How Bill Clinton Almost Privatized Social Security

How Bill Clinton Almost Saved Social Security (and lessons we can learn to prevent disaster)

The push to privatize Social Security hasn’t been discussed much lately. That’s too bad. It’s probably the best (and least intrusive) option to save Social Security that NO ONE is talking about.

This option was almost used in the late 90s and if it would have been implemented, we probably wouldn’t have the issues with the solvency of Social Security that we have today. But it may not be too late!

Over the past 10 years its been often repeated that the solvency issue of the Social Security trust fund can only be fixed by either increasing taxes or cutting benefits. Without one of these, there will be a 20% shortfall by the year 2034.

Wrong!

There is a third option that’s rarely discussed. In fact, its become a bit of a third rail. If you touch it your political career may be over. That third option is to privatize Social Security by investing part of the assets in the trust fund. 

So how would it help to privatize Social Security? The quick answer is that there is a 2.9 trillion dollar balance in the trust fund that’s earning a measly 2.7%. If the rate of return could be increased, the funds would last longer.

This huge balance was built up by having more workers than retirees. Thus, since Social Security collects from current workers to pay current retirees, there was an imbalance in the amount of money that came in vs. what needed to be paid out. This money built up over the years until it grew to its current massive size.

Now, the tables are turning and there are projected to be more retirees than workers. This means that to make the promised Social Security payments the Administration will have to start taking withdrawals from the trust fund. By the year 2034, this trust fund will be been depleted unless something changes. At that point, benefit payments will be funded solely by payroll taxes from current workers and a few other small sources. In short, there won’t be enough money to make 100% of benefit payments.

But what if we could make the trust fund last longer by increasing the rate of return?

The Clinton’s Disagreement on Privatized Social Security

Let me give you some reasons this hasn’t happened yet. Back in 2016, when Senator Hillary Clinton was running for President, she loved to bash the “Republican” idea of investing Social Security. But ironically, it was her husband, President Bill Clinton, who actually proposed the privatized version of Social Security.

During the late 90’s he had a study group that suggested multiple fixes for Social Security. The one he really liked? Invest part of the Social Security trust fund. This made perfect sense! In multiple academic papers that followed it was found that the deficit would be closed completely by doing this.

How The Blue Dress Stopped The Plan To Privatize Social Security

But then something happened that stopped everything. Monica Lewinsky and her blue dress. At this point, President Clinton’s political survival forced him to align with his party and abandon several of his big objectives. Putting safeguards in place that would protect Social Security and Medicare for the long term was one that had to be pushed aside. The push to privatize Social Security died alongside his pride.

It’s too bad it went that way. In retrospective data, a paper from the Boston College’s Center for Retirement Research illustrated that this plan would have been effective, and we would not be in the place where we are today. In this same report, they say that investing the trust fund would still fix the issue. At the same time, reports from the SSA say that it wouldn’t have much of an impact this late in the game. So there’s some disagreement there about whether or not this will work at this point. After all, the time value of money needs TIME to work and we’re waiting until the 11th hour to get something done. 

My Perspective

So let me tell you where I stand. I’m a conservative and find most of my views to align with our conservative legislators. However, no one gets a blank check for my approval.

Even though I have comments on my YouTube videos saying I’m a flaming liberal, and other comments on the same video saying I’m a crazy right winger I think that I have a responsibility to support the legislation that makes sense… even if it is from the ‘other’ party. But everything is framed as good or bad, liberal or conservative, black and white.  We’ve gotten to a point where we feel bad for agreeing with a proposal from a party we don’t like and feel like we have to agree with everything our chosen party likes. There is an in-between here. And unless we find it, were going to have a disaster on our hands with Social Security.

If we keep waiting the only way to fix it will be drastic benefit cuts or tax increases. Increased taxes on the rich do not create ANYTHING! Instead, the often-unintended consequence is of targeting rich people with more taxes will be a BIGGER gap between the rich and the poor. This is because companies, who are more often than not owned by rich people, are not likely to take a reduction to their net profit or pay. Instead, the increased costs of higher taxes get passed on to employees through pay and benefit cuts.  

It’s your retirement!

Before we go I want to thank you for taking the time to get informed. So many people just float into retirement hoping everything will work out. Sometimes it does, but sometimes a lack of planning can ruin what should be your best years. This is your retirement! Please continue to stay informed! 

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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks for reading…have a great day. 

The FICA Tax: Your Ticket to Social Security Benefits

Today I want to talk about FICA taxes. It’s really important to understand this because it’s the FICA taxes that serve as your admission ticket to Social Security and Medicare benefits. Keep reading to learn more.

Today I want to talk about FICA taxes. I know…it sounds boring. But it’s really important to understand this because it’s the FICA taxes that serve as your admission ticket to Social Security and Medicare benefits. 

Have you ever looked at the federal income tax brackets and wondered why your taxes are so much higher than the rates published by the IRS? That’s because the federal income tax is a relatively small part of the overall taxes that most people pay.

Today I want to talk about FICA taxes. It’s really important to understand this because it’s the FICA taxes that serve as your admission ticket to Social Security and Medicare benefits. Keep reading to learn more.

If you take a close look at your paystub you’ll see the deduction from gross pay due to federal withholding. Depending on your state, you may also see state withholding.

Today I want to talk about FICA taxes. It’s really important to understand this because it’s the FICA taxes that serve as your admission ticket to Social Security and Medicare benefits. Keep reading to learn more.

FICA Taxes

If you keep moving down you’re going to see a line for FICA taxes. These are the taxes that you contribute to the federal government to pay current recipients of social security and Medicare and FICA stands for Federal Insurance Contributions Act.

Now this could be in two lines. One for Social Security and another for Medicare. Or the Social Security portion could be labeled OASDI for the Old Age Survivors Disability Income fund. Whatever it says, there is a strong likelihood that you’re paying the tax.

There are a few occupations groups that do not pay FICA, but 96% of all workers do pay it and it is not optional.

Breakdown of FICA

So, I want you to understand what this tax is and how it gets paid. It has two components to it:

  1. The Social Security portion. This is also the largest part of Social Security. The total is 12.4%. However, that is limited to the first $132,900 in wages for 2019. The limit of $132,900 does increase every year, but you do not pay the 12.4% on your wages once you cross this limit. Also, you only pay for half of this amount. Your employer pays the other half. Unless you’re self-employed…then you pay the entire amount.
  2. The Medicare portion. This is a total of 2.9% in taxes and is also split 50/50 between the employee and employer. This means that in total, 15.4% of your wages are paid in to the social security and medicare. 
Today I want to talk about FICA taxes. It’s really important to understand this because it’s the FICA taxes that serve as your admission ticket to Social Security and Medicare benefits. Keep reading to learn more.

I hope that next time you look at your paycheck you’ll have a better understanding of what those lines mean and what they do.  

Take Action!

Before we go I want to thank you for taking the time to get informed. So many people just float into retirement hoping everything will work out. Sometimes it does, but sometimes a lack of planning can ruin what should be your best years. This is your retirement! Please continue to stay informed! 

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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks for reading…have a great day. 

What Everyone Should Know About Social Security Taxes

What Everyone Should Know About Social Security Taxes

Hey everyone! Today I want to cover the basics of Social Security taxation. As you are planning for or living in your retirement this is crucial to understand. Also, this topic is from a recent poll where you asked for more information regarding social security taxes.

Don’t Be Taken By Surprise

How much you owe in taxes on Social Security income can be a big shock.

I clearly remember that it was one of my Dad’s biggest retirement surprises. He didn’t expect to pay so much in taxes. Yet there it was…a big whopping tax bill in the first year of retirement. Like a lot of other retirees, he knew that some of his Social Security benefit could be counted as taxable income, but he wasn’t real familiar with the rules on what determined the amount of taxes. 

This wasn’t isolated to him. Every year individuals retire and are faced with sticker shock when they find out how much they’ll have to pay in taxes on Social Security income. To some, it doesn’t seem fair. You’ve worked for years and paid your Social Security tax as the admission ticket to a Social Security benefit. Now that you’re collecting that benefit, you have to pay taxes?  Again?  

The Social Security Act

Originally, Social Security benefits were not taxable as income. This was not due to the way the original Social Security Act was written, but rather the result of a series of administrative rulings issued by the Treasury Department. 

There were three separate Treasury Rulings, two from 1938 and one from 1941. During the years 1937-1939, two types of Social Security benefit were paid:

  1. Lump-sum retirement payments to retired workers; and
  2. Lump-sum death benefits to the family of deceased workers.

So there are two 1938 tax rulings, one covering lump-sum retirement payments and one covering lump-sum death payments.

In 1939, the Social Security Act was amended and dramatically expanded to include survivors’ and dependents’ benefits of various types. In a 1941 ruling, the Treasury Department explicitly extended its earlier rulings to these new types of benefits.

In 1970, the prior rulings were reaffirmed. However, in 1983 Congress changed the law by specifically authorizing the taxation of Social Security benefits. This was part of the 1983 Amendments, and this law overrode the earlier administrative rulings from the Treasury Department. 

The Deficit Reduction Act

10 years later, the Deficit Reduction Act of 1993 expanded the taxation of Social Security benefits. Under this Act, an additional bracket was added where up to 85% of Social Security benefits could be taxable above certain thresholds.

The combination of these laws left us with the current tax structure on Social Security benefits. Today, somewhere between 0% and 85% of your Social Security payment will be included as taxable income. 

Provisional Income

In order to determine how much of your Social Security benefits will be taxable, you first have to calculate “provisional income” – a measurement of income used specifically for this purpose of determining how much of your benefit is taxable. 

Provisional income can be roughly calculated as your total income from taxable sources, plus any tax exempt interest (such as interest from tax free bonds), plus 50% of your Social Security benefits.  Once you’ve calculated your “provisional income” you can apply it to the threshold tables to determine what percentage of your Social Security will be included as taxable income.

If your total “provisional income” is less than $32,000 ($25,000 if single), none of your Social Security benefits will be taxable.  However, if you are married and your total exceeds $32,000 then 50% of that excess is the amount of Social Security benefits that must be included in taxable income.

Provisional Income In Action

If your provisional income exceeds $44,000 ($34,000 for singles), then 85% of the excess amount is included in income. That can seem confusing so let’s look at an example.  

Tim and Donna have recently retired.  They have some rental property that generally averages $12,000 in net annual income.  Their combined Social Security benefit will be $3,000 per month ($36,000 a year).  In addition to this income, they will take an annual distribution from their IRA in the amount of $32,000. 

Using the income from those sources, here’s how the provisional income would be calculated.  First, we have the $32,000 IRA distribution. Then we have the $12,000 in net rental income, and then we have their Social Security benefit. And remember that only 1/2 of the Social Security income is counted.

Based on these numbers, they have a provisional income of $62,000. Now that the provisional income is calculated, it’s time to find out how much of their Social Security benefit is taxable which is accomplished by applying the income to the thresholds we previously discussed.

As we move this 62,000 in provisional income through the thresholds, remember …the first $32,000 of the provisional income has no impact on whether or not a Social Security benefit is taxable.  50% of the amounts between $32,000 and $44,000 will be added.  85% of the amount in excess of $44,000 will be added.

In the column on the far right I’ll put the results of the calculation which is the amount of Social Security that is taxable. So, you can see that the first 32,000 adds nothing. The amount between 32k and 44K is 12,000, of which half is counted, so $6,000 gets added to taxable Social Security. There is still 18K remaining about the 44K line and that gets added at 85% which is an additional $15,300 in taxable social security. 

When you add this up you see that as a rough calculation, a married couple with a provisional income of $62,000 would have $21,300 of taxable Social Security income. This means that for Tim and Donna, they would have 60% of their total benefit subject to taxation. 

What Everyone Should Know About Social Security Taxes

Reach Out To Your Tax Advisor

Since you can only spend the dollars you keep, you need to be familiar with the rules about how much you may pay in taxes on Social Security.  You don’t have to be a tax expert…I know I’m not. I do understand enough to know how to roughly calculate the amount of taxable Social Security benefits.  You should too.  For anything deeper, see your tax advisor. High taxes in retirement is a surprise that can often be avoided.

Before we go I want to thank you for taking the time to get informed. So many people just float into retirement hoping everything will work out. Sometimes it does, but sometimes a lack of planning can ruin what should be your best years. This is your retirement! Please continue to stay informed! 

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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Question: Do you think your social security benefits should be taxable?

Thanks for reading…have a great day. 

Is Social Security an Entitlement?

Is social security an entitlement

One of the things that some of my readers get REALLY fired up about is when Social Security is referred to as an entitlement. I can understand why. After all, the term entitlement has taken on a demeaning definition that insinuates getting something that you haven’t earned or maybe even deserve. But is it possible we are all being jerked around a little bit here?

Entitlement Programs

Over the past couple of years I’ve noticed that the dialogue about government entitlement programs has gotten really heated. That’s not really a surprise considering the current level of political division. 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, or 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. 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 mean?

So why do they refer to it this way and does it have a negative connotation?

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.

Is Social Security an entitlement? A hand out or a right? Or, does it mean something else entirely? This word fires up a lot of people, so let's explore what entitlement actually means.

The Cambridge dictionary defines it as something, often a benefit from the government, that you have the right to have.

Is Social Security an entitlement? A hand out or a right? Or, does it mean something else entirely? This word fires up a lot of people, so let's explore what entitlement actually means.

Then, in the glossary of the United States Senate, the word entitlement is defined as a federal program or provision of law that requires payments to any person or unit that meets the eligibility criteria. 

Is Social Security an entitlement? A hand out or a right? Or, does it mean something else entirely? This word fires up a lot of people, so let's explore what entitlement actually means.

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. 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. 

Is Social Security an entitlement? A hand out or a right? Or, does it mean something else entirely? This word fires up a lot of people, so let's explore what entitlement actually means.

Before we go I want to thank you for taking the time to get informed. So many people just float into retirement hoping everything will work out. Sometimes it does, but sometimes a lack of planning can ruin what should be your best years. This is your retirement! Please continue to stay informed! 

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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Question: Do you think Social Security should be called an entitlement? 

Thanks for reading, and have a great day!

The Ugly Truth About Social Security Taxes

Have you ever wondered why Social Security taxes have increased 130% in the last 10 years and what that means for you? I will explain that and why almost everyone will eventually pay taxes on their Social Security benefits.

If your Social Security benefits aren’t taxable yet, just wait. It’s probably coming soon for you.

How Benefits Are Taxed

It’s hard to have a discussion about taxes on Social Security without a brief overview of how benefits are taxed. They aren’t taxed for everyone, and, at worst case, only 85% of your benefits can be included as taxable income. I’ll get into the actual brackets in just a moment, but let’s take a look at what determines whether your benefits are taxable at all.

Provisional Income

There’s a term within the tax code called provisional income. I’m not a tax professional, but to my knowledge, the only place this term is found is when it relates to SS benefits. It’s a formula by which the IRS determines how much of your social security benefits should be included as ordinary income on your tax return. This provisional income is simply the sum of your adjusted gross income, your tax-exempt income, excluded foreign income and one half of your SS benefits. Once you add all of those up you have your provisional income and once you’ve calculated your provisional income, you can apply it to the threshold tables to determine what percentage of your Social Security will be included as taxable income.

Is It Taxable?

If your total provisional income is less than $32,000 ($25,000 if single), none of your Social Security benefits will be taxable. However, if you are married and your total exceeds $32,000 ($25,000 for singles), then 50% of the excess income is the amount of Social Security benefits that must be included in taxable income. If your provisional income exceeds $44,000 ($34,000 for singles), then 85% of the excess amount is included in income.

Amendments to the Social Security Act

At first, Social Security benefits were not taxable. That all changed with the passage of 1983 Amendments to the Social Security Act. Under this new rule, up to 50% of Social Security benefits became taxable for certain individuals.

10 years later, the Deficit Reduction Act of 1993 expanded the taxation of Social Security benefits. Under this Act, an additional bracket was added where up to 85% of Social Security benefits could be taxable above certain thresholds.

Since those brackets have been added, they’ve never been changed! As far as I know, there are no plans to change them in the future. This means that as the general income levels rise, more individuals will be subject to taxation on their social security benefits.  

For proof of this, look at what’s already happened. Since taxes on SS benefits were introduced, the revenue coming in from these taxes have skyrocketed. Here’s an example: In 2008, taxes were slightly above 15 billion dollars. In 2017, this amount was 130% higher!

What You Need To Know

Here’s the big takeaway: When you’re planning for retirement, you probably ought to go ahead and include your SS benefits as taxable income. I don’t expect these brackets to ever increase because the tax revenue collected is returned back to the SS trust fund and used to pay benefits. There’s just too much trouble down the road for the solvency of SS for anyone to suggest cutting revenue.  So, reduce the amount of income you expect to receive from SS to reflect the bite that the IRS will take. 

Before we go I want to thank you for taking the time to get informed. So many people just float into retirement hoping everything will work out. Sometimes it does, but sometimes a lack of planning can ruin what should be your best years. This is your retirement! Please continue to stay informed!

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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Question: Do you think Social Security benefits should be taxable? Put your answer in the comments below and I look forward to seeing what you think about this. 

Thanks for reading, and have a great day!

Top 5 Social Security Books

Today we're talking about my favorite books on social security. If you’re serious about your retirement plan, you need to understand how this program works. After reviewing dozens of books that cover the topic, I’m going to tell you which 5 will get your knowledge level up to the point where you can feel confident.

Today we’re talking about my favorite books on social security. If you’re serious about your retirement plan, you need to understand how this program works. After reviewing dozens of books that cover the topic, I’m going to tell you which 5 social security books will get your knowledge level up to the point where you can feel confident.

You know what I’ve never found? Someone who said their social security wasn’t important to them. In the 16 years I’ve spent as a financial planner, I’ve advised clients who were very wealthy down to the clients who were of much more modest means.

All of them have been very concerned that they maximize their income stream. If you look at the data you can see why. When you look at both married and unmarried retirees, 62% rely on SS for HALF of their income. This is a program that needs to be understood. Thankfully, there are some fantastic books out there that break this down and make it easier to understand. Today I want to tell you what my top 5 books on social security are.  

First, I’ll start with two that are great at giving you the fundamentals. These two books will help you build a foundation for the slightly heavier reading to follow. The good part is they are both around 100 pages so you can read these quickly and then read them again to really lay the foundation.  

1. Social Security Made Simple by Mike Piper

The first book is Mike Piper’s Social Security Made Simple. It’s a short read but it hits the surface of a lot of topics within social security. He breaks this book down into three parts. Part one is about 27 pages and speaks in clear and concise terms about how benefits are calculated and how you qualify for them. Part two is about the same length and turns up the dial with rules for less common situations. He talks about Social Security for divorced spouses, childrens benefits, the earnings limit and even the windfall elimination provision and the government pension offset for those who worked at a job where they did not pay into SS. My personal favorite is part three. This is where he gets into the “when to file” question. He talks about how a single person should approach this decision. How married couples should coordinate benefits and then in chapter 13 he addresses taking social security early to invest it. Good stuff!

BUY IT HERE ON AMAZON

2. Social Security Basics: 9 Essentials That Everyone Should Know by Devin Carroll

The second book on my list is my book. I know…that’s somewhat self serving. But I included that because I do think its one of the best books out there that covers the fundamentals. If you read my book and Mike’s book, you’ll have a deep understand of the basics (and probably be smarter than many financial advisors.) I don’t try to get fancy in this book. I simply wanted to take the most relevant parts and put them in a book that was easy to understand. I’ve found over the years that most of the SS questions I receive could be answered with a good knowledge of the 9 social security basics and that’s what this book covers.

BUY IT HERE ON AMAZON

3. Get Whats Yours – The Secret To Maxing Out Your Social Security by by Laurence J. Kotlikoff, Philip Moeller, and Paul Solman.  

With book number three we start to get a little deeper. Its Get Whats Yours-the secret to maxing out your social security. This is the only SS book that I know of that has made it on to the New York Times Bestsellers lists. This book was written by three authors—all social security experts in their own right. This is the perfect book to read after you’ve read the first two on my list. The book is conversational, but the subject matter is dense. In my opinion, chapters 16 & 17 make this book worth it. This is where they cover the 50 Good News Secrets to Higher Lifetime Benefits and 50 Bad-news Gatchas that can reduce your benefits forever. There could easily be ONE THING you read in these two chapters that will make the book purchase worth it.

BUY IT HERE ON AMAZON

4. Social Security For Dummies by Jonathan Petersen

What I like best about the Dummies series is that they take topics that are hard to understand and turn it into something that is easy to use. In my opinion, the best part of this book is Part 5. While the entire book is full of useful knowledge, Chapter 15, which is the beginning of Part 5, covers the myths of social security and replaces them with facts. Chapter 16 refers to why young people should have a big stake in social security, and should follow the policy changes that are coming up in the next few years. Chapter 17 finishes it up by talking about the realities of the future of social security.

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5. Social Security: The Inside Story, 2018 Silver Anniversary Edition by Andy Landis

This book is detailed and comprehensive but is easy to read. I absolutely love this book. The author actually worked for the social security administration for over a decade and it shows almost as soon as you open the book. It has examples, graphics and website links to back up what the author is saying, and gives you confidence that you are on the right path. I personally use this book as a personal reference. I also believe it does not need to be read all at once, but can be used as a topical reference to answer your questions as they come up.

Whether you are a retiree, a to-be retiree or a financial advisor, this book needs to be on your shelf.

BUY IT HERE ON AMAZON

I’ll have to admit…narrowing down this list to my top 5 wasn’t easy. There are some other great books out there.

One last thing…I’ve linked up all of the books we’ve discussed here. Full disclosure…if you buy one of these by using my link above, I’ll get paid a small fee from Amazon. 

Remember…THIS IS YOUR RETIREMENT. CONTINUE TO LEARN AND STAY INFORMED because no one is going to feel the pain of retirement planning mistakes like you will.  

Now that you’ve read this article (which is a great first step in understanding Social Security), 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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

In addition to the books I’ve recommended here, what social security books should be added to our list? Leave the book title and your thoughts in the comments below. 

Thanks for reading…have a great day. 

Your Social Security Age: The Most Important Thing About Social Security

FRA: The Most Important Thing To Know About Social Security

There are A LOT of important things that you need to know about Social Security. But there’s one that’s more important than any of them. That’s your full retirement Social Security age.

I’ve often said that you don’t need to know everything about Social Security to make it work for you. It’s kinda like driving a car. You don’t have to know how the fine mechanical details of the internal combustion…just enough of the basics to keep you safe while you’re operating it. It’s the same way with retirement planning and investing. If you have a firm grip of the basics, you’ll be ok.

The Most Important Factor in Social Security

After reading my book Social Security Basics, someone asked me the other day, “Which of those 9 basics do you think is most important?” I didn’t hesitate. It’s your full retirement social security age!

Understanding at which point you attain the official social security age of full retirement is crucial so you can understand how the benefit reductions and increases will affect you for the various filing ages and so you’ll know at which point the earnings limit will no longer impact you. 

Thankfully, this is one of the simpler parts of Social Security. If you were born between 1943-1954, your full retirement age is 66. For every year thereafter, the full retirement age increases all the way to birth year 1960. For everyone born in 1960 or later, the full retirement age is 67 (for now).

Understanding this age is important for two reasons. One, you have a limit on the amount of earnings you can have PRIOR to your full retirement age. Once you reach full retirement age, there is no limit. The second reason is how your full retirement age (FRA) controls the increases or decreases to your benefit amount. We often discuss these increases and decreases in terms of annual numbers, but its really important to know how to figure them on a monthly basis. Afterall, if your FRA is 66 & 6 months, your penalty for filing at 62 will be higher than the individual who has a FRA at 66.

How Monthly Reductions and Increases Work

Here’s the way the monthly reductions and increases work. 

At your FRA, you are entitled to 100% of your benefit amount. If you file early, your benefit will be reduced. However, the reduction is different based on how early you file. If you file in the 36 month period immediately prior to FRA, your benefit will be reduced by about .56% per month. For months BEYOND the 36 month period immediately prior to FRA, your benefit is reduced by about .42% per month. If you file after FRA, your benefit will increase by about .67% per month up until age 70. 

FRA: The Most Important Thing To Know About Social Security

So with these simple numbers, you can do the math for yourself and not be forced to rely on the SSA to tell you what your benefit will be.

Now that you’ve read this article (which is a great first step in understanding Social Security), 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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks so much for reading…have a great day. 

What FDR Said About Social Security

What FDR Said About Social Security. This article is based on an email I received from a reader. It was about promises made by FDR. I've debunked the myths of these 5 promises and explained them each in detail.

I received an email that had some quotes from President Franklin Roosevelt about Social Security. This email came to me from a reader who wanted to know my thoughts.

It says…

Just in case some of you young whippersnappers (& some older ones too) weren’t taught or just didn’t know this. Be sure and show it to your kids. They need a little history lesson on what’s what. And it doesn’t matter whether you are Democrat or Republican. Facts are facts!!!

FDR’s “Facts”

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the program would be completely voluntary,

2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the program,

3.) That the money the participants elected to put into the program would be deductible from their income for tax purposes each year,

4.) That the money the participants put into the independent ‘Trust Fund’ rather than into the General Operating Fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program, and,

5.) That the annuity payments to the retirees would never be taxed as income.

So let’s take each of these and talk about their validity.

The Myths Debunked

Myth 1: President Roosevelt promised that participation in the program would be completely voluntary

This tax has never been voluntary. From the first days of the program to now, anyone working at a job covered by Social Security has been obligated to pay their payroll taxes. There’s never been an opt-in or opt out provision except in VERY narrow circumstances.  

In the early years of the program, I believe that only about half the jobs in the US were covered by Social Security. So someone could choose to work at a job that wasn’t covered by Social Security and not have to pay FICA taxes and of course, that person would not be eligible to collect a future Social Security benefit. I suppose, in a very indirect sense, participation in Social Security was voluntary by your choice of employer. However, if a job was covered by Social Security, participation in payment of Social Security taxes was mandatory. 

 
Myth 2:President Roosevelt promised that the participants would only have to pay 1% of the first $1,400 of their annual incomes into the program. 

 
In the original 1935 Social Security Act the amount of tax was 1% each on the employer and the employee, on the first $3,000 of earnings. This rate was increased on a regular schedule in four steps so that by 1949 the rate would be 3% each on the first $3,000. The figure was never $1,400, and the rate was never fixed for all time at 1%. 

Myth 3:President Roosevelt promisedthat the money the participants elected to put into the program would be deductible from their income for tax purposes each year

There was never any provision of law making the Social Security taxes paid by employees deductible for income tax purposes. In fact, the 1935 law expressly forbid this idea, in Section 803 of Title VIII.  

It says, “the tax imposed by section 801 shall not be allowed as a deduction to the taxpayer in computing his net income for the year in which such tax is deducted from his wages.” 

Myth 4:President Roosevelt promisedthat the money the participants paid would be put into the independent “Trust Fund,” rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement program, and no other Government program

The idea here is somewhat correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations to pay for a war or some other project.  

The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been “put into the general fund of the government.” 

Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968), the transactions to the Trust Fund were included in what is known as the “unified budget.” This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are “on-budget.” This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken “off-budget.” This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are “on-budget” or “off-budget” is primarily a question of accounting practices–it has no affect on the actual operations of the Trust Fund itself. 

 
Myth 5:President Roosevelt promised thatthe annuity payments to the retirees would never be taxed as income. 

 
Originally, Social Security benefits were not taxable income. This was not due to the way the law was written. It was the result of a series of administrative rulings issued by the Treasury Department. 

There were three separate Treasury Rulings, two from 1938 and one from 1941. During the years 1937-1939 two types of Social Security benefit were paid: Lump-sum retirement payments to retired workers, and lump-sum death benefits to the family of deceased workers. So there are two 1938 tax rulings, one covering lump-sum retirement payments and one covering lump-sum death payments. 
 
In 1939 the Social Security Act was amended and dramatically expanded to include survivors and dependents benefits of various types. In a 1941 ruling, the Treasury Department explicitly extended its earlier rulings to these new types of benefits. 
 
In 1970, the prior rulings were reaffirmed. 

In 1983 Congress changed the law by specifically authorizing the taxation of Social Security benefits. This was part of the 1983 Amendments, and this law overrode the earlier administrative rulings from the Treasury Department.  

So..the next time you see this email, you’ll know that it’s not really accurate. I’ve found that to be the case for lots of stuff on the internet.  

Thanks to the reader for the email. Now that you’ve read this article (which is a great first step), 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.)

Be sure to subscribe to my site so you won’t miss any of the new content coming out, plus you will receive the blueprint version of my book for free. Alternatively, you can just head over to Amazon and buy the full version. I can’t guarantee this, but I’m pretty sure you’ll get more value than the $12 it costs.

Thanks so much for reading…have a great day.  

How A Baby Boom Could Save Social Security


Yes…you read the title right. A baby boom can save the Social Security trust fund.

3 Assumptions That Could Change Everything

On an annual basis, the Social Security trustees release their report detailing the solvency of the Old Age Survivors Disability Insurance program, also called the OASDI or simply…the social security trust fund.

You’ve probably heard about the OASDI being empty by the year 2034, and that there will only be enough tax revenue to cover 75% of the benefit payments.

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Video: Medicare at 65 – Is EVERYONE Required to Sign Up?

The numbers of Americans who are working beyond 65 are increasing. Since many of these workers are covered by healthcare plans at their jobs, it causes many of them to wonder if they need to file for Medicare part B. In this video I clearly lay out who does, and does not, need to file for Medicare at 65.

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