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Entries in Social Security (22)

Thursday
Jan172013

CEOs Propose Hiking Retirement Age for Benefits

Comstock/Thinkstock(NEW YORK) -- Some of the most affluent Americans in the country believe that the rest of us should work until we're at least 70 years old.

Chief executive officers who belong to an organization known as the Business Roundtable have issued a proposal that U.S. workers should not be able to benefit from the two sacred cow entitlements, Social Security and Medicare, until they turn 70.

Their reasoning is that Social Security and Medicare won't be able to sustain the ever-expanding number of people planning to get benefits at age 65.

The Business Roundtable contends its new recommendation wouldn't affect anyone currently 55 or older but if you fall under that age bracket, the CEOs say that Social Security checks for future retirees should be reduced.

Meanwhile, the group says that it would be better if Medicare was voluntary and that health benefits ought to be at least partially privatized.

John Engler, president of the Business Roundtable, adds, "Implementing changes now and implementing them gradually over a long period of time realizes dramatic savings down the road without putting an impact on individuals."

Copyright 2013 ABC News Radio

Friday
Nov092012

Some Seniors Resist Electronic Social Security Payments

Comstock/Thinkstock(NEW YORK) -- Glenn Smallwood does not have a cellphone, computer or credit card.  Nor does he have a bank account.  And that’s exactly the way he likes it.

“I guess you could say I’m an old fuddy duddy,” Smallwood, 63, a semi-retired insurance salesman in Clearwater, Fla., told ABC News.  “I’m set in my ways.  I don’t want my money in a bank.  I keep my money in my pocket.”

So when Smallwood received a notice from the U.S. Treasury Department informing him that as of March 2013, his Social Security checks would be directly deposited into his bank account -- or he could enroll in the government’s Direct Express Debit MasterCard program -- he was decidedly unhappy.

“I don’t think the federal government has the right to tell me that I have to have a checking account or a debit card,” Smallwood said, adding that he cashes checks at Wal-Mart, pays his rent by money order and has no plans -- or desire -- to stop.

Smallwood lives in one of the nation’s 10 million households that are unbanked, according to figures from the Federal Deposit Insurance Corporation (FDIC).

While waivers are automatically granted for anyone who was 90 years old or older on May 1, 2011 -- as well as people living in remote locations or those who are mentally incapable of handling their own affairs -- Dick Gregg, the fiscal assistant secretary of the Treasury, acknowledged that these waivers are rare.

“Most individuals that receive checks will drive to a local bank to cash them and individuals with mental impairments will designate a representative payee that will sign up for electronic payment,” he said.

He added that the initiative to have all benefits payments made electronically will save an additional $1 billion in taxpayer money over 10 years.  It is also safer, faster and more reliable than receiving paper checks, which can be lost, stolen or delayed.

But John Runyan, executive director of Consumers for Paper Options, an advocacy group funded by “paper-based communications interests” -- which includes the Envelope Manufacturers Association, the American Forest & Paper Association and paper companies -- believes the mandate is unfair to seniors like Smallwood who don’t want to change.  

”Our goal is to get the federal government to recognize fully that there is certain type of information that should continue to be provided on paper if the consumer wants them, and that should be the consumer choice,” he told ABC News.

Copyright 2012 ABC News Radio

Monday
Sep102012

Gen Z Imagines An Inheritance It Will Not Get

Fuse/Thinkstock(NEW YORK) -- Thirty-nine percent of Generation Z (kids aged 13 to 22) think that they will be getting an inheritance -- thus, that they won't need to worry as much about saving for retirement. Only 16 percent of their parents, however, intend to leave them any money.

The two generations' different expectations are borne out by a new survey, "Generation Z and Money Survey," produced by market research company Head Solutions Group on behalf of investment advisers TD Ameritrade.

Ameritrade's managing director of investor services, Carrie Braxdale, says that up to a point Gen Z kids and their parents share the same view of the future. She was surprised to see, for example, that when both groups were given an open-ended, non-multiple choice question asking them to list their biggest concerns about the economy, they gave virtually identical answers.

Without any prompting, both groups said jobs and unemployment were their biggest worry (kids 26 percent, parents 25 percent). Their fourth-biggest concern was not having enough money (kids eight percent, parents 10 percent). Braxdale cites this as proof of just how powerful an influence the parents' financial view can be on their kids'.

For this reason, she says, it's crucial for parents to spend time with their children discussing such subjects as the proper use of credit cards or learning how to make -- and stick to -- a budget.

The survey also documents quite vividly, however, that what they think they have been discussing with their kids may not be the same as what the kids think: 38 percent of Gen Z respondents say their parents have spoken with them about saving for retirement; 49 percent of the parents say that they have.

The degree to which the youngest generation and their parents are not on the same page financially is proof that young Americans who grew up during the recession did not learn much from their parents' woes, says USA Today.

Kids in the survey were not asked why they believed they would be living comfortably on their parents' money in the future, but Braxdale hazards a guess: It's because they're living comfortably on it now.

"We can't say for sure what their rationale is," she says, "but when you're young, and your parents are providing for all your needs," it's not unreasonable to suppose that this might go on forever.

Gen Z has much less confidence that Social Security will be around to help them in retirement: 35 percent believe it won't be, versus six percent of parents. And Z's expectations about retirement are different: 51 percent of parents imagine that retirement will be a time when they no longer work for money; only 37 percent of kids expect that.

The survey of some 2,000 U.S. residents was conducted this spring -- roughly 1,000 kids and 1,000 parents. It took every participant 12 minutes on average to complete. Why would any 13-year old kid sit still that long? The fact the survey was online, says Braxdale, helped.

Copyright 2012 ABC News Radio

Friday
Aug172012

More Social Security Money Withheld Because of Unpaid Student Loans

Comstock/Thinkstock(NEW YORK) -- About twice as many Social Security recipients are not receiving all of their Social Security payments this year because they have unpaid federal student loans, according to a report by SmartMoney.com.

According to a 1996 law, the federal government has the authority to withhold portions of Social Security payments if defaulted debt is owed to the government, including federal student loans.

“It’s quite extraordinary because normally Social Security benefits can’t be touched by creditors,”  said Deanne Loonin, a staff attorney with the National Consumer Law Center.

From January through Aug. 6 of this year, the government reduced the size of about 115,000 retirees’ Social Security checks, almost double the department’s enforcement in 2011, according to data from the Treasury Department.  In 2007, there were 60,000 cases and in 2000, there were only six cases.

While the amount that the government withholds can vary, at least $750 a month must be left untouched.

“When you think about it, $750 a month is less than the poverty line.  It’s not a lot of money for people to have,” said Loonin.

Loonin said she has worked with people who are often older and have their Social Security benefits withheld.  They are delinquent on a range of loans, including those federal student loans parents took out for their children.

Many federal loans allow borrowers to request a reduction in loan payments or suspension based on hardship, such as total permanent disability.

The National Consumer Law Center in Boston has set up a website to assist borrowers to avoid default and to outline steps to take if they do default on a loan.

Copyright 2012 ABC News Radio

Thursday
Jun142012

One in 10 Children Are Victims of Identity Theft, Report Finds

Comstock/Thinkstock(NEW YORK) -- Children are increasingly becoming the preferred target of identity thieves, authorities say.

“We’ve seen children have this crime begin as early as five months old and then it goes on for years,” said Bo Holland, founder and CEO of All Clear ID, a company that offers basic identity theft protection to consumers.

“A parent will typically find out when their child is moving into adulthood,” Holland added.  “When they are about to go to college, they apply for that first loan and, boom, they get denied.”

In the last three years, there have been 57,000 cases of child identity theft reported to the Federal Trade Commission.  A new report from All Clear ID estimates that one in 10 U.S. children are victims.

Criminals can hack home computers in search of tax forms with a child’s Social Security number.  They also can target hospitals, child-welfare agencies and even schools.

“They’ll use your child’s Social Security number with a different name and a different birth date,” Holland said.  “So if you pull a credit report, the credit report is looking for a specific name and the birthday that goes with it.  And so you won’t find it.  You’ll get 'file not found,' and you’ll feel safe.”

“The problem is large and growing,” said David Vladeck, the FTC’s director of the Bureau of Consumer Protection.  “Part of the problem is it’s undetected and undetectable.”

Authorities advise parents to:

-- Make sure you have antivirus software installed on your home computer.
-- Tell your children never to give out their Social Security number without your permission.
-- Check your children’s credit periodically, even when they are under age.

“Parents need to understand that there are measures they can take to safeguard their children’s identity,” said Vladeck.  ”Parents should think about protecting their children’s identity, and the Social Security number is absolutely the foundation there.”

Copyright 2012 ABC News Radio

Monday
Apr232012

Could Social Security and Medicare Run Out Sooner Than Expected?

Comstock/Thinkstock(WASHINGTON) -- Social Security’s retirement and disability programs have enough funds to cover the next 20 years, but that could change come 2033.

Every year the Social Security Board of Trustees releases its report outlining the stability and financial security of the two biggest federal programs in the United States, Social Security and Medicare.

This year’s report says that because of an increase in pressure on these programs -- Americans are living longer and the baby boomers are beginning to collect -- funds could run out sooner than expected. In addition, the slow rebound of the economy and high energy prices are leading to a quicker deterioration of the trusts that fund Social Security.

“In 2033, incoming revenue and trust fund resources will be insufficient to maintain payment of full benefits," Treasury Secretary Tim Geithner, said, referring to Social Security.  “At that point there will only be enough money to cover about  three-fourths of full benefits.”

Social Security is broken into two arms: retirement, and its disability program, which aids 11 million Americans and will be exhausted two years earlier than last year’s estimate.

In 2011, the report estimated that funds would last until 2036.

Medicare’s Hospital Insurance Trust Fund maintained the same projection as last year, with sufficient resources to maintain benefits through 2024. This is attributed to the 2-percent cut in Medicare that Congress enacted last year.

“Please, please remember that ‘exhaustion’ is an actuarial term of art and it does not mean there will be no money left to pay any benefits,” Commissioner of Social Security Michael Astrue cautioned.  “After 2033, even if Congress does nothing there will still be sufficient assets to pay about 75 percent of the current level of benefits.”

According to Public Trustee Charles Blahous, the bleak projections for these two programs, which accounted for 36 percent of federal expenditures in fiscal year 2011, signifies the largest actuarial deficit seen in Social Security since the 1983 reforms and the “second largest single year deterioration in all trustee reports since the last major reforms.”

The Affordable Care Act has offered some stabilization to the Hospital Insurance Trust Fund that finances Medicare. Originally the Hospital Insurance Trust Fund was set to expire in 2016.

“As a result of the law, we’ve added another eight years to its life, putting Medicare on much more solid ground,” Kathleen Sebelius, secretary of Health and Human Services, said.

She said that the law does this “through a range or reforms, from cracking down on fraud to helping providers prevent costly medical errors to reducing excess payments to Medicare advantage plans.”

Both Sebelius and Geithner emphasized the importance of quick action to solve the problem facing the giant retirement and disability programs.

Copyright 2012 ABC News Radio

Wednesday
Nov302011

Payroll Tax Cuts: Will They Bankrupt Social Security?

Comstock/Thinkstock(WASHINGTON) -- The Democratic winds of high-income taxation are picking up and the Republican thunderheads of off-setting spending cuts are rolling in as Capitol Hill braces for yet another partisan thunderstorm.

This time the battle is over payroll taxes, which fund Social Security, and whether to end, extend or expand the 2 percent cut that is set to expire on Dec. 31.

The one-year cut to Social Security’s funding stream decreased federal revenues by $112 billion in 2011, but the already-dwindling trust fund for Social Security remained untouched because the government borrowed extra money to fill the gap, adding instead to the $1.3 trillion deficit.

“On paper [the payroll tax cut] does nothing to Social Security,” said Andrew Biggs, a resident scholar at the American Enterprise Institute.  “It is just as solvent as it was before.  But that’s not the sort of bookkeeping that you would do in the private sector.”

Senate Democrats want not only to extend the current tax break, but further reduce it from the original 6.2 percent to 3.1 percent.  The Democrats' proposal also cuts employers’ share of the payroll tax in half, down to 3.1 percent on the first $5 million paid in wages.

Congressional Republicans, who are wary of even extending the cut at its current 2 percent level, are unlikely to support the expanded cuts that Democrats are pushing for.

“The problem here is that the payroll tax doesn’t go into general revenue, it supports Social Security,” Sen. Jon Kyl, R-Ariz., the number two Republican in the Senate said on Fox News Sunday.  “And you can’t keep extending the payroll tax holiday and have a secure Social Security.”

Biggs, the former principal deputy commissioner of the Social Security Administration, said Social Security is already running on a deficit.  Even without the payroll tax cuts, revenues cannot keep up with the flood of baby boomers who are retiring at the rate of about 10,000 per day, he said.

“In the short term the government can make up the difference in the lost payroll taxes,” Biggs said.  “Social Security benefits will continue to be paid.  The real question is: are we undermining the financing of a program whose finances are already precarious?”

When the tax cut was enacted as part of the 2010 stimulus package, it was intended to be a one-year, short-term break for middle-income Americans.   A family earning $50,000 per year saved about $1,000 on their taxes in 2011 because of the cut.

“If it doesn’t [get extended] every paycheck in the country will go down on Jan. 1,” said Chuck Marr, the director of federal tax policy at the Center for Budget and Policy Priorities.  “It’s real money.  Every person you see every day has a thousand dollars less money, and that’s a lot of bucks.”

Copyright 2011 ABC News Radio

Wednesday
Nov162011

For Retirement, Is 80 the New 65?

Rosemary Calvert/Photographer's Choice RF(CHARLOTTE, N.C.) -- The traditional retirement age of 65 is an outdated concept and middle-class Americans expect to continue working far longer, according to a survey released Wednesday by Wells Fargo & Co.

Some 76 percent of the 1,500 middle-class Americans surveyed by Harris Interactive said it is more important to have a specific amount saved before retirement, regardless of age, and just 20 percent said it’s most important to retire at a specific age, no matter how little or much they saved.

The survey taken in September and October also found that 25 percent of middle-class Americans say they will “need to work until at least age 80″ to live comfortably in retirement and three in four said they expect to work in their retirement years.  Of those, it was split about evenly between those who will have to work to maintain their lifestyles and those who will work because they want to.

The survey found that 49 percent of middle-class Americans aged 25 to 49 would accept future cuts in Social Security to help reduce America’s debt, but that dropped to 28 percent of those age 50 to 59 and just 19 percent of those age 60 to 75.

A majority of those surveyed said they would “need to significantly cut back on spending today to save for retirement.”

Copyright 2011 ABC News Radio

Thursday
Oct202011

Social Security: When Is the Best Time for Retirees to Collect Benefits?

Comstock/Thinkstock(WACO, Texas) -- Retirees will see a 3.6-percent increase in their Social Security checks next year, but choosing when to receive benefits remains a complicated question where missteps can be costly, especially for two-income couples.

Over 60 million people will gain from the "cost of living adjustment," or COLA Social Security increase. The increase, designed to offset rises in the cost of living, was based on the Consumer Price index from the third quarter of 2008 through the third quarter of 2011, the Social Security Administration announced Wednesday.

Raising the Social Security full retirement age has been debated by lawmakers for years. For now, people can start receiving benefits as early as age 62 or as late as age 70, but the full retirement age -- when benefits are at their maximum -- ranges from 65 to 67, depending on when you were born.

All current retirees will get increases of about $39 a month and in December those who receive supplementary Security Income, a disability program for the poor, will receive an average increase of $18 a month. The increase also applies to those who are at least 60 years old by Jan. 1.

Bill Reichenstein, a finance professor at Baylor University, said the increase will not affect people who are younger than 60 at end of year. Rather, their benefits will be based on a formula that translates their pay in their 35 highest-earning years into a "primary insurance amount." Earnings for years before they turn 60 are adjusted for the average wage level in the country.

"If someone born in 1952 earned $40,000 in 1980 and the average U.S. wage level doubled between 1980 and 2012 -- the year he or she turns 60 -- then the $40,000 would be doubled in the formula," Reichenstein said.

Those who must choose when to receive their Social Security benefits, which increase the later you receive them, face a complicated decision. For married people, the question is even more vexing.

Ted Schwartz, president and chief investment officer of Capstone Investment Financial Group and personal finance columnist, said the most difficult aspect of choosing when to receive Social Security benefits is estimating your longevity.

"That's what makes it a hard decision," Schwartz said. "If a person has great genetics and great health maybe putting it off is a better decision."

Reichenstein, 59, launched a paid tool on the website SocialSecuritySolutions.com six months ago that advises users on the best time to start receiving benefits.

He said he found a need for the tool because most Social Security Administration staff are not trained to offer the kind of advice that many people need -- mainly the timing of your benefits.

His tool can provide a report to a user in a "matter of minutes," and has a three-tier pricing system of about $20, $50 and $125 depending on how detailed of a report you choose and whether you want to speak to a "live expert."

Reichenstein said he used the tool and decided to delay his benefits until age 70, in consideration of his wife, who is six years younger. Because he is the higher-income earner, her benefits will cease when he dies.

"The key principle is the higher-earning spouse," he said. "My benefits will last until the last of us die. Her benefits will last until the first spouse dies and it doesn't matter which."

Reichenstein said he is healthy but has a family history of cancer and expects to live until he is about 82, based on his heredity. To maximize Social Security's payout, he said he needs to wait until he is 70 until he starts to receive benefits.

That is, if Social Security benefits will last.

Based on the current promises, Reichenstein said the reserves in the Social Security trust fund are expected to be depleted in the 2030s. If no other change occurs, then recipient benefits would fall to about 75 percent of promised levels. However, there have been proposals in Washington to adjust the method of calculating the COLA to relative inflation, which would decrease the COLA percentage increases.

Reichenstein said he agrees that the full retirement age should be raised for people born after 1960 because life expectancy has increased.

In the early 1980s, the full retirement age was raised to 66 from 65 for people born between Jan. 2, 1943 and Jan. 1, 1955 and to 66 for people born on or after Jan 2, 1960.

"I think me and my fellow generation should bear a small part of the cost of ensuring the solvency of the Social Security program," he said. "In my opinion, the responsible thing to do is for my generation to bear a small part of the burden. After all, we refused to force our elected officials to make adjustments earlier even though we knew the system had to be reformed."

Copyright 2011 ABC News Radio´╗┐

Wednesday
Oct192011

Seniors Will See a Little More in Their Social Security Checks

Comstock/Thinkstock(WASHINGTON) -- The Social Security Administration announced Tuesday that benefits would be boosted starting in January for the first time since 2009.

It's expected that the increase will be around 3.5 percent.

At present, the average is $1,175 a month. With the increase, recipients will see about an extra $38. The current maximum is $2,346 a month, or $541 a week.

Senior citizens who receive federal benefits did not get cost-of-living adjustments (COLA) during the past couple of years because inflation was so low.  But due to a sharp jump in consumer prices, the government is adjusting retirees’ paychecks to help offset rising inflation.

There's just one problem: Medicare premiums will also rise next year meaning that the small bump in Social Security checks will have to go toward paying increased healthcare costs.

Copyright 2011 ABC News Radio







ABC News Radio