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Social Security Pro
November 7, 2019

Affordable medical coverage is something everyone wants, especially as people age. Luckily, our nation has safeguards for workers as they get older. Millions of people rely on Medicare, and it can be part of your health insurance plan when you retire.

Medicare is available for people age 65 or older, as well as younger people who have received Social Security disability benefits for 24 months, and people with certain specific diseases. Two parts of Medicare are Part A (Hospital Insurance) and Part B (Medicare Insurance). You are eligible for premium-free Part A if you are age 65 or older and you or your spouse worked and paid Medicare taxes for at least 10 years.  Part B usually requires a monthly premium payment.

You can apply online for Medicare even if you are not ready to retire. Use our online application to sign up. It takes less than 10 minutes. In most cases, once your application is submitted electronically, you’re done. There are no forms to sign and usually no documentation is required. Social Security will process your application and contact you if we need more information. Otherwise, you’ll receive your Medicare card in the mail.

You can sign up for Medicare on our website.

If you don’t sign up for Medicare during your initial enrollment window that begins three months before the birthday that you reach age 65 and ends three months after that birthday, you’ll face a 10 percent increase in your Part B premiums for every year-long period you’re eligible for coverage but don’t enroll. You may not have to pay the penalty if you qualify for a special enrollment period (SEP). If you are 65 or older and covered under a group health plan, either from your own or your spouse’s current employment, you may have a special enrollment period during which you can sign up for Medicare Part B. This means that you may delay enrolling in Part B without having to wait for a general enrollment period and without paying the lifetime penalty for late enrollment. Additional rules and limits apply, so if you think a special enrollment period may apply to you, read our Medicare publication, and visit the Centers for Medicare and Medicaid Services for more information.

Health and drug costs not covered by Medicare can have a big impact on how much you spend each year. You can also estimate Medicare costs using an online tool.

Keeping your healthcare costs down allows you to use your retirement income on other things that you can enjoy. Social Security is here to help you plan a long and happy retirement. Visit our website today.

Social Security Pro
October 24, 2019

Social Security and Medicare are both programs that are household names, but do you know the true difference? Both programs help safeguard millions of Americans as well as improve the quality of life for their family and friends. While Social Security offers retirement, disability, and survivors benefits, Medicare provides health insurance.

Medicare is our country’s health insurance program for people age 65 or older and younger people receiving Social Security disability benefits. The program helps with the cost of health care, but it doesn’t cover all medical expenses or the cost of most long-term care.

When you first enroll in Medicare and during certain times of the year, you can choose how you get your Medicare coverage. There are 2 main ways to get Medicare:

Original Medicare

Original Medicare includes Medicare Part A (Hospital Insurance) and Part B (Medical Insurance). If you want drug coverage, you can join a separate Part D plan. To help pay your out-of-pocket costs in Original Medicare (like your deductible and 20% coinsurance), you can also shop for and buy supplemental coverage. Examples include coverage from a Medicare Supplement Insurance (Medigap) policy, or from a former employer or union.

Medicare Advantage (also known as Part C)

Medicare Advantage is an “all in one” alternative to Original Medicare. These “bundled” plans include Part A, Part B, and usually Part D.  Part C plans may have lower out-of-pocket costs than Original Medicare.  They also may offer extra benefits that Original Medicare doesn’t cover — like vision, hearing, dental, and more.

If you can’t afford to pay your Medicare premiums and other medical costs, you may be able to get help from your state. States offer programs for people eligible for or entitled to Medicare who have low income. Some programs may pay for Medicare premiums and some pay Medicare deductibles and coinsurance. To qualify, you must have limited income and resources.

You can learn more about Medicare, including how to apply for Medicare and get a replacement Medicare card on our website.

Social Security Pro
October 10, 2019

When we announce the annual cost-of-living adjustment (COLA), there’s usually an increase in the Social Security and Supplemental Security Income (SSI) benefit amount people receive each month. Federal benefit rates increase when the cost of living rises, as measured by the Department of Labor’s Consumer Price Index (CPI-W).

The CPI-W rises when inflation increases, making your cost of living go up. This means prices for goods and services, on average, are a little more expensive, so the COLA helps to offset these costs.

As a result, nearly 69 million Americans will see a 1.6 percent increase in their Social Security and SSI benefits in 2020.

January 2020 marks other changes that will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax, as well as the retirement earnings test exempt amount, will change in 2020.

Want to know your new benefit amount as soon as possible? In December 2019, we will post Social Security COLA notices online for retirement, survivors, and disability beneficiaries who have a my Social Security account. You will be able to view and save these COLA notices securely via the Message Center inside my Social Security.  You can also opt out of receiving notices by mail that are available online.

Be the first to know! Sign up for or log in to your personal my Social Security account today and choose email or text under “Message Center Preferences” to receive courtesy notifications so you won’t miss your online COLA notice!

You can find more information about the 2020 COLA here.

Social Security Pro
September 23, 2019

Unfortunately, tragedy can strike without any warning. The loss of the family wage earner can be devastating both emotionally and financially. Social Security helps by providing income for the families of workers who die.

Some of the Social Security taxes you pay go toward survivors benefits for workers and their families. The value of the survivors benefits you have under Social Security may even be more than the value of your individual life insurance. When you die, certain members of your family may be eligible for survivors benefits. These include widows and widowers (and divorced widows and widowers), children, and dependent parents.

Here are the people who can get survivors benefits based on your work:

  • Your widow or widower may be able to get full benefits at full retirement age. The full retirement age for survivors is age 66 for people born in 1945-1956, with the full retirement age gradually increasing to age 67 for people born in 1962 or later. Your widow or widower can get reduced benefits as early as age 60. If your surviving spouse is disabled, benefits can begin as early as age 50.
  • Your widow or widower can get benefits at any age if they take care of your child younger than age 16 or disabled, who is receiving Social Security benefits.
  • Your unmarried children, younger than age 18 (or up to age 19 if they’re attending elementary or secondary school full time), can also get benefits. Your children can get benefits at any age if they were disabled before age 22. Under certain circumstances, we can also pay benefits to your stepchildren, grandchildren, step-grandchildren, or adopted children.
  • Your dependent parents can get benefits if they’re age 62 or older. (For your parents to qualify as dependents, you must have provided at least half of their support.)

You can read more our publication Survivors Benefits for more information.

How much your family can get from Social Security depends on your average lifetime earnings. The more you earned, the more their benefits will be. For more information on widows, widowers, and other survivors, visit our webpage.

Social Security is with you through life’s journey. Be sure to tell friends and family about our Survivors Benefits and how we can help in times of need.

 

Social Security Pro
August 30, 2019

Many people enjoy the independence of owning and operating their own small business. If you’re a small business owner, you know that you have additional financial responsibilities when reporting your taxes. A part of this is paying into Social Security. 

Most people who pay into Social Security work for an employer. Their employer deducts Social Security taxes from their paycheck, adds a matching contribution, then sends those taxes to the Internal Revenue Service (IRS) and reports the wages to Social Security. Self-employed people must do all these actions and pay their taxes directly to the IRS.

You’re self-employed if you operate a trade, business or profession, either by yourself or as a partner. You report your earnings for Social Security when you file your federal income tax return. If your net earnings are $400 or more in a year, you must report your earnings on Schedule SE, in addition to the other tax forms you must file.

You must have worked and paid Social Security taxes for a certain length of time to get Social Security benefits. The amount of time you need to work depends on your date of birth, but no one needs more than 10 years of work (40 credits).

In 2019, if your net earnings are $5,440 or more, you earn the yearly maximum of four credits — one credit for each $1,360 of earnings during the year. If your net earnings are less than $5,440, you still may earn credit by using an optional method described below.

We use all your earnings covered by Social Security to figure your Social Security benefit, so, report all earnings up to the maximum, as required by law.

Family members may operate a business together. For example, a husband and a wife may be partners or run a joint venture. If you operate a business together as partners, you should each report your share of the business profits as net earnings on separate self-employment returns (Schedule SE), even if you file a joint income tax return. The partners must decide the amount of net earnings each should report (for example 50 percent and 50 percent).

You can read more about being self-employed and how that affects your Social Security benefits including optional methods of reporting.

Taxman
August 22, 2019

 

Some of the terms and acronyms (an abbreviation of the first letters of words in a phrase) people use when they talk about Social Security can be a little confusing. We’re here to help you understand all you need to know.

Social Security employees strive to explain benefits using easy-to-understand, plain language. In fact, The Plain Writing Act of 2010 requires federal agencies to communicate clearly in a way “the public can understand and use.”

If a technical term or acronym that you don’t know slips into the conversation or appears in written material, you can easily find the meaning in our online glossary.

Social Security’s acronyms function as verbal shorthand in your financial planning conversations. If you’re nearing retirement, you may want to know what PIA (primary insurance amount), FRA (full retirement age), and DRCs (delayed retirement credits) mean. These terms involve your benefit amount based on when you decide to take it.

If you take your retirement benefit at FRA, you’ll receive the full PIA (amount payable for a retired worker who starts benefits at full retirement age). So, FRA is an age and PIA is an amount.

Once you receive benefits, you get a COLA most years. But don’t expect a fizzy drink — a COLA is a Cost of Living Adjustment, and that will usually mean a little extra money in your monthly payment.

What about DRCs? Delayed retirement credits are the incremental increases added to the PIA if you delay taking retirement benefits beyond your full retirement age. If you wait to begin benefits beyond FRA — say, at age 68 or even 70 — your benefit increases.

If one of those unknown terms or acronyms comes up in conversation, you can be the one to supply the definition using our online glossary. Sometimes learning the terminology can deepen your understanding of w Social Security works for you. Discover and share more on our website.

Social Security Pro
June 7, 2019

 

Timing is everything, and the arrival time of your monthly payment from Social Security can be key to keeping your financial house in order.

As you budget to pay your bills and save for future needs, keep in mind that your monthly retirement or disability benefit will be paid at the same time each month. To see your next payment date, create or log on to your my Social Security online account and go to the “Benefits & Payments” section.

In general, here’s how we assign payment dates:

  • If you were born on the 1st through the 10th of the month, you’ll be paid on the second Wednesday of the month;
  • If you were born on the 11th through the 20th of the month, you’ll be paid on the third Wednesday of the month; and
  • If you were born after the 20th of the month, you’ll be paid on the fourth Wednesday of the month.

There are exceptions. For example, children and spouses who receive benefits based on someone else’s work record will be paid on the same day as the primary beneficiary.

For others, we may issue your payments on the 3rd of each month. Among other reasons, we do this if:

  • You filed for benefits before May 1, 1997;
  • You also receive a Supplemental Security Income (SSI) payment;
  • Your Medicare premiums are paid for by the state where you live; or
  • You live in a foreign country.

Individuals who receive SSI payments due to disability, age, or blindness receive those payments on the 1st of each month.

If your payment date falls on a federal holiday or weekend, you can expect to receive that month’s payment on the weekday immediately prior.

You can see a current schedule for Social Security and SSI benefit payments in an easy-to-read calendar.

Author: 

Andy Landis
December 27, 2016

 

Avoid retirement surprises by understanding the Social Security computation. Let’s go back to school to study the math behind your Social Security. A little understanding of the numbers goes a long way to avoiding retirement surprises and shortfalls. Like other pension systems, your Social Security is based on three factors: eligibility, earnings, and age. SSA puts its own twist on each factor. Math 101: Compute your eligibility To be eligible for Social Security retirement payments, you need 40 Work Credits (WCs). You can earn up to 4 WCs per year, so they’re sometimes called quarters. In 2015 you earn one WC for each $1220 you earn anytime in the year. So if you earn 4 x $1220, or $4880 in 2015, you get all 4 WCs for the year. (Only work where you pay Social Security taxes counts. The cost per WC generally increases annually with inflation.) 40 WCs ÷ 4 WCs per year = 10 years of part-time work needed for a retirement payment. Math 102: Compute your average earnings The second factor is your lifetime average earnings. Many pensions are computed on your best 5 years of work. Not Social Security. It’s based on your best 35 years of work. Here’s how: • SSA records each year’s earnings subject to Social Security taxes. • When you hit 62, every year is multiplied by an inflation factor to make it more comparable to today’s pay level. • The top 35 years of inflated earnings are selected and averaged together. The years need not be contiguous (in a row or block). That 35-year average determines your Social Security payment—a higher average means higher Social Security. 35 years are used, even if you don’t have 35 years of work. Missing years post as zeros, reducing your 35-year average. A little math hocus-pocus (see http://www.socialsecurity.gov/OACT/COLA/piaformula.html) converts your 35-year average into your Social Security payment. Avoid two mistakes here. • First, high late-career earnings don’t always mean high Social Security, if you had low earnings earlier. It’s a lifetime average. • Second, retiring a few years early after lifelong work won’t drastically reduce your Social Security. A few zeros have little impact on your 35-year average. Math 103: Compute your age The third factor is your age when you start payments. That’s based on your Full Retirement Age (FRA). Your FRA is between 65 and 67, determined by your birth year. (See http://www.socialsecurity.gov/OACT/ProgData/nra.html) Whatever your FRA, you can start payments any month from 62 to 70. Start payments at your FRA and you get a 100% payment. Start payments earlier and you get a small reduction for each reduction month. For example, if your FRA is 66, and payments start at 62, your 48 reduction months yield a 75% payment. Start payments after your FRA and you get a raise for each month’s Delayed Retirement Credit (DRC). For example, if your FRA is 66 and payments start at 70, the 48 DRCs yield a 132% payment. Age factors top out at 70; don’t delay filing after that. An SSA calculator at http://www.socialsecurity.gov/OACT/quickcalc/early_late.html#calculator figures the percentage for any month from 62-70. More schooling • Get SSA’s estimate of your future payments at www.ssa.gov/myaccount. • Math nerds: See a sample computation dissected by SSA at http://www.socialsecurity.gov/OACT/ProgData/retirebenefit1.html or in my book, available at http://andylandis.biz/index_files/Page403.htm. • Compute your own estimate at www.ssa.gov/pubs/index.html. Type “your retirement” in the lower search box (under the “Publications” headline), and select your birth year in the “PDF” button. It all adds up. So as always, keep on planning.