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Social Security

Windfall Elimination Provision (WEP) for Social Security

WEP (Windfall Elimination Provision) can cause a substantial decrease in your Social Security benefit. This article explains WEP to help you understand it.

Government Pension Offset for Social Security

Are you impacted by the Government Pension Offset (GPO)? Read on for more details on how this program works and why you’re impacted.

The Primary Insurance Amount (PIA)

Do you know how the Primary Insurance Amount is used to calculate your Social Security benefit? Or how the PIA is calculated itself?

How to Check Your Social Security Benefits

How can you check the current status of your Social Security benefits? Or get an estimate of your future benefits? Here’s how-

Payback When You’ve Earned Too Much

How does Social Security make it up to you when they’ve withheld benefits because you earned more than the annual limit?

Social Security Earnings Test

Do you understand how the earnings test for Social Security works? This article is a brief primer on the way it works, with examples.

When To Apply for Social Security Benefits

Deciding when to apply for Social Security benefits requires some thought – but in the end result it might not matter at all.

Health Savings Accounts – The Basics, Part 1

A Health Savings Account (HSA) is a tax-exempt trust or custodial account that you set up with a bank or other US financial institution which allows you to pay or be reimbursed for qualified medical expenses. The HSA must be used in conjunction with a High Deductible Health Plan (HDHP). The HSA can be established using a qualified trustee or custodian that is separate from the HDHP provider. Contributions to an HSA must be made in cash or through a cafeteria plan. Contributions of stock or property are not allowed. Benefits of an HSA There are quite a few benefits to an HSA: Contributions to an HSA are deductible from income – even if you don’t itemize deductions; If your employer makes contributions to an HSA on your behalf (such as via a cafeteria plan) the contributions can be excluded from your gross income; Your account contributions can remain in […]

How Remarriage Affects Widow(er)s and Ex-Spouses Differently

Do you know the differences in how Social Security treats a widow as opposed to an ex-spouse? It’s important to understand these distinctions

Social Security Eligibility

How many Social Security credits do you need in order to be eligible for retirement benefits? What about Social Security disability?

The Outrageous Effect of Taxation of Social Security Benefits

Minor increases to income can result in significant increases to taxation of Social Security benefits, if you’re in the right range of income.

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

It pays to know the rules. You can coordinate Social Security survivor benefits with your own retirement benefit if you’re eligible for both.

How Social Security COLA is Calculated

Do you know how the COLA is calculated for your Social Security benefit each year. We step through the actual formula to calculate the increase here.

3 Myths About Social Security Filing Age

This article takes a long hard look at these three “facts” about Social Security filing age and shows the real math behind them. All three are only true to a point – and as you’re planning your Social Security filing age, you should understand the real truth behind these three items. First, let’s look at the concept of delay. You Should Always Delay Your Social Security Filing Age to 70 This one is the easiest to understand why it’s wrong – but the component of truth in it can be important because it could work in your favor to delay. Of course an absolute like this is going to be proven incorrect in some circumstances. If you happen to be able to delay your Social Security filing age and you live a long time after age 70, over your lifetime you will receive more from Social Security than if you […]

Credit for Reduced Social Security Benefits When Subject to the Earnings Test

Continuing to work while receiving Social Security benefits may cause a reduction to your benefit – if you earn more than the annual earnings test (AET) amount. But this reduction isn’t permanent – you will get credit for reduced Social Security benefits when you reach Full Retirement Age. So how does this work? Earnings Test The earnings test limit is $17,640 for 2019 if you are under Full Retirement Age for the entire year. The limit is $46,920 in the year that you reach Full Retirement Age. Full Retirement Age (FRA) is age 66 if you were born between 1946 and 1954, ratcheting up to age 67 if your birth year is 1960 or later. So for 2019 if you were born after 1952 and you are receiving Social Security benefits, for every two dollars that you earn over $17,640, one dollar of your benefit is withheld. For example, if […]

Friends With (Social Security) Benefits

Social Security is arguably one of the most important cash flows for individuals in retirement. Many individuals have paid into the system for years, and in turn will be eligible for reduced benefits as early as age 62, or at their full retirement age (between ages 66 and 67). The decision on when to start collecting benefits is important and can impact your retirement cash flows for your remaining retirement. This decision should not be taken lightly, and it should not be left to informal conversations with friends, coworkers, etc. In other words, don’t base your decision to take benefits based on what your friends have done. Your situation is different. And in most cases, your decision is final. There are several strategies that may be employed when collecting benefits. Such strategies include taking benefits early at a reduced amount, delaying benefits for a higher amount, spousal retiree benefits, and […]

Your Account(?) at Social Security

One of the biggest misconceptions about Social Security is that each individual has a specific “account” which holds all the money you’ve had withheld from your paycheck over the years. Nothing could be further from the truth… as we’ve mentioned before on this blog, the Social Security system is a pay-as-you-go system (largely) where withholding today is used to pay benefits for current recipients. It is for this reason that much consternation has been brought about in recent years with regard to the question of the Social Security system’s running out of money. You see, for quite a while the Social Security system has had a surplus over current expenses, with the surplus amounts being placed in the trust fund. In 2020 it is expected that current benefits being paid out will become greater than the payroll taxes are bringing in, so the difference will come from the trust fund. […]

The Earnings Test is Specific to the Individual

This topic comes from a reader, J., who asks the following question: My wife is 62 and she works a part-time job earning around $23k per year. She is planning to retire in June, and so her total earnings for the year will be approximately $11,500. She would like to begin taking Social Security benefits right after her retirement. The question is this:  will her earnings test be based upon her “individual” earnings, or on the higher combined earnings of the two of us (I am still working, earning in excess of the earnings test amount)? Since her earnings of approximately $11,500 are under the $17,640 earnings limit, her earnings would not be reduced – but if the earnings test is based upon both of our earnings combined, her earnings would definitely be reduced. How does this work? My Response Each person’s earnings record is specific to that individual – […]

Medicare is Not Automatic

Enrollment in Medicare is not automatic, unless you are actively receiving Social Security benefits. If you miss the enrollment window, you’ll be penalized.

Integrating Roth IRA With Social Security Benefits

It can pay off if you plan on integrating Roth IRA with your Social Security benefits. Conversion to Roth IRA can be very beneficial in surprising ways.