The Unintended Consequences of Increasing the Full Retirement Age for Social Security Benefits

 

Increasing the full retirement age for Social Security retirement benefits is one of the most common proposals made to help save Social Security. The idea is that by requiring people to be older before they officially hit the full retirement age, there will be less of a burden on the system and therefore keep Social Security solvent for more generations to come. 

Whatever you might think of this proposed change, one thing is for sure: Something needs to be done about Social Security. 

We are now within 15 years of having benefits cut in order to prevent the program’s trust funds from running dry. Most projections suggest that benefits will have to be cut by around 25% if nothing else is done. Most people simply cannot afford to see a benefit reduction like this! 

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How the CPI-E Compares With the CPI-W for the Annual Social Security COLA

 

Recently, the Social Security Administration announced yet another Social Security cost of living adjustment. And once again, the adjustment left us with less than a2%.

The announcement ignited the same conversation and questions as it does every time. In the comments of my videos, my Facebook group, and on my website, many people  say things like, “My expenses have increased a lot more than this cost of living adjustment,” or, even more commonly, “There has to be a better way to measure the increases to living expenses than the way it’s being done now!” 

Given that it’s such a common response to the usual Social Security cost of living increases, I want to cover the proposal that may change how these adjustments are calculated. 

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Joe Biden’s Plans to Change Social Security 

Now that the votes have been counted and we know that Joe Biden will be “President” Biden in January 2021, it’s time to dive into his plans to change Social Security. 

Biden campaigned on a number of agenda items that came up fairly often during his election bid. We can reasonably expect at least some of his proposals will go through the legislative process to become laws during his term in office.

One of the proposals involves plans to change Social Security.

The New Administration’s Plans to Change Social Security 

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Social Security’s Monthly Income Limit for Retirement Benefits: Most Frequently Asked Questions and Answers

social security monthly income limit

If you file for Social Security retirement benefits before your full retirement age, there is a limit on the amount of income you can earn. This limit is almost always based on your annual earnings, but in certain circumstances, it could be your monthly earnings that are counted.   

 The monthly income limit was created because the Social Security Administration recognized that some people who retire mid-year have already earned more than their yearly earnings limit.  The SSA recognized that it wasn’t fair to make those individuals wait until the next year to file for benefits if they are truly retired, so there are some cases in which it’s your monthly earnings that are counted. 

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How the Government Pension Offset and Windfall Elimination Provision Affects Dually Entitled Spouses

Trying to plan for your retirement but can’t understand the complicated rules for calculating Social Security benefits when you have your own benefit and a spousal benefit?

You’re not alone! Most people find this really perplexing…

…and when you add in a spouse that’s affected by the Government Pension Offset (GPO) and Windfall Elimination Provision (WEP) to the mix, the rules become even more tangled. 

If you have a scenario where both spouses are subject to these rules, it can really seem like the convoluted rules are setting you up to fail!  In a case like this, it can mean that one spouse could be forced to have their Social Security benefit calculated with the dual penalties from both the WEP and GPO (at the same time!) 

This application of both of these rules is not necessarily a “double penalty,” but rather a separate type of penalty on each of the separate benefits. 

Don’t worry if it all seems hopelessly confusing. I’ll explain all of this below. 

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Calculating Spousal Benefits with Dual Entitlement

calculating dual entitlement with social security spousal benefits

Calculating the spousal benefit for a spouse who also has their own Social Security benefit is an important process to understand. Your own Social Security benefit and your spousal payment are NOT calculated the same when it comes to reductions for filing early or increases for filing later.

Knowing the correct way to calculate your spousal benefits in this situation isn’t something that a rare few need to worry about. According to the Congressional Research Service, there are 3.2 million individuals who are entitled to a social security benefit from their own work as well as a spousal benefit. 

This situation is referred to as “dual entitlement” to benefits. In this article, we’ll dive into calculating spousal benefits with dual entitlement so you’ll be able to accurately plan the amount of benefits you can expect to receive. 

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How The SSA Legally Steals $378 Million Of Your Benefits Through Rounding (Every Year!)

social security benefits rounding

Every month, the Social Security Administration keeps millions of dollars’ worth of benefit payments that have been rightfully earned by individuals with work histories that should entitle them to receive that money. 

For most of us, taking anything that doesn’t belong to you is considered theft. Theft is a crime, and there are a lot of people who are paying the price for committing such a crime right now.

Maybe their crime  was egregious as armed robbery. Perhaps they engaged in some less-physically violent form of theft, like embezzlement or even tax evasion (which is pretty ironic considering what I’m about to tell you). 

Either way, it’s all considered a crime of theft and such actions land normal folks like you and me in prison. 

But the Social Security Administration? It sure does seem as if they don’t follow the same rules that we do.

In fact, they engage in theft on a daily basis! Social Security steals so much that when you add it all up, they steal more than $378 million dollars every year.  

And if you receive Social Security benefits, or will in the future, this impacts you.

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The Right Way to Use a Social Security Break Even Calculator

how to use a social security break even calculator

Trying to decide the best age to file for Social Security Benefits? Using a Social Security break even calculator can give you some important data to help you make the right decision for you. 

A Social Security break even calculator can help you understand which filing age will net you the highest total payments from Social Security over your lifetime. 

At face value, using these calculations seems like a logical approach to making the filing decision. But it’s just one step in the process, as this is a complex situation with more data points to consider. Break even age is an important consideration, but that information alone cannot be the deciding factor when choosing the best filing age. 

It is, however, a great starting point, so in this article we’ll aim to make sure you walk away with an understanding of the following:

  • Who should use a Social Security break even calculator
  • The problem with the calculators available today that you need to bear in mind
  • How to access our one-of-a-kind Social Security Break Even Calculator (for FREE) 

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How the Hold Harmless Rule Really Works — and Who Is NOT Protected by It

Nearly every year, two things increase: your Social Security benefit, and your Medicare Part B premium. 

So what happens if your Medicare premiums increase by more than how much your Social Security benefit increases? And can you actually see a decline in your monthly Social Security benefits? 

Unfortunately, the answer is yes… if you’re not covered by the Medicare Hold Harmless provision. 

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Can Social Security Be Garnished?

Social Security Garnishment Notice

“We need to get an immediate payment or we’ll garnish your Social Security benefit!”

The voicemail left for my client couldn’t have been more clear. After his wife died, he was left with thousands of dollars in medical bills. He’d tried to sort it all out, but trying to process his wife’s death and a mountain of medical bills at the same time was overwhelming. He planned to get to it, but for now, he just needed a minute to grieve.

The bill collectors didn’t wait, and it didn’t take long for the nasty calls to come rolling in. His last straw was the voicemail with the threat of taking away his Social Security benefit. I still remember the frustration, fear and anger in his voice when he asked me, “Can Social Security be garnished by debt collectors?”

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