If you’re of any age between the Millennials and the Boomers, you’ll want to read this blog.
It could help you or someone you love optimize the benefits they receive from the Social Security Administration. This week, explore the following practicalities of passing through the threshold—the liminal dimension, if you will—from working world to retirement. (Liminal dimensions, as you recall, are those thresholds from one place to another).
I had the privilege of hearing one of the foremost experts in Social Security benefits, Kurt Czarnowski at this month’s Colorado Financial Planning Association meeting.
ATTN: CEU credit opportunity for CFP and insurance licensed readers who listen to the audio and take the quiz. Contact me for more information by clicking HERE.
A few tidbits to whet your appetite:
- “Social Security will be bankrupt by 2017”: Myth or Fact?
Answer: Myth. Social Security is, in fact, set up as a “pay-as-you-go” system. As long as there are workers paying FICA taxes, current beneficiaries will continue to receive benefits. Social Security will likely be able to pay full benefits until at least 2030.
- “I’m 35. I’m absolutely better off if I file and collect social security benefits as soon as I can when I turn 62”: Myth or Fact?
Answer: Myth. There are few absolutes in life. However, given current SSA assumptions, if you don’t file and collect at age 62 but instead wait until your full retirement age, you’d get a “raise” of about 30%. If you wait until age 70, you’d get another 30%. So, by waiting an additional eight years to collect benefits, you practically double your income for the rest of your life! Most planners would encourage you to adopt strategies that will minimize your risk of outliving your income. SSI is one of the few remaining inflation-adjusted (COLA) retirement plans left!
- “You are automatically enrolled in Medicare when you turn age 65”: Myth or Fact?
Answer: Myth. You have to enroll in Medicare in order to maximize benefits and avoid penalties. There is a very narrow window to file before and after you turn 65. If you miss that window, you’ll pay a monthly surcharge in addition to the standard $104.90/month.
- “You’ll generally reduce your SSI benefits by working after you achieve Full Retirement Age (FRA)”: Myth or Fact?
Answer: Myth. Since the SSA counts your 35 highest years’ earning there is a possibility that one of your later earning years could replace an earlier, lower earning year in your benefits calculation. So, despite the taxes on those earnings, you could very well come out ahead. Additionally, in the year you achieve FRA, you can actually make up to $40,080 (vs. the usual $15,120 exemption).
Toolkit:
Check out your own SSA benefits HERE.
Share in your comments any new tidbits you gleaned or questions you have from reading this blog.
