More Information Equals A Better Outcome in Retirement Planning

IRA, Retirement Planning, Social Security / 401(k), Budget, IRA, retirement, Social Security, St. Petersburg

Most people who work for a living dream of retirement. However, for many workers, the idea of retirement comes with its own worries. Will there be enough money? Will I be healthy enough to enjoy it?

Money and health are the two biggest worries about retirement. There are other unknowns: where will we live? How long will we be able to travel? What’s all this about paying estimated taxes, and how does Medicare work? Getting prepared for retirement will be less stressful, says the article “3 Ways to Approach Retirement More Confidently,” from The Motley Fool, if you follow these steps:

Start with a budget. The chances are that you don’t know how much money you spend every month. You’re working, money comes in and it goes out. However, if you know how much money you are spending, and what you are spending it on, you’ll be able to have a handle on how much money you’ll need for retirement. You’ll also be able to see where your discretionary dollars are going and make a conscious decision, as to whether those are dollars that should be going into long-term savings for your retirement.

Remember that while some expenses may go down—like commuting—others will stay the same. You won’t be going to the office every day, but you will want to enjoy yourself. What will your leisure and entertainment activities be, and how much will they cost? How will you handle health care costs? You should also remember that there will be quarterly taxes to be paid.

The more information you can pull together about your spending, savings and unavoidable costs like taxes and health care, the better you’ll be able to plan for this next phase of your life.

How much income will your retirement accounts provide? We tend to focus on how much we need to save, but we should really focus on how much income our retirement savings will generate. How much will your IRA or 401(k) provide on a monthly basis?

Let’s say you’ve saved $500,000 in time for retirement. If you use an annual 4% withdrawal rate, which is the going rule these days, you’ll only have $20,000 a year generated for annual income. If you add Social Security to that amount, you may find that it’s not enough to enjoy the lifestyle you’ve anticipated for retirement. You may find that part-time employment can fill the gap, or you may need to work for a few more years.

Be smart about Social Security. Despite your years of saving, you will likely come to rely on Social Security to pay some of your bills. The smarter you are about your filing strategy, the better positioned you’ll be to maximize your Social Security benefits. If you wait until your Full Retirement Age, you’ll get the full monthly benefit you’re entitled to. If you can hold off claiming your benefits until age 70, you’ll max out as the monthly benefits increase every year you delay claiming.

One of your key resources as you move towards your retirement years will be your estate planning attorney. The process of creating an estate plan will also answer some of your questions about what retirement will bring and planning for aging now will give you a lot more confidence about enjoying your early years of retirement.

Reference:The Motley Fool(September 23, 2018) “3 Ways to Approach Retirement More Confidently.”

How Taking Social Security at 62 Makes Sense in Some Tax Brackets

Retirement Planning, Social Security / Retirement Planning, Social Security, St. Petersburg

If you’re living on your retirement savings, while waiting to start taking Social Security benefits to full retirement age or even age 70, you might be costing yourself thousands in taxes.

It’s annoying. There’s no way around it. You’ve worked your whole life, and paid taxes on those earnings. Now you have to pay taxes on your Social Security benefits. However, depending on your asset level, you may want to start getting those benefits earlier, says this article from Kiplinger, “Why Wealthy People May Want to Take Social Security at 62.”

There are many good reasons to wait and take Social Security at full retirement age to get the full benefit amount. In waiting longer to file, the benefit can grow 8% a year from full retirement age to age 70. However, this one-size-fits-all advice may not be appropriate for everyone, especially for the wealthy.

The issue is that everyone wants to up their benefits on the front end. However, if there is no plan to boost those dollars on the back end, by keeping more of your Social Security dollars for yourself instead paying taxes, it’s not worth it. For many seniors, by the time they see they’re going to be giving up to 20% to 30% of their Social Security away in taxes, it’s too late.

Of course, conventional wisdom says that, if possible, you should wait and claim bigger Social Security benefits at age 70. That’s something high earners in many instances can do, but there are an increasing number of couples who’d be better off filing at age 62, and using that income to preserve and build their nest egg.

Look at this example: say that a husband was retiring at age 62. Without his regular paycheck, he and his wife were both about to find themselves in the lowest tax bracket they had been in since their first jobs: the 10% bracket. The question for them, like many Americans, is whether to tap into their IRA and 401(k) in retirement. These are typically the most significant accounts in terms of amounts saved through the working years. If this couple didn’t start Social Security at age 62, they’d need to withdraw heavily from pretax retirement accounts. Based on the monthly distribution rate needed to maintain their budget, those dollars (which are taxed at current income tax rates) would immediately place them into a higher tax bracket (perhaps the 22% bracket under 2018 tax rates).

However, if they take their Social Security payments at age 62, the monthly distribution amounts needed from their retirement savings accounts would be much less. This couple doesn’t want to drain their retirement accounts early in retirement, because it can mean lost opportunities for compounded growth of assets over a 20-to-30-year retirement. If the couple were to take their Social Security at age 62—while in a 10% tax bracket from age 62 to 70—the amount of tax they’d pay on those Social Security benefits would be minimal, maybe even zero.

Talk with your estate planning attorney, who has a clear picture of your tax situation in retirement and has likely designed your estate plan to minimize taxes. Make sure that your plan for when to take Social Security benefits makes sense from a tax perspective.

Reference: Kiplinger (September 7, 2018) “Why Wealthy People May Want to Take Social Security at 62”

Single Parents Need to Plan and Balance for Financial Stability

Life Insurance, Protecting Children, Retirement Planning, Social Security / Life Insurance, Retirement Planning, Roth IRA, Social Security

In addition to naming a guardian in a will, there are five other critical financial moves.

Without the security of a spouse’s income, single parents must balance their children’s needs with their own retirement savings goals.

Single parents who have to say no to their children over and over again, struggle with wanting to say yes when money is tight and there’s no room in the budget for the latest fashions or games. However, the last thing a single parent wants to do is convey a lack of financial discipline. A financial plan can help a single parent stay on track.

CNBC’s recent article, “Five financial essentials for single parents,” says that when single parents try to satisfy their kids, it can lead to a severe unintended consequence: placing their children ahead of their own retirement needs.

In addition to naming a guardian in a will, there are five other critical financial moves.

Set up an emergency cushion. A solid emergency fund is the initial step. You should have three to nine months' expenses in that fund. Don’t forget to add whatever costs the kids have each month, like sports and activity fees, school lunches, clothing, and school supplies.
Check on the right amount of insurance.Life insurance can help your family cope financially without your income. Your income could be lost through illness, so consider disability insurance. If you own a home, purchase flood insurance.
Create definitive savings goals. You most likely have things that you'd like to do for your family, such as purchase a home, pay for college or plan a special vacation. Each of these will be on a different timeline. Divide this into near-, medium-, and long-term savings goals. Your near-term goals will happen within five years. The way in which you invest these three silos of money is based upon your unique time horizon. If you have decades before you retire or need to pay tuition for a newborn, you can take on more risk. Examine your allocation among these accounts and review them once a year, to see if the amounts you're putting in each—and the investment strategies—still match your goals.
Have a set savings percentage. There's no set number that works for everyone. There are recommendations to save at least 6% or 9% of your income, but it’s not always possible. If you can only save $30 a month, do it and be glad! Just creating a positive habit of saving is important. Even if you save as little $10 a month, do it with the notion that you'll increase the amount, when your finances permit. A good rule of thumb is to put away 10% of your gross, not take-home, pay and as you get raises, increase your savings rate. Developing that disciplined habit of saving can help you accomplish many of your financial goals.
Make your retirement plan. With your savings and Social Security, achieving a 50% replacement of income may be enough for people with modest salaries. However, a person who earns $100,000 will be more likely to want 85 to 90% of income. Therefore, they’ll have to save more. In sum, the more you have, the more you’ll need to save to be able to spend the same amount of money and live the same way in retirement.

For those lucky enough to work at a company with a retirement plan, contribute as much as you can, especially if your employer offers a match to your IRA contribution. If your company does not have any kind of retirement savings plan in place, the next best thing is to set up your own IRA and have money taken from your paycheck automatically. How much you save is up to you, but saving something is better than nothing.

Reference: CNBC (August 20, 2018)“Five financial essentials for single parents”

Wait, Social Security Benefits are Taxed?

Estate Planning, Retirement Planning, Social Security, Tax Planning / Estate Planning, Required Minimum Distributions (RMDs), Retirement Planning, Roth IRA, Social Security, Tax Planning

How much of your Social Security benefits are taxable depends on several factors.

How much of your Social Security benefits are taxable depends on several factors. You’ll need the bigger picture of your retirement income to know how much of a hit you can expect.

Depending on the amount of other income and Social Security benefits, those benefits are included with other taxable income. It could be 85%, 50%, or zero. There are steps you can take to reduce your tax exposure. However, it takes planning and knowing the formulas.

Investopedia’sarticle, “How to Avoid the Social Security Tax Trap,”explains what’s includable in Social Security income and what’s taxed.

To know if your Social Security benefits will be partially taxed or fully tax-free, you need to use these formulas. Add up your gross income with certain adjustments. This is the amount from line 21 of Form 1040. Then add back any excluded income from interest on U.S. savings bonds used for higher education purposes, employer-provided adoption benefits, foreign earned income or foreign housing and income earned by residents of American Samoa or Puerto Rico.

To see if 50% of your Social Security benefits are taxed, review the amount listed on Form SSA-1099, Social Security Benefit Statement, which is sent to you by the Social Security Administration by the end of January following the year in which benefits were paid. For income tax purposes, the benefits are the gross amountlisted in Box 3, not the net amount you actually received after premiums for Medicare were withheld.

All tax-exempt interest is interest from municipal bonds listed on line 8a of Form 1040.

Look at the results compared to a “base amount” fixed for your filing status. If you’re below this amount, then none of your benefits are taxed:

$32,000 if married filing jointly; or
$25,000 if single, head of household, qualifying widow(er) and married filing separately, where spouses lived apart for the entire year.

If the income mix you figured earlier is equal to or above this base amount, then see if 50% or 85% of benefits is includible. For married persons filing jointly, 50% is includible for income between $32,000 and $44,000, and 85% is includible, if income is more than $44,000.

For singles, head of household, qualifying widow(er) and married filing separately, where spouses lived apart for the entire year, 50% is includible of income, if between $25,000 and $34,000, and 85% of benefits is includible, if income is above $34,000. For a married person filing separately who did not live apart from their spouse for the full year, 85% of benefits are includible.

There are also some special situations. The usual computation isn’t used if you:

Made deductible IRA contributions and you or your spouse were covered by a qualified retirement plan through your job or self-employment. (Instead, use the worksheet in IRS Publication 590-A);
Repaid any Social Security benefits during the year (see in IRS Publication 915); or
Received benefits this year for an earlier year (You can make a lump-sum election that will reduce the taxable amount for this year. Use worksheets in IRS Publication 915).

Since 85% of benefits are includible, once you exceed the $44,000/$34,000 income threshold, it may be wise to defer income to a particular year. Say that you know your income is going to be above this threshold and you’re planning on converting a traditional IRA to a Roth IRA. You could make the conversion in this year and pay the taxes on it. This won’t result in any additional inclusion of Social Security benefits. As a result, in the future, you won’t have to take required minimum distributions (RMDs) because you have a Roth IRA, not a traditional one. This will keep your income lower in future years than it would have been without the conversion.

Remember that your federal income tax isn’t the only tax to worry about. Thirteen states tax Social Security benefits. However, 37 states don’t (either because they have no state income tax or fully exempt Social Security benefits).

Among the 13 states, seven of them (Connecticut, Kansas, Missouri, Nebraska, New Mexico, Rhode Island, and Utah) have high-income thresholds for taxing benefits. So, even if you’re a resident, your benefits may not actually be taxed.

However, if you live in Minnesota, North Dakota, Vermont, or West Virginia—and your benefits are taxable for federal income tax purposes—they’re automatically taxable for stateincome tax purposes. This is because these states use the federal determination. Remember this, if you’re thinking of relocating in retirement.

You’ll want to gather up all your retirement income information and estate planning documents to see what can be done to reduce Social Security tax exposure. Your estate planning attorney should be able to help guide you through the process.

Reference: Investopedia(March 13, 2018) “How to Avoid the Social Security Tax Trap”

When is the Best Time to Start Taking Social Security?

Elder Care, IRA, Retirement Planning, Social Security / Elder Care, Retirement Planning, Roth IRA, Social Security

Consider these twin concepts—opportunity cost and delayed retirement credits—before you decide

Consider these twin concepts—opportunity cost and delayed retirement credits—before you decide when to start taking Social Security.

By waiting until age 70, you’ll increase your monthly benefit, but at what cost?A recent article inForbes,“Social Security Benefits: Getting Paid To Wait,”examines the dilemma. Money managers call it “opportunity risk:” if you take money from retirement accounts that would otherwise be invested and grow, in order to delay taking Social Security, you are risking the potential for that money to grow.

Can you plan for opportunity cost? Start by looking at whether to wait to take Social Security after your “normal” retirement age, which is 66 for most people. If you wait to claim at age 70, you’ll see the largest-possible Social Security benefit. If you’re not working, you’ll probably be withdrawing money from your retirement funds, which means that those funds won’t be able to grow for a period of several years. As a result, you’ll need to weigh the opportunity cost of not having funds growing tax-deferred in your retirement accounts, against the larger Social Security benefit you will eventually get.

The math isn’t always easy to calculate, but there’s a simple, indirect rule of thumb that Social Security provides. It is known as “delayed retirement credits.” Based on your birth year, Social Security will give you a bonus for waiting to claim benefits. Take a look at how that works:

Delayed Retirement Credits

Year of birth Credit per year

1917-24 3.0%

1925-26 3.5%

1927-28 4.0%

1929-30 4.5%

1931-32 5.0%

1933-34 5.5%

1935-36 6.0%

1937-38 6.5%

1939-40 7.0%

1941-42 7.5%

1943 and later 8.0%

Therefore, if you were born after 1943, for every year you wait to claim benefits after age 66 or so, you get an 8% bump in potential benefits up until age 70. That can be a sweet deal, especially if your portfolio isn’t giving you that kind of return. If it’s doing better than that (after taxes), then you might want to leave as much money as you can in your own savings.

If you elect to work, you can build up a larger nest egg, avoid withdrawals and take Social Security later for the maximum benefit. However, not everybody can work later, nor will they be able to plan to delay retirement withdrawals or Social Security. However, if you see that your work/lifestyle situation is flexible, you should run several scenarios.

Your decision needs to be made after reviewing every source of income, considering your tax and estate plan. Of course, the more assets you own, the more complex the analysis will become. Taxes are a considerable concern, since most of your retirement fund withdrawals (except for Roth IRAs) will be taxable. Another factor to consider: your expected life span. If you come from a family with long life spans, your planning may be different than if you have a chronic condition, like diabetes or heart disease.

Reference: Forbes (June 1, 2018)“Social Security Benefits: Getting Paid To Wait”

How to Balance Working with Social Security Benefits

Elder Care, Social Security, Tax Planning / Elder Care, Social Security, Tax Planning

Yes, you can work while collecting Social Security, but you have to be very careful.

Yes, you can work while collecting Social Security, but you have to be very careful. Earn too much and you’ll be working for nothing!

If your retirement plan includes working, even if only part time, make sure to know your income limits. At a certain point, your earnings will either cause Social Security to be reduced, or you might end up paying more in taxes.

Investopedia’srecent article, “How Working Affects Your Social Security Benefits,”says that when you’re retired, if you claim at your full retirement age (FRA), you are entitled to receive 100% of your benefits from Social Security (that age varies based on your year of birth). Those individuals turning 62 in 2018, will be able to fully retire at 66 and four months and begin collecting Social Security.

However, claiming benefits early means you get lessin Social Security income each month, than if you had waited until your FRA. Therefore, if you can wait until full age, or even later, it may be wise. For every month you claim beforethe full retirement age, the monthly benefit you receive will go down by a fixed percentage. You could claim an income that is about a third less,than if you would have waited. Claiming early and earning too much, means the amount you receive later may be reduced even more. This year, people who earn more than $16,920 will have a dollar held back for every two earned above the limit.

In 2018, your earnings can go to $17,040, and you won’t have your benefits impacted. Hitting your FRA and claiming in 2018 means you can earn $45,630 without a reduction in benefits. The reduction won’t be spread out over the year. Monthly benefit payments will be stopped, until the amount reduced is covered and then you’ll begin receiving your monthly checks again.

Because there’s no pro-rating, you won’t get income from Social Security until the amount is covered. The rest of the checks will then begin coming each month until the end of the year, with any extra money withheld paid back to you the following year. It is not forfeited, but added into your benefit calculation to up your benefit when you hit FRA.

The income limit on working only applies, if you’re youngerthan full retirement age. People who’ve already reached FRA can earn as much as they want, and it won’t reduce the benefits they get. The limit only applies to work earnings, not the money you gain from investments, annuities, pensions, etc. For those who are self-employed, Social Security will base their income on their net earnings.

The IRS calculates how much of your benefits will be taxed, based primarily on your adjusted gross income. To see if you will be taxed on your benefit, add half of your expected income to your other income and tax-exempt interest. If that’s more than $25,000 for you alone or over $32,000 for a married couple, some of your benefits will be taxable. If it’s more than $34,000 for you or $44,000 for a married couple in 2018, you may fall into the 85% social security tax bracket.

Some people dread the very idea of retiring, since they enjoy their work or want to continue their income stream to maintain a lifestyle. Just remember that if you claim benefits early or continue to work after reaching your FRA, there may be an impact on your benefits. Speak with an estate planning attorney to figure out the balance of benefits and work that makes sense for you.

Reference: Investopedia(December 27, 2017) “How Working Affects Your Social Security Benefits”

What Should a Financial Plan Include?

Elder Care, Estate Planning, IRA, Medicare, Retirement Planning, Social Security / Elder Care, Estate Planning Lawyer, IRA, Long-Term Care Planning, Medicare, Retirement Planning, Social Security

You may need a guide—but how do you know who to choose?

Hit a spring pothole and you can lose a tire. But hit a pothole with your financial plan, and you may be in for a bigger problem than replacing a tire.

Do you have an up-to-date roadmap to your retirement? Keeping your finances, investments and retirement plan on a smooth road has become more and more challenging. Every day seems to bring a new regulation, investment product, or app that claims to offer the best route. You may need a guide—but how do you know who to choose?

Kiplinger’srecent article, “5 Bases You Need Covered With Your Retirement Plan,”says there are plenty of financial professionals today who can get you started down the right path with investment advice. However, a professional who limits his or her professional life solely to investing advice, isn’t going to get you comfortably and confidently to your retirement goals. Be sure you have someone who will concentrate on these five key areas of your financial life:

Income Planning.Your retirement could last for decades. You must be certain that you’ll have reliable income streams to pay your monthly expenses. This area typically should cover things like Social Security maximization, income and expense analysis, inflation, a plan for the surviving spouse, longevity protection and investment planning. Once your income plan has been created, you need to analyze your remaining assets (those that you won’t have to draw from every month). This should cover your risk tolerance, adjusting your portfolio to reduce fees, volatility control, ways to reduce risk while still working toward your goals and comprehensive institutional money management.

Tax Planning. Your comprehensive retirement plan should include strategies to decrease tax liabilities, such as determining the taxable nature of your current portfolio, possible IRA planning, looking at ways to include tax-deferred or tax-free money in your plan, prioritizing tax categories from which to draw income initially to potentially reduce your tax burden and considering ways to leverage your qualified money to leave tax-free dollars to your beneficiaries.

Health Care Planning. Retirees today must have a plan to address rising health care costs with little expense. Strategies should include examining Medicare Parts A, B, and D, reviewing options for a long-term care plan and legacy planning.

It’s critical that your hard-earned assets go to heirs and loved ones in the most tax-efficient manner possible. Your financial adviser should work collaboratively with a qualified estate planning attorney to help with these tasks:

Maximize estate and income tax planning opportunities;
Protect any assets in trust and ensure that they’re distributed probate-free to beneficiaries and
Prevent your IRA and other qualified accounts from becoming fully taxable to beneficiaries upon death.

Your estate planning attorney should be able to give you some recommendations for trustworthy and respected professionals. You’ll also need to do your homework, and interview more than two or three to make sure that it’s a good fit. Ideally, this person will work with you, your estate planning attorney and your CPA, as part of a team, for many decades.

Reference: Kiplinger(May 4, 2018) “5 Bases You Need Covered With Your Retirement Plan”

Making the Right Decision on Social Security Benefits

Asset Protection, Retirement Planning, Social Security / retirement, Social Security

When you file for Social Security benefits has a big impact on overall lifetime benefits

When you file for Social Security benefits has a big impact on overall lifetime benefits, especially for couples. Make sure you understand the details before deciding.

Mapping out your financial situation for retirement? Social Security benefits undoubtedly play a big part in your calculations. But do you know what your best options are? Filing early for benefits—like as soon as you turn 62—is rarely the best move. You may be eligible, but, according to this article from CNBC,“Here's when it makes sense to claim Social Security early,”taking benefits this early will reduce not only your lifetime earnings overall, but your monthly checks as well.

If you can wait and delay claiming benefits until your full retirement age (either 66 or 67, depending on when you were born), you’ll receive 100% of the benefit available to you based on your personal work record. If you wait until age 70, your retirement benefits will be even more. Delaying past full retirement age allows your benefits to grow by roughly 8% per year, until you reach that age. Therefore, waiting until 70 could increase your benefit amount to 132%. As a result, most experts recommend that you hold off on claiming for as long as you can. That can be a gamble.

The bet is that you’ll live longer and get more money. The government is asking you to make a calculated risk decision on what you had been mandated to pay into, while taking a risk on the back end.

Taking Social Security at 62 may be wise if you're single and terminally ill, and know for a fact that you’re not going to live very long. However, in most other situations, it doesn't make sense to claim early and take that permanent reduction. If you're married, claiming early could decrease the amount of benefits your spouse will have, after you're gone. The spouse’s survivor benefit is permanent.

Survivor benefits are determined by the age a person dies and the amount of Social Security credits they’ve accrued. If you wait to claim benefits, you’ll have a greater number of credits, and thus a larger benefit to pass on when you die. How much of that amount survivors can access, is based on when they claim the benefit. A person can file for widow or widower benefits starting at age 60. However, that benefit amount will be reduced. If a surviving spouse waits until his full retirement age, he is eligible to receive 100% of their spouse's benefit amount.

Those eligible for survivor benefits can decide between claiming those funds and their own retirement benefits, if they are eligible for them. That can include taking the survivor benefit, while letting their own benefit grow up to age 70. Those born before January 2, 1954 and who’ve reached full retirement age, can opt to receive their spousal benefit and delay taking their own retirement benefit. That would allow their retirement benefit to continue to grow. However, if you’re born after that date, you don’t have that option. You must choose between one benefit and the other.

Speak with an estate planning attorney to determine how Social Security fits in with your overall estate plan and tax liability. There are many moving parts here, and you don’t want to make an expensive mistake.

Reference: CNBC (March 10, 2018)“Here's when it makes sense to claim Social Security early”

Who is Most Worried About Social Security?

Elder Law, Retirement Planning, Social Security / elder law, Planning for the Future, Retirement Planning, Social Security

Worrying about Social Security doesn’t help anyone but being aware of the challenges facing the system and preparing for change is always the best course

Worrying about Social Security doesn’t help anyone but being aware of the challenges facing the system and preparing for change is always the best course.

Not surprisingly, pre-retirement adults age 50-64 are the largest group of American adults worried about the Social Security system: 51% expressed worry to pollsters.

It’s a different view from another generation, as reported in Think Advisor’sarticle, “Older Pre-Retirees Worry a Lot About Social Security: Gallup.”Just a third of young adults, expressed a great deal of concern about the system.

Gallup conducted telephone interviews in March with a sample of about 1,000 adults living in all 50 states and DC. The data showed that 44% of Americans worry a “great deal” about Social Security, 28% worry a “fair amount,” 17% “only a little” and 10% “not at all.” Social Security ranked in the middle of a list of 15 issues or social problems the respondents were asked to rate in the poll. The survey participants said they were most worried about the availability and affordability of health care.

Gallup says the percentage of older pre-retirees in the survey who worried a great deal about the Social Security system had decreased from the 59% record highs recorded in the three-year rolling averages for 2009 to 2011 and 2011 to 2013.

Younger adults in the survey also recorded slightly lower averages than in recent years, and 11 percentage points lower from 2007. Concern about Social Security has also subsided with retirement-aged Americans. Roughly 46% express a great deal of worry—down from an average of 56% for 2010 to 2012.

For respondents in the 30-to-49 age bracket, the percentage expressing a lot of concern about Social Security has remained steady in the range of 46% to 52% since 2005, according to Gallup. In the current poll, 49% said they worried a great deal.

It’s no surprise that majorities of Americans with annual incomes of $30,000 or less have consistently reported a great deal of concern about the Social Security system since 2005. That peaked at 62% as the average for 2009 to 2011. The current 53% who worried a great deal is about the same as the low recorded in the 2007 to 2009 average.

Worries among higher-earning groups have remained steady, with a range of 47% to 53% between 2005 and 2018 for respondents with annual household incomes between $30,000 and $74,999, and 40% to 44% for those with annual incomes of $75,000 or more.

The Gallup report said that no politician wants to get involved with the heavy lifting needed to fix Social Security to ensure that it can continue to operate. Previous administrations certainly didn’t get anywhere. But at some point, this will have to be addressed, and at that time, it’s likely that Americans will begin worrying again.

Reference: Think Advisor (April 9, 2018) “Older Pre-Retirees Worry a Lot About Social Security: Gallup”

Mortality Rates Might Make You Think Twice About Claiming Social Security

Elder Care, Estate Planning, Retirement Planning, Social Security / Elder Care, Estate Planning, Retirement Planning, Social Security

They say that numbers don’t lie—and you definitely want to know about this data!

They say that numbers don’t lie—and you definitely want to know about this data!

Before you decide to retire at age 62 and start taking Social Security benefits, you may want to dig a little deeper into the statistics, especially if you are a man.

“Your life might depend on your decision,” MarketWatchnotes in its article, “Why early retirement can be a killer.”This is because there’s a significant increase in mortality among men who retire at 62 and begin receiving Social Security, according to a new study that recently was distributed by the National Bureau of Economic Research.

The increase in the death rate is quite large, particularly among males who retire and claim Social Security at 62. The study found it to be by 20%. However, the data are inconclusive among females.

The authors of the study believe there is a causal link. Evidence of such a link is from the period before it was even possible to claim Social Security as early as age 62. During that earlier period, the researchers found there was no abnormally high increase in mortality at age 62. Thus, the unexpectedly large increase in mortality at age 62 starts to occur in the historical record right when people could start claiming their Social Security benefits at that earlier age.

So why would taking early retirement lead to increased mortality? The research found unhealthy changes in life style that often go with retirement. For instance, there is other research that found male “retirees become sedentary, often watching more television.” But there appears to be no increase in sedentariness among females after retirement—perhaps a reason why there is a lower mortality rate among women who retire at age 62.

Also, unlike women, male retirees, in particular, also typically have fewer social interactions after they stop working, which other research has shown has a negative impact on health. There are also studies that found there to be an increase in tobacco and alcohol use after stopping work.

There’s no requirement you must stop working when you claim Social Security benefits at age 62; however, a third of those who do claim their benefits at that age do stop working.

Some will conclude from this research they should delay claiming Social Security for as long as they can. If they can’t, they should keep working—even if part time. This might be the right thing to do, if it keeps you from engaging in unhealthy behaviors.

If your retirement plans include a healthy diet, lots of exercise and social activities, and if your overall health is good, you may be the exception to these statistics. Remember the key factor isn’t so much that you retire, but what you do when you retire.

Reference: MarketWatch (March 24, 2018) “Why early retirement can be a killer”

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