General Social Security – Page 11 – Social Security Intelligence

Do Felons Have a Right to Social Security?

It’s no secret that Social Security is not the easiest system to understand. A maze of complex and complicated rules make it very hard to understand what is and isn’t allowed, and there are a number of hoops everyone has to jump through to ensure they get their benefits in the right amount.

Another not-so-secret fact about the system? It’s plagued with problems, the biggest of which may be the fact that the Social Security Administration’s trust funds will run out of money around 2035 unless someone finds a fix — and quick.

Considering this, it’s little wonder that people are quick to take issue with anything about Social Security that seems to indicate that someone is getting more benefits than they should. After all, anyone receiving income from Social Security is pulling from a very finite pool of resources.

The more money that goes to people who shouldn’t be receiving it means less for people who truly need it.

So when it comes to people with felony convictions who receive Social Security checks, it’s little wonder people get very fired up about this topic. But there’s also a lot of misinformation floating around about this topic, so let’s set the record straight about whether felons have a right to Social Security or not.

Not long ago, someone commented that the Social Security system wouldn’t be in such trouble if we didn’t have prisons full of people collecting disability and retirement benefits.

While I have a lot of content, in the form of both blog posts and videos on my YouTube channel, dedicated to breaking down and explaining the complex rules around Social Security, that comment made me realize that I’ve never gone into detail on whether or not someone with a felony conviction can receive benefits.

Here’s how this works: a felony conviction alone does not turn off your Social Security benefits. But an individual cannot receive benefits while imprisoned for more than 30 days for that conviction.

That detail is important! It means that if someone is arrested for a crime, and spends 90 days in county jail waiting on their trial, their benefits will continue. In order for the benefits to be suspended, they must be convicted and imprisoned for more than 30 days.

The Rules Around Medicare and Other Benefits for Imprisoned Individuals

While we’re clearing up the misinformation around whether or not convicted felons serving their sentences for their crimes are eligible for benefits, let’s look at a few other important points that most people don’t have the facts on.

If someone is on Medicare when they go to prison, their Social Security benefits will stop. The automated payments to Medicare Part B stop, as well — but those premiums are still due and payable.

If an individual does not pay their Part B premiums, then their Medicare Part B coverage will discontinue. That person would then have to reapply for benefits during an open enrollment period. The result for that person would most likely be a much higher Part B premium.

The other interesting note is with regards to spousal and childrens’ benefits. The rules are fairly clear that if a spouse or child is receiving benefits from the work of an individual who is incarcerated, that benefit will continue.

Keep in mind that before a spouse or child can receive a benefit from another work record, the individual who owns that record has to file first. If someone is in prison when they first become eligible to file, then they can’t actually take that action — and if they can’t file, then their spouses and children can’t receive their benefit.

What’s Your Take on This Topic?

It’s easy to hear rumors like the one that a bunch of felons are sitting around collecting Social Security, and feel worried or concerned over whether that’s completely true. After all, Social Security is in some degree of trouble because funds will run out unless new rules or regulations go into effect soon.

But I ask that you really think this one through. Some people believe that if an individual is being provided housing and food by the government at taxpayer expense, they shouldn’t be able to get any kind of Social Security benefit on top of that.

But you can consider this from another perspective, too. Some people say that if a prisoner worked for their entire life and contributed to the system, the government shouldn’t be able to seize any portion of that earned benefit.

Questions?
If you still have questions, you could leave a comment below, but what may be an even greater help is to join my FREE Facebook members group. It’s very active and has some really smart people who love to answer any questions you may have about Social Security. From time to time I’ll even drop in to add my thoughts, too. Also…if you haven’t already, you should join the 100,000+ subscribers on my YouTube channel!

One last thing, be sure to get your FREE copy of my Social Security Cheat Sheet. This is where I took the most important rules and things to know from the 100,000 page Social Security website and condensed it down to just ONE PAGE! Get your FREE copy here.

Why Means Testing Social Security May Be The Most Obvious Fix

by Devin Carroll

Worries and rumors and complaints about a broken system on the verge of collapsing have been the norm when it comes to talking about Social Security since as far back as the 1980s — and that shows no signs of slowing down today.

With current projections showing the Administration’s trust funds run out in 2035, it makes sense that people are still concerned and clamoring for a solution. Wouldn’t it be nice if we could just fix Social Security once and for all?

It sure would be — and it might be easier than most people currently think. In fact, I believe there is a solution to fix Social Security. Not only would it repair a broken system, but it wouldn’t even require extensive legislation and the infrastructure is already in place to start administering this today.

Sound too good to be true? Keep reading and I’ll give you all the details on the most obvious fix for Social Security’s current woes.

It’s no secret that Social Security is facing financial challenges ahead. Again, we know that within the next 15 or so years, there will not be enough money coming in to pay out benefits.

Something has to change, and fast, or we can expect benefits to be cut by around 25% across the board. Maybe that’s not a big deal for some people… but for many others, losing a full quarter of your benefit payment could be devastating.

This would be a good place to pause before I share my solution, and give a quick warning to politicians who would like to stay in office:

There are nearly 50 million individuals in the United States over the age of 65. 25 million households get half of their family income from Social Security. More than 12 million get 90% of their income from Social Security.

That’s a lot of people — and this many people can easily swing election outcomes one way or another. Since 1900, the average popular vote difference between the winner and loser of a presidential election has been 5.8 million votes.

Clearly, there are more than enough voters here — voters who have the majority of their income at stake — to easily swing an election to the side of someone who can fix this system before benefit cuts happen.

My idea would not be difficult for politicians or the government to implement, because the systems are already in place to put this plan into action. So what is this great fix?

It’s very simple: it’s an extension of the Social Security earnings limit to all ages.

Here’s how it would work.

Under the current rules, if you’re younger than the full retirement age then you can only make a certain amount of income before your benefits are withheld. If you make over a certain amount in income, you don’t get benefits at all.

But once you reach full retirement age, there is no limit on the amount of earnings you can have outside of your Social Security benefit.

My fix would simply extend this current rule around the earnings limit to apply that limit to all ages. If your earnings exceed a certain amount — which would mean you don’t actually need Social Security in order to get by or afford your lifestyle — you would not be eligible to receive benefits.

This would actually realign the system with the original guidelines. It would also free up funds to go to those who truly rely on their Social Security benefits to survive in retirement and have little or no other sources of income to use.

When Social Security first began, the earnings limit applied to all ages. In 1950, the earnings limit was eliminated at age 75.

In 1954, this was changed to age 72. Another change happened in 1983 when the age was dropped to 70. Finally, in 2000, the rules changed for a final time to make the earnings limit drop off at your full retirement age.

I’m certainly not the first to suggest this specific fix to Social Security — although my simplified method of extending the earnings limit may be new.

On the campaign trail in 2015, now-President Donald Trump said, “I would be willing to say I will not get Social Security. But the fact is that there are people that truly don’t need it, and there are many people that do need it very, very badly.”

In the same campaign season, then-Governor Chris Christie said, “We need to save this program for people who have paid into the system and need it. This government doesn’t need more money to make Social Security solvent. We need to be not paying benefits to people who don’t really need it.”

Although a means test has been suggested before, I haven’t seen the research on the impact of such a change. One of my big questions about this is, where would the earnings limit be set under this solution?

Ultimately, there is an earnings amount where cutting benefits to individuals above the line would completely fix the system. Is that number $15,000 in income? $25,000? Who knows?

To my knowledge this topic hasn’t been researched enough to have a complete answer, which is where the means test seems most problematic to me. It’s a big puzzle piece that’s missing and really needs to be known before this proposal can get serious.

I know some people will say that even my proposed solution of making the earnings limit something that applies to everyone regardless of age is a form of means testing — and that it unfairly punishes success.

As much as I agree with that, the entire Social Security system is already built on means testing. My fix doesn’t present a huge change due to the progressive Social Security benefits formula.

Under that formula, lower-earning individuals receive a benefit that is a higher replacement of pre-retirement earnings than higher earning individuals. And once benefits begin to be paid, lower earning individuals usually don’t have to pay any taxes while those with higher incomes have to give some of it back through taxes.

Adding a “means test” like the earnings limit applying to all ages wouldn’t really represent a monumental policy shift.

The fact is, any solution we can use now will likely impact anyone under 50 with a higher than average income. Even I don’t love my solution, as it impacts me, too!

This is probably something we need to get used to — and I think a solution like the earnings limit applying to everyone is preferable to a convoluted fix that only fixes part of the problem through half measures and complex law. Let’s keep it simple so we can rip the bandaid off and get it over with!

As this and other policies develop, I’ll be here to give you the details.

The SSA Is Watching Your Social Media Accounts

by Devin Carroll

government watching your social media accounts

The government really is watching you. Or at least, the Social Security Administration is watching your social media accounts.

It might sound like the plot of a movie, or the latest conspiracy theory about Big Brother out to get you. But it’s true: the Social Security Administration (SSA) wants to increase its monitoring of social media accounts.

This isn’t a future threat. It’s happening now. The SSA already monitors social media posts from individuals who are on disability. The purpose is to help identify and investigate fraudulent disability claims, but what may change is when they begin monitoring.

The SSA wants to start using social media activity not just to catch or track potential cases of fraud. They want to use social media content as part of the evaluation of a disability application.

If you file for disability, the Social Security Administration could start checking out your Facebook, Instagram, and other social networking profiles to make sure you aren’t behaving in a manner inconsistent with your disability.

For example, if you file a disability claim for degenerative disc disease, the SSA could potentially check out your social media posts to verify that you aren’t participating in activities that would be inconsistent for someone with chronic back pain.

Here’s what you need to know about this potential ability of the SSA to keep an eye on you online.

The SSA’s Fiscal Year 2020 Budget Overview addresses the potential for increased social media surveillance. The document includes this line explaining what the administration may roll out in the near future:

“We are evaluating how social media could be used by disability adjudicators in assessing the consistency and supportability of evidence in a claimant’s case file.“

social security disability and social media post

It’s no surprise that the Social Security Administration has turned to this. Since 1970, there has been a 460% increase of individuals on disability. Unfortunately, there’s no doubt that at least some of these cases are fraudulent.

The SSA wants to increase their efforts to identify and prosecute these claimants — especially considering the administration faces huge financial challenges to continue funding the program. With an uncertain future for Social Security in general, this increasing burden on the system only makes things worse.

Frankly, I’m not shocked that the SSA might increasingly mine social media platforms and profiles for proof of fraud — I’m only shocked that it took them this long to consider this approach.

There are more people using social media accounts than ever before. According to the Pew Research Center, 69% of all adults have at least one social media account. (Just for reference, this was 5% in 2005.)

50% of those who don’t have a social media account live with someone who does and in the same research report it shows that a good percentage of these individuals use the account of the other person to see posts.

And all those people on social networks? They’re sharing content — and personal information and data — like crazy. On average, people upload 350 million photos to Facebook every day. The platform experiences 100 million daily video views and 4 million likes every minute.

The desire to share the details of your daily experience with your interconnected network helped to drive this kind of growth and mass adoption of the platforms. This treasure trove of data is too tempting and valuable for the SSA to continue ignoring as part of their evaluation.

Again, I’m not surprised to see the SSA want to take advantage of the ability to look in on the real lives of people requesting benefits from the program to confirm their claims are legitimate. But the problems come in with the application of the policy.

How would this work? As users of social media, we understand that each photo or video has to be taken in context (and with a grain of salt). We all know that social media serves as a highlight reel of our lives and doesn’t always portray reality very accurately.

In other words, we’ve all posted content meant to paint us in a good light or to make our lives look just grand all the time (even though 5 minutes before you posted a happy picture of you and your spouse you had a screaming match in the living room).

We all do this, and on some level, we all know other people do it too. As users of social media, we understand that what we see on the platforms isn’t 100% representative of our 24/7 daily lives.

But what happens when that personal connection is lost? What happens when there’s no context to the photos and your content is taken at face value with no other information taken into account? Will the SSA understand the context around a photo enough to make a decision about whether you are really disabled?

For example, the leading cause of disability payments are made due to “musculoskeletal and connective tissue” disorders. That seems easy enough to evaluate through images and videos.

After all, if an individual files a claim for disability on the basis of chronic Fibromyalgia but posts a current video of them winning their age group in a marathon, that seems like a no-brainer. Maybe they shouldn’t be on disability.

But again, given the tendency to present our best self to our network on social media, we tend to only post the photos showing us happy and healthy.

Imagine you live with daily chronic back pain, but have a rare day of low pain. Do you think you might be more likely to post photos of yourself and your activities from that particular day than the next few days where confinement to a bed is a real possibility?

You might share those rare, fleeting moments not only because you’re likely happier on that one day you experienced unusually low pain, but also because you may have enjoyed doing something you’re rarely in any physical condition to do, like hike a favorite trail.

At around 26%, the second leading reason for disability payments are from “all other mental disorders.” How will the SSA use a social media account to evaluate those claims? Does a picture really show what’s going on inside the mind?

I think the investigation of potential fraud is important, but it needs to be done correctly. The Social Security Administration should understand that life on social media is generally not an accurate recording of someone’s real circumstances.

Regardless of what the Social Security Administration begins doing with social media monitoring, all of us should use this as a reminder that what we say and post online matters and could have consequences.

As this and other policies develop, I’ll be here to give you the details.

Questions?

If you still have questions, you could leave a comment below, but what may be an even greater help is to join my FREE Facebook members group. It’s very active and has some really smart people who love to answer any questions you may have about Social Security. From time to time I’ll even drop in to add my thoughts, too. Also…if you haven’t already, you should join the 100,000+ subscribers on my YouTube channel!

The History of the Social Security Earnings Limit

by Devin Carroll

Not long ago, a viewer on my YouTube channel asked me to give her a good reason why we have the Social Security earnings limit. The comments that followed showed how many viewers shared the belief that the earnings limit is unfair and should be eliminated.

In my response, I explained that the rationale behind the entire program of Social Security was a safety net. The original intent of the Social security program was not to supplement retirement income, but to keep the elderly (most of whom lost any potential long-term wealth in the Great Depression) out of poverty.

I also added that today’s earnings limit is relatively generous compared to where the Social Security earnings limit began. Let’s take a walk through history and see how the earnings limit has evolved.

The original Economic Security Bill which is what the Social Security Act was originally called) President Roosevelt sent to Congress featured a very restrictive earnings limit.

It said, “No person shall receive such old-age annuity unless . . . He is not employed by another in a gainful occupation.”

Whoa! This means that if you had even a single dollar in wages from a job, you could not collect a Social Security benefit at all.

The Bill reached Congress and then made its way into the House Ways and Means Committee. After holding hearings, committee members suggested dropping the retirement earnings test — but the Senate Finance Committee ultimately decided that the earnings limit should remain.

Eventually, the House version without the earnings limit passed by a vote of 372 to 33. The Senate version with the earnings limit passed by a vote of 77 to 6. After a couple more months of wrangling over details, the government signed the final version of the Bill featuring the earnings limit into law.

The final version of the Social Security Act of 1935 contained this language on the subject:

“Whenever the Board finds that any qualified individual has received wages with respect to regular employment after he attained the age of sixty-five, the old-age benefit payable to such individual shall be reduced, for each calendar month in any part of which such regular employment occurred, by an amount equal to one month’s benefit.”

(Keep in mind that age 65 was the earliest age of eligibility during the first few decades of Social Security.)

Over the next few years, lawmakers realized they needed to make the term “regular employment” more clear and better defined. In the 1939 amendments to the Social Security Act, they defined “regular employment” as having earnings of less than $15 in one month.

How the Earnings Limit Evolved Over Time

By the late 1940s, post-WWII wages rose and the $15 earnings limit became outdated. In the 1950, lawmakers passed more amendments that eliminated the retirement test for applicants at age 75. They also increased the earnings limit from $15 to $50.

The 1950s also saw the vast expansion ofSocial Security, and an additional 10 million people, including many self-employed individuals, gained Social Security coverage.

The earnings test for the self-employed was set at $600 per year initially, but in 1952 that jumped to $900 per year. Meanwhile, the earnings test amount also increased for employees, from $50 to $75.

The 1954 amendments reduced the age where the earnings test no longer applied from 75 to 72. The differences between wage earners and self employed were also made uniform with an annual earnings test.

Up until this point, wage earners faced a monthly test but self-employed individuals had an annual limit of $900. With the new law, the earnings test would only apply if earnings exceeded $1,200. Then, for every $80 increment, one month’s benefit would be withheld.

Further Changes to the Earnings Test through the 1960s and 1970s

The 1960 amendments introduced the phase-in earnings limit where an individual could still exceed the limit without a total loss of benefits.

For earnings between $1,200 and $1,500, the reduction was $1 for every $2 of earnings. For earnings over $1,500 the reduction amount would be dollar for dollar.

From this point forward, the earnings limit used this phase-in approach. The 1961 amendments increased the upper limit to $1,700 from $1,500 while the 1965 amendments changed this range again.

Recipients could then earn up to $1,500 a year and still get all their benefits. If, however, earnings exceeded $1,500, $1 in benefits would be withheld for each $2 of annual earnings up to $2,700 and for each $1 of earnings thereafter. The 1967 amendments modified this range from $1,680 to $2,880.

The 1972 amendments modernized the method used to determine the earnings limit. Previously, only an act of Congress could mandate an increase in the earnings limit amounts. The 1972 law put the increases “on automatic” by tying them to increases in the average wage index. This became effective in 1975.

From 1977 to Now: The Modern Way the Earnings Limit Evolves

The 1977 amendments earnings limit changes focused on allowing older Americans to access much-needed Social Security benefits to supplement their retirement incomes.

The House passed a bill eliminating the earnings limit at age full retirement age. The Senate passed a similar bill, but it didn’t eliminate the earnings limit until age 70. Ultimately, the conference committee accepted the Senate position and the final legislation ended the earnings limit at age 70 (but it didn’t officially come into effect until 1983).

The 1977 amendments also separated those who were under full retirement age and those who were over full retirement age. They granted a more generous earnings limit of $6,000 annually for those who were are or above full retirement age.

In the 1983 amendments, lawmakers expanded this by not only giving those above full retirement age a higher earnings limit, but also decreasing the amount of withholding by reducing the withholding to $1 for every $3 over the limit. Even though this change was legislated in 1983, it went into effect in 1990.

The next major change introduced the earnings limit as we know it today. The Senior Citizens Freedom To Work Act of 2000 permanently ended the earnings limit at full retirement age and increased the amount an individual can earn in the calendar year they attain full retirement age.

Since 2000, except for the annual increases, the earnings limit has been unchanged. As you can see from the timeline above, this is the longest period the earnings limit has ever gone without substantial changes.

Part of that is due to the automation of the increases by tying in with the annual changes in average wages, but there has been some talk about the earnings limit being one of the fixes for the pending shortfall in the Social Security trust fund.

The argument is that the earnings limit could be reinstituted for any ages if their income exceeded certain thresholds. This would be the “means testing” that would exclude high income individuals from drawing a Social Security benefit. That may never happen, but the framework certainly seems to be in place for those with high income — even if they’re above full retirement age.

Whatever changes come, I’ll be sure to keep you informed! You can keep up with me on my YouTube channel the other projects I’m involved with.

Also, be sure to get your FREE copy of my Social Security Cheat Sheet. This is where I took the most important rules and things to know from the 100,000 page Social Security website and condensed it down to just ONE PAGE! Get your FREE copy here.

If you want to read more on this subject, check out these resources below.

POMS chart showing all different calcs https://secure.ssa.gov/poms.nsf/lnx/0302501001

Major changes by year here https://www.ssa.gov/history/reports/crsleghist2.html
SSA ET History https://www.ssa.gov/history/ret.html

Are Social Security Payments Guaranteed?

by Devin Carroll

Many Americans believe that future Social Security payments are an “earned right” when they retire. As nice as that would be, that’s not the case.

The truth is, you are sadly mistaken if you believe you’re entitled to these benefits down the road — even if you pay FICA taxes!

And if you’re sitting there, nodding your head, saying “that’s right, you’re not entitled to anything!” …you might want to sit down and read the rest of this post, too.

Social Security isn’t a guarantee, and it is in fact an entitlement program.

Scratching your head yet? Let me explain… and more importantly, let me try to reduce some of the inflammatory language around this conversation.

The government almost encourages the belief that Social Security benefits are guaranteed. In fact, in a 1936 pamphlet from the Social Security Administration, it specifically states, “The United States government will set up an account for you … The checks will come to you as a right.”

Whether or not it was intended this way, this pamphlet implied that the new tax would be somehow credit a personal account to which the worker would be lawfully entitled to receive. It didn’t take long for that to get “clarified” by the Supreme Court.

Not long after the Social Security began, a shareholder of the Edison Electric Illuminating Company challenged the tax that funded the program. He wanted to stop the company from making the tax payments and deductions from wages on the grounds that the Social Security Act of 1935 was unconstitutional.

For a period, it appeared that he won. The U.S. First Circuit Court of Appeals held that Title II of the Social Security Act (the heart of the program) was void as it was in direct opposition of the tenth amendment. However, once the case reached the Supreme Court, things changed.

The Ruling That Nixed Future Guarantees on Your Benefits

In Helvering v. Davis, the Supreme Court reversed the lower court’s opinion and held that the Social Security Act of 1935 was constitutional.

That in itself was not the interesting part. What was interesting was the language that was used in the written opinion. It said, “The proceeds of both taxes are to be paid into the treasury like internal-revenue taxes generally, and are not earmarked in any way.”

That eliminated the idea of the separate, personal account that the Social Security pamphlet originally implied.

In 1960, another case came up that made it clear how the government felt about the individual’s “right” to Social Security benefits.

Ephram Nestor was a Bulgarian immigrant who paid Social Security taxes from 1936 until his retirement in 1955. In 1956, he was deported for his membership in the Communist Party during the 1930s.

In accordance with a 1954 law Congress had passed a law saying that any person deported from the United States should lose his Social Security benefits, Nestor’s $55.60 per month Social Security checks were stopped.

Nestor sued, claiming that he had a right to Social Security benefits regardless because he paid Social Security taxes.

This case made its way to the Supreme Court in Flemming v. Nestor. In the Social Security Administration’s summary of the court’s findings, they state the following:

“There has been a temptation throughout the program’s history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law.”

If there was any doubt left about an individual’s “right” to a Social Security benefit, this case should’ve banished it.

But just in case people forget that benefits can be changed or stopped altogether at any time, the Social Security Administration puts this reminder on every statement they create:

“Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time.”

The big takeaway is that your payment of FICA taxes is not necessarily paying for your future access to Social Security benefits. The criteria for eligibility could change with the whims of politics.

Ultimately, you should heed the advice that’s also printed on each and every Social Security statement:

“Social Security benefits are not intended to be your only source of income when you retire. On average, Social Security will replace about 40 percent of your annual pre-retirement earnings. You will need other savings, investments, pensions, or retirement accounts to live comfortably when you retire.

The Social Security Administration today makes it clear that you have no legal right to Social Security benefits, and there are multiple court cases that set precedent to back this up.

Whether or not you agree does not change the reality that paying FICA taxes does not provide you a guarantee to any future benefit from the program.

Given the current level of political division, its no surprise that the dialogue about government entitlement programs has gotten really heated.

Many of our congressmen and senators have discovered how polarizing the use of the word “entitlement” is and that they can associate it with words like welfare, handouts, or charity.

Then they can fire up their supporters by loudly proclaiming SOCIAL SECURITY IS NOT AN ENTITLEMENT!

What’s happened here is that they’ve effectively redefined the word “entitlement” into something that is divisive and dirty. How handy.

Here’s the truth: the federal government has referred to Social Security as an entitlement program for several decades.

On their website, you can see hundreds of uses of the word. In fact, they go so far as to explicitly state “The social security benefit programs are entitlement programs.”

What Does Entitlement Really Mean, Anyway?

If you examine the definition of the word “entitlement,” you’ll see there is no mention of welfare, charity or handouts:

The Merriam Webster dictionary defines it as “a government program providing benefits to members of a specified group.”
The Cambridge dictionary defines it as “something, often a benefit from the government, that you have the right to have.”
The glossary of the United States Senate defines the word as “a federal program or provision of law that requires payments to any person or unit that meets the eligibility criteria.”

The fact is, the phrase “entitlement program” is simply a term for any government program guaranteeing certain benefits to a segment of the population who qualify for them under specific terms and conditions.

That’s exactly what Social Security is. You have to work for at least 10 years with a certain amount of earnings to be entitled to your own benefit. There’s nothing dirty, shameful or beggarly about this word.

But in the highly politicized world that we live in, what words actually mean and the meaning given to words aren’t always the same.

I hope this helps keep you grounded in the reality we’re working with, and not get swept away by anyone else’s political rhetoric.

Have More Questions?

You should also consider joining the 100,000+ subscribers on my YouTube channel! For visual learners (as most of us are), this is where I break down the complex rules and help you figure out how to use them to your advantage.

Social Security Scam Alert!

by Devin Carroll

In 2018, a Social Security scam cost seniors millions of dollars. The scammers recognized a winning formula and have doubled down in 2019. I don’t want you or anyone you care about to get caught up in this. Keep reading; I am going to tell you how you can avoid being victimized by this scam!

Social Security scams cost seniors millions of dollars.

These scammers have recognized a winning formula to steal your money and have doubled their efforts to get you into their trap.

I don’t want you or anyone you care about to get caught up in this. Here’s how you can avoid being victimized by this scam!

There are some scams that have a longer life than others. The most recent Social Security scam has been around since about 2017 and has started to explode. The number of those affected by this increased ten-fold in 2018 and 2019 is already on its way to being even bigger than 2018.

There’s nothing incredibly new or savvy about this scam, but it’s working better than most. That’s probably because it’s being aimed at those who count on Social Security payments to buy food, pay for utilities and other necessities.

The Scam

The phone rings, and the person on the other side tell you your social security number has been suspended, and you need to talk to them to get it straightened out. When you talk to them, they’ll have to “verify your identity” and in the process gather all sorts of personally identifiable information that will allow them to get to your money.

Currently, there are two version of this scam. Here’s how the first sounds.

“YOU HAVE RECEIVED THIS PHONE CALL FROM OUR DEPARTMENT TO INFORM YOU THAT WE HAVE JUST SUSPENDED YOUR SOCIAL SECURITY NUMBER BECAUSE WE HAVE JUST FOUND SOME SUSPICIOUS ACTIVITY. SO IF YOU WANT TO KNOW ABOUT IT…”

This sounds like a pre-recorded bot voice, not an actual person, and the computerized call will continue to tell you how to reach the “department”.

Then there’s the second version that ups the ante with the threat of arrest! The message is much like the first one, but the difference is that the voice says if you do not contact them immediately, they will issue an arrest warrant and arrest you for the suspicious activity.

Keep Yourself Safe

I understand why scams like this work. To an older generation that is not as familiar with technology, it sounds very convincing and scary!

Here are four things to remember:

Number 1…don’t trust your caller ID! In many cases these scammers appear to be calling from the Social Security administration’s phone number. There’s spoofing technology to make it appear that way.

Second, the Social Security administration will NEVER threaten arrest.

Third, a social security number can’t be suspended for any reason that I know of. They can suspend benefit payments, but not your social security number.

Lastly, NEVER EVER EVER provide your social security number to any unknown individuals.

If you are contacted by a scammer and want to make sure everything is ok here are three ways to find out:

First, contact the social security fraud hotline to report the contact.

Second, if you just want to make sure everything is fine with your benefit payments, call the main SSA number at 800-772-1213. If you want a shorter hold time you may want to just call your local office. You can find that number at ssa.gov/locator.

You may be in the same situation I’m in where you’re pretty sure that you’d never fall for this type of scam. But you may know someone who could be more vulnerable to this. Please share this article with everyone who needs to be aware.

It’s Good To Be Proactive

You’re making a smart move by learning all you can and reading sites like these. It’s your retirement! If you know more about Social Security, and what retirement will look like for you, you will be in a better position to make sound decisions when it’s time. This is why I talk about Social Security … so you know what’s going on in the world around you.

I’d recommend staying connected with my content so you won’t miss anything. In many cases I’ll publish my newest stuff on YouTube and then share it on my Facebook page. Then my content team does their magic and cleans it up into an article for those who enjoy reading. (Again…the article is shared on my Facebook page.)

If you still have questions, you should join my FREE Facebook members group. It’s very active and has some really smart people who love to answer any questions you may have about Social Security. From time to time I’ll even drop in to add my thoughts, too.

Also…if you haven’t already, you should join the 100,000+ subscribers on my YouTube channel!

Thanks for reading…have a great day.

The Delay of Social Security Delayed Retirement Credits

by Devin Carroll

Today we're taking about delayed retirement credits and how they get added to your benefit. If you plan to file after your full retirement age, you may be disappointed when you get your first check because those credits aren’t added right away. Let me explain what you should expect and when to apply for benefits to minimize this delay.

What do you know about Social Security delayed retirement credits — and how confident are you in that knowledge?

If you don’t fully understand how delayed retirement credits work and how they get added to your benefit amount, you might be disappointed when you receive your first Social Security check after you file.

You should know that when you delay filing for your Social Security benefits after your full retirement age, your delayed retirement credits aren’t added right away.

Here’s why, what else you need to understand, and when you should file instead to minimize the delay.

Why You May Be Missing Credits

Does the Social Security Administration have a little trick up their sleeves when it comes to delaying your benefits?

It can look that way! They do not add your credits immediately if you file after full retirement age.

To be honest with you, this is a little puzzling to me and I’m not sure why they do this. It’s not as if they don’t have the systems in place to do the calculations. After all, if you file early, the reductions are applied immediately!

So why don’t you get the same treatment when you delay filing?

I’m going to show you how this works — but let me give you a little context around this first.

Know How to Calculate Monthly Changes to Your Benefits

I often discuss the monthly reductions for filing early or increases for filing early, and understanding that is a fundamental part of today’s discussion. Let’s take a look at this chart to start:

You can file for your retirement benefits between the ages of 62 and 70. The red line in the chart above represents your full retirement age.

Knowing this, you can calculate how much your Social Security income benefits should increase if you delay filing — as well as how much those benefits might decrease if you file before full retirement age.

If you file early, decreases are broken up into two separate bands. First, you have the 36 month period immediately prior to full retirement age where benefits are reduced by .555% per month, and then anything more than 36 months, benefits are reduced by .417%.

But if you file after your full retirement age, your benefit will be increased by .667% for every month. These increases are referred to as delayed retirement credits.

What Happens If I File After My Full Retirement Age?

It’s important to understand that there is a difference in how the increases and reductions are applied.

If you file at any time before your full retirement age, your benefit will be calculated by these reduction amounts and immediately reduced beginning with your first check.

That is not the case for the increases.

In the Social Security Administration’s operations manual, you can see there are two times retirement benefits are increased for delayed retirement credits:

The month you attain age 70
In January of the year following the year you earned the delayed retirement credits.

Let’s look a specific example to better understand this.

Make Sure You Understand the Full Impact of When You Choose to File

Let’s assume your birthday is in February, and this is the year you hit your full retirement age.

Six months later, you decide to file for benefits and you receive your first check in September of that same year.

You’ve probably already calculated in your head that you should receive 6 months of delayed retirement credits; that works out to 4% increase to your full retirement age benefit.

When you get your first check deposited in September, therefore, you might be surprised to find that check is for the same amount as it would have been had you filed for Social Security benefits back in February.

The delayed retirement credits would be added — eventually. The fact that they don’t kick in immediately throws many people off!

You’d probably see the delayed retirement credits come through starting in January of the following year, which means you wouldn’t see it on your actual checks until that February.

And no, you don’t receive any sort of payment to make up for those months that you missed.

Can You Get Your Delayed Retirement Credits Faster?

One way to lessen the lag is to file later in the year.

If you want to avoid this lag altogether, you could wait until your 70^thbirthday. Then, no matter what month it falls on, the delayed retirement credits are added immediately.

Maybe in the future the Social Security Administration can figure out how to do this for any filing age after full retirement like they do before. It can’t be that hard, right?

One would think!

But for now, this is how the system is set up. It’s important to know this so you can get proactive and plan accordingly — and not get hit with a nasty surprise after you’ve already delayed filing so you can get a bigger benefit.

Take Control, Because It’s Your Retirement and Your Benefits

You’re making a smart move by learning all you can and reading sites like these, but don’t use this as specific advice for your own situation. I encourage you to do your research and talk to your own advisors. Most importantly, continue to educate yourself and stay curious!

You should also consider joining the 400,000+ subscribers on my YouTube channel! For visual learners (as most of us are), this is where I break down the complex rules and help you figure out how to use them to your advantage.

Social Security Benefits: File Early And Invest It?

by Devin Carroll

File early, invest the monthly benefit, and you'll be able to generate more income than someone who waited until later to file. Does it make sense to file early and invest the money?

We’re taking a look at the math behind a social security strategy that’s been around for a while. Here it is: File early, invest the monthly benefit, and you’ll be able to generate more income than someone who waited until later to file.

Effectively…you can do better on your own. But does it make sense to file early and invest the money?

A Decade of Positive Returns Creates Optimism in Investing

There’s nothing like a decade of positive returns in the market to create optimism for investing. We’re starting to see this optimism affect how individuals file for social security.

A few years ago, there weren’t many people saying they were big believers in the market. We were still recovering from the worst market since the Great Depression, and news was still (mostly) negative.

A few years later, individuals started seeing a few years of positive returns. Some of those have been double digit returns, and optimism began rising.

And so I’ve started to hear more people say things like “Devin, I think I could file early for Social Security, invest it, and create more income down the road than what I would’ve had with Social Security.”

So, You Think You Can Do Better?

Now, I’ve heard things like that for a while, but I’ve never gotten into the numbers to see what was really possible. So…I decided it was time for a closer look.

Let’s consider someone with a $2,000 benefit at their full retirement age. For this example, we’ll assume full retirement age is 67.

You can file as early as 62 and get $1,400 or as late as 70 and get $2,480.

Let’s look at two scenarios: First one is where you need to start your income at 67; and the other is where you need to start your income at 70.

In both cases, I’ll assume that you file for benefits at 62. That benefit has a 2% cost of living adjustment (COLA) applied and that you invest the monthly benefits check.

Here’s how that investment would accumulate at various rates of return from the beginning if age 62 to the beginning at age 67:

First, let’s assume you didn’t make anything. That $1,400 would be worth $87,427. At 4, 6 and 8 percent it would gradually increase and the highest rate of return I assumed was 10 percent where your balance would be $116,985. These amounts would be the available balance to use in supplementing your income.

So now let’s look and see what the income gap would be after we adjust for the annual cost of living adjustments. Your benefit would start at $1,400, but by age 67, it would be approximately $1,546 if there was a 2% annual COLA.

The age 67 benefit was $2,000, but when you add the COLA to it, that amount would now be $2,208. So there would be an income gap of $662 that you would need to create from the invested Social Security benefits.

I’m assuming there are two ways to generate this income. First, is an immediate lifetime annuity. This is the closest thing to your Social Security benefit in that it offers a fixed payment that’s guaranteed for your lifetime. The way these work is that you give a lump sum of money to an insurance company and they send you the payments. The other option I assumed was leaving your money invested and taking a 5% annual withdrawal to supplement the income.

And The Results Are In

Here were the results: If you need to generate an income stream of $662 per month, it would require an annuity of $115,539 and an investment portfolio of nearly $160,000.

For the annuity, this would mean that you’d have to achieve an annual return of 10% and for the portfolio option you’d need to get a return of 21%.

Keep in mind…these are the returns needed to break even. You’d have to exceed that to do better that what you’d get with almost no risk from the Social Security administration. I’m not sure how you feel about your capabilities to get consistent investment returns like these, but if you can…maybe you should start a hedge fund. I can tell you that there’s no way I would take that chance with a client’s money.

What If You Invest It For A Longer Period of Time… Does That Work Out?

But what if you have a longer time period?

Let’s say that you don’t need the income to start until you’re 70. In this scenario, you’d have from the beginning of age 62 to the beginning of age 70 to receive benefits and invest them. How would the time/value of money change the outcome?

By the time you take your age 70 benefit, it would have grown to $2,905 with an annual 2% cost of living adjustment. That’s an income gap of $1,265 you’d need to cover. Since you’d have a few additional years to invest, the balance of the investment portfolio would be higher than in the prior scenario ranging from 144,000 to 224,000 at 10% annual return.

Now we know you may have saved, but how much would it take to replace $1,265?

You need an annuity of $200,000, and an investment portfolio of around $300,000. This means that for the annuity to work you’d need to get about a 7% return and for the portfolio to work you’d need about a 17% return.

Again…those numbers are just to give you the dollar amount of income that you’d get from Social Security without taking hardly any risk. And, the risk is not the only difference here.

For example, the annuity options do not have survivor benefits, the taxation of an annuity vs. investment portfolio vs. social security is all different so the net amount would not be the same. The annuity options were calculated with today’s interest rates and there’s just no way to know what the interest rates would be in the future and how these annuities would be affected. The investment returns I illustrate are compounded annually and would be slightly different if compounded on a monthly basis. The amount of your social security benefit would also affect the required rate of return on the other options.

This article is based on what we know today with a set benefit amount, but your mileage may vary with your own circumstances.

It’s Your Retirement!

Ultimately, remember…I’m not your financial, legal or tax advisor. This article is meant to help educate you, but not as specific advice for your specific situation. I’d highly recommend that you keep learning and stay curious!

Questions?

A Felony Conviction Does Not Automatically Disqualify Someone for Social Security

The Rules Around Medicare and Other Benefits for Imprisoned Individuals

What’s Your Take on This Topic?

We CAN Avoiding Cutting Social Security Benefits

Extending the Social Security Earnings Limit to All Ages Could Fix the System

Shouldn’t Social Security Go to Those Who Need It Most?

A Word on Fixing Social Security with Means Testing

Why the Social Security Administration May Increase Its Social Media Surveillance

With Financial Challenges Ahead for Social Security, Expect Crackdowns

Social Media’s Popularity Means There’s an Abundance of Data for the SSA to See

How Will the Social Security Administration Truly Leverage Social Media for Monitoring and Surveillance of Potential Claimants?

Understanding the Origins of the Social Security Earnings Limit

How the Earnings Limit Evolved Over Time

Further Changes to the Earnings Test through the 1960s and 1970s

From 1977 to Now: The Modern Way the Earnings Limit Evolves

Why Aren’t Social Security Payments Guaranteed?

The Ruling That Nixed Future Guarantees on Your Benefits

Other Court Cases Made It Clear: Social Security Payments Not Guaranteed

Paying FICA Taxes Does Not Make Your Social Security Payments Guaranteed

While Benefits Aren’t Guaranteed… Social Security Is an Entitlement Program

What Does Entitlement Really Mean, Anyway?

Have More Questions?

Social Security Scams Over Time

The Scam

Keep Yourself Safe

Here are four things to remember:

If you are contacted by a scammer and want to make sure everything is ok here are three ways to find out:

It’s Good To Be Proactive

Why You May Be Missing Credits

Know How to Calculate Monthly Changes to Your Benefits

What Happens If I File After My Full Retirement Age?

Make Sure You Understand the Full Impact of When You Choose to File

Can You Get Your Delayed Retirement Credits Faster?

Take Control, Because It’s Your Retirement and Your Benefits

A Decade of Positive Returns Creates Optimism in Investing

So, You Think You Can Do Better?

And The Results Are In

What If You Invest It For A Longer Period of Time… Does That Work Out?

It’s Your Retirement!