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Here’s What You Need To Know About The Latest Social Security Scam

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Social Security scam

Scams aiming at your finances are nothing new. The latest Social Security scam, however, could cause you quite a bit of trouble if you catch yourself falling for it. Here’s everything you need to know and how to identify a scam to avoid getting burned.

Scams Targeting Seniors

Many times, these scams target senior citizens or people who may otherwise be fooled by their tactics. In a lot of instances, seniors aren’t always as mentally aware as they once were, which makes them more susceptible to these kinds of crimes.

The Latest Social Security Scam

Those looking to scam seniors have been calling and claiming to be the Social Security Administration (SSA). When the person answers, they are threatened by the scammer with suspended benefits if they don’t provide personally-identifying information.

Others are calling saying that there has been criminal activity linked to your Social Security number. As a result, you are told you must resolve it or your benefits will be put at risk. In some cases, you may be asked for your social so that the SSA can sort out some issue with your account.

Don’t fall for it! If you are collecting Social Security, it is important to know the signs of a scam.

How to Identify a Scam

Always avoid giving out personally-identifying information over the phone. You should also know the SSA will never call and threaten to suspend your benefits. Occasionally, they may call you asking for information. Unfortunately, scammers can call from numbers that appear to be the SSA. If you’re unsure, hang up, and call the SSA back immediately. Call (800) 772-1213 to speak to an agent to legitimize the call.

If you suspect someone is trying to scam you, hang up immediately and report it. Visit the Federal Trade Commission (FTC) website for information about reporting scams.

If You’ve Been a Victim

Maybe you’re reading this thinking to yourself, “Oh no, I’ve already given my Social Security number out to a scammer.” If that’s the case, you’ll need to do a few things quickly to minimize any damage to your life and finances.

  1. Contact the FTC. Officials will help guide you through what you should do next.
  2. Then you’ll want to contact the SSA. If someone has your social, they’ll be able to impact your benefits. Explain you think they may be at risk. The SSA agent you speak with will be able to advise you in your next steps. In some cases, this may lead to you being issued a new Social Security number.
  3. Freeze your credit. This way, the scammer won’t be able to open fake accounts in your name and go into debt.
  4. Keep a close eye on your accounts and credit score. Check it every month or so to be sure there hasn’t been anything suspicious going on.

The best way to avoid getting scammed altogether is not letting it happen. Anyone calling you claiming to be the SSA is lying. If you think about it that way, you won’t fall victim to this scam. Just be sure to call the SSA back and be sure!

Readers, have you heard anything about this scam? 

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Can You Really Retire at Age 50?

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retire at age 50

For many, the idea of retiring at age 50 sounds amazing. However, many question if it is even realistic. Considering that anyone born after 1960 won’t qualify for full Social Security benefits until age 67, that leaves 17 years before they could access that source of income if they stop working at age 50. Plus, most retirement accounts – like 401(k) and IRA accounts – won’t allow you to make withdrawals without penalties until age 59 ½, leaving an 8 ½-year gap. But, even with that, that doesn’t mean retiring at age 50 isn’t possible.

How to Retire at Age 50

If your goal is to retire at age 50, you’ll need to start planning immediately. If you don’t plan on working once you retire, you have to have enough saved to cover the rest of your life. With the average life expectancy sitting just below the 79-year mark, that means having enough money to support yourself (and possibly your household) for 29 years or longer.

As daunting as that may seem, it is doable. It just requires some planning, diligence, and dedication. Here’s how to get started.

Save as Much as Possible

Retiring early requires a substantial amount of savings. Along with having a robust retirement account, giving you something you can tap once you reach age 59 ½, you’ll need another source of funds to cover that 8 ½-year gap.

Many who aim to retire at age 50 open investment accounts beyond their retirement savings vehicles. Often, these accrue more in interest than traditional savings accounts, allowing your money to grow more quickly. However, they aren’t risk-free, so you need to consider your risk tolerance and choose options that are right for you. For example, index funds, target-date funds, and many mutual funds provide a level of diversification, so they may be a good place to start if you are new to investing.

Reduce Your Expenses

The less you need to spend each month, the less you’ll need to save. Tackle as much debt as possible before you reach age 50, and the goal becomes more realistic. Similarly, consider cutting back on unnecessary services, like premium cable packages, or other high-dollar expenses, like dining out, to make retiring early more manageable.

Calculate Your Post-Retirement Spending

In order to determine how much you will need to save, you need to understand what you’ll spend in retirement. This includes everything from debt payments to household expenses to medical costs. Plus, you need to account for any changes to your entertainment-oriented expenses. When you retire, you may want to travel, see more movies at the theater, or embrace a hobby, all of which can impact your spending estimates. You’ll also have to contend with inflation, something that can significantly impact your spending power over time.

Planning for healthcare costs can be especially challenging. You won’t have access to Medicare until you are eligible for Social Security benefits. Even if your employee has post-retirement medical options available, the premiums are usually higher than they would be if you are still working, so you need to explore your options thoroughly to estimate the cost.

Once you calculate your spending, you can use that information to extrapolate how much you need to save. Usually, planning to use a withdrawal rate of 2 to 4 percent is a smart move. If you want to be conservative and use the 2 percent rate and estimate you’ll need $50,000 a year, then you’d have to save $2.5 million before you reach age 50 if that’s when you want to retire.

Consider a Partial Retirement

If you can’t save enough to fully retire at age 50, that doesn’t mean you can’t dramatically change your relationship with the working world by then. For example, you may be able to save enough to cover part of your expenses and then opt to work at a job you enjoy on a part-time basis until Social Security kicks in or you can access other retirement savings. Not only will this provide you with some flexibility and additional income, but it also gives you more time to lower your expenses and save.

Then, when you reach age 59 1/2, 67, or anything in between, you can reassess and shift to a full retirement if it is viable. That way, you can change your lifestyle earlier, making your years feel more fulfilling and rewarding.

At what age do you think you will retire? Does 50 sound realistic or even possible for you? Share your thoughts in the comments below.

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Deciding When to Take Social Security

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deciding when to take social security

Under today’s rules, a person can begin taking social security benefits as early as age 62. The full retirement age (FRA) used to calculate social security benefits ranges from 65 to 67, depending on when you were born. But one can also wait as long as age 70 before taking benefits, and the annual benefit increases the longer you wait. So an important question arises: How does a person decide when to begin taking his or her benefits?

For those who are in relatively good health and do not need social security payments to meet current expenses, it can be a good decision to wait until the person’s FRA or even as long as possible (age 70) before taking benefits. The reasoning is straightforward: You’ll receive a penalty if you start your benefits early and you will receive a credit if you delay your benefits.

If you decide to receive benefits before reaching the FRA, the benefit reduction is 0.56% for each month before that age, up to 36 months. If you receive benefits for more than 36 months before the FRA, the benefit reduction is another 0.42% per month. But by delaying the first year in which you receive your social security benefits until after your FRA, your monthly checks will be higher over the long-run by as much as 8% each year until you reach age 70.

Running the Numbers

Understanding how much money one needs to retire comfortably is of utmost importance when planning for retirement. In addition to this, it is also extremely important to understand how to generate the most income in retirement as possible.

The best way to take the benefits, penalties, and any credits into account is to look at a break-even analysis, which I performed using a calculator called When to Take Social Security. It is very informative to see at which age the total accumulated benefits break-even with, and then surpass, the accumulated benefits that occur when taking social security at earlier ages.

Social Security benefits chart

The chart above assumes that this person turns 62 next year and has made $70,000 per year (in today’s dollars) for the past 35 years. Also, all projected dollars are in today’s dollars and are not adjusted for inflation.

Let’s start by looking at how this person fares when taking benefits at age 62 vs. age 65. By delaying the first social security payment to age 65 this person will break-even vs. taking the first payment at age 62, in terms of accumulated benefits, when he is 77 years old. If he then lives until age 90, he will receive over $66,000 more during his retirement. Waiting until age 70 gives this person a break-even that is similar. The break-even vs. taking the first payment at age 62 would be 78 years old. The difference in accumulated benefits, if he lives until age 90, would be nearly $162,000.

What It All Really Means

The cold, hard reality of making decisions such as this is that you are betting on how long you will live. Clearly, if you believe you will live until age 90 and you do not need your social security payments right away to meet expenses, you should wait until age 70 before taking social security. The Social Security Administration (SSA) algorithm that determines these payments was set up so that the typical person will receive the same accumulated benefits over time given average life expectancies today.

Of course, not everybody is in average health, so this is probably the biggest factor you should consider if you’re deciding when to take Social Security. Basically, if the person in this hypothetical illustration decides to take his first social security payment at age 65, he is betting that he will live to at least age 77, which is the break-even age for accumulated benefits.

In an attempt to save money, the SSA no longer sends out information on estimated benefits. However, there are a whole host of websites that help you determine what your social security payments will be. It is a good idea to run scenarios yourself in a detailed retirement planning software application, changing the age in which you receive your benefits. You can then see how your accumulated benefits change as you change the age in which you receive your first payment.

Social Security Accounts for 66% of Retirees’ Primary Income

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Social Security Income

It’s no surprise millions of senior citizens depend on Social Security income to pay their monthly bills. However, the number of retirees who rely on Social Security as their primary source of income is steadily increasing. In fact, approximately 66 percent of seniors believe it will be their primary source of income throughout their golden years.

Why You Can’t Depend on Social Security Income

You may be thinking, “well, isn’t that what Social Security is for?” Many Americans don’t realize that Social Security isn’t designed to replace your income. Instead, it is supposed to supplement your retirement income. On top of Social Security, you should have retirement accounts (like a 401K or IRA), investments, and/or a pension to fund your day-to-day expenses.

When it boils down to it, Social Security benefits will only replace about 40 percent of your pre-retirement income. Considering most retirees need about twice that to live a comfortable life in retirement, relying on Social Security as your primary source of income may be a grave mistake when it comes to your financial well-being. Not to mention, future cuts in retirement benefits are still a possibility.

Social Security was only ever meant to prevent poverty in older Americans. Typically, someone’s Social Security benefits will cover basic needs, such as housing, food, utilities, clothing, healthcare, and transportation. However, it won’t cover any entertainment or enjoyable aspects of life. Who would want to live in retirement that way?

How to Financially Survive Retirement

The key to financial success in retirement is finding ways to boost your income before (and after) you leave the workforce. For those who are still working, you still have time to contribute to savings, 401K, and IRA accounts. It also isn’t too late to chat with a financial advisor about investing some of your cash.

Retirees who depend on Social Security still have options to boost their income during their golden years. You can always try a part-time job. Consider consulting in your former field, working for a nonprofit you support or turning a hobby into a small business. For instance, seniors who enjoy crocheting or knitting can make extra money selling items on Etsy or at pop-up markets.

You can also take a look at your assets and see if any of them may serve as a secondary source of income as well. If you have extra space in your home, consider renting it out. You may also look for items you have around the house that are of value that you can sell.

Bottom Line: Don’t Rely on Social Security

Even now Social Security benefits are barely enough to keep retirees afloat, and two-thirds of the retired population heavily rely on them. Looking into the future, those benefits could disappear as early as 2034. The only way to prevent yourself from living in poverty during retirement is searching for new ways to make more money to add to any benefits you’re receiving.

For those who haven’t retired yet but are concerned Social Security benefits won’t be around when they retire, it is never too late to start saving and prepping for your life after you leave the workforce. Start a retirement account as soon as possible.

Readers, do you currently collect Social Security? Do you have supplemental income?

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You’ll See More Changes to Social Security in 2019 Than Just a COLA

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Social Security beneficiaries are finally getting some good news. It was recently announced that there will be a 2.8% cost-of-living adjustment (COLA) for beneficiaries in 2019. However, that is only a small portion of the changes being made to Social Security next year.

1. The Social Security Cost-of-Living Increase

Yes – Social Security beneficiaries will see a 2.8% increase starting January 2019. This increase has been made to adjust for cost-of-living. The Social Security Administration estimates this will increase the average beneficiary’s monthly earnings by about $40. The average monthly benefit paid in 2018 was $1,422, the SSA estimates the average payout will be $1,461 monthly in 2019.

2. Taxable Earnings

The next big change for Social Security next year will be the maximum taxable earnings. The maximum taxable income will increase from $128,400 to $132,900. Social Security tax sits at 6.2% for employees and employers. So, if you earn $150,000 in Social Security-covered employment, you’ll have to pay SS tax on $132,900 of it. This change also increases the maximum Social Security tax an employee could pay from $7,960.80 to $8,239.80.

3. Maximum Social Security Benefits Will Be Higher

Another huge change in Social Security for 2019 will be the maximum possible benefit. Someone claiming Social Security at full retirement age (66) can claim as much as $2,861 per month. This will increase even more if the retiree waits longer to claim. If they begin claiming four years from now, at the age of 70, their benefit would start at $3,776.52. Not to mention, they’ll be able to benefit from any cost-of-living adjustments made between now and 2023.

4. Earning Test Limits Will Increase in 2019

Social Security beneficiaries will also be able to earn more money from a job without affecting your benefits in 2019. The changes for earnings limits in 2019 are detailed in the chart below.

Age 2018 Earnings Test Limit 2019 Earnings Test Limit
You’ll Turn 66 After 2019 $17,040/yr. ($1,420/month) $17,640/yr. ($1,470/month)
You’ll Turn 66 in 2019 $45,360/yr. ($3,780/month) $46,920/yr. ($3,910/month)

Individuals who have reached the full retirement age will not be impacted by the earnings test. Those who will turn 66 in 2019 will have $1 of their benefits withheld for every $3 in excess earnings from employment. Only earning made in the months before your 66th birthday will be considered. Individuals who have not yet reached retirement age but are claiming benefits will have $1 withheld for every $2 in excess earnings.

5. Social Security Credits Will ‘Cost’ More

To be able to claim Social Security benefits, you need to earn 40 Social Security credits. You can only earn four credits per year. Each credit will equate $1,360 in earnings in 2019 (a $40 increase).

Social Security Benefits By Age

The formula used to determine how much you’ll receive in Social Security benefits depends on the year you turn 62 years old. For instance, if you turned 62 in 2012, that year’s formula would be used to determine your benefit. Of course, you’ll also be entitled to any other cost-of-living adjustments made as well. People turning 62 in 2018 can expect the benefits detailed in the chart below (via The Motley Fool).

Annual Income  Age 62 Age 65 Age 66  Age 68 Age 70
$20,000 $771 $958 $1,052 $1,192 $1,361
$30,000 $967 $1,202 $1,319 $1,495 $1,706
$40,000 $1,163 $1,445 $1,586 $1,797 $2,051
$50,000 $1,358 $1,687 $1,852 $2,099 $2,395
$60,000 $1,554 $1,931 $2,119 $2,402 $2,741
$70,000 $1,695 $2,106 $2,312 $2,620 $2,990
$80,000 $1,787 $2,220 $2,437 $2,762 $3,152
$90,000 $1,879 $2,334 $2,562 $2,904 $3,313
$100,000 $1,970 $2,448 $2,687 $3,045 $3,475

Don’t forget, eligible Americans can begin claiming Social Security benefits between the ages of 62 and 70. Those choosing to start receiving benefits before the retirement age of 66 will have their benefits permanently reduced. On the other hand, individuals who waiting to start claiming SS benefits will have theirs permanently increased.

So, there is some good news for Social Security beneficiaries in 2019. However, it is important to keep in mind that, while there are many positive changes being made to Social Security this year, Medicare has not yet released an announcement about changes Part B for 2019. So, these increases in Social Security may be overshadowed by Medicare premium increases. Only time will tell.

Readers, what do you think about the Social Security changes for 2019? 

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5 Challenges Women Face in Retirement

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Challenges women face in retirement can be grouped in five categories.
How’s your retirement plan holding up? If you are a woman, you’re probably having more difficulty with retirement plans than your male counterparts.

Despite advances, women still face lower average salaries – 82 percent of the average man’s salary, according to the Pew Research Center.

Fewer working years on average, often due to time off for child care or family responsibilities, adds to the difficulty of earning sufficient income for retirement savings.

Here are five areas that seem to be most challenging for women approaching retirement, according to the recent edition of the Transamerica Retirement Survey of American Workers.

1. Lack of Confidence

Only 12 percent of women reported being “very confident” that a comfortable retirement is in their future.

Perhaps that’s because more than four out of five women don’t expect Social Security benefits to be available for them when they decide to retire.

2. Working Beyond Retirement

Over half of the women surveyed by Transamerica expect to be working beyond age 65.

While 53 percent of women say they intend to retire beyond age 65 or never retire at all, 54 percent expect to work after retirement.

Most of those women (43 percent) plan to work part time, while the remaining 11 percent plan to work full time.

The reason for working into retirement or never retiring at all may be financial, since 64 percent of women surveyed have no alternative plan for income if they have to retire sooner than expected.

Are women taking the proper steps to make a longer career feasible? Job-related factors are not promising.

Only 46 percent of women stay current with their job skills, and only 57 percent are focused on doing a good job in their current role – effectively reducing their value as retirement nears.

3. Savings Concerns

More women place a priority on paying down debt (68 percent) than on retirement savings (51 percent) – but at least they are saving.

Seventy-three percent of women contribute to a retirement program, and started saving for retirement at a median age of 27.

The median retirement account balance is estimated at $42,000 – not as grim as it sounds since this is averaged across age groups.

While 30 percent of women expect to depend on Social Security, 45% will be drawing from traditional retirement programs (401(k), IRA, etc.) or other separate savings accounts.

The good news – almost two-thirds of working women are offered employee-funded retirement plans, and 77 percent of those women participate in the programs.

The median contribution is 7 percent of their salary. The bad news – 28 percent of women work in part-time positions where employee-funded retirement plans are less likely to be offered.

Women’s emergency savings accounts contain a median of $2,000 – which doesn’t cover much of an emergency these days.

4. Health

While 63% of women report keeping healthy, only 26 percent of women consider their long-term health when making lifestyle choices.

Are women expecting their good health to continue into their retirement years?

5. Financial Knowledge and Education

Women expect to need $500,000 in retirement – but 55 percent admit that’s a guess.

Less than half (47 percent) of female baby boomers know “a great deal” or “quite a bit” about Social Security benefits – a low percentage given that boomer women are at or near retirement now.

Only 28 percent of women know about the Saver’s Tax Credit, a useful tool for lower-income women.

Professionals can fill the education gap – but only one-third of women use professional financial assistance in their retirement plans.

America’s women must be proactive with retirement plans. You’ve spent a lot of time taking care of others. Now it’s time to take care of yourself.

This article was provided by our partners at moneytips.com. Photo ©iStockphoto.com/PeopleImages

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