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Social Security

Social Security Bend Points for 2015

Along with the increases to the maximum wage base and the Cost-of-Living Adjustment (COLA) announced by the Social Security Administration, the 2015 bend points used to calculate both the Primary Insurance Amount (PIA) for Social Security benefits were announced as well. In addition, the Family Maximum Benefit (FMax) bend points for 2015 were also announced.

Social Security Wage Base Set for 2015

The Social Security Administration has set the maximum taxable wage base for 2015 at $118,500. This represents an increase of $1,500 over the 2014 wage base of $117,000, an increase of 1.28%.

Social Security COLA for 2015 Set at 1.7%

The Social Security Administration announced today that the annual automatic Cost Of Living Adjustment (COLA) for Social Security benefits in 2015 will be 1.7%. This is comparable to the 1.5% COLA for 2014, and is the 5th time in the past six years that the adjustment has been less than 2%. Look for more articles in the near future with details on earnings limits, bend points, and other factors affected by the COLA.

Understand Deemed Filing to Avoid a Surprise in Your SS Strategy

There’s nothing worse than feeling as if you have your Social Security filing strategy all lined out, when a rule like deemed filing rears its ugly head to throw your strategy off track. Here’s an example: Steve and his wife Edie are ages 66 and 61 respectively. The plan is for Steve to file for his Social Security benefit now (at his Full Retirement Age), and for Edie to file for her own benefit when she reaches age 62. Then Edie will wait until she reaches Full Retirement Age of 66 to file for the Spousal Benefit based on Steve’s record, which will increase her benefit by $500 at that time.

Minimize taxes by adjusting your portfolio

Since the markets have had some downturns lately, now could be a good time to make some adjustments to your portfolio, rebalancing and the like, that may help to minimize taxes. In doing so you can possibly get a bit of advantage in your tax bill from a loss you’ve experienced in your investments. If you have taxable accounts, that is, accounts that are not tax-deferred (like IRAs or 401(k) plans) when you sell your investments there is capital gains treatment on your gains and losses. If you have losses and gains in your taxable account, when you realize these losses and gains by selling the holdings, your losses are subtracted from the gains, and if the result is positive (net gains), these gains are taxed at the preferable long-term capital gains rates. I say this is preferable as the rate is less, often much less, than ordinary income tax […]

File & Suspend and Restricted Application are NOT Equal

We’ve discussed the Social Security filing options of File & Suspend and Restricted Application many times before, but it seems that folks continue to confuse these two options. It’s easy to see why: one (File & Suspend) can be used to enable the other (Restricted Application). Also, neither option is available until the individual is at least at Full Retirement Age (FRA). It’s important to know the difference between File & Suspend and Restricted Application though – primarily because if you confuse the two when talking to the Social Security folks, you’ll have a much different outcome than you expected and hoped for. Let’s start by defining each option.  

Paper Social Security Statements are Back

The best laid schemes o’ mice an’ men Gang aft agley — Robert Burns To a Mouse, on Turning Her Up in Her Nest with the Plough As with many great ideas, in practice the concept of exclusive electronic delivery of Social Security benefit statements seems to have gone “agley”. Apparently a very small percentage of folks actually took advantage of the online version of these statements (primarily my client base, I’m guessing). As a result of this and apparent feedback from customers, advocates and Congress, Social Security is resuming the physical delivery of paper Social Security Statements. The new delivery schedule will be based upon the age of the potential Social Security benefit recipient, with statements being sent automatically 3 months before your 25th, 30th, 35th, 40th, 45th, 50th, 55th, and 60th birthdays. You will only receive this statement if you are not currently receiving Social Security benefits AND […]

7 Questions About Divorcee Social Security Benefits

Included in the myriad of questions that I regularly receive from readers are questions about how a divorced person can collect benefits based upon his or her ex-spouse’s Social Security record. For a divorcee (as with many married couples) sometimes the ex’s benefits represent the lion’s share of the couple’s SS record. Because of this, many divorcees are very interested in knowing what benefits are available to them, and when. In addition, even when the divorced spouse in question is not the higher earner there are questions about benefits that can be quite difficult to find answers for.

10 questions: Social Security Spousal Benefits

I recently had the pleasure of taking part in a live interactive event with Yahoo! Finance, where folks were able to ask virtually any question they wished. We received and responded to over 200 questions – they’re all on Facebook on the Yahoo! Finance page (click the link to go to the page). One recurring theme played out over and over: Social Security Spousal Benefits are not understood by a vast number of folks. Naturally I find this to be disturbing.  Social Security Spousal Benefits often represent a large part of the total benefits available to a couple.  This benefit is even more important for many divorced spouses, as it might represent the only benefits available to many divorcees. Understanding this benefit is very important, as SSA staff often isn’t fully-conversant in the options that you have available.

Social Security Wage Base Projected for 2015

Update 10/22/2014: The wage base has been set for 2015. See the article Social Security Wage Base Set for 2015. According to the Social Security Administration trustees, the Social Security wage base for 2015 is projected to be $119,100.  This represents an increase of $2,100 from the 2014 wage base of $117,000. This is an increase of 1.79% – and won’t be finalized until October when the other increases for Social Security amounts are announced. This is a relatively small increase when compared to recent annual increases we’ve seen.  The previous 3 years’ increases have averaged 3.09%. This is different from the COLA (Cost of Living Adjustment), which has increased an average of 2.27% in the past three years. The 2014 COLA (applicable to 2015 benefits and other figures) will be released later in the year, typically in October.

Windfall Elimination Provision May Impact Spousal Benefits but not Survivor Benefits

When your Social Security retirement benefit is subject to the Windfall Elimination Provision (WEP), you’re likely painfully aware of the reduction to your own benefit by this provision. What you may not be aware of is that the effect goes beyond your own benefit – your spouse’s and other dependents’ benefits are also impacted by this provision. However, the impact of WEP does not continue after your death. 

3 Do Over Options For Social Security Benefits

You’re allowed to file for your Social Security retirement benefits when you reach age 62 (in general). Most advisors recommend that you delay filing until some later date to better maximize your lifetime benefits. But what do those advisors know anyhow? At least that is what you were thinking when you first filed. After all, you’ve paid into the system for your entire working life, you deserve to get the money back out, right? Plus, who knows when Social Security will go bankrupt, right? Gotta get the money while you can! Then a couple of years pass and you realize that you short-changed yourself (and your spouse) by taking early benefits. Turns out that you didn’t need that money at 62 – you could have delayed. And you’ve come to realize that Social Security is not likely to go away, at least not in your lifetime. (Maybe those advisors were […]

Social Security Spousal Benefits After a Divorce

We’ve discussed many different factors about Social Security Spousal Benefits, but what happens to Spousal Benefits after the couple has divorced? We know that a divorcee can file for Spousal Benefits if the marriage lasted for at least 10 years – but only after a 2-year period has passed if the ex-spouse has not already filed for benefits.  The only other factors that must be in place are for the ex-spouse to be at least 62 years of age, and of course the ex must have a benefit record to calculate Spousal Benefits from. On the other hand, if a couple is divorcing and one of the spouses (soon to be ex-spouses) has already filed for his or her own Social Security benefits, the other spouse can file for Spousal Benefits either before or after the divorce is finalized with no waiting period, as long as they were married for […]

File and Suspend in the Crosshairs?

Apparently in the President’s recent budget documentation there is a brief mention of a desire to curtail the availability of File and Suspend as an option for Social Security benefit filing. The reason, it appears, is that the Obama administration views this option as one used only by high income folks to take advantage of the government with this valuable option. The problem with that viewpoint is that it is used by folks of all income levels, and in fact if it is taken away this could cause some big problems for folks who can least afford to lose benefits. As if anyone can afford to lose benefits, right? Here’s what happens with File and Suspend: a Social Security benefit recipient has a spouse and/or children that would be eligible for benefits based on his or her record when he or she files for benefits.  If he or she happens […]

Your Social Security Benefits: Are They Taxable?

If you’re receiving Social Security benefits, either for disability, retirement, or survivor’s benefits, when you file your tax return you will need to figure out if the benefits you’ve received during the prior year are taxable to you. You’ll receive a Form SSA-1099 from Social Security sometime in the first months of the year, showing what your benefits were in the prior year, as well as any deductions that were made throughout the year – including Medicare premiums (Part B and/or Part D) if applicable, and federal income taxes withheld. But are the benefits taxable to you?  At most, 85% of your benefit might be taxed – and it’s possible that none of your benefit is taxable, all dependent upon your total income for the year.  See this article for a detailed explanation of How Taxation of Social Security Benefits Works.  The IRS recently published their Tax Tip 2014-23, which […]

The Unmarried Penalty With Social Security (and the Divorce Advantage)

Okay, penalty probably is the wrong term for it – maybe the better term would be short-change. You’ve undoubtedly heard of the marriage penalty for income taxes – this is where it can be beneficial tax-wise for two people to remain single than to be married and be forced to file either jointly or separately.  The tax code contains several ways that this is true.  But did you know that there is a way that married folks might level the field versus singles in the Social Security law-scape?  Plus, divorced folks may also have an advantage over singles AND married folks who were never divorced (or who divorced after marriage of less than ten years)? The Marriage Advantage When a worker remains single over his or her working life, there is an inequality in benefits paid out based on his or her record when you compare it to that of […]

The Inequity of Spousal Social Security Benefits

We’ve covered a lot of ground talking about Spousal Benefits and strategies for filing, and other facts to know about Spousal Benefits.  But did you realize that there is a flaw in the process that shortchanges some couples when it comes to Spousal Benefits? Here’s a pair of example couples to illustrate the inequity: The first couple: Jane has worked her entire life and has earned a Social Security benefit of $2,600 per month when she retires.  Her husband Sam has been a struggling artist his whole life, as well as a stay-at-home Dad to their three kids when they were young.  As a result, Sam has never generated enough income on his own to receive the requisite 40 quarter-credits to have a Social Security benefit of his own. The second couple: Sid and Nancy have both worked and had earnings within the Social Security system over their lifetimes.  Sid […]

Social Security and the Non-Citizen Spouse

With our increasingly global society today, many married couples are made up of a US citizen and a non-citizen.  In some cases, the non-citizen spouse has never been covered by the US Social Security system – he or she may have been covered by another system in his or her home country.  In other cases, the non-citizen spouse may have worked in a Social Security-covered job while living in the US, and so may have generated a Social Security earnings record of his or her own. At any rate, it is important to know that your lawful spouse who is a non-citizen may be eligible for Social Security benefits based on your earnings. As long as other qualifications are met (length of marriage, age of the spouse, and your filing status with Social Security), your non-citizen spouse may qualify for Spousal Benefits based upon your record.  By the same token, your […]

Survivor Benefits Do Not Affect Your Own Benefits (and vice versa)

I’ve had a few questions about this topic over the past several weeks, so I thought I’d run through a few examples and explain it. When you have access to a Social Security Survivor Benefit and a Social Security retirement benefit, you can maximize your lifetime benefits by coordinating the two and planning out your strategy for taking each benefit. As we’ve covered in other articles, it often is best to delay receiving your own benefit as long as possible.  This is because you will receive Delayed Retirement Credits (DRCs) for every month after you’ve reached your Full Retirement Age (FRA, which is age 66 if you were born between 1943 and 1954, and increasing gradually up to age 67 if you were born in 1955 or later).  This DRC amounts to 8% per year, or 2/3% per month. In addition, it can be beneficial to delay receiving a Survivor […]

Social Security Spousal Benefits versus Survivor Benefits

I’ve written a lot about Social Security Spousal Benefits and Survivor Benefits on these pages, but oftentimes there is confusion about how they are applied.  There are things about them that are common, but for the most part there are some real differences that you need to understand as you make decisions about applying for one or the other of these benefits. For one thing – Survivor Benefits and Spousal Benefits are benefits that you may be entitled to that are based on someone else’s record: your spouse (or ex-spouse) to be exact.  No matter what your own Social Security benefit might be, you have access to the Spousal Benefit and Survivor Benefit, if, of course, you have or had a spouse with a Social Security retirement benefit available on his or her record. In addition, it is important to note that Spousal Benefits and Survivor Benefits are mutually exclusive.  […]