaching the wage cap consistently. The wage cap is the maximum income that's subject to Social Security taxes, and for 2021, that limit is $142,800 per year.

If your income falls below that limit, that's OK. The majority of workers won't be able to reach the maximum benefit amount, but that doesn't mean you can't take steps to earn a higher-than-average monthly payment.

The more you're earning, the more you can collect in benefits. If you're able to pick up a side hustle or find a source of passive income, that can result in a higher benefit amount in retirement.

Finally, the age you file for Social Security will have a dramatic impact on the amount you receive each month.

You can begin claiming benefits at 62 years old or any age after that. The longer you wait (up to age 70), the more you'll collect each month. While delaying benefits isn't the right move for everyone, if you are able to hold off on claiming, you could potentially receive hundreds of dollars more per month.

If your goal is to earn a higher-than-average benefit amount, delaying benefits could be a smart strategy. By waiting until age 70 to file, you could receive up to 32% more each month on top of your full benefit amount, which can go a long way.

The amount you ultimately collect in Social Security benefits will depend on many factors. However, you can check your benefit amount by reviewing your statements through your mySocialSecurity account. From there, you can see your estimated future benefit amount based on your actual earnings.

Keep in mind, though, that that number isn't necessarily set in stone. There are ways to increase the size of your monthly checks, and with the right strategy, you can give yourself the best shot at beating the average benefit amount.

Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Stock Advisor list price is $199 per year.

Stock Advisor launched in February of 2002. Returns as of 09/15/2021.

Making the world smarter, happier, and richer.

Market data powered by Xignite.

Compass Retirement: Common social security questions

FOX 2 St. Louis 15 September, 2021 - 05:00pm

Op-ed: Social Security trust fund will die in 2033. You need to take action now

CNBC 15 September, 2021 - 05:00pm

Tens of millions of Americans lost their jobs due to Covid-19. Their loss of income caused problems for themselves and their families – and for the Social Security system.

The problem is that the Social Security system is paying out more money to retirees than it collects from workers. You see, the money coming out of your paycheck does not fund your future retirement. Instead, your money is given to current retirees; the next generation to pay for your benefits, and the generation after that will pay for theirs.

This is how the Social System has always worked. It's performed just fine, thank you, for decades — because we always had lots more workers than retirees. Indeed, when the program started in 1935, there were 150 workers for every retiree. They provided more money than was needed to pay benefits, so the excess was placed into a trust fund. Today, it holds about $3 trillion.

But the worker/retiree ratio has shifted radically over the decades and Covid-19 made it worse by throwing tens of millions out of work. The result: there are now only three workers for every retiree.

The result is that the system is paying out more in benefits each year than it collects in payroll taxes. To cover the shortfall, SSA has been dipping into the trust fund. By 2033, SSA's trustees now say, the trust fund will be depleted. When that happens, the only money SSA will be able to distribute to retirees is the money it collects from workers. That's enough to cover only 76% of retiree benefits.

In other words, all retirees will suffer a Social Security benefit cut of 24%, starting in 2033. This would be a huge financial crisis for our nation. The average monthly check is about $1,400. For most retirees, it's the majority of their income. If this situation isn't averted, millions of retirees will lose their homes, be unable to pay for medicine and health care and suffer other financial challenges.

Solving the problem means cutting benefits and/or raising taxes, a problem for members of Congress seeking re-election. This is why Congress has largely ignored the issue, even though they all know this crisis is coming. To get Congress to act, I created the Funding Our Future Coalition in 2018, now the largest organization of its kind, with more than 50 academic institutions, non-profit groups, think tanks and corporate partners working together to get Congress to fix this problem.

What should you do about this? Some wonder if they should start to collect their Social Security benefits now, before the cut occurs. If you're in your 20s to early 50s, it's moot, because you can't start to receive benefits until age 62. But if you or your parents are in your late 50s to early 60s, you already can (or soon will be able to) start receiving your monthly benefits. So, pay attention.

Financial advisors like me usually tell our clients to delay starting Social Security benefits until age 70, because the older you are when you start, the more you'll receive each month. But if the benefits are being reduced 24% in 2033, should you start now, so you can enjoy the larger amounts in the meantime?

Good thinking, but no. Say you're 62 and you start now, receiving about $17,000 per year, which is the average annual payout according to SSA. If you wait until age 70, you'll receive more than $30,000 per year. Assuming you live into your 80s or beyond, you're much better off by delaying benefits.

You're also better off even if Congress does allow benefits to be cut. The difference is smaller, but you still end up with more money by waiting. And show of hands: do you really think Congress is going to let tens of millions of retirees suffer a 24% cut in benefits? That's politically unlikely. More likely: Congress will offset at least some of the reduction by increasing taxes. And the less of a cut, the better off you are by waiting.

But perhaps your financial plan has called for you to start receiving benefits prior to age 70. If so, simply stick with your plan. The cut in benefits will be what it will be, and no change in your financial planning is required.

What is required is you and me – all of us – getting Congress to act, now. The sooner it acts, the smaller the benefit cuts or tax increases need to be. If Congress acts now, cuts/increases will be merely annoying. If it waits, the changes will be financially devastating to tens of millions of families, threatening our entire economy.

Contact your elected representatives in Congress and President Biden. Demand action now.

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Social Security Cost of Living Projection Dips Slightly, But Still Historically High

Yahoo Finance 15 September, 2021 - 05:00pm

On Tuesday, The Senior Citizens League (TSCL), a nonpartisan seniors advocacy group, projected that the Social Security Cost of Living Adjustment (COLA) for 2022 will be 6% to 6.1% based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That projection is down slightly from the previous month’s estimate of 6.2%, but would still represent the biggest COLA increase since 1982.

The forecast is based on CPI data through August, according to a statement from the TSCL. There’s still one more month of consumer price data to come in before the official COLA announcement in October.

“This year is particularly difficult to forecast with certainty,” said Mary Johnson, Social Security policy analyst for The Senior Citizens League. “The inflation patterns caused in large part due to the COVID-19 pandemic were unprecedented in my experience. Price changes due to climate disasters throw a monkey wrench into things on top of the difficulty in watching run up in costs earlier this year.”

Sharp COLA increases typically happen during periods of high inflation. This hasn’t been much of a problem in recent years. As previously reported on GOBankingRates, the U.S. economy has been operating at near-zero inflation for the better part of the last decade. That included the price of gasoline, which the Social Security Administration keeps a close watch on.

But this year, gas prices have been on a steep increase, which accounts for a large part of the projected COLA increase. Not everyone agrees with putting such a big emphasis on gas prices, however. Gas prices usually impact younger consumers more than older ones. As people age, they tend to spend more on housing and medical costs, which is one reason some advocates want to see a bigger focus on those costs when determining COLA increases.

No matter the increase, chances are it won’t make a huge impact on the amount of money Social Security recipients have at the end of the month. Most, if not all, of the extra funds will likely be swallowed up by inflation, according to The Motley Fool financial site — not just in the form of higher living expenses, but also in terms of higher medical expenses, Medicare Part B premiums and housing costs.

This article originally appeared on GOBankingRates.com: Social Security Cost of Living Projection Dips Slightly, But Still Historically High

If you’re on Social Security there is good news, and some not quite so good news, in the latest official inflation report out from Uncle Sam on Tuesday. The good news is that you’re on track for the biggest annual cost of living adjustment next year in over a decade. Based on the U.S. Labor Department’s consumer price data for August, Social Security is on track to hike benefits 5.9% for 2022 when it makes the official announcement next month.

A recent email raised a question that I’m sure is prominent in many minds: How can I claim Social Security benefits off my ex-spouse’s earnings record? Spousal benefits are an important part of Social Security retirement benefits. A spousal benefit is available to provide for a spouse who has a lower benefit due to a lower earnings record over his or her lifetime.

So you think you know all you need to know about Social Security? If so, congratulations - you are in the minority when it comes to knowledge of the nation's biggest retirement benefits program. See:...

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3 Reasons Claiming Social Security at 70 Could Be a Mistake

The Motley Fool 15 September, 2021 - 05:00pm

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

As you're preparing for retirement, one of the most important questions to ask yourself is what age you want to begin claiming Social Security benefits.

The earliest you can file is age 62, but for every month you wait beyond that age to claim, you'll receive slightly larger checks. By waiting until age 70, you'll collect your full benefit amount plus up to 32% extra each month for the rest of your life.

Delaying benefits until age 70 may seem like the wise choice to make the most of your money. However, there are a few reasons why waiting that long might not be the best decision.

One crucial factor to consider when deciding when to file for benefits is your break-even age. This is the age at which the total amount you've received over a lifetime by claiming at age 70 surpasses the lifetime amount you'd have received by claiming earlier.

Your exact break-even age will depend on how much you're eligible to collect from Social Security, but it generally falls between your late 70s and early 80s. If you end up living longer than that, you'll receive more money over a lifetime by delaying benefits than you would if you'd claimed earlier.

Of course, nobody can predict exactly how long they'll live. But life is unpredictable, and if you're battling health issues or have reason to believe you won't live well into your 80s, waiting until age 70 to file for benefits may not be worth it.

Even if you do live a longer-than-average lifespan, time is still your most valuable resource. The difference between claiming Social Security at age 62 versus age 70 can have an enormous effect on the quality of your retirement.

This is especially true if you're eager to enjoy an active lifestyle once you retire. If you plan to travel the world, hike through the mountains, or simply have fun running around the backyard with your grandkids, these activities are often easier when you're in your 60s compared to your 70s.

That's not to say it's impossible to enjoy an active lifestyle well into your 70s or even 80s. But by retiring and claiming benefits sooner rather than later, you'll have more time to enjoy retirement when you're still relatively young and healthy.

The biggest reason to consider delaying benefits is to earn larger monthly payments. And it's true that you can collect hundreds of dollars more per month by waiting to claim. However, if you have a robust nest egg, that extra month may not be worth the wait.

Before you file for benefits, take a thorough look through your finances to figure out how much you think you'll need to enjoy a comfortable retirement. Consider how your spending may change once you retire, then compare that to how much you have saved.

You can also check your estimated Social Security benefit amount online by creating a mySocialSecurity account. This estimate assumes you're claiming at your full retirement age (which is age 67 for anyone born in 1960 or later).

If you have a full retirement age of 67, claiming at age 62 will result in 30% less money each month. If you wait until 70, you'll receive your full benefit amount plus 24% more. From here, you can determine just how much you'll collect each month depending on the age you claim, and it will be easier to decide if delaying benefits is really worth the wait in your situation.

The age you file for Social Security is a personal decision, and there's no one-size-fits-all answer as to when is the right time to begin claiming. In some cases, delaying benefits until age 70 is truly the best option. Sometimes, though, you're better off claiming earlier.

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Oregon man pleads guilty to stealing dead child's identity, collecting Social Security benefits for years

NBC News 15 September, 2021 - 03:11pm

Robert Lizarraga, 70, admitted to fraudulently collecting retirement benefits from a stolen identity, according to court documents from federal court in the District of Oregon. Prosecutors say Lizarraga stole the deceased child’s identity in 1990 and began using it for his work history the next year.

Lizarraga, of Gresham, Oregon, cashed in $12,509.60 from retirement benefits from the Social Security Administration he was not entitled to. He also deposited a $1,200 check he falsely obtained from the Internal Revenue Service, court documents state. Those offenses occurred from August 2017 through June 2020, court records stated.

He used the identifying information of the dead child to fraudulently obtain a Social Security number in April 1990, and then used that identity as his own from then on.

"His work history was under his true name until 1991, after which his work history was under the false identity,” according to a plea agreement filed on June 2.

Lizarraga also collected retirement benefits from his true identity, records said.

He was sentenced to two years of probation on Monday, even though he was facing up to 10 years imprisonment.

Court documents said prosecutors took into consideration Lizarraga’s lack of recent criminal history, his health issues and how he eventually cooperated with authorities.

He paid back the Social Security Administration in full, and according to a court filing from Sept. 8, he told prosecutors he sent the IRS a check for the $1,200 he owed.

Lizarraga could not be reached Wednesday. A spokeswoman with the federal public defender’s office declined comment.

Lizarraga told the judge he went to a courthouse and obtained the dead child’s name and birthdate from court records, The Oregonian reported. It’s unclear if he had known the child or what motived him to steal the identity.

Antonio Planas is a breaking news reporter for NBC News Digital. 

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