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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)

Do You Know These Three Crucial Social Security Numbers?

The Southern 17 September, 2021 - 11:30pm

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.

There are a lot of misunderstandings surrounding Social Security. Some of them could lead to big mistakes when planning for how your retirement benefits will help support you in your later years. 

To make sure you make the right choices about your benefits, here are three numbers that you need to know. 

This number refers to your full retirement age, which is important because the age when you claim benefits in relation to your FRA will determine the amount you receive.

Every retiree has a standard benefit based on a percentage of average wages earned. It's called the primary insurance amount. But in order to get that standard benefit, retirees must claim their benefits exactly at FRA. The chart below shows what that FRA is, as determined by the year you were born. 

Many people don't end up claiming their benefits exactly at their FRA, though. And if you plan to claim earlier or later, you need to know what impact this will have. Here's what happens when you claim before, or after, FRA:

These early filing penalties or delayed retirement credits add up. For each of the first three years you claim before your FRA, you'll end up with a 6.7% annual benefit decrease, and for each prior year, it's a 5% cut. The delayed retirement credits, on the other hand, raise your payment by 8% annually.   

This number is the average monthly Social Security benefit. Knowing it is important to develop a realistic expectation of what your benefits will do for you.

They probably aren't going to be sufficient to support you, and they're not designed to be. They'll replace only around 40% of pre-retirement earnings, while you'll need around 80% to 90% (or more) to live on. 

Knowing that benefits aren't as large as you might expect can help you plan to build a nest egg that provides the supplementary income you need.

Finally, 2034 is important because that's the year automatic benefit cuts might take effect. This could happen because Social Security has a trust fund that's in danger of running dry. If that happens, benefits can only be paid with current tax revenue coming in, which could lead to a 22% benefit cut.

Lawmakers could prevent this if they take action to shore up the trust fund, but any compromise legislation to do that would likely involve changes such as moving full retirement age later or reducing the annual raise retirees get by changing the formula by which it's calculated. In other words, benefits will probably end up being cut anyway. 

Future retirees need to be prepared for the possibility they could get less retirement benefits than planned, so they can make sure they aren't overly reliant on Social Security. 

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 09/17/2021.

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Do-over options for Social Security claiming decisions

County 10 17 September, 2021 - 11:30pm

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.

There are a lot of misunderstandings surrounding Social Security. Some of them could lead to big mistakes when planning for how your retirement benefits will help support you in your later years. 

To make sure you make the right choices about your benefits, here are three numbers that you need to know. 

This number refers to your full retirement age, which is important because the age when you claim benefits in relation to your FRA will determine the amount you receive.

Every retiree has a standard benefit based on a percentage of average wages earned. It's called the primary insurance amount. But in order to get that standard benefit, retirees must claim their benefits exactly at FRA. The chart below shows what that FRA is, as determined by the year you were born. 

Many people don't end up claiming their benefits exactly at their FRA, though. And if you plan to claim earlier or later, you need to know what impact this will have. Here's what happens when you claim before, or after, FRA:

These early filing penalties or delayed retirement credits add up. For each of the first three years you claim before your FRA, you'll end up with a 6.7% annual benefit decrease, and for each prior year, it's a 5% cut. The delayed retirement credits, on the other hand, raise your payment by 8% annually.   

This number is the average monthly Social Security benefit. Knowing it is important to develop a realistic expectation of what your benefits will do for you.

They probably aren't going to be sufficient to support you, and they're not designed to be. They'll replace only around 40% of pre-retirement earnings, while you'll need around 80% to 90% (or more) to live on. 

Knowing that benefits aren't as large as you might expect can help you plan to build a nest egg that provides the supplementary income you need.

Finally, 2034 is important because that's the year automatic benefit cuts might take effect. This could happen because Social Security has a trust fund that's in danger of running dry. If that happens, benefits can only be paid with current tax revenue coming in, which could lead to a 22% benefit cut.

Lawmakers could prevent this if they take action to shore up the trust fund, but any compromise legislation to do that would likely involve changes such as moving full retirement age later or reducing the annual raise retirees get by changing the formula by which it's calculated. In other words, benefits will probably end up being cut anyway. 

Future retirees need to be prepared for the possibility they could get less retirement benefits than planned, so they can make sure they aren't overly reliant on Social Security. 

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 09/17/2021.

Making the world smarter, happier, and richer.

Market data powered by Xignite.

Hochul Orders Release of 191 Detainees as Rikers Crisis Deepens

Yahoo Finance UK 17 September, 2021 - 11:15am

The New York governor signed a bill on Friday that authorized the release of the detainees, but the population of the city’s notorious jail will remain far higher than it was last spring.

Gov. Kathy Hochul on Friday ordered the release of nearly 200 detainees from New York City’s Rikers Island jail complex, underscoring the growing alarm about violence and unbridled disorder at the notorious facility.

Ms. Hochul’s move came amid increasing calls for federal or state intervention at the city-run jail, which officials and detainees say has plunged into chaos — Ms. Hochul described it as a “pressure cooker” — and is rife with health and safety risks for inmates and employees alike. Ten detainees have died there since December, including several from suicide.

But the plan will not significantly reduce overcrowding, and it may do little to address two continuing crises at Rikers, one rooted in an acute staff shortage at the complex, the other in an increase in coronavirus cases there in recent weeks.

In addition to the release of the 191 detainees she announced Friday, Ms. Hochul also said she would transfer 200 others to state prisons in the coming days. Even with those moves, Rikers will be far more crowded than it was in spring 2020, when a wave of releases during the pandemic lowered the population below 4,000. On Friday, more than 6,000 people, the vast majority of them awaiting trial, were being held there.

The release of the detainees was based on a new law that Ms. Hochul signed on Friday that seeks to reduce jail populations by ending the practice of incarcerating people who commit certain technical parole violations.

But the law does not tackle what a court-appointed federal monitor has described as the widespread absenteeism among correction officers that has contributed to a deterioration of security and health conditions at the complex. With hundreds or thousands of guards not showing up to work daily, officials and detainees alike say that basic jail functions have ground to a halt: Gangs patrol hallways, detainees are held in showers repurposed as stalls and some incarcerated people are going without water, food or medical care for days.

On Friday, some local officials suggested that the federal authorities might seek to wrest control of the crisis from the city. Eric Gonzalez, the Brooklyn district attorney, urged the monitor to ask a federal judge to order authorities to increase staffing levels. The monitor was appointed in 2015 under a settlement between the city and the Justice Department that was meant to resolve a class-action civil rights lawsuit that detailed abuses at Rikers.

“About a month ago, the federal monitor overseeing Rikers stated that for the time being the situation was best dealt with by the City and the Department of Correction,” a spokesman for Mr. Gonzalez said on Friday. “That time is now over, and an immediate action plan to increase staffing and safety is required.”

At a meeting on Friday with the leaders of the unions that represent Rikers officers, Vincent Schiraldi, the correction commissioner, mentioned several ideas that he said were being considered to address the crisis, according to Joseph Russo, the president of the union that represents assistant deputy wardens and deputy wardens.

Those ideas include transferring officers in from state juvenile facilities and hiring private security guards to handle some duties at the complex. A Correction Department spokesman confirmed that bringing in private firms had been discussed but that the jobs in question would not involve interacting with people in custody.

Mr. Russo said that the unions would fiercely resist any plan to privatize jobs held by uniformed correction employees.

“We are circling our wagons and discussing what we can do to stop it,” he said.

Benny Boscio, the president of the Correction Officers’ Benevolent Association, said in a statement on Friday that the jobs being discussed did require significant contact with incarcerated people and that any move to privatize them would be illegal.

He said that Mayor Bill de Blasio, who has come under harsh criticism for his response to the problems at the complex was trying “to cover up years of intentional neglect, failing to hire any C.O.s and leaving Rikers to rot until it closes.”

Ms. Boscio added: “Now he’s willing to break the law to help his own reputation before a run for governor.”

The mounting disorder at the jail comes as the city confronts a rise in violent crime, which some law-enforcement officials cited as a contributing factor to the overcrowding at Rikers.

Last fall, there were around 700 defendants from the Bronx being held at the complex; this month, there were 1,100, an increase that Darcel D. Clark, the Bronx district attorney, attributed to a “surge in violence.” She noted that most of those defendants had been charged with violent crimes, including murder, domestic violence, shootings and rape.

As the violence at Rikers has worsened, finger-pointing has ensued: The correction officers’ union has blamed mismanagement, staffing shortfalls and unsafe conditions for thousands of worker absences. Prosecutors have blamed delays in court for a backlog of detained defendants. Judges have faulted the Correction Department for defendants missing court appointments.

And Mr. de Blasio, who has championed a plan to eventually close the troubled facility, has come under withering criticism both for his handling of the crisis and his failure to visit the jail complex in recent years. The closing plan, approved two years ago by the City Council, has stalled amid objections to creating four new jails around the city to replace Rikers.

This week, after a series of violent episodes and reports of chaotic conditions at Rikers, Mr. de Blasio announced an emergency plan that would allow the Correction Department to suspend without pay workers who were found to be absent without permission. From July 2020 to June of this year, the average number of guards who called in sick each month had more than doubled, while the number of those who were absent without official approval had risen 300 percent.

Tina Luongo, attorney-in-charge of the Criminal Defense Practice at The Legal Aid Society, said that Ms. Hochul’s willingness to sign the law, known as the Less is More Act, was a strong first step toward decreasing the population at Rikers.

But Mx. Luongo also said Mr. de Blasio had not done nearly enough to sharply lower the number of detainees at the complex, and urged him to put those serving sentences for low-level crimes on supervised release rather than transferring them to state prison.

“Less is More is hugely important, and this is the level of crisis intervention you want to see from leadership,” Mx. Luongo said.

“I don’t see that level of crisis intervention leadership from the mayor. There are still things that must be done,” they added. “He has the opportunity to do it right now.”

On Friday, Mr. de Blasio said the city had committed to releasing the 191 detainees as soon as possible. In some cases, he said, it might take several days to free those who had to appear in court before they could be released.

He also said the best way to reduce the jail population was to fully restart the court system.

“I’ve been appealing to the state to restart the whole criminal justice system, the court system fully,” he said.

But Ms. Clark, the Bronx District Attorney, said the staffing crisis had also exacerbated the backlog of court cases. Without an adequate number of guards, she said, defendants who are being held in the jails are not arriving to court on time, or at all.

“Now, because of the staffing issue, we have inmates indicted for violence while in jail who are not being produced for arraignment in a timely manner,” Ms. Clark said.

While officials seek to tamp down the chaos at the jail, virus rates among detainees appear to be climbing. Correctional health officials first reported an uptick in the prevalence of the virus in mid-August, followed by a spike in cases later in the month. After active cases and rates in the jail dropped to near zero in June and July, the seven-day average positive test rate among detainees — 4.36 percent this week — is now higher than the city’s overall 3.92 rate.

Only 36 percent of detainees and 37 percent of the Correction Department’s staff are fully vaccinated, according to city data.

“The current conditions are resulting in a rapid increase in Covid-19 infection rate in the jails. Previously effective control mechanisms such as isolation and quarantine will not be possible because of the department’s dysfunction and overcrowding,” Dr. Robert Cohen, a member of the Board of Correction, an independent body that monitors the jail system, said at a City Council hearing this week.

On Friday, Dr. Cohen praised Ms. Hochul’s signing of the bill, but he said more needed to be done to further reduce the jail population.

“Decarceration is the critical response to this emergency because until the officers come back it will allow the smaller staff to potentially function more safely for everybody,” he said.

The city should also move quickly to close Rikers, said the state’s former chief judge, Jonathan Lippman, who led the study to shutter the troubled jail.

“There’s nothing that is enough until you close that horrible place,” Judge Lippman said in an interview. “We cant keep kicking this down the road. There’s got to be an urgency. Less is More is helpful, but this is getting into a crisis mode. There’s no easy answer.”

Most of the 191 people set to be released on Friday were being held for violating parole, and Ms. Hochul said the new law’s focus on ending reimprisonment tor technical violations was a crucial step toward ending one of the largest causes of mass incarceration in New York.

“Parole in this state often becomes a ticket back into jail because of technical violations,” she said. “Someone was caught with a drink or using a substance or missing an appointment.”

In its report last month, the federal monitor said the staff shortages had compounded a breakdown in basic security protocols, which had led to a rash of violence across the jail.

“This state of seriously compromised safety has spiraled to a point at which, on a daily basis, there is a manifest risk of serious harm to both detainees and staff,” the monitor, Steve Martin, wrote. “Turmoil is the inevitable outcome of such a volatile state of affairs.”

Putting Social Security's financial outlook in perspective - InvestmentNews

Bismarck Tribune 17 September, 2021 - 09:36am

“Although the Trustees assert that Covid-19 and the ensuing recession had ‘significant effects’ on Social Security finances, it’s hard to see much of an impact in the report,” Alicia Munnell, director of the Center for Retirement Research at Boston College, wrote in a new report, Social Security’s Financial Outlook: The 2021 Update in Perspective.

The biggest reasons for the one-year acceleration in the projected date for the depletion of the trust fund included fewer births than expected in 2020; a 1% decline in the level of gross domestic product as a result of Covid and the accompanying recession; updates to projections of initial benefit claims; and moving the 75-year valuation period ahead by one year.

The 75-year deficit in the 2021 Trustees Report is the largest since 1983, when Congress enacted major legislation to restore balance to the federal retirement and disability program. Social Security moved from a projected 75-year surplus of 0.02% of taxable payroll in the 1983 Trustees Report to a projected deficit of 3.54% of payroll in the 2021 report.

That means that if payroll taxes were raised immediately by 3.54 percentage points — roughly 1.8 percentage point each for the employees and the employers — the government would be able to pay the current package of benefits for everyone who reaches retirement age through 2095.

“The bottom line is the 75-year deficit has increased, and it is not primarily due to Covid,” Munnell wrote. “At the same time, Social Security has once again demonstrated its worth during these tumultuous times when — in the face of economic collapse — it continued to provide steady income to retirees and those with disabilities.”

Not everyone was so sanguine about the trustees’ report.

“To call the newly released 2021 annual Social Security Trustees’ Report alarming would be a gross understatement,” Charles Blahous, a former public trustee for Social Security from 2010 through 2015, wrote in a recent article published in Barron’s.

“Only in a federal capital paralyzed by dysfunction would such a report fail to galvanize lawmakers to move immediately to rescue this most vital of all federal programs,” he wrote. “Urgent action is necessary to maintain Social Security in its current form.”

Social Security’s costs started to exceed its income from payroll taxes back in 2010. Since then, the government has been tapping the interest on the trust fund assets to cover benefits. Starting this year, taxes and interest are expected to fall short of annual benefit payments, forcing the government to start drawing down the trust funds until they are exhausted 13 years from now.

The increase in costs is driven by demographics, specifically the drop in the total fertility rate after the baby boom. The combined effects of the retirement of baby boomers and the slow-growing labor force due to the decline in fertility reduce the ratio of worker to retirees from about 3:1 to 2:1 and raise costs commensurately. In addition, the long-term increase in life expectancy causes costs to continue to increase even after the ratio of workers and retirees stabilizes.

“The depletion of the trust fund does not mean that Social Security is bankrupt,” Munnell wrote. “Payroll tax revenues keep rolling in and can cover 78% of currently legislated benefits initially, declining to 74% by the end of the projection period” unless Congress acts before then.

Andrew Biggs, a Social Security scholar who served in the Social Security Administration during the George W. Bush administration, argues that it’s unlikely that Congress would allow the nation’s largest federal spending program to cut benefits to more than 65 million beneficiaries.

Biggs noted that in 2016, Congress transferred funds from Social Security’s retirement program to keep benefits flowing. Then last year, Congress passed an $80 billion-plus bailout of the underfunded multiemployer pension plans.

“So if Congress wouldn’t cut benefits for the disabled or for union members, what is the chance Congress will allow large, across-the-board benefit cuts for Americans who paid into Social Security for decades? Not very large, and I’m willing to wager my own retirement security on that,” the 58-year-old wrote in an opinion piece on MarketWatch.

The bigger danger, Biggs said, is that Social Security’s rising costs threaten to squeeze out other government priorities, such as health, education and infrastructure, as Congress scrambles to find ways to keep Social Security solvent for future generations.

The expected 6% increase in Social Security benefits next year due to rising inflation could also affect trust fund depletion.

“Usually, inflation does not have a significant impact on Social Security finances because benefits and payroll tax revenue go up in lock step in response to rising prices,” Munnell wrote. “But this year things are different.”

Benefits will increase as a result of a host of Covid-related price hikes, but it appears that payrolls are not rising commensurately. Munnell estimates that the cost of living adjustment could shift the trust fund depletion forward by three months.

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The acceleration in the projected depletion of the trust fund is bad, but given that this was the first report to include the effects of the pandemic-induced recession, the news could have been worse.

Clients don't have to make any changes, but they may be able to save money by re-shopping their prescription drug coverage.

The 2021 Trustees Report shows the trust funds will run dry in 2034 as a result of the economic fallout from the pandemic.

The long-delayed report, which is due every year no later than April 1, is expected this week and should highlight the pandemic's impact on program funding.

The woman, who's twice divorced and widowed, can select the biggest of the benefits available.

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