Category Archives: Social Security

Attention, Seniors: A New Social Security COLA Bill Was Just Introduced in Congress

My Comments: This might be good news if it wasn’t so unlikely to happen.

Sean Williams | Mar 18, 2017

According to the January snapshot provided by the Social Security Administration, nearly 41.4 million retired workers are receiving a monthly benefits check from Social Security totaling an average of $1,363. While that may not sound like a lot, Social Security benefits comprise more than half of all monthly income for 61% of retired workers, based on SSA data. Without Social Security, it’s very likely that the poverty rate for seniors would soar, and many would struggle to make ends meet.

But as many of you also probably know, Social Security is beginning to run into some roadblocks. Two major demographic shifts — the ongoing retirement of baby boomers which is lowering the worker-to-beneficiary ratio, and the lengthening of life expectancies over the past five decades — are weighing on this vital program. According to the 2016 report from the Social Security Board of Trustees, the program will have exhausted its more than $2.8 trillion in spare cash by the year 2034, at which point a benefits cut of up to 21% may be needed on an across-the-board basis.

Congress can’t forget about current retirees

It’s pretty clear from this data that Congress needs to act with some degree of expediency to ensure that Social Security offers a financial foundation during retirement for the many generations of workers to come. However, Congress also has to be careful not to forget about the tens of millions of seniors already receiving Social Security.

One of the more contentious battles in Washington is in regards to what should be done (if anything) about Social Security’s cost-of-living adjustments, or COLA.

Right now, Social Security’s COLA is tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As with any of the CPI variants, it takes into account the price movements of a pre-determined basket of goods and services and compares that year-over-year data.

For Social Security, the average CPI-W reading from the third quarter of the previous year serves as the baseline figure, while the average reading from the third quarter of the current year serves as the comparison. Any decrease in year-over-year prices means a 0% COLA for the following year. Thankfully, Social Security benefits cannot be decreased due to deflation, albeit beneficiaries have had three years of no COLA, and a minuscule 0.3% COLA over the past eight years. Any increase in the year-over-year CPI-W is passed along and rounded to the nearest 0.1% in the following year.

A new Social Security COLA bill was just introduced

The debate in Washington involves whether or not the CPI-W is the best measure to tie Social Security’s COLA to. According to one Congressman, it’s not.

Earlier this month, Rep. John Garamendi (D-Ca.) introduced the CPI-E Act of 2017 into Congress. The sole purpose of the Act introduced by Garamendi would replace the CPI-W with the Consumer Price Index for the Elderly, or CPI-E, in calculating Social Security’s COLA. The CPI-E strictly measures the spending habits of households with people aged 62 and up. Since roughly two-thirds of all Social Security beneficiaries are seniors, switching to the CPI-E would (presumably) be more accurate in representing their spending habits.

For instance, according to data found in Garamendi’s press release that accompanied his bill, which already has 24 co-sponsors, the CPI-E rose at an average rate of 3.1% between 1982 and 2011 compared to just 2.9% for the CPI-W over the same time span. In other words, seniors could receive a larger COLA most years with the CPI-E.

Why, you wonder? The CPI-E places a considerably larger emphasis on medical care expenditures and housing costs, which for seniors are often much higher than that of working-age Americans as measured by the CPI-W. Likewise, the CPI-W tends to overemphasize the impact of educational, apparel, transportation, and food expenditures, which just aren’t as important for seniors when compared to working Americans.

In recent years, weaker fuel prices at the pump and stagnant food prices have been the main cause of seniors’ weak COLAs. Plus, medical care inflation has outpaced Social Security’s CPI-W-based COLA in 33 of the past 35 years. According to estimates from The Senior Citizens League, had the CPI-E been used in place of the CPI-W over the past 25 years, the average retired worker would have netted an extra $29,600 in payments.

Switching to the CPI-E probably isn’t in the cards

However, before you get too excited, realize that the chances of this bill succeeding in a Republican-led Congress are slim-to-none.

For starters, the CPI-E has its shortcomings, too. For example, the CPI-W factors in more households than the CPI-E, meaning that it’s providing more data points and presumably a more accurate picture of what Americans are spending their money on.

Also, the CPI-E fails to take into account the rising costs associated with Medicare Part A. Medicare Part A covers in-patient hospital stays, surgical procedures, and long-term skilled nursing care. Even if the CPI-E Act of 2017 were to pass and be signed into law, seniors would likely still fail to keep pace with the true medical care inflation they’re facing.

There’s also that not-so-tiny problem about Social Security running out of spare cash between now and 2034. Switching to the CPI-E without any additional revenue generation would mean depleting the Trust’s spare cash at an even faster rate.

And, of course, the CPI-E is the complete opposite of what Congressional Republicans are angling for. Rep. Sam Johnson’s (R-Tx.) Social Security Reform Act of 2016, introduced in December, called for a switch to the Chained CPI, which Republicans seem to prefer over the CPI-W. The Chained CPI factors in a consumer behavior known as “substitution,” which the CPI-W does not. The Chained CPI assumes that consumers will trade down to lower-priced goods and services if the goods and services they currently buy become too pricey. Thus, the Chained CPI grows at a slower pace than the CPI-W, which could place seniors in a bigger hole to medical care inflation.

Clearly, this isn’t the last we’re going to hear about the COLA debate on Capitol Hill. But, don’t expect COLA reform to happen anytime soon.

The Big Problem With Democrats’ and Republicans’ Social Security Proposals Is They’re Both Right

My Comments: We long ago decided as a society that letting huge swaths of our population, the elderly, suffer and die early was not in our best interest. This premise has been part of the fabric of every society for millions of years.

In the 1930’s it was decided that it was not enough to hope it would happen, but that society should formalize the premise at the Federal level. What resulted was the Social Security Administration and today we have over 41 million people getting financial help every month.

There are now those in leadership positions at the Federal level that want to make fundamental changes. Many feel the burden on society that benefits elderly members of that same society are onerous. Never mind we’ve long accepted the premise of looking after the elderly. Perhaps it’s a matter of degree, but whatever the case, a vigorous debate is necessary.

So, sometime in the next 20 years, structural changes will be made to Social Security in this country. Demographics will demand it, along with the many millions of Americans who have been paying into the system their whole working life. That is, unless we are now willing to ignore the elderly, push them out into the streets, and wait for them to die.

Sean Williams \ Mar 11, 2017 at 9:35AM

The importance of Social Security for America’s retirees simply can’t be overstated.

As of January, the Social Security Administration’s (SSA) monthly snapshot showed that nearly 41.4 million retired workers were receiving monthly payments averaging $1,363. This may not sound like a lot of money, but the SSA’s data from 2016 shows that 61% of all retired workers receiving benefits relied on their monthly Social Security checks to account for at least half of their income. Without this money, there would presumably be a considerable poverty problem among seniors.

Both solutions work — that’s the problem

But America’s most sacred social program is caught in a tailspin. Two ongoing demographic shifts — the retirement of baby boomers and the steady lengthening of life expectancies over the past couple of decades — are expected to push Social Security to the brink, so to speak. While the program is in no danger of going bankrupt (as long as people are working, payroll taxes will be collected, and payments made to beneficiaries), the current payout rate may not be sustainable.

According to the Social Security Board of Trustees report from 2016, the more than $2.8 trillion in spare cash currently held by Social Security should be depleted by 2034, at which point an across-the-board benefits cut of up to 21% may be needed to sustain the program through 2090. While there are numerous proposals on the table to fix Social Security, doing nothing and cutting benefits when the Trust burns through its spare cash is essentially the least favorite “fix” among the public.

Perhaps the greatest irony here is that solutions aren’t the issue. Well over a dozen separate fixes for Social Security have been proposed. The crux of the problem is that Democrats and Republicans on Capitol Hill can’t agree on a plan.

The way I see it, the real issue with the Democrat and Republican proposals is that they’re both right, which makes compromising extremely difficult. While both approaches clearly have downsides, both the Democrat and Republican solutions would extend the life of Social Security for retired workers. In other words, both plans work.

How Democrats would fix Social Security

Let’s begin by taking a generalized look at the three ways Democrats often propose to fix Social Security. We won’t be looking at any bill in particular; just the general concepts that most lawmakers in the Democratic Party tend to agree on when it comes to Social Security reform.

1. Raise the payroll tax earnings cap

Pretty much every Democratic proposal involves increasing Social Security’s payroll tax cap. As it currently stands, 12.4% of your pay between $0.01 and $127,200 is taxed as 12.4%. However, most Americans don’t pay the full 12.4%. They’re responsible for half (6.2%), with their employer picking up the tab for the other half (6.2%). Any earned income above and beyond $127,200 in 2017 is free and clear of the payroll tax.

As the argument goes, since roughly 90% of Americans are paying into Social Security with every cent they earn, it’s not fair that the wealthy are only paying tax on a smaller percentage of their income. Select payroll tax proposals have suggested providing a moratorium between the wage-indexed cap ($127,200) and, say, $250,000, then taxing all earned income above $250,000 at the 12.4% rate, or removing the maximum earnings cap completely. Removing the cap completely would go a very long way to narrowing Social Security’s more than $11 trillion budgetary shortfall.

2. Tie COLA to the CPI-E
Second, Democrats would like to stop using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as the determinant of the annual cost-of-living adjustment (COLA) and replace it with the Consumer Price Index for the Elderly (CPI-E). The CPI-E strictly factors in the spending habits of households with persons aged 62 and up, meaning it would emphasize medical and housing expenditures more, and de-emphasize less important expenditures, such as education, entertainment, apparel, and transportation.

The Senior Citizens League has estimated that if the CPI-E were used in place of the CPI-W, seniors would have been paid an aggregate of $29,600 more over the past 25 years.

3. Give low-income workers a raise
Lastly, Democrats would like to see low-income retirees earn more. While there are minimum monthly benefits in place, this doesn’t mean seniors are necessarily earning enough annually to move above the national poverty income threshold. Democratic solutions to fix Social Security often include measures to boost payouts to low-income workers, women, and/or older Americans (i.e., those in their 80s or 90s).

Obviously, this plan isn’t perfect. It requires the rich to pay more without compensating them any more when they retire and begin claiming benefits. It also boosts payouts by using the CPI-E and giving low-income workers a raise, which is counterproductive to the current budgetary shortfall for Social Security.

The Republican solution for Social Security

Just like the Democrats, Republicans have a three-pronged approach to solving Social Security’s budgetary woes. Once again we’re not focusing on any specific bill here; we’re just examining the basic tenets of most Republican Social Security proposals.

1. Raise the full retirement age
Hands down the most popular solution for Republicans in Washington involves raising the full retirement age. Your full retirement age, which is determined by your birth year, is the age at which you become eligible to receive 100% of your monthly payout. Claim benefits before reaching this age, and your monthly payout is permanently reduced. Wait until after your full retirement age to claim benefits, and your monthly payout is even higher.

The various Republican proposals have suggested increasing the full retirement age from 67, which will be reached in 2022, to 68, 69, or even age 70. Raising the full retirement age would presumably coerce healthy seniors to remain in the workforce, ultimately adding more payroll tax revenue into the program. It would also account for lengthening life expectancies.

2. Tie COLA to the Chained CPI
Republicans also have a strong tendency to want to abandon the CPI-W. However, their proposal usually involves switching to the Chained CPI, not the CPI-E.

The difference between the Chained CPI and the CPI-W is that the Chained CPI takes into account a buying habit known as “substitution.” In other words, if the price of a good or service increases in cost by a lot, the Chained CPI assumes the consumer will trade down to a less expensive good or service. The CPI-W does not factor in consumer substitution. As a result, the Chained CPI would result in lower annual COLAs than the CPI-W, which according to Republicans would more accurately represent the inflation that seniors are facing.

3. Means-test for benefits
Finally, Republicans often suggest means-testing seniors for benefits. In short, means-testing would be an arbitrarily chosen annual income level at which well-to-do retired workers would receive a reduced benefit, or perhaps no benefit at all.

As a completely arbitrary example, if a Social Security-eligible senior were earning $200,000 a year, he or she might be deemed ineligible for benefits based on means-testing since the income provided by Social Security is essentially not needed to live comfortably and pay bills. Republicans believe means-testing will save money by eliminating unnecessary payouts.

The Republican plan isn’t perfect, either. Raising the retirement age and relying on the Chained CPI means a benefits cut for future retirees, along with lower annual COLAs. Seniors would either need to wait longer to file their claims, or be willing to accept a steeper reduction in monthly payouts.

While neither party’s plan is perfect, they both make fiscal sense and achieve the task of getting Social Security back onto stable ground. The real question at this point is whether Democrats and Republicans can work together on a joint plan when both of their current plans make sense. Only time will tell.

Social Security Taxes

My comments: Social Security is under threat. It’s running out of money. Sort of.

Back in 1983, under President Reagan, Congress made some changes as, like now, the future of the program looked cloudy. They increased the age at which you qualified for full benefits, they increased the percentage of earned income you paid into the system and they raised the threshhold for how much of your earned income was subject to the FICA tax.

This is a good explanation of what it going on now.

By William Perez October 31, 2016

The Social Security tax is a tax applied to income related to labor. All employees and self-employed entrepreneurs pay into Social Security through the Social Security tax, which is also known as Old-Age, Survivors, and Disability Insurance (OASDI).

The Social Security tax functions very much like a flat tax. A single rate of 12.4% is applied to wage and self-employment income earned by a worker up to a maximum dollar limit.

Half of this tax is paid for by the employee in the form of payroll withholding. The other half of this tax is paid for by the employer. Self-employed persons pay both halves of the Social Security tax since they are both the employee and the employer.

Social Security tax rates

Employees pay 6.2% of their wage earnings, up to the maximum wage base.

Employers pay 6.2% of their employee’s wage earnings, up to the maximum wage base.

Self-employed persons pay the combined rate of 12.4% of their net earnings from self-employment, up to the maximum wage base. This is calculated as part of the self-employment tax on Schedule SE.

The Math Behind the Social Security Tax

All wages and self-employment income up to the Social Security wage base in effect for a given year is subject to the Social Security tax.

Social Security Wage Base by Year
2017 $127,200
2016 $118,500
2015 $118,500
2014 $117,000
2013 $113,700
2012 $110,100
2011 $106,800
Source: Social Security Administration, Contribution and Benefit Base

Earnings up to the Social Security wage base amount have the Social Security tax applied. Earnings over the wage base amount do not have the Social Security tax applied.

The math works like this:

  • If wages are less than $127,200 in the year 2017, then wages times 6.2% is the amount the employee pays and wages times 6.2% is the amount the employer pays.
  • If wages are more than $127,200 in the year 2017, then 127,200 times 6.2% is the amount the employee pays and this is also the same amount the employer pays.

What is the Social Security Tax For?

Unlike income taxes, which are paid into the general fund of the United States and can be used for any purposes, Social Security taxes are paid into special trust funds that can be used only to pay for current and future Social Security retirement benefits, benefits for widows and widowers, and disability benefits.

Historical information about Social Security Taxes

Special Rate Reduction for 2011 and 2012

Back in the years 2011 and 2012, the Social Security tax rate paid by employees is 4.2% instead of the normal 6.2%. Employers still pay the full 6.2% rate. Thus for 2011 and 2012, the combined Social Security tax rate is 10.4%. Self-employed persons will pay this 10.4% combined rate on their earnings. This special payroll tax holiday was enacted as part of the Tax Relief Act of 2010, then extended through February 2012 by HR 3765, and then further extended through the end of 2012 by HR 3630.

The reduced Social Security tax rate was not renewed for 2013 as part of the American Taxpayer Relief Act. For 2013, the Social Security tax reverts to its normal tax rate of 6.2% for employees, 6.2% for employers, and 12.4% for self-employed persons.

Thus for 2011 and 2012, we substitute 4.2% for 6.2% in the above math formulas for the amount paid by the employee. At the maximum wage base of $106,800 for 2011, this translates into a tax savings of $2,136, as follows:

  • Social security tax at the normal rate: 106,800 times 6.2% = $6,621.60
  • Social security tax at the reduced rate for 2011: 106,800 times 4.2% = $4,485.60

At the 2012 maximum wage base of $110,100, this translates into a tax savings of $2,202, as follows:

  • Social security tax at the normal rate: 110,100 times 6.2% = $6,826.20
  • Social security tax at the reduced rate for 2012: 110,100 times 4.2% = $4,624.20

You can plug in your own salary level to determine your own personal savings from the payroll tax holiday. If your earnings from wages and self-employment are less than the wage base, simply multiply your earnings by 2% to find your savings. If your earnings are more than the wage base, you receive the maximum savings of $2,136 (for 2011) and $2,202 (for 2012).

What Happens to the “Missing” Social Security Funds from the 2-Year Tax Rate Reduction?

To prevent Social Security from losing tax revenue, Congress mandated that revenues be transferred from the general fund to the Social Security trust funds to make up for the tax reduction. This is provided for in section 601 of the Tax Relief Act, which reads in part, “There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues to the Treasury by reason of the application of subsection (a). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted.”

Your Local Social Security Office: Who Can Help

SSA-image-3My Comments: There are a lot of good people working for the Social Security Administration. It’s just that some of them are not equipped to answer your questions. This leads to frustration and sometimes making the wrong choices. Here’s an article that might be helpful if you have questions of them and need the right answer.

Devin Carroll | February 17, 2017

I help a lot of clients with Social Security. One thing they all have in common is that they’ve called their local Social Security office at least once. Most of these calls have ended in frustration. It doesn’t have to be that way. If you know who to ask for, you’ll get the help you need.

I often consult with individuals throughout the nation regarding Social Security issues. For some, it’s simply determining how their filing strategy fits in with their overall retirement plan and making sure they haven’t missed anything. For others, I help solve complex Social Security problems. Many that I help would never call me if they would have received a satisfactory answer and solid advice when they called their local Social Security office. So I may be hurting myself slightly, but I can’t stand to see any more bad, and sometimes non-reversible, decisions made as a result of incorrect guidance from the Social Security Administration.

I’m going to tell you who to ask for the next time you call.

The Hierarchy at the Social Security Office

If you’ve ever been to your local Social Security office, you’ve probably seen a maze of cubicles and possibly more employees than you expected. All these people have a role and handle very specific areas of Social Security benefits. Within each Social Security office there is a hierarchy of representatives. Not all are created equal. For retirement and disability benefits, the Social Security employee will most likely have one of the following titles.

Service representatives have the responsibility of handling general inquiries, fixing simple post-claim issues and answering the phones. Simply put, they are generalists. Although this is the first position for a new hire, I wouldn’t automatically discount their experience. Some service representatives begin—and end—a long Social Security career with the same title. Just understand, the service representative that answers your call may be a six-month employee or a 25-year employee.

Claims Representative

The claims representative is there for one reason: to assist individuals in filing claims to benefits under Social Security programs. Unless you are ready to process your claim, you’ll have little interaction with this representative.

Technical Expert

The technical experts handle the complex cases and do the stuff that’s too complicated for the others. Those I’ve come in contact with have exhibited a deep understanding of the rules and provisions of the Social Security programs. But you won’t find them answering the phones or meeting with just anyone. Normally, you have to be referred by a service representative or a claims representative to get in front of the technical expert.

How to Get Help

The next time you call (or visit) your local Social Security office, you’ll speak to a service representative. Give them a chance and they may be able to help you. However, if you have ANY doubt about what you’re being told, it’s time to escalate. Ask them to let you speak to a technical expert. It may take a while, but eventually you’ll be able speak to the most knowledgeable person in the office.


How to Have a Comfortable Retirement on Social Security Alone

SSA-image-3My Comments: Some of the folks who attend my workshops on SS benefits planning reveal that they have virtually no other resources to fund their retirement. That’s a challenge, especially for those whose lives were spent in physical labor of some kind and simply can’t continue working that way.

There is real pain in their eyes when they now hear that whatever they can expect to come from Social Security may be cut. I try to persuade them this is highly unlikely given their current age and the numbers they can see on the SSA.GOV web site.

I’m careful not to remind them, especially those from rural areas nearby, that the person they voted for in the last election is among those who are promoting a reduction in their benefits.

By Rebecca Lake | January 13, 2017

Is it possible to have a comfortable retirement on Social Security alone? It’s a necessary question, because although saving for retirement should be at the top of your financial to-do list, for many Americans it often ends up slipping through the cracks. According to PwC’s 2016 Employee Financial Wellness Survey, 33% of Baby Boomers say they’re worried about running out of money in retirement, while 47% of all workers have less than $50,000 tucked away for their later years.

Having a Comfortable Retirement on Social Security Alone

Social Security is one way to supplement retirement income when your savings fall short, but it only goes so far. As of November 2016 the average monthly retirement benefit was just $1,309. If you’re headed toward retirement with a nest egg that’s smaller than you’d like, you’ll need a game plan for making do with Social Security alone, so let’s see what we can come up with.

Who’s Banking on Social Security?

Nearly nine out of 10 Americans aged 65 or older currently receive Social Security. The Social Security Administration estimates that 21% of married couples and 43% of single seniors rely on Social Security for 90% or more of their income. According to a 2015 Gallup poll, 36% of near-retirees say they expect Social Security to be a major source of income once they retire. (For more, see How Social Security Works After Retirement.)

Income and the time frame to save for retirement seem to be major factors in determining who’s going to be more dependent on Social Security. In the Gallup poll, for example, 48% of non-retirees aged 55 and older and 45% of those making less than $30,000 said that Social Security would account for a large chunk of their retirement income.

When Social Security is your primary or only source of funds in retirement, it takes some creativity to make those dollars go further. Making certain adjustments can help you to navigate retirement without leaving like you’re feeling broke. Here are four concrete steps you can take.

Downsize Your Home
Housing costs can easily eat up your Social Security benefits. The Bureau of Labor Statistics estimates that seniors aged 65 to 74 spend approximately 32% of their household income on housing each year. That amount climbs to 36.5% at age 75.

Trading in your current home for something smaller can help to cut down on what you’re spending. A reduction of even $100 a month could make a significant difference in the type of lifestyle you’re able to maintain. Avoid the Downsides of Downsizing in Retirement can help you handle this decision intelligently. If the numbers really don’t work out well in your current location, consider moving to a region with a lower cost of living (See Least Expensive States to Retire In) – or even moving abroad

Streamline Your Other Expenses

If you’ve managed to make your housing more affordable, the next step is reducing or eliminating other household spending. If you’ve got credit card debt or a car loan, for example, you’d want to get those paid off as quickly as possible. Then you can move on to cutting down things such as your utility bills, transportation expenses and food budget. (For more, see 5 Ways to Stretch Your Retirement Budget.)

The key question that you must ask is what do you really need to have an enjoyable retirement and what can you live without? Could you ditch cable TV, for example, in favor of watching TV online (see The 4 Best Ways to Cut the Cord) or pursuing a low-budget hobby? If you own two cars but you and your spouse are both retired, could you sell one of them? Making these kinds of decisions can be tough, but they can make your transition to retirement on Social Security a much smoother one in the long run.

Keep Healthcare Costs Under Control

Healthcare is another potential trouble spot for which you need to plan, especially if you have an existing medical condition. While Medicare can cover some of the costs beginning at age 65, it doesn’t pay for everything. If you’ve retired and your income is exclusively coming from Social Security, you’ll need to look beyond Medicare to pay for your medical expenses.

Medicaid, for example, is available to low-income seniors, and you can have this coverage along with Medicare. It’s designed to pick up the tab for things Medicare doesn’t cover, including long-term care. State-sponsored Medicare Savings Programs help with the cost of Medicare premiums, while the Extra Help program helps with prescription drug costs. Just keep in mind that your ability to qualify for these programs is based on your age, income and in some cases your disability status. (For more, see Medicare 101: Do You Need All 4 Parts? and 10 Best States for Affordable Senior Care.)

Delay Taking Social Security as Long as You Can

Normal retirement age is 67 these days for most seniors, but you can begin taking your Social Security benefits as early as 62. The problem is that if you do so, you’ll see your benefits reduced for each year you take benefits ahead of schedule.

On the other hand, if you can put off taking your benefits past full retirement age, you’ll see your monthly benefit check increase. For someone who was born in 1943 or later and waits until age 70 to apply for Social Security, the increase should come to 8%. Those extra dollars could come in handy if you don’t have any other retirement money to fall back on.

The Bottom Line

Social Security isn’t a substitute for building a solid retirement base, and if you’ve still got time before you retire, consider looking for ways to shore up your savings. Start by chipping in as much as you reasonably can to your employer’s retirement plan, especially if it comes with a matching contribution. If you don’t have a 401(k) or similar plan at work, an individual retirement account (IRA) is another way to grow your savings. The more you set aside now, the less pressure you’ll feel to make your Social Security benefits stretch.

Nevertheless, if you have to stretch them, cutting overhead, controlling healthcare costs and delaying taking Social Security can make a big difference. For more ideas, see Retirement Strategies for Low Income Seniors. And if the numbers really don’t work out well, consider

How To Maximize Your Social Security Benefits

My Comments: Sometimes simple is better, much better. I found these words recently and am sharing them here since so many people are now making the transition to retirement. It’s a stressful time for a lot of reasons and the more you understand the financial dynamics involved, the less stressed out you’ll be.

January 11, 2017 / MoneyTips Staff

Retirement approaches, and you are struggling to figure out how to make the most of your Social Security benefits. The rules are hard to decipher and the Social Security Administration does not generally give case-specific advice. We cannot decipher Social Security in a few hundred words — not even the Social Security Administration can do that — but we can offer the following helpful secrets to maximize your Social Security benefits.

Time your filing appropriately — You have the option of drawing benefits as early as age 62 or as late as 70. Most advisors suggest delaying filing for benefits until age 70, because your monthly benefits will increase by 8 percent annually for every year you wait past your full retirement age (FRA). Conversely, filing early will decrease your monthly benefits by up to 30 percent.

How long will you live? — Your expected lifespan is the key to your choice. If you file early, you will get less in each check — but you will be receiving checks for more years. Delaying only works if you live long enough and can afford to wait to draw your benefits. Also, delaying only increases benefits on your own record, not spousal or survivor benefits.

Change your mind (once) — If you decide you have made the wrong choice in filing for benefits, you have a one-time opportunity to change your mind within the first 12 months of receiving benefits. However, you will have to repay any benefits you and your family received, as well as any amounts withheld from your benefits for payments like Medicare premiums.

Hold off on divorce — Had enough after nine years of marriage? Hang on for at least one more year to improve your benefit options. You can still file for spousal benefits on an ex-spouse’s income history if you were married for at least 10 years.

Spousal vs. widow/widower benefits — Widow/widower benefits have one big advantage over spousal benefits — widows/widowers can start drawing benefits on their own earnings history and switch to survivor’s benefits later, or use the reverse order and draw survivor’s benefits first and draw on their own history later, even when the widow/widower files before his or her FRA.

Work at least 35 years — The calculation of benefits is quite complex, although online calculators are available to help you estimate your own Social Security benefits. The key is to have at least 35 years of work experience prior to retirement. Social Security is based on the highest-earning 35 years of your career. If you only worked 33 years, two zeroes will be included in your benefit calculations — so hanging on for a few extra years can disproportionately increase your benefits.

Keep in mind that your early earning years are indexed for annual changes in average wages, so a seemingly lower salary twenty or thirty years ago may be comparable with your current salary in adjusted terms.

Seek SSDI representation — Any watcher of daytime TV will find many ads for lawyers offering help for Social Security Disability Insurance (SSDI) cases. Should you become disabled, it is wise to seek legal representation at the time of your initial application. The process is not always straightforward and an initial denial can take significant time to reverse.

We offer one final piece of advice that is not a secret: It is very difficult to retire comfortably on Social Security benefits alone. Maximize your benefits to the extent that you can, but make sure that you save separately for your retirement as well. Social Security is a lot less stressful when you can consider it as supplementary income.

Let the free MoneyTips Retirement Planner help you calculate when you can retire without jeopardizing you.

5 Totally Free Ways to Get Ready for Retirement Using the Social Security Website

SSA-image-3My Comments: There is a lot of talk these days about the Trump administration wreaking havoc with something that has become synonymous with retirement for many millions of Americans. But I have my doubts since those same millions also vote and are unlikely to sit by idly if their benefits are threatened.

Yes, you have reason to be nervous (I am…) but no need to panic. So… look for changes that will help Social Security become more financially robust as the years pass and respond pro-actively to changes in society. Things like raising the limit on earnings that are subject to the FICA taxes and possibly raising the age to start taking benefits. Those are realistic options that you must encourage our elected leaders to explore.

In the meantime, do as the writer says and open an online account. Once set up, the site is remarkedly user friendly, and good information is everywhere.

Karen Damato on January 5, 2017

Check out your options.

You’ve paid into Social Security for decades. Now, as retirement approaches, it’s time to figure out how to get the most from the system. Among all the guides and online tools that can help, don’t overlook the many resources—all free—on the Social Security website.

Here are five steps you should take, sooner rather than later, at as you work to master the sometimes surprising math of Social Security.

1. Sign up for a My Social Security account. You can use your online account to generate, at your convenience, a statement showing your Social Security earnings and estimated payouts (more on that in a minute)–and, later, to manage your benefits. Another reason to open an account is to protect yourself: Identity thieves can potentially hijack your benefits by opening a fraudulent account in your name. You can block their access by getting there first, cybersecurity expert Brian Krebs has written on his blog.

2. Review your Social Security statement. Check that the earnings posted to your account are correct. (You should do this at least every few years.) You’ll also see estimates of your future benefits–and benefits for your family–based on a couple of assumptions.

For people who don’t have an online account, the Social Security Administration mails printed statements a few months before you reach 25, 30, 35, 40, 45, 50, 55 and 60. You’ll get them annually after that if you aren’t already receiving Social Security benefits. You can also fill out a form to request a printed Social Security statement be mailed to you.

3. Check out the impact of early or late retirement. The Social Security website has simple tables that show you how much your benefit will be reduced or increased from your full benefit amount based on your exact age (in years and months) when you begin. This retirement planner for full retirement age shows the FRA for each birth year. Click on your year of birth to see exactly how much your benefit would be reduced by each month of early claiming. (While the tables show the haircut for claiming as early as age 62, note that the vast majority of people actually can’t start until one month after their 62nd birthday.)

There’s a similar tool that lets you see the benefit of any delayed retirement credits you’d earn by deferring the start of benefits past your FRA. On the right side of the screen, use the dropdown menu to select your year of birth and hit “Change” to see a month-by-month table.

4. Do some simple calculations. Social Security’s Retirement Estimator is a handy first stop to explore your future benefits because it can incorporate your earnings history from the Social Security database. That keeps you from having to type in all those year-by-year figures.

5. Explore more what-ifs. The Retirement Estimator may not let you explore all the scenarios you would like. If that’s the case, move on to the most flexible tool that Social Security offers, the Detailed Calculator. It enables you to play around with various estimates of future part-time earnings and possibilities for when you might stop work and when you might start collecting.

Plan to commit some time and brainpower to figuring this tool out. It isn’t intuitive and doesn’t have a snazzy interface. You must download the Detailed Calculator to your computer, and it might not work on your particular system. But if you read the instructions carefully, it’s not hard to get comfortable with. Unlike with the Retirement Estimator, you will need to type in your history of year-by-year earnings (which probably won’t be as big a hassle as you are thinking at this minute)–but then you can keep changing your estimated future earnings to see the impact of various work scenarios.

You can save your earnings history and come back to the tool over and over.